Cisco Systems (CSCO) Q4 2024 earnings summary

Executive summary

• Q4 revenue reached $13.6B, above guidance but down 10% year-over-year; Splunk contributed $960M and product order growth was 14% (6% excluding Splunk).

• FY24 revenue totaled $53.8B, with annualized recurring revenue at $29.6B, up 22%; subscription revenue comprised 56% of total.

• Gross margin hit 67.9% (non-GAAP), the highest in 20 years; non-GAAP EPS was $0.87, above guidance but down 24% year-over-year.

• Announced a restructuring plan impacting 7% of workforce and up to $1B in pre-tax charges, focusing on AI, cloud, and cybersecurity.

• Integration of Splunk progressing, with early synergies and cross-portfolio deals closed.

Financial highlights

• Q4 total revenue: $13.6B; product revenue: $9.9B (down 15%); services revenue: $3.8B (up 6%).

• Q4 non-GAAP net income: $3.5B (down 25%); non-GAAP EPS: $0.87 (down 24%); GAAP net income: $2.2B (down 45%).

• FY24 revenue: $53.8B (down 6%); non-GAAP EPS: $3.73 (down 4%); GAAP EPS: $2.54 (down 17%).

• Returned $12.1B to shareholders in FY24 (119% of free cash flow) via dividends and buybacks; $3.6B returned in Q4.

• Cash and investments at Q4 end: $17.9B; operating cash flow for Q4: $3.7B.

Outlook and guidance

• Q1 FY25 revenue expected at $13.65B–$13.85B; non-GAAP EPS $0.86–$0.88; gross margin 67%–68%.

• FY25 revenue guidance: $55B–$56.2B; non-GAAP EPS $3.52–$3.58; effective tax rate ~19%.

• Demand patterns are normalizing post-inventory digestion, with continued AI infrastructure momentum and another $1B in AI product orders expected in FY25.