Summary
Cisco Systems, Inc. (CSCO) reported its first quarter fiscal year 2021 results, ending October 24, 2020. The company experienced a year-over-year revenue decline of 9% to $11.93 billion, largely driven by a 13% decrease in product revenue, though service revenue saw a modest 2% increase. This downturn was attributed to broad-based weakening in the global macroeconomic environment, exacerbated by the COVID-19 pandemic, impacting commercial and enterprise markets, as well as service provider and emerging country segments. Despite the revenue decline, Cisco maintained solid gross margins, which stood at 63.6%, though slightly down from 64.3% in the prior year. The company reported a significant increase in restructuring and other charges ($602 million) related to a new restructuring plan, impacting operating income, which decreased by 28% to $2.57 billion. Consequently, net income fell 26% to $2.17 billion, and diluted earnings per share decreased to $0.51 from $0.68 in the prior year. Cisco's balance sheet remains strong, with total assets of $95 billion and total liabilities of $56.8 billion, resulting in equity of $38.2 billion. The company maintained a healthy cash position, with cash, cash equivalents, and investments totaling $30.0 billion. Cash flow from operations was robust at $4.1 billion, enabling the company to return significant capital to shareholders through $1.5 billion in dividends and $0.8 billion in stock repurchases. The company also provided an update on its pending acquisition of Acacia Communications, expected to close in the first half of fiscal 2021.
Financial Highlights
55 data points| Revenue | $11.93B |
| Cost of Revenue | $4.35B |
| Gross Profit | $7.58B |
| R&D Expenses | $1.61B |
| Operating Expenses | $5.01B |
| Operating Income | $2.57B |
| Interest Expense | $112.00M |
| Net Income | $2.17B |
| EPS (Basic) | $0.51 |
| EPS (Diluted) | $0.51 |
| Shares Outstanding (Basic) | 4.23B |
| Shares Outstanding (Diluted) | 4.24B |
Key Highlights
- 1Total revenue decreased by 9% year-over-year to $11.93 billion, primarily due to a 13% drop in product revenue, while service revenue increased by 2%.
- 2The company incurred significant restructuring and other charges of $602 million in the quarter, impacting profitability.
- 3Net income decreased by 26% to $2.17 billion, and diluted earnings per share fell to $0.51 from $0.68 in the prior year's comparable quarter.
- 4Cisco maintained a strong liquidity position with $30.0 billion in cash, cash equivalents, and investments.
- 5Operating cash flow remained robust at $4.1 billion, supporting substantial capital returns to shareholders.
- 6Shareholders received $1.5 billion in dividends and $0.8 billion in stock repurchases during the quarter.
- 7Infrastructure Platforms revenue saw a significant decline of 16%, while Security revenue grew by 6%.