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Cisco Systems (CSCO) is set to report Q4 (Jul) results today after the close with a call to follow at 4:30pm ET. CSCO typically reports 5 minutes after the close. The current S&P CapitalIQ consensus is for adjusted EPS of $0.74 (down 11% yr/yr) and revenue of $12.09 bln (down 10% yr/yr). Cisco typically guides for EPS and revenue (on a percentage basis) for the next quarter.

• Last quarter, Cisco guided to Q4 adjusted EPS of $0.72-0.74 and a revenue decline of -11.5% to -8.5%, which computes as $11.884-12.287 bln. Cisco tends to be conservative with guidance so we're not surprised to see analysts on the higher end of EPS guidance. Current guidance for non-GAAP operating margin in Q4 is 31.5-32.5%.
• Cisco is a particularly important tech name to watch with earnings. Because it's so large and touches so many areas, it's a great barometer to get a general sense for enterprise sending levels on IT. It's also the first big tech name to report that includes the month of July, so we should get a better sense of how briskly enterprises are spending this summer.
• Last quarter, Cisco reported nice upside, but was still pretty harshly impacted by the pandemic. Infrastructure Platform sales were down 15% due to supply chain challenges. Switching and routing revenue also declined. Applications segment sales were down 5%, however, this segment saw strong double-digit growth in AppDynamics and IoT software. The main bright spot was booming demand for its Webex video conferencing platform which in April was running at 3x February's capacity.
• Something that stood out to us on the last call was Cisco saying that the pandemic had caused a lot of customers to realize they have a lot of aged equipment. Many of those customers have said this is a wakeup call and the crisis has provided cover to talk to senior leadership about upgrading to more modernized infrastructure. We'll see if that panned out in Q4.
• In terms of how Cisco performs relative to consensus, it typically beats modestly on EPS in the $0.01-0.03 range with modest revenue upside. As such, the $0.08 beat in Q3 was unusually strong but that may have been caused by analysts being overly pessimistic due to the pandemic. CSCO has not missed on EPS or revs in the past five years, so if it did so, that would be notable. (PVIEW)