Cisco Systems (CSCO, Financial) was up $1.99 or 5.83% after hours trading yesterday, Nov. 15, after the largest networking company in the world posted its figures for the first quarter of fiscal 2018 that ended on Oct. 30.
Cisco Systems closed the quarter with a non-GAAP measure of EPS – adjusted to one-time charges – of 61 cents (U.S. dollars), flat on a year over year basis, or a non-GAAP and unadjusted net profit of $3 billion. The company beat expectations by 1 cent.
The beat produced a positive surprise of only 1.67%.
On a GAAP basis, earnings rose 3% to $2.4 billion. The headline earnings per share was 48 cents in the quarter.
Earnings were backed on a quarterly figure for revenue of $12.1 billion, which was a 1.7% decline year over year. Cisco Systems beat expectations on revenue by $30 million.
Revenue coming in from the sale of products, $9.05 billion, declined 3% compared to the first quarter of fiscal 2017, while the revenue coming from services was $3.08 billion, increased by 1%. Recurring revenue, which was over 3% higher than the comparable quarter of fiscal 2017, accounted for 32% of Cisco Systems’ total revenue.
Let’s have a look at a breakout of the company’s revenue by region. Sales from the Americas went down 1% year over year to $7.35 billion; sales from Europe, Middle East and Africa geographic segment decreased 3% year over year to $2.91 billion; sales from the geo-segment of Asia Pacific, Japan and China declined by 1% to $1.88 billion.
Sales from Infrastructure Platforms’ segment went down 4% year over year to $6.97 billion; sales of applications increased by 6% to $1.2 billion; with $585 million the security’s segment went up 8%; Other sales accounted for $296 million and were 16% lower than the first quarter of fiscal 2017.
Cisco Systems also reported a 10% rise in deferred revenue that was $18.6 billion during the quarter. To this total amount of deferred revenue, deferred product revenue contributed with a 16% year over year increase – which was driven by subscriptions and offers of software – and deferred service revenue contributed with a 5% increase.
For the second quarter of fiscal 2018, which will close Jan. 31, 2018, Cisco Systems expects that revenue will grow between 1-3% compared to the same quarter of fiscal 2017. The largest networking company in the world expects that EPS on a non-GAAP basis will be of 58 cents to 60 cents, while analysts expect that Cisco Systems will report an EPS of 58 cents as a mean of a 0.56 (low) and 0.61 (high) range.
The company is also guiding gross margins at 62.5-63.5%, operating margin at 29.5-30.5% range while a tax provision rate of 22% is expected by Cisco Systems for the second quarter of fiscal 2018.
Cisco is trading at $34.11 per share with a market capitalization of $168.91 billion, a price-book (P/B) ratio of 2.58, a price-sales (P/S) ratio of 3.57 versus an industry median of 1.31 and a price-earnings (P/E) ratio of 17.80 versus an industry median of 25.97.
The forward P/E ratio is 13.97 that multiplied by an EPS of $2.43 – as forecasted by analysts for full fiscal 2018 – yields a value of $33.95 per share.
Disclosure: I have no positions in Cisco Systems.
