Cisco Q2 Results: Topline and Bottom-line above estimates!

Cisco q2

Net Income - The company reported a net income of $3 billion or $0.71 per share on GAAP while non-GAAP net income was $3.5 billion or $0.84 per share. The earning is higher than analysts' estimation of 81 cents per share.

Revenue - CISCO reported revenue of $12.7 billion, a growth of 6% YoY. The revenue is higher than street estimates of $12.65 billion. Software revenue grew to $3.8 billion, and 80% of software revenue was subscription-based, up 4% YoY. Total subscription revenue grew to $5.5 billion, representing 44% of total revenue.

Gross Margins - On a GAAP basis, total gross margin, product gross margin, and service gross margin were 63.3%, 61.8%, and 67.3%, respectively, as compared with 65.1%, 64.5%, and 66.6%, respectively, in the second quarter of fiscal 2021.

Operating Expenses - On a GAAP basis, operating expenses were flat at $4.6 billion, and were 35.9% of revenue. Non-GAAP operating expenses were $4.0 billion, up 2%, and were 31.2% of revenue.

Operating Income - GAAP operating income was $3.5 billion, up 8%, with a GAAP operating margin of 27.4%. Non-GAAP operating income was $4.4 billion, up 6%, with a non-GAAP operating margin of 34.3%.

Dividend - The company has declared a quarterly dividend of $0.38 per common share, a 1-cent increase or up 3% over the previous quarter's dividend. It will be paid on April 27, 2022, to all stockholders of record as of the close of business on April 6, 2022.

Q3 Outlook - Cisco expects revenue growth of 3% to 5% year-over-year and an EPS between 85 cents and 87 cents. The market is expecting an EPS of 86 cents.

Target Price- The 22 analysts offering 12-month price forecasts for Cisco Systems Inc have a median target of $63.55, with a high estimate of $73 and a low estimate of $54. Currently, the Cisco share price is $54.25 per share.

Cisco Q2 Results Review

Cisco's topline and bottom-line have topped expectations. All the segments have shown good growth YoY. The outlook for the next quarter is also better than analysts' expectations. For the 2022 fiscal year, Cisco sees $3.41 to $3.46 in adjusted earnings per share and 5.5% to 6.5% revenue growth. The FY22 projections cheered the investors as the share price increased 5% on Wednesday.