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Cisco Systems CSCO reported third-quarter fiscal 2025 non-GAAP earnings of 96 cents per share, beating the Zacks Consensus Estimate by 5.49%. The figure increased 9.1% year over year.
Revenues of $14.15 billion surpassed the Zacks Consensus Estimate by 0.65%. The top line increased 11.4% year over year.
Cisco shares were up 4.13% in pre-market trading. In the year-to-date period, CSCO shares have gained 3.6%, outperforming the Zacks Computer & Technology sector’s 2.4% decline.
CSCO’s Top-Line Details
Revenues from Networking in the third quarter of fiscal 2025 were $7.06 billion, up 8% on a year-over-year basis.
Cisco Systems, Inc. Price, Consensus and EPS Surprise
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Security revenues were $2.01 billion, up 54% year over year. Collaboration revenues were $1.03 billion, up 4% year over year. Observability revenues were $261 million and grew 24% year over year.
Total Product revenues in the third quarter of fiscal 2025 were $10.37 billion, comprising 73.3% of Cisco’s total revenues. On a year-over-year basis, product revenues increased 15%.
Service Revenues were $3.77 billion, comprising 26.7% of Cisco’s total revenues. On a year-over-year basis, service revenues increased 2.6%.
Annualized Recurring Revenues (ARR) for the quarter were $30.6 billion, increasing 5% on a year-over-year basis, with product ARR growth of 8%.
Region-wise, the Americas’ revenues increased 14% year over year to $8.38 billion. EMEA (Europe, Middle East and Africa) revenues jumped 8% year over year to $3.73 billion. APJC (Asia Pacific Japan China) revenues climbed 9% year over year to $2.03 billion.
In the third quarter of fiscal 2025, AI Infrastructure orders from webscale customers exceeded $600 million, surpassing our $1 billion annual target a quarter ahead of schedule.
CSCO’s Operating Expenses Expand Y/Y
Non-GAAP gross margin was 68.6%, which expanded 30 basis points (bps) year over year.
On a non-GAAP basis, the product gross margin increased 200 bps on a year-over-year basis to 49.6%. Service gross margin decreased 170 bps to 19%.
In the third quarter of fiscal 2025, Cisco reported total non-GAAP operating expenses of $4.82 billion, up 11.5% year over year. As a percentage of revenues, the figure was in line with 34%.
Consequently, CSCO reported a non-GAAP operating income of $4.88 billion, up 12.2% year over year. Operating margin expanded 30 bps to 34.5%.
CSCO’s Balance Sheet Details
As of April 26, 2025, cash and cash equivalents and investments totaled $15.6 billion, which decreased from $16.9 billion as of Jan. 25, 2025.
Total debt was $29.2 billion as of April 26, 2025, compared with $31.03 billion at the end of the prior quarter.
The remaining performance obligations (RPO) at the end of the third quarter of fiscal 2025 were $41.7 billion, up 7%, with 51% of the amount to be recognized as revenues over the following 12 months. Product RPO was up 10%, and services RPO was up 5%.
In the third quarter of fiscal 2025, CSCO returned $3.1 billion to stockholders through share buybacks and dividends. It repurchased approximately 25 million shares of common stock.