Cisco Stock Rises After The Bell On Q3 Beat, FY25 Guidance Hike: Retail Mood Buoyant

Cisco Systems, Inc. (CSCO) shares rose nearly 3% in Wednesday's after-market hours as the San Jose, California-based company posted a beat-and-raise quarter. The company also said CEO Scott Herren will retire by the end of the fiscal year.

The networking giant reported adjusted earnings per share (EPS) of $0.96 for the third quarter of the fiscal year 2025, exceeding the year-ago quarter's $0.92.

Revenue climbed 11% year over year (YoY) to $14.15 billion from $12.7 billion.

The results also exceeded the Finchat-compiled consensus estimates of $0.92 and $14.05 billion.

Among business segments, networking contributed $7.07 billion to the total revenue and saw a YoY growth of 8%. The fastest growth (54%) came from the Security business, which contributed $2.01 billion to the topline. 

The Services business ($3.78 billion) reported revenue growth of 3%.

Among operational metrics, remaining performance obligations (RPO) climbed 7% YoY to $41.7 billion, with half expected to be recognized as revenue over the next 12 months.

Deferred revenue was up 2% at $28 billion.

The YoY growth rates of both metrics fell from the second quarter's 16% and 8%, respectively.

CEO Chuck Robbins said, "Cisco once again had strong quarterly results with clear demand for our technologies."

The executive said the momentum seen with artificial intelligence (AI) was fueled by "the power of our secure networking portfolio, our trusted global partnerships, and the value we bring to our customers."

The company said it generated $4.1 billion in operating cash flow and returned $3.1 billion to shareholders.

Cisco announced a quarterly dividend of $0.41 per share, payable on July 23 to shareholders on record as of July 3.

On the earnings call, Robbins downplayed the impact of tariffs on customer buying behavior. "I think the AI transition is just so important that they're going to continue to spend until they just absolutely have to stop," he said, according to a Koyfin transcript.

The CEO also clarified that the company did not witness a notable business advance due to the tariffs.

Cisco raised its 2025 guidance, and the revision is as follows:

• Adj. EPS guidance: $3.77-$3.79  (from $3.68-$3.74) vs. $3.72 consensus
• Revenue guidance: $56.5B-$56.7B (from $56B-$56.5B) vs $56.39B consensus

It expects fourth-quarter adjusted EPS and revenue of $0.96-$0.98 and $14.5 billion to $14.7 billion, respectively, exceeding the average analysts' estimate of $0.95 and $14.52 billion.

CEO Robbins announced Herren's retirement on the earnings call, adding that Chief Strategy Officer Mark Patterson will serve as the new finance chief. The company also announced the promotion of Jeetu Patel to the role of President and Chief Product Officer.

On Stocktwits, retail sentiment toward the Cisco stock was 'extremely bullish' (98/100) by late Wednesday, with the message volume also at 'extremely high' level.

A bullish watcher said Cisco's earnings looked good enough, adding that they bought 500 shares.

Another user said Cisco's stock move always disappoints, potentially referring to the more modest advance in the after-hours session.

Cisco stock ended Wednesday's session up 0.18% at $61.29, and is up about 5% year-to-date.

The Koyfin-compiled consensus analysts' price target of $67.29 implies an upside potential of about 10%.

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