Cisco earnings Q3 2019

Cisco’s Chairman as well as CEO Chuck Robbins speaks to participants during the Viva Technologie show at Parc des Expositions Porte de Versailles in Paris on May 24, 2018.

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Cisco shares rose as much as 3% after hours on Wednesday after the company reported better-than-expected earnings for the third quarter of its 2019 fiscal year, which ended on April 27, as well as strong revenue guidance.

Here are the key numbers:

  • Earnings: 78 cents per share, excluding certain items, vs. 77 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $12.96 billion, vs. $12.89 billion as expected by analysts, according to Refinitiv.

Revenue was up 4% year over year, according to a statement.

Cisco said the item expects 4.5% to 6.5% revenue growth in its fiscal fourth quarter, as well as earnings of 80 cents to 82 cents per share. Analysts surveyed by Refinitiv were looking for $13.29 billion in revenue, or 3.5% revenue growth, as well as 81 cents per share.

CEO Chuck Robbins addressed the subject of how tariffs could affect Cisco’s business during a Wednesday conference call with analysts.

“We see very minimal impact This kind of point based on all the great work the teams have done, as well as the item is usually absolutely baked into our guide going forward,” Robbins said.

The majority of Cisco’s business comes by selling networking software as well as hardware, including switches as well as routers which are kept inside corporate data centers. This kind of market is usually represented in Cisco’s Infrastructure Platforms business segment, which contributed $7.55 billion in revenue, beating the $7.46 billion consensus estimate among analysts polled by FactSet.

The company’s Applications business segment, which includes AppDynamics as well as conferencing products, generated $1.43 billion in revenue, lower than the $1.50 billion FactSet analyst estimate.

The Security business segment, featuring among things the recently acquired Duo Security, had revenue of $707 million, up 21% as well as above the FactSet estimate of $676 million.

Heading into the earnings report, some analysts suggested which Cisco is usually continuing to see strong results by its Catalyst 9000-series switches.

“We believe the Catalyst 9000 refresh remains within the early innings,” Nomura Instinet analysts led by Jeffrey Kvaal said in a note distributed to clients last week. “In our survey, we found which 11% of respondents have upgraded as well as 16% expect to do so within the next 12 months. This kind of refresh is usually currently nearly two years old. This kind of suggests the refresh has yet to hit the steepest part of the adoption curve.”

This kind of time last year, though, the Catalyst 9000 line was seeing a pickup in adoption, setting the stage for tough comparisons within the fiscal fourth quarter, Piper Jaffray analysts James Fish as well as Andrew Nowinski wrote in a note distributed to clients on Monday.

as well as Cisco’s conversations with customers around upgrading could open up the door for them to move to additional vendors’ products.

“Both our CIO survey as well as calls indicate some discomfort using a cost hike by Cisco – at least a perceived one,” the Nomura Instinet analysts wrote. Some customers are choosing to open up the refresh to bids by rival vendors. Others are using the perceived cost hike as well as shift to software as a mechanism for reducing cost on the traditional systems business. Both Juniper as well as Arista have indicated their enterprise businesses are growing faster than the overall market. “

There are also broader challenges for Cisco to confront.

“Public partners as well as results across public the item peers suggest a general Enterprise pause in spending at a minimum is usually occurring, if not a full Enterprise cycle slowdown,” Fish as well as Nowinski wrote.

within the fiscal third quarter Cisco saw enterprise revenue go up 9%, commercial revenue rise 5% as well as public sector revenue grow 10%. Service provider revenue fell 13% in which period. Robbins said the service provider category is usually the only one where he saw a change in economic conditions.

Cisco stock is usually up 21% since the beginning of 2019. within the fiscal third quarter Cisco announced initiatives with Alphabet’s Google Station Wi-Fi initiative as well as SoftBank.

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