Cisco Systems Inc on Wednesday raised its full-year earnings forecast and delivered strong second-quarter results, indicating that spending on network infrastructure was staying resilient in the face of an economic slowdown.
The maker of routers and other products that run computer networks and the internet said customers were keeping investments steady in systems related to cloud, artificial intelligence and tools for hybrid work.
The company is also benefiting from the easing of pandemic-driven supply chain constraints, which plagued its business last year and resulted in significant inventory buildup.
"Cisco is better positioned today than at any time since I became CEO almost eight years ago," Chuck Robbins said in a post-earnings analyst call. Shares of the company were three percent higher after earlier jumping 12 percent in extended trading.
For fiscal 2023, Cisco said it expects revenue growth of nine percent to 10.5 percent, and adjusted per-share earnings between US$3.73 to US$3.78 (S$4.98 to S$5.05). It had previously forecast revenue growth of 4.5 percent to 6.5 percent and earnings per share of US$3.51 to US$3.58.
Its second-quarter adjusted earnings of 88 US cents per share and revenue of US$13.59 billion were both higher than market estimates pooled by Refinitiv.
"This is very strong growth and shows that the company may finally be exiting a difficult period related to supply-chain challenges," said Scott Raynovich, chief analyst at Futuriom.
Cisco said it reduced backlog six percent sequentially, while remaining performance obligations (RPO), a metric that denotes contractual revenue that will be recognised in the future, was US$31.8 billion as of January-end, compared to US$30.9 billion in October.
Cisco's strong performance comes at a time of cost-cutting and restructuring across the US technology sector in response to economic headwinds. Cisco announced a nearly five percent workforce reduction in November.
