Cisco Notches Q3 Beats, but Earnings Guidance Falls Short

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Cisco Systems had a good, if not spectacular, third quarter of fiscal 2021, the company revealed in its latest earnings release.

For the quarter, revenue rose by 7% on a year-over-year basis to $12.80 billion. That was on the back of a 10% rise in total product order growth, which the company said was the most robust in almost 10 years. Meanwhile, adjusted net income also headed north, advancing by 4% to $3.5 billion, or $0.83 per share.

That meant Cisco eked out beats on both the top and bottom lines. Collectively, analysts tracking the stock were anticipating $12.56 billion in revenue, and adjusted per-share net income of $0.82.

The company is promising a bright near-term future. “Our investments in innovation and accelerated shift to more software offerings and subscriptions led to double-digit growth in deferred revenue, remaining performance obligations and higher levels of recurring revenue,” it quoted CFO Scott Herren as saying.

Cisco also proffered guidance for its current fourth quarter. It believes revenue will rise by 6% to 8% compared to the same quarter of fiscal 2020, and adjusted earnings will land at $0.81 to $0.83 per share. That’s a mixed bag, however, as the average analyst projection is modeling only 5.5% for the former, yet $0.85 for the latter.

While it’s a bit disappointing that the forward earnings number doesn’t quite hit prognosticator expectations, at the end of the day Cisco is still extremely profitable and a reliably strong cash generator. At this point in its long life, it’s basically a slow-growing, consistent dividend-paying, long-play incumbent tech stock.