Cisco Systems reported third quarter (Q1 FY2023) results that beat analysts’ expectations and lifted its guidance for fiscal 2023.

Total revenue was up 6% at $13.6 billion, with product revenue up 8% and service revenue was flat. Revenue by geographic segment was: Americas up 5%, EMEA up 11%, and APJC was flat.

Product revenue performance was led by growth in Secure, Agile Networks up 12%, End-to-End Security up 9%, and Optimized Application Experiences up 7%. Internet for the Future was down 5% and Collaboration was down 2%.

Gross Margin – Total gross margin, product gross margin, and service gross margin were 61.2%, 59.2%, and 67.3%, respectively, as compared with 62.4%, 61.5%, and 65.2%, respectively, in the first quarter of fiscal 2022.

Operating Expenses were $4.8 billion, up 4%, and were 35.3% of revenue. Non-GAAP operating expenses were $4.2 billion, up 5%, and were 31.1% of revenue.

Operating Income was $3.5 billion, up 3%, with GAAP operating margin of 26.0%. Non-GAAP operating income was $4.3 billion, up 1%, with non-GAAP operating margin at 31.8%.

Net Income and EPS – Net income was $2.7 billion, a decrease of 10%, and EPS was $0.65, a decrease of 7%. On a non-GAAP basis, net income was $3.5 billion, an increase of 2%, and EPS was $0.86, an increase of 5%.

Cash Flow from Operating Activities – $4.0 billion for the first quarter of fiscal 2023, an increase of 16% compared with $3.4 billion for the first quarter of fiscal 2022.

For the second quarter of fiscal year 2023, Cisco expects a revenue between 4.5% – 6.5% growth Y/Y, operating margin rate 31.5% – 32.5% and EPS $0.84 – $0.86.

In the first quarter of fiscal 2023, Cisco returned $2.1 billion to stockholders through share buybacks and dividends. The company paid a cash dividend of $0.38 per common share, or $1.6 billion, and repurchased approximately 12 million shares of common stock at an average price of $43.76 per share for an aggregate purchase price of $0.5 billion.

The remaining authorized amount for stock repurchases under the program is $14.7 billion with no termination date.