Cisco Systems shares are heading lower in late trading Wednesday after the networking infrastructure company posted results that were in line with guidance, but shy of some investor expectations.
January quarter revenue guidance was short of Street estimates. The company said supply issues are restraining its ability to meet customer demand.
For the fiscal first quarter ended October 30, the company posted revenue of $12.9 billion, up 8% from a year earlier, which was toward the lower end of the company’s forecast growth range of 7.5% to 9.5%, and slightly below the Street consensus forecast of $13 billion.
On a non-GAAP basis, the company earned 82 cents a share, a penny above the high end of the guidance range of 79 cents to 81 cents a share. Under generally accepted accounting principles, the company earned 70 cents a share.
Cisco (ticker: CSCO) said that order growth was up 33% from a year ago, higher than the 31% order growth in the July quarter. Annual recurring revenue was $21.6 billion, up 10% from a year ago.
Cisco is projecting quarter revenue growth for the January 2022 fiscal second quarter of between 4.5% and 6.5%, which implies $12.6 billion at the midpoint, below the Street consensus at $12.9 billion. Cisco sees profits for the quarter on a non-GAAP basis of 80 cents to 82 cents a share; Street consensus was 82 cents.
For the July 2022 fiscal year, Cisco sees revenue up 5% to 7%, consistent with the Street consensus forecast for 6.1% growth. The company sees full year non-GAAP profits of between $3.38 and $3.45 a share, bracketing the Street consensus at $3.42 a share.
“In Q1, we had robust growth and continued strong demand despite the very dynamic supply environment,” Cisco CEO Chuck Robbins said in a statement.
This is the first quarter of a new segment reporting structure. Cisco reported revenue from “secure, agile networks,” which includes campus, data center and enterprise routing, compute and switching, of $5.97 billion, up 10%.
“Hybrid work,” including collaboration and contact center products, had revenue of $1.1 billion, down 7%. The “end to end security” segment had revenue of $895 million, up 4%.
“Internet for the Future,” including optical networking and 5G products, had revenue of $1.37 billion, up 46%. Revenue from “optimized application experiences,” including observability and cloud software, was $181 million, up 3%. Services revenue was $3.37 billion, up 1%.
On a conference call with investors, Robbins said that Cisco saw the strongest demand in over a decade, but that supply issues constrained what the company could build and ship to customers, putting pressure on gross margins. The company sees non-GAAP January quarter gross margin of between 63.5% and 64.5%, versus 64.5% in the October quarter.
Without giving a specific number, Cisco said it finished the quarter with the largest backlog in its history. CFO Scott Herren said the company is “working night and day” to resolve the component issues.
Cisco said it bought back $256 million stock in the quarter.
Cisco shares fell 6.3% in after-hours trading. The S&P 500 closed the day down 0.3% and the Dow Jones Industrial Average closed down 0.6%.
Write to Eric J. Savitz at eric.savitz@barrons.com
Source: finance.yahoo.com