What happened
Shares of the digital communications tech company Cisco Systems (CSCO +0.47%) were rising fast today after the company surprised investors by reporting second-quarter revenue and earnings that beat Wall Street's average estimate.
The strong quarter also prompted Cisco's management to raise its guidance for 2023, adding to optimism for the stock today.
Cisco's shares were up by 5% as of 11:01 a.m. ET.
So what
Investors grew optimistic about Cisco's stock today after the company reported non-GAAP (adjusted) earnings of $0.88 per share, which was an increase of 5% from the year-ago quarter and beat analysts' consensus estimate of $0.85.
The tech giant also impressed inventors with its second-quarter sales of $13.6 billion -- up 7% year over year -- which outpaced Wall Street's expectation of about $13.4 billion for the quarter.
Image source: Getty Images.
Sales climbed higher due in part to the company's total software revenue rising 10% from the year-ago quarter to $4.2 billion. Cisco's management said on the company's earnings call that 84% of its software revenue is now subscription-based, up 4% from the year-ago quarter.
The company also announced that it was raising its quarterly dividend by $0.01 to $0.39 per share, which management said is Cisco's 13th consecutive increase. Speaking about the dividend increase, Cisco CFO Scott Herren said on the call: "This reinforces our commitment to returning a minimum of 50% of free cash flow to our shareholders annually and confidence in the strength and stability of our ongoing cash flows."
Now what
Cisco CEO Chuck Robbins said on the call that the company "is well positioned to benefit from multi-year investment cycles with our market-leading hardware, as well as our innovative software and services."
And because of its strong performance in the second quarter, Cisco's management raised its earnings and revenue guidance for the full year. The company's leadership now estimates sales will grow between 9% and 10.5% for the full year, up from the previous growth estimate of about 5.5%.
Additionally, management says adjusted earnings will be $3.75 at the midpoint of guidance, up from the previous estimate of about $3.54.
With better-than-expected second-quarter results and management raising its outlook for the full year, Cisco investors clearly had a lot to be optimistic about today.
