Cisco Q3 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise

Cisco Systems CSCO reported third-quarter fiscal 2025 non-GAAP earnings of 96 cents per share, beating the Zacks Consensus Estimate by 5.49%. The figure increased 9.1% year over year.Revenues of $14.15 billion surpassed the Zacks Consensus Estimate by 0.65%. The top line increased 11.4% year over year.Cisco shares were up 4.13% in pre-market trading. In the year-to-date period, CSCO shares have gained 3.6%, outperforming the Zacks Computer & Technology sector’s 2.4% decline.CSCO’s Top-Line DetailsRevenues from Networking in the third quarter of fiscal 2025 were $7.06 billion, up 8% on a year-over-year basis. Cisco Systems, Inc. Price, Consensus and EPS Surprise Cisco Systems, Inc. price-consensus-eps-surprise-chart | Cisco Systems, Inc. QuoteSecurity revenues were $2.01 billion, up 54% year over year. Collaboration revenues were $1.03 billion, up 4% year over year. Observability revenues were $261 million and grew 24% year over year.Total Product revenues in the third quarter of fiscal 2025 were $10.37 billion, comprising 73.3% of Cisco’s total revenues. On a year-over-year basis, product revenues increased 15%. Service Revenues were $3.77 billion, comprising 26.7% of Cisco’s total revenues. On a year-over-year basis, service revenues increased 2.6%.Annualized Recurring Revenues (ARR) for the quarter were $30.6 billion, increasing 5% on a year-over-year basis, with product ARR growth of 8%.Region-wise, the Americas’ revenues increased 14% year over year to $8.38 billion. EMEA (Europe, Middle East and Africa) revenues jumped 8% year over year to $3.73 billion. APJC (Asia Pacific Japan China) revenues climbed 9% year over year to $2.03 billion. In the third quarter of fiscal 2025, AI Infrastructure orders from webscale customers exceeded $600 million, surpassing our $1 billion annual target a quarter ahead of schedule.CSCO’s Operating Expenses Expand Y/YNon-GAAP gross margin was 68.6%, which expanded 30 basis points (bps) year over year. On a non-GAAP basis, the product gross margin increased 200 bps on a year-over-year basis to 49.6%. Service gross margin decreased 170 bps to 19%.In the third quarter of fiscal 2025, Cisco reported total non-GAAP operating expenses of $4.82 billion, up 11.5% year over year. As a percentage of revenues, the figure was in line with 34%.Consequently, CSCO reported a non-GAAP operating income of $4.88 billion, up 12.2% year over year. Operating margin expanded 30 bps to 34.5%.CSCO’s Balance Sheet DetailsAs of April 26, 2025, cash and cash equivalents and investments totaled $15.6 billion, which decreased from $16.9 billion as of Jan. 25, 2025.Total debt was $29.2 billion as of April 26, 2025, compared with $31.03 billion at the end of the prior quarter.The remaining performance obligations (RPO) at the end of the third quarter of fiscal 2025 were $41.7 billion, up 7%, with 51% of the amount to be recognized as revenues over the following 12 months. Product RPO was up 10%, and services RPO was up 5%.In the third quarter of fiscal 2025, CSCO returned $3.1 billion to stockholders through share buybacks and dividends. It repurchased approximately 25 million shares of common stock.CSCO Offers Positive GuidanceFor the fourth quarter of fiscal 2025, Cisco expects non-GAAP earnings between 96 cents per share and 98 cents.  (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Revenues are expected to be in the range of $14.5 billion-$14.7 billion. Non-GAAP gross margins are expected to be between 67.5% and 68.5%. Non-GAAP operating margin is anticipated to be between 33.5% and 34.5%. For fiscal 2025, Cisco expects non-GAAP earnings between $3.77 per share and $3.79. Revenues are expected to be in the range of $56.5 billion-$56.7 billion.Zacks Rank & Stocks to ConsiderCisco currently carries a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable entry point to accumulate the stock. Advance Auto Parts AAP, PagerDuty PD and Canada Goose GOOS are some better-ranked stocks that investors can consider in the broader sector. While AAP sports a Zacks Rank #1 (Strong Buy), PD and GOOS presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Advance Auto Parts shares have lost 30.8% year to date. AAP is set to report its first-quarter 2025 results on May 22.PagerDuty shares have lost 8.4% year to date. PD is set to report its first-quarter fiscal 2026 results on May 29.Canada Goose shares have lost 9% year to date. GOOS is set to report its fourth-quarter fiscal 2025 results on May 21.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report Advance Auto Parts, Inc. (AAP): Free Stock Analysis Report Canada Goose Holdings Inc. (GOOS): Free Stock Analysis Report PagerDuty (PD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks