Summary
Cisco Systems, Inc. (CSCO) reported its financial results for the second quarter and first six months of fiscal year 2020, ending January 25, 2020. The company experienced a 4% year-over-year decrease in total revenue for the quarter, totaling $12.0 billion, and a 1% decrease for the first six months, reaching $25.2 billion. This decline was primarily driven by a 6% decrease in product revenue, with notable weaknesses in Infrastructure Platforms and Applications, although Security product revenue saw an increase. Service revenue, however, showed resilience with a 5% increase in the quarter and 4% for the six-month period. Despite the revenue headwinds, Cisco demonstrated improved profitability. Gross margin percentage increased by 2.2 percentage points in the quarter to 64.7% and by 2.1 percentage points for the six months to 64.5%, driven by productivity improvements and a favorable product mix, partially offset by pricing pressures. Diluted earnings per share (EPS) saw a positive increase of 8% year-over-year for the quarter, reaching $0.68, though it decreased by 3% to $1.36 for the six-month period. The company continued its capital allocation strategy, repurchasing $1.6 billion in stock and paying $3.0 billion in dividends during the first six months of fiscal 2020.
Financial Highlights
55 data points| Revenue | $12.01B |
| Cost of Revenue | $4.24B |
| Gross Profit | $7.76B |
| R&D Expenses | $1.57B |
| Operating Expenses | $4.38B |
| Operating Income | $3.38B |
| Interest Expense | $158.00M |
| Net Income | $2.88B |
| EPS (Basic) | $0.68 |
| EPS (Diluted) | $0.68 |
| Shares Outstanding (Basic) | 4.24B |
| Shares Outstanding (Diluted) | 4.26B |
Key Highlights
- 1Total revenue declined 4% YoY to $12.0 billion for the quarter and 1% YoY to $25.2 billion for the first six months.
- 2Product revenue decreased 6% YoY in the quarter, with Infrastructure Platforms and Applications seeing declines, while Security revenue grew 9%.
- 3Service revenue increased 5% YoY for the quarter and 4% YoY for the six months, indicating continued growth in recurring revenue streams.
- 4Gross margin percentage improved significantly, up 2.2 percentage points YoY to 64.7% for the quarter and 2.1 percentage points YoY to 64.5% for the six months.
- 5Diluted EPS increased 8% YoY to $0.68 for the quarter, but decreased 3% YoY to $1.36 for the six months.
- 6The company generated $7.4 billion in cash from operating activities for the first six months of fiscal 2020.
- 7Cisco continues to return capital to shareholders, repurchasing $1.6 billion of stock and paying $3.0 billion in dividends during the first six months of fiscal 2020.