Cisco’s Shares Surge Following Strong Earnings Report

Shares of Cisco jumped by 15% in after-hours trading on Wednesday, following the company’s announcement of earnings and guidance that exceeded Wall Street’s expectations.

During this quarter, Cisco revealed it would cut fewer than 4,000 jobs, which is under 5% of its total workforce.

Here’s a quick comparison of their performance against estimates:

• Earnings per share: Adjusted at $1.06, beating the estimate of $1.04
• Revenue: $15.84 billion, surpassing expected $15.56 billion

In a statement, Cisco noted its revenue for the quarter ending April 25 has risen by 12% compared to $14.15 billion for the same period last year. Net income increased to $3.37 billion (85 cents per share), up from $2.49 billion (62 cents per share) the previous year.

For the upcoming fiscal fourth quarter, Cisco anticipates adjusted earnings per share between $1.16 and $1.18, along with revenue ranging from $16.7 billion to $16.9 billion. Analysts had forecasted adjusted earnings per share of $1.07 on a revenue of $15.82 billion.

Notably, Cisco reported $5.3 billion in orders related to artificial intelligence infrastructure and hyperscalers this year, raising its forecast for total orders to $9 billion, up from a previous estimate of $5 billion. The company now expects revenue from this segment to hit $4 billion, an increase from prior expectations of $3 billion.

While Cisco has been perceived as lagging compared to many of its data center competitors in the AI sector, its stock has reached all-time highs recently, overcoming the peaks established during the dot-com era. So far this year, the stock has risen by 33%, significantly outpacing the Nasdaq’s 14% growth.

If the stock maintains these gains through Thursday, it would mark the steepest increase since 2011.

In a blog post, CEO Chuck Robbins reflected on Cisco’s position in the evolving landscape of AI, mentioning that “companies that excel in the AI era will be those that can dynamically prioritize investments based on demand and long-term value.” He emphasized that making tough decisions will be essential as they adapt to opportunities in this shifting market.

Cisco also disclosed it would incur $1 billion in pre-tax charges for severance and associated expenses, with about $450 million recognized in the fourth fiscal quarter.

Earlier in the third quarter, Cisco introduced new switches and routers featuring next-generation processors and debuted ranking systems that assess AI models’ resilience against cybersecurity threats.

The company’s network revenue increased by 25% to $8.82 billion, exceeding the $8.47 billion consensus from analysts. Security revenue remained steady at around $2 billion, in line with analyst expectations of $1.99 billion.

Executives are scheduled to discuss the quarterly results in a conference call beginning at 4:30 p.m. ET.