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Cisco stock rose more than 6 percent on Wednesday after the company reported better-than-expected earnings for the fourth quarter of its 2018 fiscal year, which ended on July 28.
Here's how the company performed:
As a whole, revenue was up 6 percent year over year in the quarter, while revenue growth for the entire fiscal year came out to 3 percent, according to a statement.
The majority of Cisco's revenue comes from sales of hardware like data center networking switches, which is included in the Infrastructure Platforms business segment. That segment generated $7.44 billion, above the FactSet analyst estimate of $7.28 billion. Routing product revenue was down slightly in the quarter because of declines among service provider customers, chief financial officer Kelly Kramer said on a conference call with analysts on Wednesday.
Cisco's Hyperflex converged data center infrastructure products contributed to the Infrastructure Platforms growth.
"We find ourselves in a lot of head-to-head deals and winning against Nutanix, which is obviously a really tough competitor out there but we feel good about the offer we have," Kramer said.
The next-largest business segment, Applications, which includes software products like Broadsoft's cloud contact center technology, was below the $1.4 billion FactSet analyst expectation, at $1.34 billion in revenue.
The Security segment came in above the $614.8 million revenue expectation, at $627 million. And Cisco's Other Products segment had $232 million in revenue, below the $255.9 million FactSet consensus estimate.
Across the entire 2018 fiscal year, Cisco had a $10.4 billion charge as a result of U.S. tax reform.
Cisco is following Microsoft and other technology companies in adopting new the ASC 606 revenue-recognition standards in the 2019 fiscal year.
"It's going to accelerate some of our term-based licenses, so we will have to write-off some of our deferred revenue," Kramer said. "We won't see that revenue, but we will offset that with acceleration of those offers when we book new orders and bill new orders." Cisco had $19.7 billion in deferred revenue in the fiscal fourth quarter, up 6 percent year over year.
In the quarter Cisco announced an expanded cloud partnership with Alphabet's Google and the sale of its service provider video software business to Permira Funds. "We believe the divestiture was the right move to make, but it will impact near-term results," Piper Jaffray analysts James Fish and Andrew Nowinski wrote in a Monday note.
With respect to guidance, Cisco said that for its fiscal first quarter it's expecting to register 70-72 cents per share, excluding certain items, on an implied $12.74-12.99 billion in revenue. Analysts had been expecting guidance of 69 cents per share, excluding certain items, on $12.61 billion in revenue, according to Thomson Reuters.
Cisco stock is up about 14 percent since the beginning of 2018.