Cisco Beats - Guides Up
November 17, 2022
reported first quarter results for the period ended October 29, 2022. Cisco
reported first quarter revenue of $13.6 billion, net income on a generally
accepted accounting principles (GAAP) basis of $2.7 billion or $0.65 per share,
and non-GAAP net income of $3.5 billion or $0.86 per share.
Wall Street was expecting an EPS of 84 cents
with revenue of $13.3 billion.
The firm sees sales growth in fiscal 2023 of 4.5% to 6.5%, up from a prior
forecast that called for growth of 4% to 6%.
"Our fiscal 2023 is off to a good start as we delivered the largest quarterly
revenue and second highest quarterly non-GAAP earnings per share in our
history," said Chuck Robbins, chair and CEO of Cisco. "These results demonstrate
the relevance of our strategy, our differentiated innovation, and our unique
position to help our customers become more resilient."
"We delivered strong results in Q1 and continued to make progress on our
business transformation," said Scott Herren, CFO of Cisco. "Our annualized
recurring revenue increased to more than $23 billion, with product ARR growing
12%. This, together with our significant backlog, strong RPO, and easing supply
situation, provides us with great visibility and predictability, and supports
our increased full year guidance."
All comparative percentages are on a year-over-year basis unless otherwise
Q1 FY 2023 Highlights
Revenue -- Total revenue was up 6% at $13.6 billion, with product revenue up 8%
and service revenue was flat. Revenue by geographic segment was: Americas up 5%,
EMEA up 11%, and APJC was flat. Product revenue performance was led by growth in
Secure, Agile Networks up 12%, End-to-End Security up 9%, and Optimized
Application Experiences up 7%. Internet for the Future was down 5% and
Collaboration was down 2%.
Gross Margin -- On a GAAP basis, total gross margin, product gross margin, and
service gross margin were 61.2%, 59.2%, and 67.3%, respectively, as compared
with 62.4%, 61.5%, and 65.2%, respectively, in the first quarter of fiscal 2022.
On a non-GAAP basis, total gross margin, product gross margin, and service gross
margin were 63.0%, 61.0%, and 68.8%, respectively, as compared with 64.5%,
63.8%, and 66.5%, respectively, in the first quarter of fiscal 2022.
Total gross margins by geographic segment were: 63.0% for the Americas, 63.3%
for EMEA and 62.3% for APJC.
Operating Expenses -- On a GAAP basis, operating expenses were $4.8 billion, up
4%, and were 35.3% of revenue. Non-GAAP operating expenses were $4.2 billion, up
5%, and were 31.1% of revenue.
Operating Income -- GAAP operating income was $3.5 billion, up 3%, with GAAP
operating margin of 26.0%. Non-GAAP operating income was $4.3 billion, up 1%,
with non-GAAP operating margin at 31.8%.
Provision for Income Taxes -- The GAAP tax provision rate was 23.2%. The non-GAAP
tax provision rate was 19.0%.
Net Income and EPS -- On a GAAP basis, net income was $2.7 billion, a decrease
of 10%, and EPS was $0.65, a decrease of 7%. On a non-GAAP basis, net income was
$3.5 billion, an increase of 2%, and EPS was $0.86, an increase of 5%.
Cash Flow from Operating Activities -- $4.0 billion for the first quarter of
fiscal 2023, an increase of 16% compared with $3.4 billion for the first quarter
of fiscal 2022.
Balance Sheet and Other Financial Highlights
and Cash Equivalents and Investments -- $19.8 billion at the end of the first
quarter of fiscal 2023, compared with $19.3 billion at the end of fiscal 2022.
Remaining Performance Obligations (RPO) -- $30.9 billion, up 3% in total, with
53% of this amount to be recognized as revenue over the next 12 months. Product
RPO were up 5% and service RPO were up 1%.
Deferred Revenue -- $23.0 billion, up 4% in total, with deferred product revenue
up 7%. Deferred service revenue was up 2%.
Capital Allocation -- In the first quarter of fiscal 2023, we returned $2.1
billion to stockholders through share buybacks and dividends. We declared and
paid a cash dividend of $0.38 per common share, or $1.6 billion, and repurchased
approximately 12 million shares of common stock under our stock repurchase
program at an average price of $43.76 per share for an aggregate purchase price
of $0.5 billion. The remaining authorized amount for stock repurchases under the
program is $14.7 billion with no termination date.