Cisco reports earnings and revenue beat for quarter while cutting 7% of workforce.

• Cisco experienced a decline in revenue for the third consecutive quarter, marking the end of its first fiscal year with a revenue drop since 2020.
• The company announced it is reducing its global workforce by 7%. Despite this, earnings and revenue surpassed analysts' predictions.
• On Wednesday, the stock had fallen 10% this year, while the Nasdaq had risen approximately 15%.

On Wednesday, shares of the networking company popped in extended trading after it announced it was cutting 7% of its global workforce and reported quarterly results that exceeded analysts' expectations.

Here are the key numbers:

• The adjusted earnings per share estimate for LSEG is 85 cents, while the actual earnings per share are 87 cents.
• According to LSEG, the revenue was estimated to be $13.54 billion, but the actual revenue was $13.64 billion.

Cisco announced that it will implement a restructuring plan that will result in $1 billion in pre-tax charges to its financial results, allowing it to invest in key growth opportunities and drive more efficiencies in its business.

The company announced that it will recognize between $700 million and $800 million of charges in the current quarter, with the remaining charges being spread out over fiscal 2025.

Cisco reported a 10% decline in sales in the fiscal fourth quarter compared to the previous year, marking the third consecutive quarterly drop in revenue and the first full fiscal year decline since 2020, according to a press release.

Cisco anticipates revenue of $13.65 billion to $13.85 billion for the first quarter, a decrease from $14.7 billion in the previous year. Analysts predicted $13.7 billion, according to LSEG.

In previous quarters, Cisco stated that revenue slippage was due to clients setting up equipment from previous periods.

Despite the ongoing decline, Cisco exceeded expectations thanks to the increased subscription revenue from the $28 billion acquisition of Splunk, which was completed in March and marked the company's largest deal to date.

Since large enterprises began moving to the cloud years ago, Cisco's core networking business, which includes switches and routers, has been declining. To diversify and generate more recurring revenue, the company has strengthened its software and security business.

In the most recent quarter, networking revenue dropped by 28% to $6.8 billion. Security revenue increased by 81% to $1.8 billion, while collaboration revenue remained relatively stable at $1 billion. Splunk generated $960 million in revenue.

In the previous year, net income in the quarter was $4 billion, or 97 cents a share, but this quarter it dropped by 45% to $2.2 billion, or 54 cents a share.

Prior to the close, the Nasdaq rose approximately 14%, while Cisco's shares fell 10%.

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