Cisco published its third quarter financial results on Wednesday, beating market expectations despite revenue declines overall. The networking giant posted non-GAAP earnings of 79 cents per share on revenue of $12 billion, a decline of 8% year over year.
Analysts were expecting earnings of 71 cents per share on revenue of $11.88 billion.
"As we look at the quarter, it very much reflected the journey of the pandemic. In March, we were performing ahead of our expectations as companies focused on building resiliency in their IT environments," said Cisco CEO Chuck Robbins, on a call with analysts.
"Then in April, we began to see a slowdown across the business as countries across the world were locked down. world were locked down. While parts of our portfolio have been more impacted than others, we believe our leadership from a product, innovation and operational perspective remains solid. While there's so much uncertainty now, we believe our stay connected, secure and productive. must focus on."
Breaking revenue out by segment, product revenue was down 12% to $8.6 billion, and service revenue was up 5% to $3.38 billion. Product revenue sales from infrastructure platforms, which includes Cisco's networking and router portfolios, was down 15% to $6.43 billion. Sales of security products grew 6% to $776 million, and sales of applications fell 5% to $1.36 billion for the quarter.
For the fourth quarter, the company is predicting non-GAAP earnings between 72 cents and 74 cents with revenue declining between 8.5% and 11.5% year-over-year. Wall Street is looking for non-GAAP earnings of 71 cents per share with $12.07 billion in revenue.
"We executed well in Q3 in a very challenging environment, delivering strong margins and non-GAAP EPS growth," said Kelly Kramer, CFO of Cisco. "The resiliency that we have been building into our business model is paying off, with software subscriptions now at 74% of our software revenue, up 9 points year over year. We are focused on driving long-term profitable growth while delivering shareholder value."
Shares of Cisco were up almost 3% after hours.