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Cisco Q3 Revenue Hits $12.8B, Flat Year-over-Year, While Non-GAAP EPS Up 5%, as Financial Impacts Arrive Due to Covid-19 Lockdowns in China and the War in Ukraine

The News: Cisco Q3 revenue came in flat at $12.8 billion – unchanged from a year ago – as the enterprise hardware and software maker announced its Q3 2022 financial results on May 18 after the markets closed. Cisco CEO Chuck Robbins, however, said the company continues to see strong demand for its products and services, but is feeling negative financial impacts due to continuing Covid-19 lockdowns in China and the ongoing war in Ukraine. Read the full earnings report here.

Cisco Q3 Revenue Hits $12.8B, Flat Year-over-Year, While Non-GAAP EPS Up 5%, as Financial Impacts Arrive Due to Covid-19 Lockdowns in China and the War in Ukraine

Analyst Take: Cisco Q3 revenue figures experienced the same trials and tribulations as many other tech vendors this quarter as the global economy continues to reel from the now two-year-old Covid-19 pandemic, lingering supply chain issues, and the nascent Russian attack on Ukraine.

While the flat $12.8 billion year-over-year Q3 earnings may not be what Cisco wanted for the quarter, it could have been worse, as the stock market continues the wild gyrations and adjustments we’ve seen in the last month.

Here are the Cisco Q3 revenue figures by the numbers:

  • Q3 2022 revenue of $12.835 billion, compared to $12.803 billion in the same quarter one year ago. That is below analyst consensus estimate of $13.3 billion for the quarter.
  • Q3 2022 non-GAAP net income of $3.6 billion, up three percent from $3.5 billion a year ago.
  • Q3 2022 non-GAAP earnings per share at $0.87 cents, up four cents from $0.83 cents per share one year ago. That beats the analyst consensus estimate of $0.86 cents per share for the quarter.
  • Q3 2022 order growth up eight percent year-over-year.
  • Q3 2022 Annualized Recurring Revenue (ARR) at $22.4 billion, up 11 percent year-over-year.

Despite the negative market reaction, we see the Cisco Q3 revenue figures as encouraging even though flat, especially considering the global economic and supply chain challenges that the company and its competitors are facing today.

For example, in March, Cisco announced that it would stop its business operations in Russia and Belarus “for the foreseeable future” due to the Russian invasion of Ukraine in February. According to Cisco’s Q3 financial report, the total negative impact to revenue was about $200 million in Q3. Sales in Russia, Belarus and Ukraine combined typically make up approximately one percent of Cisco’s total revenue.

Such an action makes it clear this is no ordinary global business environment we’re experiencing, above and beyond the realities of the continuing pandemic and its accompanying supply chain challenges, along with inflation and the looming potential of a global recession. Companies are dealing with serious issues everywhere and there’s no immediate relief in sight.

Digging Deeper into Cisco’s Q3 2022 Revenue

While Cisco’s Q3 revenue was flat at $12.8 billion, its revenue mix saw some notable changes. Product revenue rose by three percent, while service revenue dropped by eight percent for the quarter.

Q3 revenue by geographic segment saw revenue in the Americas up by five percent, while revenue dropped six percent for the quarter in EMEA and in the APJC region.

Product revenue rose four percent for secure, agile networks spending, six percent for internet for the future spending, seven percent for end-to-end security spending, and eight percent for optimized application experiences spending. Product revenue for Q3 dropped seven percent for collaboration spending.

Perhaps more impressive was the strong backlog that Cisco is seeing, which currently sits at record levels. At over $15 billion, the backlog has grown over 130% YoY, with $2 billion of it being software.

Also, orders have surged more than 19% YoY, with webscale seeing 50% YoY growth. These numbers should be seen as strength, especially in enterprise demand. Indicating strength in future quarters even if guidance disappointed.

On Cisco’s Changing Businesses

While Cisco is mostly known historically for its core networking switches market, the company has grown to be one of the world’s largest software companies and one that is intent on making a significant business transformation to software and services.

That shift is paying off as the company again posted double-digit ARR growth while pivoting from a perpetual license model to a subscription-based model. This is a challenging pivot, especially for publicly traded companies which must make such shifts under the glare of quarterly reporting. The fact that Cisco is pulling off the switch speaks to the robust executive leadership under Robbins’ stewardship.

Cisco Gives 2022 Future Earnings Guidance

For Q4 2022, Cisco provided guidance for the quarter with revenue falling one to five percent from the same period one year ago. Non-GAAP EPS is expected to be between $0.76 cents to $0.84 cents per share, the company estimates.

For the full year of 2022, Cisco provided guidance for expected revenue growth of two to three percent year-over-year from 2021 and full-year non-GAAP EPS of $3.29 to $3.37 per share.

While the guidance was somewhat light, I think the macro environment requires caution and I’m sure Chuck Robbins and his team were being cautious knowing Covid-19 lockdowns and an ongoing war will likely hinder business and cause complications in the supply change. Any improvements on these fronts during the next period could be a bullish sign for a stronger quarter.


It continues to be an interesting market for Cisco and the entire tech industry as the global economy continues its twists and turns in a tumultuous time. Cisco’s Q3 revenue results provide clear evidence of those lingering issues.

However, despite those issues, we continue to see Cisco as a bellwether of the enterprise tech space and at this juncture we remain confident that Cisco will continue to take the right steps to navigate these challenges as it delivers needed technologies and expertise to its customers and partners.

Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.

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Image Credit: Cisco

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.


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