Cisco Reports Fourth Quarter And Fiscal Year 2024 Earnings

News Summary :

　　Product order growth of 14% year over year; up 6% excluding Splunk

　　Revenue of $13.6 billion in Q4 FY 2024, above the high end of our guidance range

　　Strong margins:

　　Q4 FY 2024 GAAP gross margin of 64.4% and Non-GAAP gross margin of 67.9%

　　FY 2024 GAAP gross margin of 64.7% and Non-GAAP gross margin of 67.5%, the highest in 20 years

　　Solid growth in software and recurring metrics in FY 2024, enhanced by Splunk

　　Total subscription revenue of $27.4 billion including Splunk, representing 51% of total revenue

　　Total annualized recurring revenue (ARR) at $29.6 billion, including $4.3 billion from Splunk, up 22% year over year

　　Total software revenue at $18.4 billion, up 9% year over year, with software subscription revenue of $16.4 billion, up 15% year over year, making up 89% of total software revenue

　　Q4 FY 2024 Results:

　　Revenue: $13.6 billion

　　Decrease of 10% year over year

　　Earnings per Share: GAAP: $0.54; Non-GAAP: $0.87

　　GAAP EPS decreased 44% year over year

　　Non-GAAP EPS decreased 24% year over year

　　FY 2024 Results:

　　Revenue: $53.8 billion

　　Decrease of 6% year over year

　　Earnings per Share: GAAP: $2.54; Non-GAAP: $3.73

　　GAAP EPS decreased 17% year over year

　　Non-GAAP EPS decreased 4% year over year

　　Q1 FY 2025 Guidance:

　　Revenue: $13.65 billion to $13.85 billion

　　Earnings per Share: GAAP: $0.35 to $0.42; Non-GAAP: $0.86 to $0.88

　　FY 2025 Guidance:

　　Revenue: $55.0 billion to $56.2 billion

　　Earnings per Share: GAAP: $1.93 to $2.05; Non-GAAP: $3.52 to $3.58

　　Cisco today reported fourth quarter and fiscal year results for the period ended July 27, 2024. Cisco reported fourth quarter revenue of $13.6 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.2 billion or $0.54 per share, and non-GAAP net income of $3.5 billion or $0.87 per share.

　　"We delivered a strong close to fiscal 2024," said Chuck Robbins, chair and CEO of Cisco. "In our fourth quarter, we saw steady customer demand with order growth across the business as customers rely on Cisco to connect and protect all aspects of their organizations in the era of AI."

　　"Revenue, gross margin and EPS in Q4 were at the high end or above our guidance range, demonstrating our operating discipline," said Scott Herren, CFO of Cisco. "As we look to build on our performance, we remain laser focused on growth and consistent execution as we invest to win in AI, cloud and cybersecurity, while maintaining capital returns."

　　Q4 FY 2024 Highlights

　　Revenue -- Total revenue was $13.6 billion, down 10%, with product revenue down 15% and services revenue up 6%. Splunk contributed approximately $960 million of total revenue for the fourth quarter of fiscal 2024.

　　Revenue by geographic segment was: Americas down 11%, EMEA down 11%, and APJC down 6%. Product revenue performance reflected growth in Security up 81% and Observability up 41%. Networking was down 28%. Product revenue in Collaboration was flat. Security and Observability, excluding Splunk, grew 6% and 12%, respectively, in the fourth quarter of fiscal 2024.

　　Gross Margin -- On a GAAP basis, total gross margin, product gross margin, and services gross margin were 64.4%, 63.0%, and 67.8%, respectively, as compared with 64.1%, 63.6%, and 65.7%, respectively, in the fourth quarter of fiscal 2023.

　　On a non-GAAP basis, total gross margin, product gross margin, and services gross margin were 67.9%, 67.0%, and 70.3%, respectively, as compared with 65.9%, 65.5%, and 67.5%, respectively, in the fourth quarter of fiscal 2023.

　　Total gross margins by geographic segment were: 67.7% for the Americas, 69.2% for EMEA and 66.4% for APJC.

　　Operating Expenses -- On a GAAP basis, operating expenses were $6.2 billion, up 12%, and were 45.2% of revenue. Non-GAAP operating expenses were $4.8 billion, up 4%, and were 35.4% of revenue.

　　Operating Income -- GAAP operating income was $2.6 billion, down 38%, with GAAP operating margin of 19.2%. Non-GAAP operating income was $4.4 billion, down 17%, with non-GAAP operating margin at 32.5%.

　　Provision for Income Taxes -- The GAAP tax provision rate was 9.8%. The non-GAAP tax provision rate was 16.6%.

　　Net Income and EPS -- On a GAAP basis, net income was $2.2 billion, a decrease of 45%, and EPS was $0.54, a decrease of 44%. On a non-GAAP basis, net income was $3.5 billion, a decrease of 25%, and EPS was $0.87, a decrease of 24%.

　　Cash Flow from Operating Activities -- $3.7 billion for the fourth quarter of fiscal 2024, a decrease of 37% compared with $6.0 billion for the fourth quarter of fiscal 2023.

　　FY 2024 Highlights

　　Revenue -- Total revenue was $53.8 billion, a decrease of 6%. Splunk contributed approximately $1.4 billion of total revenue for fiscal 2024.

　　Net Income and EPS -- On a GAAP basis, net income was $10.3 billion, a decrease of 18%, and EPS was $2.54, a decrease of 17%. On a non-GAAP basis, net income was $15.2 billion, a decrease of 5% compared to fiscal 2023, and EPS was $3.73, a decrease of 4%.

　　Cash Flow from Operating Activities -- $10.9 billion for fiscal 2024, a decrease of 45% compared with $19.9 billion for fiscal 2023.

　　Balance Sheet and Other Financial Highlights

　　Cash and Cash Equivalents and Investments -- $17.9 billion at the end of the fourth quarter of fiscal 2024, compared with $18.8 billion at the end of the third quarter of fiscal 2024, and compared with $26.1 billion at the end of fiscal 2023.

　　Remaining Performance Obligations (RPO) -- $41.0 billion, up 18% in total, with 51% of this amount to be recognized as revenue over the next 12 months. Product RPO were up 27% and services RPO were up 10%.

　　Deferred Revenue -- $28.5 billion, up 11% in total, with deferred product revenue up 15%. Deferred service revenue was up 9%.

　　Capital Allocation -- In the fourth quarter of fiscal 2024, we returned $3.6 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.40 per common share, or $1.6 billion, and repurchased approximately 43 million shares of common stock under our stock repurchase program at an average price of $46.80 per share for an aggregate purchase price of $2.0 billion. The remaining authorized amount for stock repurchases under the program is $5.2 billion with no termination date.

　　Guidance

　　Cisco estimates the following results for the first quarter of fiscal 2025:

　　Q1 FY 2025

　　Revenue：$13.65 billion - $13.85 billion

　　Non-GAAP gross margin：67% - 68%

　　Non-GAAP operating margin：32% - 33%

　　Non-GAAP EPS：$0.86 - $0.88

　　Cisco estimates that GAAP EPS will be $0.35 to $0.42 for the first quarter of fiscal 2025.