Cisco Systems Inc.’s stock rose 3.5% in extended trading Wednesday after the computer-networking company reported fiscal second-quarter results slightly above Wall Street estimates and offered encouraging guidance despite lingering investor concern over supply-chain issues.
The company also announced a $15 billion stock repurchase, but did not mention a rumored $20 billion acquisition of Splunk Inc. SPLK, -0.31% in its earnings announcement. When asked about Splunk during a subsequent conference call with analysts, company executives declined comment but said they look at 10 to 15 deals for every one they pursue.
Cisco CSCO, -0.04% reported net income of $2.97 billion, or 71 cents a share, compared with net income of $2.5 billion, or 60 cents a share, in the year-ago quarter. The company’s adjusted net income was $3.5 billion, or 84 cents a share, vs. $3.4 billion, or, 79 cents a share, a year ago.
Revenue improved 6% to $12.7 billion, from $12 billion a year ago. Analysts surveyed by FactSet had expected earnings of 81 cents a share and revenue of $12.66 billion.
“We continue to see incredibly strong demand across our portfolio, emphasizing the criticality and relevance of Cisco’s innovation,” Cisco Chief Executive Chuck Robbins said in a statement announcing the results. “Our robust order strength, record backlog and double-digit growth in annual recurring revenue position us well to deliver growth.”
The company expects 70 cents to 74 cents a share in profit, or 85 cents to 87 cents on an adjusted basis, in the fiscal third quarter. Analysts were forecasting 78 cents and 87 cents, respectively, according to FactSet.
Cisco reported sales of $9.35 billion for products and $3.37 billion for services during the quarter. Secure, Agile sales ($5.9 billion, up 7% year-over-year) and Internet for the Future ($1.32 billion, up 42%) led in revenue categories.
Cisco, like most major tech component suppliers, is coping with supply-chain issues that have partially offset strong enterprise sales. “Our business performed well with revenue and non-GAAP EPS growing 6% year over year despite the supply-constrained environment,” Cisco Chief Financial Officer Scott Herren said in a statement. During a conference call with analysts late Wednesday, he said Cisco ended its second quarter with a record backlog of $14 billion, up 150% year-over-year, and he expects the issue to linger through July. About $2 billion of that total is software.
“The supply chain hasn’t gotten any better, but it hasn’t gotten worse,” Herren told MarketWatch in a video interview. “We are experiencing a record level of demand, with few if any double orders or cancellations.”
Cisco’s stock is down 14% so far in 2022, while the Dow Jones Industrial Average DJIA, -0.16%, which counts Cisco as a component, has declined 4%. The broader S&P 500 index SPX, +0.09% has dropped 6% this year.