10-QPeriod: Q3 FY2015

CISCO SYSTEMS, INC. Quarterly Report for Q3 Ended Apr 25, 2015

Filed May 20, 2015For Securities:CSCO

Summary

Cisco Systems, Inc. (CSCO) reported its financial results for the third quarter of fiscal year 2015, ending April 24, 2015. The company demonstrated solid revenue growth, driven by an increase in product revenue, particularly in Switching and Data Center categories. Service revenue also saw a moderate increase. Overall, profitability improved year-over-year, with operating income and net income showing significant year-over-year growth, leading to a diluted EPS of $0.47. The company continued to actively manage its capital, returning value to shareholders through dividends and stock repurchases. Despite some challenges in emerging markets and the service provider segment, Cisco expressed confidence in its strategic positioning and ability to capitalize on market transitions.

Financial Highlights

58 data points
Beta

Revenue

$12.14B

62.0% Gross Margin

Net Income

$2.44B

20.1% Net Margin

EPS (Diluted)

$0.47

Total Assets

$106.21B

Cash & Equivalents

$3.87B

Free Cash Flow

$2.68B

Financial Statements
Beta
Revenue$12.14B
Cost of Revenue$4.61B
Gross Profit$7.53B
R&D Expenses$1.55B
Operating Expenses$4.60B
Operating Income$2.92B
Interest Expense$139.00M
Net Income$2.44B
EPS (Basic)$0.48
EPS (Diluted)$0.47
Shares Outstanding (Basic)5.10B
Shares Outstanding (Diluted)5.15B

Key Highlights

  • 1Total revenue increased by 5.1% to $12.1 billion, driven by a 5.7% rise in product revenue and a 3.2% increase in service revenue.
  • 2Operating income increased by 15% to $2.9 billion, and operating income as a percentage of revenue improved to 24.1% from 22.0% in the prior year's quarter.
  • 3Diluted earnings per share (EPS) rose by 11.9% to $0.47.
  • 4The company repurchased $1.0 billion of common stock in the quarter and declared a dividend of $0.21 per share, reflecting a continued commitment to shareholder returns.
  • 5Product revenue growth was strong in Switching (up 5.7%), Data Center (up 21.0%), Wireless (up 9.1%), and Security (up 14.1%).
  • 6Geographically, the Americas and EMEA segments showed revenue growth, while APJC experienced a slight decline.
  • 7The company incurred $24 million in restructuring and other charges related to its fiscal 2015 restructuring plan.

Frequently Asked Questions

Cisco reported total revenue of $12.1 billion for the third quarter of fiscal year 2015, representing a 5.1% increase compared to the same period in the prior year. This growth was primarily driven by a 5.7% increase in product revenue, with notable strength in Switching and Data Center products.

Profitability improved year-over-year. Operating income increased by 15% to $2.9 billion, and operating income as a percentage of revenue expanded by 2.1 percentage points to 24.1%. Net income grew by 11.7% to $2.4 billion, resulting in diluted earnings per share of $0.47, an increase of 11.9%.

Cisco continued its commitment to returning capital to shareholders. In the third quarter of fiscal year 2015, the company repurchased $1.0 billion of common stock under its authorized repurchase program and paid a cash dividend of $0.21 per share. Cisco aims to return a minimum of 50% of its free cash flow annually to shareholders through dividends and stock repurchases.

Cisco noted challenges in emerging markets, specifically mentioning product revenue declines in China, Brazil, and Russia. The service provider segment also experienced a relative slowdown. The company also incurred $24 million in restructuring charges as part of its fiscal 2015 plan.