Cisco Systems Inc. shares were gaining in Wednesday’s extended session after the networking and software company said customer demand was stabilizing and issued an upbeat revenue outlook for the ongoing quarter.
The company CSCO, +1.47% on Wednesday posted fiscal third-quarter net income of $ 1.89 billion, or 46 cents a share, compared with $ 3.21 billion, or 78 cents a share, in the year-earlier period. On an adjusted basis, Cisco logged earnings per share of 88 cents, whereas analysts tracked by FactSet were modeling 83 cents.
Revenue for the quarter fell to $ 12.70 billion from $ 14.57 billion, whereas analysts were looking for $ 12.53 billion. The product business drove in $ 9.02 billion in revenue, compared with estimates for $ 8.95 billion. Services generated $ 3.68 billion in revenue, while analysts had been projecting $ 3.58 billion.
“The strength of our core business continues to produce strong cash flows, reinforcing our ongoing commitment to delivering consistent capital returns,” Chief Executive Chuck Robbins said on the company’s earnings call.
He added that Cisco anticipates customers will finish the installation of most of their current inventory by the time the company’s fiscal year wraps up in July. Cisco disclosed last year that some customers had been “digesting” past purchases, which was weighing on demand at the time.
Cisco shares rose about 5% in Wednesday’s after-hours action.
“Customers are consuming the equipment shipped over the last few quarters in line with our expectations and we are seeing stabilization of demand as a result,” Chief Financial Officer Scott Herren said in a release. “The addition of Splunk to our product line will be a catalyst for further growth.”
For the current quarter, Cisco models $ 13.4 billion to $ 13.6 billion in revenue, along with 84 cents to 86 cents in adjusted earnings per share. The FactSet consensus calls for $ 13.25 billion in revenue and 86 cents cents in adjusted earnings per share.
Robbins noted that Cisco is working to “capitalize on the multibillion-dollar AI infrastructure opportunity,” and management has “confidence in our line of sight to $ 1 billion of AI product orders in fiscal 2025.”
Cisco shares are down about 2% so far this year, while the S&P 500 SPX has advanced 11% and the Dow Jones Industrial Average DJIA has climbed 6% over the same period.