Unstoppable Cisco: A Stellar Fiscal Q3 Performance with 14% Revenue Increase YoY

In their Q3 report for the fiscal year 2023, Cisco Systems, Inc. (Nasdaq: CSCO) announced impressive growth fueled by its ongoing business model transformation. The company reported revenue of $14.6 billion, marking a 14% increase YoY, with GAAP EPS of $0.78 and non-GAAP EPS of $1.00, up 7% and 15% YoY respectively.

The operating cash flow was significantly strong at $5.2 billion, registering a 43% YoY increase. A key highlight of the quarter was the continued progress in the company’s business model transformation, indicated by an 18% increase in total software revenue and a 17% rise in software subscription revenue.

“We once again delivered a strong quarter in a dynamic environment,” said Chuck Robbins, chair and CEO of Cisco. He emphasized the record revenue and double-digit growth in both software and subscription revenue.

A closer look at the performance reveals that the total annualized recurring revenue (ARR) stood at $23.8 billion, up 6% YoY. The product ARR showed an even more promising growth of 10% YoY. Remaining performance obligations (RPO) reported at $32.1 billion, marked a 6% increase YoY, with product RPO up 9%.

Operating expenses on a GAAP basis were up 17%, totaling $5.3 billion, and were 36.3% of revenue. Non-GAAP operating expenses rose 16% to $4.6 billion, 31.3% of the revenue. GAAP operating income was $3.9 billion, a 9% increase, with a GAAP operating margin of 27.1%. Non-GAAP operating income was $4.9 billion, an 11% increase, with non-GAAP operating margin standing at 33.9%.

For the coming quarter, Cisco expects revenue growth in the range of 14%-16% YoY. The guidance for GAAP EPS stands between $0.82-$0.87, and Non-GAAP EPS between $1.05-$1.07.

In a bid to return wealth to its shareholders, Cisco also declared a quarterly dividend of $0.39 per common share, to be paid on July 26, 2023, to all stockholders of record as of the close of business on July 6, 2023. The company returned $2.9 billion to stockholders in Q3 FY 2023 through share buybacks and dividends, leaving $12.2 billion remaining for stock repurchases under the program with no termination date.

Overall, Cisco’s Q3 FY 2023 report paints a picture of robust growth and a strong position in the marketplace, driven by the successful transformation of its business model and a focus on recurring revenue streams.

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