Cisco reported revenues for its fiscal fourth quarter to July up 6 percent year-on-year to USD 13.4 billion. However, the company warned that growth will slow in the first quarter to October, due in part to the US-China trade tensions.
The fourth quarter growth was again at the high end of Cisco's expectations and capped a strong year with annual revenues up 7 percent. The adjusted gross margin in Q4 rose to 65.5 percent from 63.2 percent a year earlier, and the adjusted operating margin reached 32.6 percent, better than Cisco guidance's at 31-32 percent.
Cisco's quarterly revenue growth was strongest in the Americas, up 9 percent to USD 8.1 billion, and the EMEA region grew 7 percent to USD 3.3 billion. Sales in Asia were down 4 percent to USD 2.0 billion. Its main hardware business grew revenues 6 percent to USD 7.9 billion in the quarter, and services revenue was up 4 percent to USD 3.3 billion. Applications revenue rose 11 percent to USD 1.5 billion, and the security business expanded 14 percent to USD 714 million.
Cisco's net profit fell 42 percent to USD 2.2 billion or 51 cents a share, hurt by additional tax charges. Over the full year, the net profit surged to USD 11.6 billion from USD 0.1 billion in 2018, and operating cash flow rose to USD 15.8 billion from USD 13.7 billion.
Flat product orders in Q4
For fiscal Q1, Cisco forecast revenues zero to 2 percent higher, after flat orders in the previous quarter. Product orders increased just 1 percent year-on-year in the Americas and 4 percent in EMEA in Q4, and were down 8 percent in Asia. Service providers showed the biggest drop, down 21 percent, and enterprise orders fell 2 percent. Cisco said the fall in orders was due in part to a rapid decline at Chinese telecom operators.
The Q4 guidance still expects continued strong profitability, with an adjusted gross margin of 64-65 percent, an adjusted operating margin of 32-33 percent and EPS at USD 0.64-0.69.
