Cisco Systems posted lower revenue and profit in its fiscal first quarter, but results beat analyst estimates, boosted by investments to support artificial intelligence.
The networking-equipment company on Wednesday said webscale customers spent over $300 million on infrastructure orders to support AI, prompting the company to back its view that it would exceed $1 billion of AI orders in fiscal 2025.
"Our AI pipeline continues to be strong," Chief Executive Chuck Robbins said.
These gains contributed to a fiscal second-quarter outlook that beat analyst estimates and a slight increase to the company's fiscal-year guidance. They were, however, tempered by charges relating to the company's restructuring plan.
In August, Cisco said it would cut 7% of its global workforce, or about 6,000 jobs, citing a need to cut costs and invest in growth areas, such as AI, the cloud and cybersecurity. Under this restructuring plan, the company expects to pay up to $1 billion in severance and other costs.
The recent quarter was hurt by $665 million in restructuring and other charges, up from $123 million last year. Future quarters are likely to contain more restructuring-related costs.
Shares fall 2.5%, to $57.75, in after-hours trading.
In its fiscal first quarter, Cisco reported a profit of $2.71 billion, or 68 cents a share, compared with $3.64 billion, or 89 cents a share, in the same quarter a year earlier. On an adjusted basis, the company posted a profit of 91 cents a share, beating the 87 cents a share that analysts surveyed by FactSet expected.
Revenue fell 5.6%, to $13.84 billion, but came in ahead of the $13.78 billion that analysts were looking for, according to FactSet.
Networking sales fell 23%, to $6.75 billion, while collaboration sales slid 1%, to $1.09 billion. These losses were slightly offset by the company's security unit, which doubled its revenue.
For its fiscal second quarter, Cisco forecast revenue between $13.75 billion and $13.95 billion, as well as adjusted per-share earnings between 89 cents and 91 cents. Analysts surveyed by FactSet are looking for revenue of $13.77 billion and adjusted earnings of 87 cents a share.
For fiscal 2025, the company slightly increased its revenue outlook to between $55.3 billion and $56.3 billion from between $55 billion and $56.2 billion. It now expects adjusted per-share earnings between $3.60 and $3.66, up from between $3.52 and $3.58. Wall Street is expecting revenue of $55.83 billion and adjusted earnings of $3.57 a share.