Summary
Cisco Systems, Inc. reported a decrease in revenue for the first quarter of fiscal year 2025, with total revenue falling by 6% year-over-year to $13.84 billion. This decline was primarily driven by a 9% decrease in product revenue, while services revenue saw a modest 6% increase. The company highlighted that excluding the impact of Splunk, total revenue would have decreased by 14%. Operating income saw a significant 45% drop, impacting diluted earnings per share, which decreased by 24%. This performance was attributed to lower revenue, increased operating expenses including those from the Splunk acquisition, higher restructuring charges, and increased amortization of purchased intangible assets. Despite the revenue decline, Cisco is focusing on strategic investments in key growth areas like AI, security, collaboration, and observability, integrating AI across its product portfolio. The company reported robust free cash flow of $3.44 billion and continued its capital return program through dividends and share repurchases. Management indicated an improvement in product demand across most geographic segments, suggesting customers have largely completed installations from prior elevated shipment periods. Cisco remains committed to its long-term strategy of securely connecting everything to drive digital transformation for its customers.
Financial Highlights
55 data points| Revenue | $13.84B |
| Cost of Revenue | $4.72B |
| Gross Profit | $9.12B |
| R&D Expenses | $2.29B |
| Operating Expenses | $6.76B |
| Operating Income | $2.36B |
| Net Income | $2.71B |
| EPS (Basic) | $0.68 |
| EPS (Diluted) | $0.68 |
| Shares Outstanding (Basic) | 3.99B |
| Shares Outstanding (Diluted) | 4.01B |
Key Highlights
- 1Total revenue decreased by 6% to $13.84 billion compared to the prior year quarter.
- 2Product revenue declined by 9%, while Services revenue increased by 6%.
- 3Operating income decreased by 45% to $2.36 billion, and operating margin compressed from 29.2% to 17.0%.
- 4Diluted earnings per share decreased by 24% to $0.68.
- 5Significant increase in R&D, Sales & Marketing, and G&A expenses, largely due to the Splunk acquisition and restructuring charges.
- 6Free Cash Flow remained strong at $3.44 billion, supporting dividend payments and share repurchases.
- 7Company announced a restructuring plan impacting approximately 7% of its global workforce, with estimated pre-tax charges of up to $1 billion, incurring $665 million in Q1 FY25.