Cisco Gives Strong Revenue Forecast as Customers Upgrade Gear

Cisco sees revenue growth in Q2 as customers upgrade network gear

Cisco Systems Inc. (CSCO) reported better-than-expected fiscal second-quarter revenue on Wednesday as businesses continued to invest in upgrading their network infrastructure.

The San Jose, California-based company said revenue increased 7% to $13.6 billion in the quarter ended Jan. 28, compared with $12.7 billion a year earlier.

Analysts on average had expected revenue of $13.46 billion, according to Refinitiv data.

Cisco’s strong results come as businesses continue to invest in digital transformation initiatives, which require them to upgrade their network infrastructure. The company’s revenue growth was driven by strong demand for its switching, routing, and security products.

“We are seeing continued momentum in our business as customers invest in digitizing their operations,” said Cisco CEO Chuck Robbins in a statement.

“Our focus on innovation and customer success is driving growth across our portfolio, and we are well-positioned to continue to capitalize on the long-term secular trends that are driving our industry.”

Cisco’s revenue growth was also helped by a favorable comparison to the year-ago quarter, when the company’s revenue was impacted by supply chain disruptions.

The company said it expects revenue to grow 4% to 6% in the fiscal third quarter, which would be a deceleration from the 7% growth rate in the second quarter.

Cisco’s stock price rose 5% in after-hours trading on Wednesday following the release of the company’s earnings report.

Here are some additional details from Cisco’s earnings report:

• Net income increased 3% to $3.6 billion, or 88 cents per share, in the fiscal second quarter.
• Non-GAAP net income increased 5% to $3.9 billion, or 95 cents per share.
• Gross margin was 63.9%, compared with 63.6% a year earlier.
• Operating expenses increased 5% to $5.7 billion.
• Cisco had $27.5 billion in cash and cash equivalents at the end of the quarter.

Cisco’s earnings report is a positive sign for the tech sector, which has been under pressure in recent months due to concerns about the economy.

The company’s strong revenue growth and upbeat outlook suggest that businesses are still investing in technology, despite the economic uncertainty.