Cisco Systems, Inc. (CSCO.US) Q1 performance exceeded expectations, with slightly conservative full year sales guidance.

Global computer networking equipment manufacturer Cisco Systems, Inc. (CSCO.US) announced better-than-expected quarterly performance, but its conservative annual performance guidance had investors reacting tepidly. The financial report showed that in the first quarter of the 2025 fiscal year ending October 26, Cisco Systems, Inc. saw a 6% year-on-year decrease in sales to $13.8 billion, surpassing analysts' expectations of $13.77 billion; adjusted net profit was $3.7 billion, down 19% year-on-year; adjusted earnings per share were $0.91, higher than analysts' expected $0.87. Cisco Systems, Inc. CEO Chuck Robbins has been working to transform the company into a network services and software provider. While this move has added more recurring revenue to its balance sheet, a significant portion of the company's sales still come from one-time hardware installations. Cisco Systems, Inc. CFO Scott Herren stated that the company is seeing strong rebounds in enterprise spending across all industries and regions. He added that the company is also benefiting from equipment spending to support artificial intelligence computing, with orders of this nature from major data center operators far surpassing the $1 billion target. However, Scott Herren pointed out that changes in the U.S. federal government and the nature of federal budgets meant that some projects were not approved, but the company believes that orders will quickly recover once a new budget is in place. Considered a barometer of corporate technology spending, Cisco Systems, Inc. has been working to rebound from a year-long slump. While orders are currently recovering growth, investors and analysts are keen to know how quickly this can be achieved. Scott Herren stated, "I feel good about our product and market position. The acceleration is very good." During the sales slowdown, Cisco Systems, Inc. implemented layoffs. The company announced three months ago that it would lay off 90,400 people, approximately 7% of its workforce, resulting in about $1 billion in costs. Looking ahead, Cisco Systems, Inc. expects second-quarter sales to be between $13.75 billion and $13.95 billion, surpassing analysts' expectations of $13.74 billion; the company also forecasts that full-year sales for the 2025 fiscal year will be between $55.3 billion and $56.3 billion, an increase from previous forecasts, but the mid-point of the forecast range falls short of analysts' expectations of $55.9 billion. As of the time of the report, Cisco Systems, Inc. was down over 2% in after-hours trading on Wednesday.