Cisco Systems (NASDAQ:CSCO) reported better-than-expected third quarter results, but shares fell 2% in pre-market trading. The company posted an EPS of $1.00, beating the consensus estimate of $0.97, and revenue grew 14% year-over-year to $14.6 billion, beating the consensus estimate of $14.4B. Product orders declined 23% year-over-year, however, and total software revenue grew 18%.
Total annualized recurring revenue (ARR) increased 6% year-over-year to $23.8B, with product ARR up 10%. Remaining performance obligations (RPO) increased 6% year-over-year to $32.1B, with product RPO up 9%.
For Q4/23, the company expects EPS in the range of $1.05-$1.07, compared to the consensus of $1.04. Revenue growth is expected in the range of 14%-16% year-over-year, which implies sales of $15.07B at the midpoint of the guidance. For the full year, Cisco raised its EPS guidance to the range of $3.80–$3.82, from the prior $3.72-3.78 range.
Some analysts were disappointed that Cisco didn’t raise the revenue growth ceiling outlook. Goldman Sachs analysts said orders miss creates uncertainty into underlying demand. Rosenblatt analysts commented that Cisco is not the networking stock they want to own, but they expect Cisco’s order performance to improve from -23% y/y in 3Q23.
Overall, Cisco’s Q3 results were better than expected, but investors remain cautious about the company’s outlook for the future.