March 28, 2024

Cisco (CSCO) recently accomplished a significant strategic move by acquiring Splunk. This $28 billion deal is aimed at augmenting Cisco’s cybersecurity and observability domains, delivering a cohesive view of the digital ecosystem and empowering teams to strengthen infrastructure, mitigate outages, and enhance network experiences. This acquisition is forecasted to favourably influence Cisco’s cash flow, non-GAAP gross margin by the 2025 fiscal year, and non-GAAP EPS by the 2026 fiscal year.

In a recent announcement, Cisco unveiled its first-quarter results for the 2024 fiscal year, which showcased a 40% decline in operational cash flow compared to the same period in 2023, owed largely to tax payment timelines. Nevertheless, Cisco’s Remaining Performance Obligations (RPO) rose by 12%, reaching $34.8 billion, suggesting promising future revenue potential. Furthermore, Cisco redistributed $2.8 billion to its shareholders this quarter and executed several takeovers aimed at amplifying its network performance monitoring, mobile services platform, threat detection, and network surveillance.

Moreover, Cisco has revealed new technological innovations in response to the burgeoning hybrid work model, including the launch of premier Wi-Fi 6E access points, enterprise Private 5G, and the innovative Catalyst 9000X series switches powered by Cisco Silicon One. These solutions aim to facilitate efficient and secure hybrid workplaces by ensuring robust performance and connectivity across diversified work environments.

On February 14, 2024, Cisco posted its Q4 earnings for the 2023 fiscal year, which saw substantial growth and surpassing market expectations. The non-GAAP earnings recorded were $1.14 per share, reflecting a 37.3% YoY increase. Total revenues for Cisco hit $15.2 billion, a 16% YoY rise, underpinned by a 20.3% boost in product revenue totaling $11.09 billion. Even though Collaboration revenues saw a 12% dip, Secure, Agile Networks led the growth with a 33% surge. Service revenues observed a modest 4.1% hike reaching $3.55 billion. Fiscal 2023 ended with Cisco recording a total revenue of $57.0 billion, demonstrating an 11% YoY rise, and a non-GAAP net income of $16.0 billion, marking a 13% increase from the preceding fiscal year. Notably, cash flow from operations rose significantly by 50% to $19.9 billion for the fiscal year 2023. Subsequent to this promising earnings report, Cisco’s stock saw around a 3% rise.

Looking ahead to the next fiscal year, for Q1 2024, Cisco is projecting revenues between $14.5 billion and $14.7 billion, with a non-GAAP EPS in the range of $1.02 to $1.04. For the entire fiscal year 2024, revenue expectations are set between $57.0 billion and $58.2 billion, and projected non-GAAP EPS should fall between $4.01 and $4.08.