In the early morning of May 19th, Beijing time, Cisco today released the company’s financial report for the third quarter of fiscal year 2022. The report shows that Cisco’s third-quarter net revenue was $12.8 billion, flat compared with $12.8 billion in the same period last year; net profit was $3 billion, an increase of 6% compared with $2.9 billion in the same period last year; According to US GAAP, Cisco’s third-quarter adjusted net profit was 3.6 billion US dollars, compared with 3.5 billion US dollars a year earlier, an increase of 3%.
Cisco’s third-quarter adjusted earnings per share beat Wall Street analysts had expected, but revenue missed expectations. At the same time, Cisco’s outlook for the fourth quarter of fiscal 2022 and the full year of fiscal 2022 also missed expectations, causing its stock price to fall sharply by more than 12% after the market, falling below its 52-week low.
Fiscal 2022 third quarter earnings highlights:
Net profit:
In the quarter ended April 30, 2022, Cisco’s GAAP net income was $3.0 billion, up 6% from $2.9 billion a year earlier. According to US GAAP, Cisco’s third-quarter earnings per share of 73 cents, the performance compared with the same period last year increased 7%. In the third quarter of fiscal 2021, Cisco’s earnings per share were 68 cents.
Excluding one-time charges (non-GAAP), Cisco’s third-quarter adjusted net income was $3.6 billion, up 3% from $3.5 billion a year earlier; adjusted EPS was $87 cents, up 5% from 83 cents a year earlier, beating analysts’ expectations. According to data provided by Yahoo Finance Channel, 23 analysts had expected Cisco’s third-quarter earnings per share on average to reach 86 cents.
Revenue:
Cisco’s third-quarter net revenue was $12.8 billion, flat compared with $12.8 billion a year earlier and missed analysts’ expectations. According to data provided by Yahoo Finance Channel, 21 analysts had expected Cisco’s third-quarter revenue to reach $13.34 billion on average.
By business category, in the third fiscal quarter of fiscal 2022, sales of Cisco products (including routers and switches, etc.) were $9.448 billion, an increase of 3% compared to $9.139 billion in the same period last year; service sales were $3.387 billion , down 8 percent from $3.664 billion a year earlier.
In the product business, Cisco’s third-quarter revenue from security and Agile Networks was $5.869 billion, an increase of 4% compared with the same period last year; revenue from the “Internet for the Future” business $1.324 billion, an increase of 6% compared to the same period last year; revenue from the partnership business was $1.132 billion, a decrease of 7% compared to the same period last year; revenue from the end-to-end security business was 938 million U.S. dollars, an increase of 7% compared to the same period last year; revenue from optimizing the application experience was $183 million, an increase of 8% compared to the same period last year; revenue from other products was $2 million, compared to the previous year It was down 58% over the same period.
By region, Cisco’s third-quarter revenue from the Americas was $7.638 billion, an increase of 5% compared to the same period last year; revenue from the EMEA (Europe, Middle East and Africa) region was $3.271 billion, A decrease of 6% compared to the same period last year; revenue from the APJC (Asia Pacific, Japan and Greater China) region was $1.926 billion, a decrease of 6% compared to the same period last year.
Gross profit margin:
Cisco’s third-quarter gross margin, product gross margin, and service gross margin were 63.3%, 61.8%, and 67.3%, respectively, compared to 63.9%, 62.6%, and 67.4% in the same period last year.
Excluding certain one-time items (not in accordance with GAAP), Cisco’s third-quarter total gross margin, product gross margin, and service gross margin were 65.3%, 64.1%, and 68.9%, respectively, compared to the prior year The same period was 66.0%, 64.9% and 68.7% respectively.
Geographically, Cisco’s third-quarter gross profit margin was 64.8% in the U.S., 65.9% in Europe, the Middle East, and Africa, and 66.4% in the Asia-Pacific region.
Operating Expenses and Operating Profits:
Cisco’s third-quarter operating expenses were $4.5 billion, down 4 percent from a year earlier, and accounted for 35.1 percent of total revenue. Among them, research and development expenses were $1.708 billion, compared to $1.697 billion in the same period last year; sales and marketing expenses were $2.209 billion, compared with $2.317 billion in the same period last year; general and administrative expenses were $517 million , compared to $603 million in the prior year; amortization expense for acquired intangible assets was $77 million, compared to $61 million in the prior year; restructuring and other expenses were nil, compared to the prior year $42 million in the same period.
Excluding certain one-time items (not in accordance with GAAP), Cisco’s third-quarter operating expenses were $3.9 billion, down 5% from a year earlier, and accounted for 30.7% of total revenue .
Cisco’s third-quarter operating profit was $3.6 billion, up 4 percent from a year earlier, with an operating margin of 28.1 percent.
Excluding certain one-time items (not in accordance with GAAP), Cisco’s third-quarter operating profit was $4.5 billion, up 4% from a year earlier, and operating margin was 34.7%.
Cash Flow, Balance Sheet and Other Financial Information:
Cisco’s third-quarter cash flow from operating activities was $3.7 billion, down 6 percent from $3.9 billion a year earlier.
Cisco’s cash and cash equivalents and investments totaled $20.1 billion at the end of the fiscal third quarter, compared with $24.5 billion at the end of fiscal 2021.
Cisco’s fiscal third quarter deferred revenue was $22.3 billion, an increase of 7% compared to the same period last year, of which product deferred revenue increased 13% compared to the same period last year, and services deferred revenue was comparable to the same period last year. an increase of 2%.
Capital Return Program:
In the third quarter of fiscal 2022, Cisco declared and paid a cash dividend of $0.38 per common share, for a total payout of $1.6 billion. Cisco repurchased a total of approximately 5 million shares of common stock under its stock repurchase program in the fiscal third quarter, at an average price of $54.20 per share, for a total expense of $252 million. Cisco returned a total of $1.8 billion in cash to shareholders in the fiscal third quarter in the form of dividends and share repurchases. Under the current stock repurchase program, Cisco may further repurchase approximately $17.6 billion worth of common stock with no expiration date.
M&A transactions:
In the third fiscal quarter of 2022, Cisco completed a transaction to acquire Opsani, a privately held enterprise software company.
Performance Outlook:
Cisco expects revenue in the fourth quarter of fiscal 2022 to decline by 1% to 5.5% from a year earlier. According to Cisco’s previously announced financial report, the company’s net revenue in the fourth fiscal quarter of fiscal 2021 was $13.1 billion, which means that the company expects revenue in the fourth fiscal quarter of fiscal 2022 to be between $12.4 billion and $13 billion. In between, less than analysts expected. According to data provided by Yahoo Finance, 21 analysts on average expected Cisco’s fourth-quarter revenue to reach $13.87 billion.
Cisco expects non-GAAP gross profit margins in the fourth quarter of fiscal 2022 to be between 64% and 65%; non-GAAP operating margins between 31.5% and 33.5%; Non-GAAP earnings per share would be in the range of $0.76 to $0.84, with an average of $0.80, missing analyst expectations. According to data provided by Yahoo Finance, 23 analysts on average expected Cisco’s fourth-quarter adjusted earnings per share to reach $0.92. Cisco also expects GAAP earnings per share in the fourth quarter of fiscal 2022 to be between $0.60 and $0.70.
For the full fiscal year 2022, Cisco expects year-over-year revenue growth of between 2% and 3%. According to Cisco’s previously announced earnings report, the company’s fiscal 2021 net revenue was $49.8 billion, which means the company expects fiscal 2022 net revenue to be between $50.8 billion and $51.3 billion, less than analysts’ estimates. expected. According to data provided by Yahoo Finance, 26 analysts on average expect Cisco’s fiscal 2022 revenue to reach $52.83 billion.
In addition, Cisco expects 2022 fiscal year 2022 GAAP earnings per share will be between $2.75 and $2.85; non-GAAP earnings per share will be between $3.29 and $3.37, which is lower than analysts’ expectations. . According to data provided by Yahoo Finance, 26 analysts on average expect Cisco’s fiscal 2022 earnings per share to reach $3.44.
Cisco’s fiscal 2022 fourth-quarter and full-year outlook assumes a 19% provision for income tax with and without GAAP.
Share price reaction:
On the same day, Cisco shares fell 2.24 US dollars in regular trading on the Nasdaq, to close at 48.36 US dollars, a decrease of 4.43%. In the subsequent after-hours trading as of 5:33 p.m. Eastern Time on the 18th (5:33 a.m. Beijing time on the 19th), Cisco’s stock price fell again by $6.04 to $42.32, a decrease of 12.49%, and fell below 52 Weekly lowest price. In the past 52 weeks as of Wednesday’s close, Cisco’s highest price was $64.29 and its lowest price was $47.47. (Tang Feng)
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