Cisco Systems (CSCO, Financial) shares rose by 5% following the announcement of robust Q3 results, including an EPS beat. Revenues increased by 11.4% year-over-year to $14.15 billion, marking the first double-digit growth in seven quarters. The company also issued optimistic guidance for Q4. Notably, AI infrastructure orders from webscale customers surpassed $600 million in Q3, exceeding $1 billion year-to-date and achieving its target one quarter ahead of schedule.
- Revenue, margins, and EPS exceeded the high-end of previous guidance. Cisco saw solid growth in ARR, RPO, and subscription revenue. Enterprise product orders rose 22% year-over-year, driven by double-digit growth in the Americas and APJC. Public sector orders increased by 8%, with growth across all regions. US federal orders grew double-digits after a challenging start to the year.
- Orders from service providers and cloud customers remained strong, up 32% year-over-year, fueled by triple-digit growth in webscale. Networking product orders saw double-digit growth, driven by webscale infrastructure, enterprise routing, switching, and industrial IoT products.
- Cisco is well-positioned to support onshoring infrastructure and manufacturing to the US, with data center switching orders up double-digits year-to-date. AI infrastructure orders from webscale customers were notably strong in Q3.
- Regarding tariffs, Cisco reported no significant changes in customer purchase decisions and no slowdown in customer spending. The AI transition remains a priority, and Cisco has not observed any broad-based pull-forward sales or push-outs.
Overall, Cisco delivered a strong quarter with impressive numbers and guidance. The positive outlook shared during the earnings call was significant, as the company is not experiencing a slowdown in customer purchases. Despite macroeconomic and tariff uncertainties, these insights are as encouraging as investors could hope for.
