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Cisco Systems Inc. experienced a notable surge in its stock price, rising approximately 6% during after-hours trading on Wednesday following the release of its fiscal second-quarter performance report. This report not only exceeded analysts’ forecasts but also indicated a significant rebound in revenue growth.
For the quarter ended January 25, the company reported earnings that surpassed projections. Here are the highlights compared to LSEG consensus:
Earnings per share: Adjusted earnings stood at 94 cents, above the anticipated 91 cents.
Revenue: The reported revenue reached $13.99 billion, exceeding the expected $13.87 billion.
This reflects a 9% increase in revenue compared to $12.79 billion for the same period last year, marking a significant turnaround after four consecutive quarters of revenue decline. Cisco noted that demand for artificial intelligence infrastructure contributed notably, with orders exceeding $350 million during the quarter.
Looking ahead, Cisco revised its fiscal year 2025 outlook, projecting adjusted earnings per share between $3.68 and $3.74, alongside total revenue expectations of $56 billion to $56.5 billion. This represents an increase from earlier estimates of $3.60 to $3.66 in earnings per share and $55.3 billion to $56.3 billion in revenue, as stated in a prior announcement.
However, net income for the latest quarter decreased by nearly 8%, coming in at $2.43 billion, or 61 cents per share, compared to $2.63 billion, or 65 cents per share, from the previous year.
Breaking down the revenue sources, the networking segment generated $6.85 billion, which, although down 3%, still surpassed analyst expectations of $6.67 billion. The security division showed a remarkable growth of 117%, bringing in $2.11 billion, attributed largely to the integration of Splunk, which Cisco acquired in March 2024 for $27 billion. Analysts had forecasted revenue from this unit at $2.01 billion, indicating a stronger-than-anticipated performance.
According to Scott Herren, Cisco’s finance chief, the acquisition of Splunk provided benefits to adjusted earnings per share more quickly than planned. He noted that Cisco’s overall revenue would have reflected a year-over-year decline of 1% if it weren’t for Splunk’s contributions.
Amid evolving dynamics in the tech industry, many firms, including Cisco, are closely monitoring the implications of recent governmental changes, notably under President Trump’s newly formed Department of Government Efficiency. Chuck Robbins, Cisco’s CEO, highlighted that approximately 75% of the company’s federal business in the U.S. is linked to the Defense Department, while recent workforce reductions have been primarily felt in other agencies. He reiterated that operations are proceeding as anticipated.
Robbins further addressed concerns regarding customer order patterns, indicating that clients do not seem to be scaling back orders ahead of the forthcoming tariff implementations, based on insights shared during a recent conference call with analysts.
As the market closed on Thursday, Cisco’s shares had shown a 5% uptick year-to-date in 2025, contrasting favorably with the S&P 500, which had risen around 3% during the same period.
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