Cisco reported third-quarter earnings and revenue that exceeded Wall Street’s expectations, despite a drop in sales compared to the previous year. The company’s revenue declined by about 13% year over year, the steepest slide since 2009. Net income also fell by 41% to $1.89 billion. The weakening performance was attributed to clients setting up equipment they received in previous quarters, according to Cisco CEO Chuck Robbins.
Robbins noted that customers are expected to complete the installation of their inventory by the end of the fiscal year in July. Cisco’s public sector business in the U.S. was weaker compared to other regions, but recent federal government funding has helped improve the situation. Networking revenue, including data center switches, declined by 27% to $6.52 billion, representing a majority of overall revenue for the company.
During the quarter, Cisco completed its acquisition of security software maker Splunk for $28 billion. The deal slightly lowered Cisco’s adjusted earnings per share but provided $413 million in additional revenue. The company identified 5,000 existing Cisco customers who have the potential to become significant Splunk customers, with sales teams already making connections. Cisco expects cost reductions over time, according to finance chief Scott Herren.
Cisco raised its fiscal 2024 revenue guidance to a range of $53.6 billion to $53.8 billion, up from the previous estimate of $51.5 billion to $52.5 billion. The company adjusted its full-year earnings forecast to $3.69 to $3.71 per share. Herren forecasted revenue growth in the low- to mid-single digits for fiscal 2025. Prior to the earnings announcement, Cisco’s shares were down 2% in 2024, while the S&P 500 index was up 11%.
Gary Steele, former CEO of Splunk, has been appointed as the parent company’s president of go-to-market, with immediate effect. Steele will continue to lead Splunk while overseeing sales and marketing at Cisco. Jeff Sharritts, Cisco’s chief customer and partner officer, will be leaving the company. Sharritts’ organization will now report to Steele, along with marketing chief Carrie Palin. Cisco CEO Chuck Robbins expressed optimism that the Splunk acquisition will drive significant financial growth for the company.
