Cisco Systems, Inc. (NASDAQ: CSCO) has reported earnings for its first fiscal quarter of 2021. The networking and communications equipment giant reported adjusted earnings of $0.76 per share (EPS) and $11.9 billion in revenues.
FactSet had its consensus estimates at $0.70 EPS on an adjusted basis and Cisco had previously indicated $0.69 to $0.71 EPS in its range. Analysts were calling for a 10% revenue decline to $11.85 billion. Cisco’s own guidance had called for a drop of 9% to 11%.
Cisco reported that product revenue was down 13% and that its service revenue up 2%. Revenue by geographic segment was down 10% in the Americas, with sales in EMEA down 10% and APJC down 7%. The company noted that its product revenue was led by growth in Security with 6% gains, while infrastructure platforms revenue was down 16% and applications was down 8%.
Total gross margins were 67.3% for the Americas region, followed by 63.9% for EMEA and 63.0% for APJC. Cisco ended its quarter with $30.0 billion in cash and cash equivalents versus $29.4 billion aa year ago. Total deferred revenue was up 10% in total to $20.5 billion, led by 15% growth in products and 7% in services.
For the quarter that has already begun, Cisco is targeting guidance at $0.74 to $0.76 in adjusted EPS on revenue coming in flat to -2% from a year ago. Refinitiv had its consensus estimates at $0.70 EPS and was calling for a 3% drop in year over year revenues.
One wild card in the equation was that Cisco has telegraphed a restructuring based on a slowdown in overall spending. The company did not specify the number of jobs it would trim, but Cisco had previously noted that it would have approximately $900 million in charges and the bulk of that would be recognized up front. The actual report showed that Cisco recognized $602 million of charges in the last quarter and that it expects roughly $200 million in charges to recognized in the quarter that has already started.
Chuck Robbins, chairman and CEO of Cisco, said:
Cisco is off to a solid start in fiscal 2021 and we are encouraged by the signs of improvement in our business as we continue to navigate the pandemic and other macro uncertainties. Our focus is on winning with a differentiated innovative portfolio, long-term growth and being a trusted technology partner offering choice and flexibility to our customers. We see many great opportunities ahead as every company in every industry is accelerating its digital-first strategy.
Kelly Kramer, CFO of Cisco, said:
Our first quarter results reflect good execution with strong margins in a challenging environment. We continued to transform our business through more software offerings and subscriptions, driving 10% year over year growth in remaining performance obligations. We delivered strong growth in operating cash flow and returned $2.3 billion to shareholders.
Cisco’s stock was down 1.7% at $38.67 ahead of Thursday’s report, with a 52-week range of $32.40 to $50.28. Its shares were last seen trading up over 8% at $42.14 in Thursday’s after-hours trading session and it had a $46.93 Refinitiv consensus analyst target price.