From Nasdaq: 2024-11-14 11:51:00

Cisco Systems (CSCO) reported first-quarter fiscal 2025 non-GAAP earnings of 91 cents per share, beating estimates by 4.6%. Revenues of $13.8 billion also topped expectations. However, shares fell over 2.5% in pre-market trading. The company’s partnership with NVIDIA and strong security growth are expected to drive future performance. YTD, Cisco shares have grown 15.7%.

Cisco’s first-quarter fiscal 2025 results saw a decline in revenues, impacted by sluggish networking sales. Collaboration revenues fell 3%, but observability revenues grew 36%. Security revenues doubled year over year. Region-wise, the Americas contributed the most to total revenues, followed by EMEA and APJC. Annualized Recurring Revenues (ARR) grew 22% year over year.

Operating expenses for Cisco rose year over year in first-quarter fiscal 2025. Non-GAAP gross margin contracted, but service gross margin increased. R&D, sales & marketing, and general & administrative expenses all saw increases. Non-GAAP operating income was down 12.1% from the prior year.

As of October 26, 2024, Cisco had cash and investments totaling $18.67 billion and total debt of $31.99 billion. The company returned $3.6 billion to stockholders in the first quarter of fiscal 2025 through buybacks and dividends. For the second quarter, Cisco expects non-GAAP earnings between 89-91 cents per share and revenues between $13.75-$13.95 billion.

Cisco’s near-term results may be impacted by networking business challenges, but the company’s expanding portfolio and cybersecurity growth are positive factors. Demand for 400 gig and 800 gig switches remains strong. However, the stock’s valuation is stretched. Investors may want to wait for a better entry point. Cisco currently carries a Zacks Rank #3 (Hold).

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Read more at Nasdaq: CSCO Falls Despite Q1 Earnings Beat: Buy, Sell or Hold the Stock?