Cisco Systems (CSC) stock gains on earnings, revenue beat
(Updated - November 17, 2022 5:15 AM EST)
Cisco Systems (NASDAQ: CSCO) shares are up 4% pre-market Thursday on the back of the company's fiscal first-quarter earnings release.
The digital communications firm topped profit and revenue consensus estimates, posting adjusted earnings per share of $0.86, $0.02 better than the analyst estimate of $0.84, with revenue coming in at $13.6 billion, above expectations of $13.29B.
The company's total annualized recurring revenue (ARR) was $23.2B in fiscal Q1, up 7% year-over-year, with product ARR rising 12%. In addition, software revenue increased by 5%, while software subscription revenue was up 11% year-over-year.
"Our fiscal 2023 is off to a good start as we delivered the largest quarterly revenue and second highest quarterly non-GAAP earnings per share in our history," said Chuck Robbins, chair and CEO of Cisco. "These results demonstrate the relevance of our strategy, our differentiated innovation, and our unique position to help our customers become more resilient."
The company added that its easing supply chain situation, alongside its annualized recurring revenue increase, significant backlog, and strong remaining performance obligations, provides the company with "great visibility and predictability."
As a result of its positive earnings, Cisco increased its full-year guidance. It now sees FY23 adjusted earnings per share between $3.51 and $3.58, while revenue growth for the period is expected to be from 4.5% to 6.5%.
Fiscal second-quarter adjusted earnings per share are expected to be between $0.84 to $0.86, while revenue growth during the period is seen from 4.5% to 6.5%.
Oppenheimer analyst Ittai Kidron said Cisco reported "solid" results, which reflect "a stable demand environment and improving supply conditions amidst a tough macro environment."
"We come away positive on the outlook, and while we expect investors to focus on the dynamic between backlog and order growth, we believe the company is positioned to deliver on its growth targets as it increases its investments into higher-growth areas (security, observability). Adj. est. for results/guidance," Kidron said in a client note.
Deutsche Bank analyst Matthew Niknam also took note of easing supply chain constraints.
"We believe the relative resilience of customer demand (i.e.: demand "not falling off a cliff" as CSCO put it, in a tougher macro) and easing supply-chain constraints, paired with CSCO's elevated backlog, yields greater visibility into FY23 targets," Niknam wrote.
By Sam Boughedda and Senad Karaahmetovic