In its recent fiscal third quarter report, technology giant Cisco announced a significant decline in revenue, with the steepest drop since 2009. However, the company managed to surpass Wall Street's expectations in terms of earnings and provides a positive revenue outlook. The acquisition of Splunk also played a significant role in boosting Cisco's overall performance.

Cisco's earnings per share for the quarter were reported at 88 cents adjusted, surpassing the expected 82 cents. Similarly, revenue reached $12.7 billion, exceeding the projected $12.53 billion. These figures came as a surprise to analysts, leading to an 8% increase in the company's stock during extended trading.

Despite the positive results, Cisco experienced a notable 13% decline in revenue compared to the previous year. This drop was attributed to the completion of client equipment installations from previous quarters. Cisco CEO Chuck Robbins highlighted the positive aspect of these installations, stating that the majority of inventory setup is expected to be completed by the end of the fiscal year in July.

One notable weakness in Cisco's performance was seen in its public sector business within the United States, which lagged behind other regions. However, Robbins expressed confidence that this issue had been resolved following the signing of the latest U.S. federal government funding.

The networking revenue category, which includes data center switches and constitutes a significant portion of Cisco's overall revenue, also experienced a decline of 27%, amounting to $6.52 billion.

During the quarter, Cisco successfully completed its $28 billion acquisition of security software company Splunk. While this transaction slightly impacted Cisco's adjusted earnings per share, it contributed an additional $413 million in revenue. Robbins highlighted the company's focus on leveraging existing Cisco customers to become meaningful Splunk customers.

Looking ahead, Cisco revised its fiscal 2024 revenue guidance to a range of $53.6 billion to $53.8 billion, higher than the initial forecasts in February. The company also narrowed its full-year adjusted earnings forecast for fiscal 2024. Cisco expects revenue growth in the low-to-mid-single digits for fiscal 2025.

The news of Cisco's Q3 results comes as shares in the company had previously experienced a 2% decline in 2024, while the S&P 500 index saw an 11% increase.

As part of organizational changes, Cisco announced that Gary Steele, former CEO of Splunk, will now serve as the parent company's president of go-to-market operations, effective immediately. On the other hand, Jeff Sharritts, Cisco's chief customer and partner officer, will be departing from the company.

Cisco CEO Chuck Robbins expressed optimism regarding the $28 billion Splunk acquisition, stating that it will significantly drive the company's financial growth in the future.

In conclusion, despite a decline in revenue, Cisco's Q3 report demonstrates resilience and positive performance, surpassing market expectations. The company's strategic acquisitions and revised revenue guidance highlight its commitment to navigating industry challenges and driving future growth.