Summary
Cisco Systems, Inc. (CSCO) reported its first quarter fiscal year 2020 results on November 19, 2019, for the period ending October 26, 2019. Total revenue for the quarter was $13.16 billion, a slight increase of 1% year-over-year, largely driven by a 3% increase in service revenue which offset flat product revenue. Geographically, the Americas and EMEA regions saw revenue growth, while the APJC region experienced a decline. The company's gross margin improved to 64.3% from 62.3% in the prior year, attributed to productivity gains and favorable product mix, partially offset by pricing pressures. Net income for the quarter was $2.93 billion, a decrease of 18% compared to the prior year, resulting in diluted earnings per share of $0.68, down from $0.77. This decline was influenced by increased operating expenses, including higher R&D, sales and marketing, and a significant increase in G&A expenses, partly due to a prior year litigation settlement benefit. The company continues to invest in strategic growth areas like Security and Applications, with security revenue showing a strong 22% increase. Cisco also maintained a strong cash position, generating $3.59 billion in operating cash flow and returning substantial capital to shareholders through dividends and stock repurchases.
Financial Highlights
55 data points| Revenue | $13.16B |
| Cost of Revenue | $4.70B |
| Gross Profit | $8.46B |
| R&D Expenses | $1.67B |
| Operating Expenses | $4.88B |
| Operating Income | $3.58B |
| Interest Expense | $178.00M |
| Net Income | $2.93B |
| EPS (Basic) | $0.69 |
| EPS (Diluted) | $0.68 |
| Shares Outstanding (Basic) | 4.25B |
| Shares Outstanding (Diluted) | 4.27B |
Key Highlights
- 1Total revenue increased slightly by 1% to $13.16 billion, driven by service revenue growth (+3%) which compensated for flat product revenue.
- 2Gross margin improved significantly by 2.0 percentage points to 64.3%, reflecting productivity improvements and a favorable product mix.
- 3Net income decreased by 18% to $2.93 billion, leading to a 12% decrease in diluted EPS to $0.68, influenced by higher operating expenses and a prior year litigation settlement benefit.
- 4Security product revenue demonstrated robust growth, increasing by 22%, indicating strength in this strategic area.
- 5The company generated strong operating cash flow of $3.59 billion and continued its capital return program with $1.49 billion in dividends and $0.77 billion in share repurchases.
- 6The APJC geographic segment experienced a revenue decline of 9%, contrasting with growth in the Americas (+3%) and EMEA (+2%).