What To Expect From Cisco’s Fiscal Third Quarter

by Trefis Team
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Cisco (NASDAQ:CSCO) is scheduled to report its Q3 fiscal 2018 earnings on May 16. In recent quarters, the company has reported stagnation in revenue growth, driven primarily by low product sales. This trend reversed in the most recent quarter, however, with product sales picking up. This was further complemented by an improvement in product gross margins through the January ended quarter. We expect the trend to continue through the April ended quarter as well. Cisco’s management gave modest guidance for the fiscal third quarter, with revenues expected to be around 3% higher on a year-over-year basis to around $11.9 billion. On the other hand, the company’s non-GAAP operating profit margin is expected to be around 2 percentage points lower at 30%.

If Cisco reports revenues in line with guidance, it would be the second consecutive quarter with an increase in revenues after around two years of consistent revenue declines. A strong performance in the second fiscal quarter, coupled with positive guidance for the third quarter, has led Cisco’s stock price to rally by over 20% in the last six months. We have created an interactive analysis where we have summarized our Q3 FY’18 expectations for Cisco. Our forecasts for the quarter are slightly more conservative than market estimates. If you disagree with our estimates, you can change expected segment revenue and margin figures for Cisco to gauge how it will impact expected EPS for the quarter.

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