Cisco on Wednesday saw its stock jump 6 percent after the company reported better than expected earnings for its fiscal second quarter, which ended on Jan. 27.
With revenue growth of 3 percent, Cisco has finally ended its streak of two years straight of year-over-year revenue declines, while also continuing its pattern of beating expectations since Chuck Robbins took over as its CEO. The company's own guidance from the previous quarter accurately predicted the return to growth.
Cisco's biggest product segment, infrastructure platforms, which includes switches for data centers, saw 2 percent revenue growth, with $6.69 billion, above the FactSet consensus estimate of $6.62 billion, according to StreetAccount.
With acquisitions like AppDynamics, Cisco has sought to bring in growth from recurring revenue. In the fiscal second quarter Cisco's applications revenue of $1.18 billion was up 6 percent year over but below the FactSet estimate of $1.2 billion, according to StreetAccount.
In a statement Cisco said it took an $11.1 billion one-time charge because of recently enacted U.S. tax reform. Cisco's tax provision rate for the fiscal second quarter was 20 percent, excluding certain items, down from 22 percent one year earlier.
In bringing back around $67 billion from overseas -- and $57 billion after taxes -- Cisco is setting aside $25 billion for share repurchases and $13 billion for quarterly cash dividend, Cisco CFO Kelly Kramer told analysts on the company's conference call after disclosing earnings on Wednesday. Repatriated money could also fund acquisitions, although the Cisco's strategy on capital allocation essentially won't be changing, Kramer said.
In terms of guidance for the fiscal third quarter, Cisco expects earnings of 64 to 66 cents per share, excluding certain items, on 3 to 5 percent more revenue than it received for the year-ago quarter. Analysts were looking for 63 cents, excluding certain items, on $12.13 billion in revenue for the fiscal third quarter, according to Thomson Reuters. In the fiscal third quarter Cisco expects a 21 percent tax rate, excluding certain items.
The Catalyst 9000 switch product is the fastest ramping product in Cisco's history, Robbins said. There were no shortages or supply issues in the quarter, Kramer said.
Robbins said "we have more to bring" to web-scale customers like Google and Microsoft, which have previously partnered with Cisco.
In its fiscal second quarter Cisco announced the Spark voice assistant for meetings, as well as a $1 billion City Infrastructure Finance Acceleration Program. Cisco stock is up 10 percent since the beginning of the year.