Cisco forecasts upbeat fourth-quarter revenue on enterprise demand

By Thomson Reuters May 15, 2024 | 3:09 PM

(Reuters) -Cisco Systems forecast fourth-quarter revenue above Wall Street estimates on Wednesday as the network equipment maker benefits from a pick up in enterprise spending and easing supply chain constraints.

The company’s shares rose 5% in trading after the bell.

Cisco has been benefiting from an increase in spending, with companies trying to boost their growing artificial intelligence and cloud computing needs.

The company has also been trying to reduce its reliance on its massive networking equipment business, which has suffered in recent years from supply chain issues and a post-pandemic slowdown in demand.

Last year, the Cisco agreed to buy Splunk, to enhance its cybersecurity capabilities and broaden its market reach. The deal, which closed in March, is expected to accelerate revenue growth and gross margin expansion in the first fiscal year post completion.

“Customers are consuming the equipment shipped over the last few quarters in line with our expectations and we are seeing stabilization of demand as a result. The addition of Splunk to our product line will be a catalyst for further growth,” Cisco Chief Financial Officer Scott Herren said.

Cisco forecast fourth-quarter revenue between $13.4 billion and $13.6 billion, compared with analysts’ estimates of $13.23 billion, according to LSEG data.

For the third quarter, revenue came in at $12.7 billion, beating estimates of $12.53 billion. Splunk contributed $413 million.

On an adjusted basis, Cisco earned 88 cents per share, beating estimates of 82 cents.

(Reporting by Juby Babu in Mexico City; Editing by Shounak Dasgupta)