CISCO SYSTEMS, INC. Quarterly Report for Q3 Ended Apr 30, 2016

Summary

Cisco Systems, Inc. reported its financial results for the third quarter and the first nine months of fiscal year 2016, ending April 30, 2016. For the quarter, total revenue saw a slight decrease of 1.1% year-over-year, primarily driven by a 4.8% decline in product revenue, partially offset by an 11.2% increase in service revenue. The sale of the Service Provider Video CPE Business in Q2 fiscal 2016 impacted year-over-year comparisons. Diluted EPS for the quarter was $0.46, a slight decrease from $0.47 in the prior year. On a nine-month basis, total revenue increased by 0.8%, with product revenue down 0.5% and service revenue up 5.0%. Diluted EPS saw a more significant increase of 20.9% to $1.56. The company highlighted operational efficiencies, productivity improvements, and a favorable product mix contributing to expanded gross margins for both product and service segments. Cisco continued its strategic focus on key growth areas, supported by strong cash flow generation and a robust balance sheet.

Key Highlights

• 1Total revenue for the third quarter of fiscal 2016 was $12.0 billion, a decrease of 1.1% compared to the prior year period.
• 2Product revenue decreased by 4.8% in the quarter to $8.9 billion, while service revenue increased by 11.2% to $3.1 billion.
• 3Diluted earnings per share (EPS) was $0.46 for the quarter, down from $0.47 in the prior year.
• 4For the nine months ended April 30, 2016, total revenue increased 0.8% to $36.6 billion, and diluted EPS rose 20.9% to $1.56.
• 5Gross margin percentage improved to 64.3% in the quarter from 62.0% in the prior year, driven by productivity gains and the sale of the lower-margin SP Video CPE Business.
• 6The company repurchased $0.65 billion of common stock and paid $1.31 billion in dividends during the quarter.
• 7Cash and cash equivalents and investments totaled $63.5 billion as of April 30, 2016, with $8.9 billion in cash and cash equivalents.

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