Cisco Systems' (CSCO) fiscal third-quarter results exceeded Wall Street's estimates, while the networking equipment maker announced a restructuring plan that involves thousands of layoffs.
For the quarter ended April 25, Cisco's adjusted EPS increased to $1.06 from $0.96 a year ago, topping the FactSet-polled consensus of $1.03. Revenue grew 12% to $15.84 billion, ahead of the Street's $15.56 billion view.
"Cisco delivered record quarterly revenue in (the third quarter) and we saw very strong, broad-based demand for our products, demonstrating the relevance of our technology for connecting and securing (artificial intelligence)," Chief Executive Chuck Robbins said in a statement.
Product sales climbed 17% to $12.12 billion, while services revenue dropped 1% to $3.72 billion.
Cisco highlighted "significant momentum and raised expectations for AI infrastructure from hyperscalers."
The company would reduce its workforce by "fewer than" 4,000 people, reflecting less than 5% of the total employee base, Robbins said in a staff memo shared on the company's website.
The move is part of a restructuring plan aimed at enabling the company to invest in growth opportunities, including silicon, optics, security and AI.
"The companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest," Robbins said. "I'm confident Cisco will be one of those winners. This means making hard decisions -- about where we invest, how we're organized, and how our cost structure reflects the opportunity in front of us."
Cisco shares jumped 15% in after-hours trading. The stock is up 32% so far this year as of Wednesday close.
The company expects to record pre-tax restructuring charges of up to $1 billion, mostly consisting of severance and other one-time termination benefits. Some $450 million of these will be recorded in the fiscal fourth quarter.
Cisco forecasts adjusted EPS between $1.16 and $1.18 for the ongoing three-month period, while revenue is pegged at $16.7 billion to $16.9 billion. The Street is looking for non-GAAP EPS of $1.08 and sales of $15.82 billion.
Cisco now expects adjusted EPS of $4.27 to $4.29 for fiscal 2026, up from the previous guidance of $4.13 to $4.17. Revenue is projected to come in at $62.8 billion to $63 billion, versus the prior outlook of $61.2 billion to $61.7 billion. The market's forecast is for non-GAAP EPS of $4.16 and sales of $61.59 billion.
