Summary
Cisco Systems, Inc. (CSCO) reported its third quarter fiscal year 2021 results, demonstrating a notable increase in total revenue, up 7% year-over-year to $12.8 billion. This growth was driven by a 6% rise in product revenue and an 8% increase in service revenue. The company highlighted strong performance across its geographic segments and product categories, particularly in Infrastructure Platforms, Applications, and Security. Despite a 1.0 percentage point decrease in total gross margin to 63.9%, largely attributed to supply chain constraints and ongoing costs, Cisco delivered a 5% increase in diluted earnings per share to $0.68. The company's strategic shift towards software and subscriptions continues to gain traction, with total software revenue up 13% and 81% of that sold as a subscription. Cisco also continued its capital allocation strategy, returning value to shareholders through dividends and stock repurchases.
Key Highlights
- 1Total revenue increased by 7% to $12.8 billion, driven by growth in both product (up 6%) and service (up 8%) revenue.
- 2Diluted EPS grew by 5% to $0.68, reflecting solid profitability despite some margin pressures.
- 3Total gross margin decreased by 1.0 percentage point to 63.9%, primarily due to supply chain costs and pricing erosion.
- 4Software revenue increased by 13%, with 81% of software sales now on a subscription basis, indicating a successful business model shift.
- 5The company saw broad-based revenue growth across its geographic segments (Americas, EMEA, APJC) and key product categories (Infrastructure Platforms, Applications, Security).
- 6Cisco generated $10.4 billion in free cash flow for the nine months ended May 1, 2021, demonstrating strong operational cash generation.
- 7The company announced a new 5-year, $3.0 billion unsecured revolving credit facility, underscoring its solid liquidity position.