MW Cisco earnings showcase AI momentum, and the stock is rising

By Britney Nguyen

The networking company hit its AI-infrastructure target earlier than expected

Cisco Systems Inc. experienced another quarter of growing demand for its networking products amid the artificial-intelligence boom.

The networking company reported revenue of $14.1 billion for the fiscal third quarter - up 11% from the previous year and above the $14 billion FactSet consensus. Cisco $(CSCO)$ reported adjusted earnings of 96 cents a share, which marked a 9% increase from a year earlier and exceeded the consensus view of 92 cents.

"Cisco once again had strong quarterly results with clear demand for our technologies," Cisco Chief Executive Chuck Robbins said in a statement. "The momentum we are seeing with AI is fueled by the power of our secure networking portfolio, our trusted global partnerships and the value we bring to our customers."

The company's stock was up more than 3% in extended trading after the earnings beat.

For the July quarter, Cisco set revenue guidance between $14.5 and $14.7 billion - above analysts' expectations of $14.5 billion, according to FactSet. For the full year, Cisco expects revenue to come in between $56.5 billion and $56.7 billion.

"Another quarter of solid execution in [third-quarter] revenue, margins and [earnings per share] above our guidance ranges," Scott Herren, the company's chief financial officer, said in a statement. "Our innovation positions us well for future growth and our operational discipline is generating strong cash flows, enabling us to deliver significant shareholder returns."

Cisco said its AI-infrastructure orders from webscale customers topped $600 million during the quarter, "surpassing our $1 billion target one quarter early." The company's product orders were up 20% from the previous year - or up 9% when excluding Splunk - and Cisco said it saw growth across all of its markets. Product revenue was up 15% year over year, while services revenue climbed 3%.

"Margins look relatively derisked given Cisco has incorporated tariff impacts into their guide that are likely higher than what they will actually see due to their assumption of a tariff on [U.S.-Mexico-Canada Agreement] compliant goods," Evercore ISI analysts said in a note on Sunday.

Evercore said the company "should benefit from a cyclical networking recovery with some product refresh tailwinds also kicking in over the next twelve months," and that barring "surprises out of the security/observability business then stock should continue to work higher after the print."

Earlier this month, the company announced a chip prototype that it said would make it possible for "quantum networks to scale" - shortening the timeline to useful quantum computing from decades to just five to 10 years.

-Britney Nguyen

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 14, 2025 16:56 ET (20:56 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.