Investing.com -- Cisco Systems (NASDAQ:CSCO) has upgraded its annual revenue forecast after reporting better-than-expected fiscal third-quarter results as firmer margins helped offset a dip in revenue.
Shares in the network equipment maker rose in premarket U.S. trading following the earnings release.
For the three months ended Apr. 27, the company reported adjusted earnings of per diluted share (EPS), down from $1.00 a year earlier.
Revenue fell by 13% a year ago to $12.7 billion, with Chief Financial Officer Scott Herren flagging the impact of an ongoing inventory backlog. Cisco's revenue has now dropped for two consecutive quarters.
But in a note to clients, analysts at Goldman Sachs noted that order demand is "stabilizing" and should return to "normal seasonality" at the beginning of Cisco's 2026 financial year.
Wall Street estimates had called for adjusted EPS of $0.83 on revenue of $12.48B in Cisco's fiscal third quarter.
Gross margin ticked up to 65.1% from 63.4% a year earlier, supported by an uptick in spending from enterprise clients and waning supply chain issues. Splunk (NASDAQ:SPLK), a company Cisco purchased to bolster its cybersecurity offerings, also added $413 million in revenue.
Looking ahead, Cisco is now forecasting revenue in a range of $53.6B to $53.8B, up from its prior guidance of $51.5B to $52.5B. Full-year adjusted EPS is also seen at between $3.69 to $3.71, compared with $3.68 to $3.74 in February.
Yasin Ebrahim contributed to this report.