Cisco has reported third quarter results for the period ended April 27, 2019. The company reported third quarter revenue of USD 13.0 billion, net income on a generally accepted accounting principles (GAAP) basis of USD 3.0 billion or USD 0.69 per share, and non-GAAP net income of USD 3.5 billion or USD 0.78 per share. As previously disclosed, Cisco completed the divestiture of the service provider video software solutions (SPVSS) business in the second quarter of fiscal 2019 on October 28, 2018. Revenue, non-GAAP financial information, and Q4 FY 2019 guidance have been normalized to exclude the SPVSS business from prior periods for comparison purposes.
Total revenue was USD 13.0 billion, up 6 percent, with product revenue up 7 percent, and service revenue up 3 percent. Revenue by geographic segment was: Americas up 9 percent, EMEA up 5 percent, and APJC down 4 percent. Product revenue performance was broad-based with growth in security, up 21 percent, applications, up 9 percent, and infrastructure platforms, up 5 percent. On a GAAP basis, total gross margin, product gross margin, and service gross margin were 63.1 percent, 62.0 percent, and 66.3 percent, respectively, as compared with 62.3 percent, 61.0 percent, and 65.8 percent, respectively, in the third quarter of fiscal 2018. On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 64.6 percent, 63.7 percent, and 67.3 percent, respectively, as compared with 64.5 percent, 63.7 percent, and 67.1 percent, respectively, in the third quarter of fiscal 2018. Total gross margins by geographic segment were: 65.6 percent for the Americas, 64.5 percent for EMEA, and 60.7 percent for APJC, respectively. On a GAAP basis, operating expenses were USD 4.7 billion, up 1 percent. Non-GAAP operating expenses were USD 4.2 billion, up 6 percent, and were 32.4 percent of revenue. GAAP operating income was USD 3.5 billion, up 12 percent, with GAAP operating margin of 27.1 percent. Non-GAAP operating income was USD 4.2 billion, up 6 percent, with non-GAAP operating margin at 32.2 percent. The GAAP tax provision rate was 15.8 percent. The non-GAAP tax provision rate was 19.0 percent. On a GAAP basis, net income was USD 3.0 billion and EPS was USD 0.69. On a non-GAAP basis, net income was USD 3.5 billion, an increase of 8 percent, and EPS was USD 0.78, an increase of 18 percent. Operating cash flow for the third quarter of fiscal 2018 included the payment of USD 1.3 billion of one-time foreign taxes as related to the Tax Cuts and Jobs Act. Operating cash flow increased 16 percent, normalized for these tax payments.