Cisco Systems, Inc. Q4 F2017 Earnings Send Shares Lower

Cisco Systems Q4 F2017 earnings were released after closing bell tonight, and the company reported non-GAAP earnings of 61 cents per share or $3.1 billion on $12.1 billion in revenue. Wall Street had been expecting non-GAAP earnings of 61 cents per share on $12.07 billion sales for the company’s fourth fiscal quarter. When the company reported its third-quarter results, it guided for non-GAAP earnings of 60 cents to 62 cents per share and $11.88 billion to $12.13 billion in revenue.

In the same quarter a year ago, Cisco reported non-GAAP earnings of 63 cents per share or $3.2 billion on $12.64 billion in sales.

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Cisco Systems Q4 F2017 earnings

On a GAAP basis, Cisco Systems Q4 F2017 earnings fell to 48 cents per share or $2.4 billion from 56 cents per share or $2.8 billion a year ago. For the full year, Cisco reported $2.39 per share in non-GAAP earnings and $1.90 per share in GAAP earnings, compared to $2.36 per share and $2.11 per share in fiscal 2016. Full-year sales fell to $48 billion from $49.2 billion in fiscal 2016.

The company said recurring revenue amounted to 31% of total revenue, an increase of 4 points year over year. Product revenue fell 5% year over year, driven by Wireless and Security. Service revenues grew 1%. Switching revenue fell 9% year over year to $3.4 billion, while NGN Routing revenue fell 9% to $1.9 billion. Collaboration revenues fell 3% to $1.1 billion, and Data Center revenue fell 4% to $837 million. Wireless revenues grew 5% to $799 million, while Security revenue grew 3% to $558 million. Service Provider revenues fell 10% to $227 million.

Cisco Systems said Americas revenue fell 6% year over year, while sales in Europe, the Middle East and Africa fell 6%. Revenue from Asia Pacific, Japan and China rose 6% year over year.

The GAAP gross margin stood at 62.2%, while the GAAP product margin fell to 60.3% from 62.2% in last year’s fourth quarter. The company said pricing drove the decline, although improvements in productivity and product mix partially offset the negative impact from pricing. The non-GAAP gross margin was 63.7%, while the product gross margin was 61.9%. The GAAP service gross margin was 67.8%, while the non-GAAP service gross margin was 68.8%.

Cisco Systems releases outlook for fiscal 2018

For the first quarter of fiscal 2018, Cisco Systems expects revenue to fall by 3% to 1% year over year. The company expects GAAP earnings to be between 48 cents and 53 cents per share and non-GAAP earnings to be 59 cents to 61 cents per share. Cisco expects the non-GAAP gross margin to be between 63% and 64%.

After Cisco Systems Q4 F2017 earnings were released, the company’s stock declined by as much as 2.13% to $31.65 in after-hours trading.