Cisco Misses on Revenue - Guides Down
November 18, 2021
reported first quarter results for the period ended October
30, 2021. Cisco reported first quarter revenue of $12.9
billion, net income on a generally accepted accounting
principles (GAAP) basis of $3.0 billion or $0.70 per share,
and non-GAAP net income of $3.5 billion or $0.82 per share.
Wall Street was looking for earnings
of 80 cents per share with revenue of. $12.98 billion. Cisco
guided Q2 per-share earnings ranging between 80 cents to 82
cents with 4.5% to 6.5% annualized revenue growth. Consensus
was set at 82 cents per share in earnings with $12.85
billion in revenue, which implies 7.4% growth.
"In Q1, we had robust growth and continued strong demand
despite the very dynamic supply environment," said Chuck
Robbins, Chair and CEO of Cisco. "Cisco's technology sits at
the heart of the accelerated digital transformation
happening today. Our breakthrough innovation, strong demand,
and the success of our business transformation position us
well for another year of growth in fiscal 2022."
"Our teams executed well in a challenging environment,
delivering balanced profitable growth with revenue and non-GAAP
EPS both growing 8% year over year," said Scott Herren, CFO
of Cisco. "We also continued to make significant progress in
our business model transformation. Remaining performance
obligations and annualized recurring revenue both grew 10%
year over year with product ARR growth of 21% providing more
predictability and visibility to our long-term growth."
Q1 FY 2022 Highlights
Revenue -- Total revenue was up 8% at $12.9 billion, with
product revenue up 11% and service revenue up 1%. Revenue by
geographic segment was: Americas up 5%, EMEA up 11%, and
APJC up 15%. Product revenue performance was led by growth
in Secure, Agile Networks up 10%, Internet for the Future up
46%, End-to-End Security up 4%, and Optimized Application
Experiences up 18%. Hybrid Work was down 7%.
Gross Margin -- On a GAAP basis, total gross margin, product
gross margin, and service gross margin were 62.4%, 61.5%,
and 65.2%, respectively, as compared with 63.6%, 62.7%, and
65.8%, respectively, in the first quarter of fiscal 2021.
On a non-GAAP basis, total gross margin, product gross
margin, and service gross margin were 64.5%, 63.8%, and
66.5%, respectively, as compared with 65.8%, 65.3%, and
67.1%, respectively, in the first quarter of fiscal 2021.
Total gross margins by geographic segment were: 64.5% for
the Americas, 64.4% for EMEA and 64.7% for APJC.
Operating Expenses -- On a GAAP basis, operating expenses
were $4.6 billion, down 8%, and were 35.8% of revenue. Non-GAAP
operating expenses were $4.0 billion, up 2%, and were 31.2%
Operating Income -- GAAP operating income was $3.4 billion,
up 34%, with GAAP operating margin of 26.7%. Non-GAAP
operating income was $4.3 billion, up 10%, with non-GAAP
operating margin at 33.3%.
Provision for Income Taxes -- The GAAP tax provision rate
was 18.5%. The non-GAAP tax provision rate was 19.0%.
Net Income and EPS -- On a GAAP basis, net income was $3.0
billion, an increase of 37%, and EPS was $0.70, an increase
of 37%. On a non-GAAP basis, net income was $3.5 billion, an
increase of 8%, and EPS was $0.82, an increase of 8%.
Cash Flow from Operating Activities -- $3.4 billion for the
first quarter of fiscal 2022, a decrease of 16% compared
with $4.1 billion for the first quarter of fiscal 2021.
Balance Sheet and Other Financial Highlights
and Cash Equivalents and Investments -- $23.3 billion at the
end of the first quarter of fiscal 2022, compared with $24.5
billion at the end of fiscal 2021.
Remaining Performance Obligations (RPO) -- $30.1 billion, up
10% in total, with 53% of this amount to be recognized as
revenue over the next 12 months. Product RPO were up 18% and
service RPO were up 4%.
Deferred Revenue -- $22.1 billion, up 8% in total, with
deferred product revenue up 19%. Deferred service revenue
Capital Allocation -- In the first quarter of fiscal 2022,
we returned $1.8 billion to stockholders through share
buybacks and dividends. We declared and paid a cash dividend
of $0.37 per common share, or $1.6 billion, and repurchased
approximately 5 million shares of common stock under our
stock repurchase program at an average price of $56.49 per
share for an aggregate purchase price of $256 million. The
remaining authorized amount for stock repurchases under the
program is $7.7 billion with no termination date.