The fourth quarter and fiscal year earnings of the company were reported

SAN JOSE, California. Aug. 14, 2024 –.

News Synopsis:.

Product order growth of 14% year over year, with Splunk excluded.

Revenue in Q4 FY 2024 of $13.6 billion, exceeding our guidance range’s upper bound.

Strong margins:.

Q4 FY 2024: A 64.4% GAAP gross margin and a 67.9% non-GAAP gross margin.

The highest gross margin in 20 years was recorded in FY 2024 with a GAAP gross margin of 64.7% and a non-GAAP gross margin of 67.5%.

In FY 2024, there will be strong software and recurring metrics growth, supported by Splunk.

With $4.3 billion from Splunk included in the total annualized recurring revenue (ARR), it increased by 22% year over year to $29.6 billion.

FY 2024 Q4 Results:.

$13 point six billion in revenue.

10% less than the previous year.

Profits per share: $0.87 non-GAAP, $0.54 under GAAP.

Year over year, GAAP EPS fell by 44%.

Over the previous year, non-GAAP EPS fell by 24%.

Results for FY 2024:.

$53,880 billion in revenue.

6 percent less than the previous year.

GAAP earnings per share is $2.54, while non-GAAP earnings are $3.73.

GAAP EPS fell by 17% on an annual basis.

Non-GAAP EPS fell by 4% annually.

Q1 Fiscal Year 2025 Outlook:.

Revenue range: $13–85 billion.

Profits per share: $0,35–0,42 under GAAP; $0,86–0,88 under non-GAAP.

Budget for Fiscal Year 2025:.

Income: $55,0 billion to $56,2 billion.

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

Results for the fiscal year that concluded on July 27, 2024, as well as the fourth quarter were announced by Cisco today. Revenue for the fourth quarter of Cisco was $13,6 billion. Net income for the same period was $22,2 billion, or $0,54 per share, under generally accepted accounting principles (GAAP); net income for non-GAAP purposes was $35,5 billion, or $0,87 per share.

Chuck Robbins, the chair and CEO of Cisco, stated, “We delivered a strong close to fiscal 2024.”. “As customers depend on Cisco to connect and secure every part of their businesses in the age of artificial intelligence, we witnessed consistent customer demand and order growth throughout the business in the fourth quarter.”. “.

“We demonstrated our operating discipline in Q4 with revenue, gross margin, and EPS at the high end or above our guidance range,” stated Scott Herren, CFO of Cisco. “We continue to be laser-focused on growth and consistent execution as we invest to win in cybersecurity, cloud, and artificial intelligence (AI) while preserving capital returns as we strive to improve on our performance. ****.

For the fourth quarter of fiscal 2024, the acquisition of Splunk, including financing costs, had a negative impact on GAAP EPS of $0.16.

For the fourth quarter of fiscal 2024, the acquisition of Splunk, including financing costs, had a negative impact on Non-GAAP EPS of $0 point04.

Including financing costs, the Splunk acquisition reduced GAAP EPS by $0 point 25 in the fiscal year 2024.

For fiscal 2024, the acquisition of Splunk had a negative impact on Non-GAAP EPS of $0.04, including financing costs.

The tables under the section “Reconciliations of GAAP to non-GAAP Measures” provide reconciliations between net income, EPS, and other measures on a GAAP and non-GAAP basis. “.

Cisco announces a quarterly payout.

Cisco announced that all stockholders of record as of the close of business on October 2, 2024 will receive a quarterly dividend of $0.40 per common share, payable on October 23, 2024. The board’s approval is required for any future dividends.

Summary of Finances.

Without exception, all comparative percentages are expressed as differences from year to year.

Q4 FY 2024 Highlights.

Revenue: The total revenue decreased by 10% to $13.6 billion, with a 15% decline in product revenue and a 6% increase in service revenue. About $960 million of the total revenue for the fourth quarter of the fiscal year 2024 came from Splunk.

Geographically, revenue decreased by 11% in the Americas, 11% in EMEA, and 6% in APJC. Product revenue performance showed increases in Security, which increased by 81%, and Observability, which increased by 41%. Networking experienced a 28% decline. Collaboration’s product income remained constant. Observability and Security, excluding Splunk, increased by 12% and 6%, respectively, in the fourth quarter of the 2024 fiscal year.

Gross Margin—In accordance with GAAP, the total gross margin, product gross margin, and services gross margin were 64.4%, 63.0%, and 67.8%, respectively, in the fourth quarter of fiscal 2023, compared to 64.1%, 63.6%, and 65.7%, respectively.

In relation to the fourth quarter of fiscal 2023, total gross margin, product gross margin, and services gross margin were 65.9 percent, 65.5 percent, and 70.3 percent, respectively, on a non-GAAP basis.

The geographic segments with the highest total gross margins were the Americas (67.7%), EMEA (69.2%), and APJC (66.4%).

Operating Expenses: Operating expenses represented 45.2% of revenue on a GAAP basis, having increased by 12% to $6.02 billion. At $4.08 billion, non-GAAP operating expenses increased by 4% to account for 35.4% of revenue.

Operating Income: With a GAAP operating margin of 19.2 percent, operating income was $2.66 billion, a 38 percent decrease. Non-GAAP operating income decreased by 17% to $4.04 billion, while non-GAAP operating margin increased to 32.5 percent.

Income Tax Provision: 91.8 percent was the GAAP tax provision rate. 16 point six percent was the non-GAAP tax provision rate.

Net Income and EPS: Using GAAP as a reference, net income was $2.22 billion, down 45%, and EPS was $0.54, down 44%. Net income decreased by 25% to $3.5 billion on a non-GAAP basis, and EPS decreased by 24% to $0.87.

Cash Flow from Operating Activities for the fourth quarter of fiscal 2024 was $3.07 billion, a 37% decline from the fourth quarter of fiscal 2023 of $6.0 billion.

Highlights of FY 2024.

Revenue: There was a 6% decline to $53.8 billion in total revenue. For the fiscal year 2024, Splunk’s revenue share amounted to roughly $1.04 billion.

Net Income and EPS: Using GAAP as a basis, net income decreased by 18% to $10.3 billion, and EPS decreased by 17% to $2.54. A decrease of 5% was seen in net income ($15.22 billion) on a non-GAAP basis, while a 4% decrease in EPS ($3.73) was reported.

Cash Flow from Operating Activities: $109,9 billion in fiscal 2024 compared to $19,9 billion in fiscal 2023 represents a 45% drop.

The balance sheet and other notable financial data.

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

410.0 billion is the total amount of Remaining Performance Obligations (RPO), an increase of 18%, of which 51% will be recognized as revenue over the course of the following 12 months. Both service and product RPO increased by 10% and 27%, respectively.

Deferred Revenue: $28.5 billion, up 11% overall, with a 15% increase in deferred product revenue. The revenue from deferred services increased by 9%.

Capital Allocation: We gave $3.66 billion in dividends and share buybacks to investors during the fourth quarter of the 2024 fiscal year. We repurchased about 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. We also declared and paid a cash dividend of $0.40 per common share, or $1.6 billion. With no end date, $5.2 billion is the remaining authorized amount for stock repurchases under the program.

Advice.

Cisco projects the following outcomes for the first quarter of the 2025 fiscal year:.

In the first quarter of fiscal 2025, Cisco projects GAAP EPS to range from $0.35 to $0.42.

For the fiscal year 2025, Cisco projects the following outcomes:.

According to Cisco, GAAP EPS for the fiscal year 2025 will range from $1.93 to $2.05 points.

Our guidance for Q1 FY 2025 and FY 2025 is based on the assumption that the effective tax provision rate will be roughly 17% for GAAP results and roughly 19% for non-GAAP results.

GAAP to non-GAAP Guidance tables are found in the “Reconciliations of GAAP to non-GAAP Measures” section and offer a reconciliation between the guidance on a GAAP and non-GAAP basis. “.

Notes from the editor:.

On Wednesday, August 14, 2024, at 1:30 p.m., Cisco will host a conference call to discuss its Q4 fiscal year 2024 results and outlook. m. Pacific Time. 1-888-848-6507 in the US or 1-212-519-0847 internationally is the conference call number.

There will be a conference call replay starting at 4:00 p.m. m. 2:00 p.m. Pacific Time on August 14, 2024. m. 2066-405-4837 (US) or 203-369-1943 (international) on August 20, 2024, Pacific Time. Additionally, the webcast of the replay will be accessible via the Cisco Investor Relations website at https://investor . cisco . com.

At 1:30 p.m., there will be more financial details released by Cisco as well as a webcast of the conference call featuring graphics intended to help attendees navigate the call. me. August 14, 2024, Pacific Time. Within 24 hours following the conclusion of the conference call, the prepared remarks can be accessed in text format. Both the prepared remarks and the Q&A session will be available on the webcast. The Cisco Investor Relations website, located at https://investor . cisco . com, will provide this information as well as the GAAP to non-GAAP reconciliation information.

(1) In order to invest in significant growth prospects and increase business efficiencies, Cisco announced a restructuring plan on August 14, 2024. As part of this restructuring plan, Cisco currently projects that it will record pre-tax charges of up to $1 billion, which will be made up of other costs and severance and other one-time termination benefits. In the first quarter of fiscal 2025, Cisco anticipates realizing $700 million to $800 million of these charges; the remaining amount is anticipated to be recognized over the course of the fiscal year.

(2) Following the effects of income taxes, estimated modifications to GAAP earnings per share are displayed.

Other than what has already been mentioned, this guidance does not account for the impact of any potential future acquisitions or divestitures, large asset impairments and restructurings, large litigation settlements and other contingencies, costs associated with the Russia-Ukraine war, gains and losses on investments, significant tax matters, or other items that may or may not be significant.

Forward-looking statements, information that is not GAAP compliant, and additional data.

It’s possible that this release includes forward-looking statements that fall under the Private Securities Litigation Reform Act of 1995’s safe harbor protections. These forward-looking statements cover a variety of topics, including predictions about the future (such as how our customers will rely on Cisco to connect and safeguard their businesses in the AI era and our commitment to growth and steady execution as we make investments in cybersecurity, cloud computing, and AI while maintaining capital returns) and the potential risks and uncertainties associated with Cisco’s financial performance in the future (such as the guidance for Q1 FY 2025 and full year FY 2025). The following factors can cause these forward-looking statements to differ materially from actual future events or results: global economic conditions, uncertainties in the geopolitical environment, our development and application of artificial intelligence, overall information technology spending, the growth and evolution of the Internet and levels of capital spending on Internet-based systems, variations in customer demand for products and services, including sales to the service provider market, cloud, enterprise, and other customer markets; the return on our investments in certain priorities, key growth areas, and other factors. It is advisable to consult the consolidated financial statements and notes thereto included in Cisco’s latest reports on Forms 10-Q and 10-K in addition to the financial information contained in this release, as they may be modified periodically. The operating results of Cisco for the three months and the full year that concluded on July 27, 2024, may not necessarily predict the company’s operating results for any subsequent periods. The projections included in this release are contingent upon the limited information that Cisco currently has access to and are subject to change. Since Cisco only offers guidance at specific times throughout the year, even though any such projections and the factors influencing them are likely to change, Cisco will not necessarily update the information. This information is only current as of the publication date.

For the periods shown, non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share are all included in this release. On a non-GAAP basis, it also includes projected ranges for future gross margin, operating margin, tax provision rate, and EPS.

These non-GAAP measurements may differ from those employed by other businesses and are neither comparable to nor an alternative to measurements prepared in line with generally accepted accounting principles (GAAP). Furthermore, no exhaustive set of accounting principles or rules forms the basis of these non-GAAP measures. According to Cisco, non-GAAP measures have limitations because they do not accurately reflect all of the amounts related to the company’s operating results as determined by GAAP. As such, the company believes that these measures should only be used in conjunction with the corresponding GAAP measures to assess the company’s operating results.

In relation to its financial condition and its historical and projected operational results, Cisco believes that the presentation of non-GAAP measures, when presented alongside the corresponding GAAP measures, offers investors and management valuable information about financial and business trends.

Cisco’s management uses financial statements for internal budgeting that exclude, where applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related/divestiture costs, reorganizations and impairments of significant assets, significant litigation settlements and other contingencies, costs associated with the Russia-Ukraine war, gains and losses on investments, and the income tax implications of the aforementioned and significant tax matters. The aforementioned non-GAAP measures are also used by Cisco’s management to evaluate the company’s financial results in addition to the corresponding GAAP measures. For the purposes of its non-GAAP financial measures, Cisco has eliminated certain items in previous periods that it no longer does. For the purpose of reviewing its financial results and its internal budgeting process, Cisco may occasionally in the future exclude additional items. For further details on the items that Cisco has excluded from one or more of its non-GAAP financial measures, see the Form 8-K that it provided to the Securities and Exchange Commission today regarding this release.

At the end of a reporting period, annualized recurring revenue is the annualized revenue run-rate of active subscriptions, term licenses, operating leases, and maintenance contracts, net of partner and customer rebates and certain other revenue adjustments. includes revenue that is recognized upfront on an annualized basis in addition to revenue recognized ratably.

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