Cisco shares soared 17% in extended trading on Wednesday after the networking company issued results and guidance that topped Wall Street's projections.
The company said it's cutting its workforce this quarter by fewer than 4,000 jobs, representing less than 5% of total employees.
Here's how the company did in comparison with LSEG consensus:
- Earnings per share: $1.06 adjusted vs. $1.04 expected
- Revenue: $15.84 billion vs. $15.56 billion expected
Revenue increased 12% in the quarter ended April 25, from $14.15 billion a year earlier, Cisco said in a statement. Net income rose to $3.37 billion, or 85 cents per share, from $2.49 billion, or 62 cents per share, a year earlier.
For the fiscal fourth quarter, Cisco called for $1.16 to $1.18 in adjusted earnings per share on $16.7 billion to $16.9 billion in revenue. Analysts polled by LSEG were looking for $1.07 in adjusted earnings per share on $15.82 billion in revenue.
Cisco said it has received $5.3 billion in artificial intelligence infrastructure and hyperscaler orders so far this year, and raised its expected orders for the fiscal year to $9 billion, up from $5 billion. The company said it expects fiscal-year revenue in that market of $4 billion, up from a prior projection of $3 billion.
While Cisco has trailed many of its data center peers in the AI race, Wall Street has been rallying to the company's story of late, pushing the stock to a record late last year, finally surpassing its dot-com high. The shares have continued to climb this year, gaining 33%, topping the Nasdaq's 14% advance.
Should the stock maintain its after-hours gains through Thursday, it would mark the sharpest rally since 2002.
CEO Chuck Robbins wrote in a blog post on Wednesday that the latest round of job cuts will begin on May 14. Cisco is the latest company to announce head count reductions tied to AI.
"The companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest," Robbins said. "I'm confident Cisco will be one of those winners. This means making hard decisions — about where we invest, how we're organized, and how our cost structure reflects the opportunity in front of us."
Cisco said in a filing that severance and other costs will result in pre-tax charges of $1 billion, and that the company will recognize about $450 million of that in the fiscal fourth quarter.
During the third quarter, Cisco announced switches and routers that use its next-generation processor. The company also debuted a leaderboard for ranking generative AI models based on their robustness against cybersecurity attacks.
Cisco's networking revenue increased 25% to $8.82 billion, exceeding the $8.47 billion consensus among analysts polled by StreetAccount. Security revenue was flat at about $2 billion, compared to StreetAccount's $1.99 billion consensus.
Executives will discuss the results with analysts on a conference call starting at 4:30 p.m. ET.
WATCH: Bullish action into Cisco earnings: Here's what options traders are looking at
Facts Only
* Cisco shares increased 17% in extended trading following the release of results and guidance.
* Earnings per share were $1.06 adjusted, compared to $1.04 expected.
* Revenue was $15.84 billion, compared to $15.56 billion expected.
* Revenue increased 12% in the quarter ended April 25, from $14.15 billion a year earlier.
* Net income rose to $3.37 billion, or 85 cents per share, from $2.49 billion, or 62 cents per share, a year earlier.
* The company is cutting its workforce this quarter by fewer than 4,000 jobs, less than 5% of total employees.
* Fiscal fourth quarter guidance for adjusted earnings per share is $1.16 to $1.18 on $16.7 billion to $16.9 billion in revenue.
* The company received $5.3 billion in artificial intelligence infrastructure and hyperscaler orders year-to-date.
* Expected orders for the fiscal year were raised to $9 billion, up from $5 billion.
* The company expects fiscal-year revenue in the AI market to be $4 billion, up from a prior projection of $3 billion.
* Networking revenue increased 25% to $8.82 billion, exceeding the $8.47 billion consensus.
Executive Summary
Full Take
The narrative of Cisco's success is heavily framed by its strategic pivot toward artificial intelligence, which serves as the primary driver for both financial performance and organizational restructuring. The emphasis on focusing investment and making hard decisions regarding cost structure and organization ties the financial results directly to a mandate for agility in a rapidly changing technological landscape. While the company successfully increased its networking revenue significantly, demonstrating strength in core business segments, the context of trailing data center peers in the AI race introduces an element of competitive vulnerability that must be monitored. The job cuts, explicitly tied to the AI era, reveal a systemic cost-cutting strategy driven by the perceived imperative of technological dominance, linking human capital decisions directly to future growth expectations. This dynamic suggests that the market is rewarding management's ability to operationalize future demand (AI orders) even if lagging in some peer areas, creating a potent feedback loop where strategic clarity is valued over mere scale. The continued rally in shares signals investor confidence in the ability of Cisco to translate AI infrastructure demand into realized revenue, establishing a pattern where AI positioning is the critical determinant of valuation, rather than pure market share in a specific segment.
Patterns detected: ARC-0043 Motte-and-Bailey, ARC-0024 Ambiguity
Sentinel — Human
The text displays the structured, fact-driven style of human financial journalism, with explicit sourcing and specific data points that indicate a high degree of authenticity.