Cisco Systems, Inc. (CSCO, Financial) announced its financial results for the first quarter of fiscal year 2025, revealing a 6% year-over-year decline in net revenue to $13.8 billion from $14.7 billion. The company’s net income dropped 25% to $2.7 billion compared to the previous year's $3.6 billion. However, both revenue and adjusted earnings per share exceeded Wall Street expectations.
The adjusted net income stood at $3.7 billion, a 19% decrease from the previous $4.5 billion, while adjusted earnings per share fell 18% to $0.91, surpassing analysts' forecast of $0.87. Despite this, Cisco’s forecasts for the second quarter were above analysts' projections, although the full-year revenue outlook was slightly below expectations.
Following the earnings report, Cisco's stock price dropped over 2% in after-hours trading. During the regular session, the stock closed at $59.18, marking a 0.80% increase, but later fell to $57.93 in after-hours trading.
In the reported quarter, Cisco’s total gross margin, product gross margin, and service gross margin showed year-over-year improvements, recording 65.9%, 65.1%, and 68.0% respectively. Adjusted figures indicated even higher margins at 69.3%, 68.9%, and 70.3%.
Regionally, gross margins were 69.6% in the Americas, 70.3% in Europe, the Middle East, and Africa (EMEA), and 66.4% in the Asia-Pacific region.
Operating expenses rose 28% to $6.8 billion while adjusted operating expenses increased by 9% to $4.9 billion. Operating income decreased to $2.4 billion from $4.3 billion, showing a 45% decline, while adjusted operating income saw a 12% decrease to $5.7 billion.
The company's deferred revenue grew 7% to $27.5 billion. Cisco returned $3.6 billion to shareholders through dividends and share repurchases, with $2 billion spent on buying back approximately 40 million shares at an average price of $49.56 per share.
By segments, product sales generated $10.114 billion, a decrease from $11.139 billion, whereas services revenue increased to $3.727 billion. Network and collaboration segments experienced revenue declines, while security and observability segments saw significant growth.
Looking forward, Cisco projects second-quarter revenue between $13.75 billion and $13.95 billion, alongside an adjusted EPS range of $0.89 to $0.91. For the full fiscal year 2025, expected revenue is between $55.3 billion and $56.3 billion, with adjusted EPS anticipated to be in the range of $3.60 to $3.66.
