The company earned 63 cents per share per share on a non-GAAP basis excluding stock option expenses, versus Wall Street expectations of 59 cents per share, according to FactSet. Revenues of $11.9 billion were slightly ahead of consensus forecasts of $11.8 billion.
Shares gained 5.3% to $44.30 after the market close.
On the earnings call with investors, CEO Chuck Robbins and other executives are expected to discuss Cisco's gain from the Tax Cuts and Jobs Act, the performance of the the Catalyst 9000 Router and how the company's ongoing transition away from hardware to software and services is progressing. Cisco's recurring revenue made up 33% of total sales in the quarter, an increase of 2 percentage points from the prior year and 1 percentage point from the previous quarter.
Cisco had $73.7 billion in cash on its books at the end of the quarter. More than $71 billion of the cash was overseas, and would be taxed at a lower rate under the new tax regime.
In its release, Cisco said its directors approved a $25 billion boost in buybacks. UBS analyst Steven Milunovich estimates that Cisco could retire 20% of its float if it spent 75% of its offshore cash on share repurchases.
The performance of Cisco's Catalyst 9000 Router, which is sold with multi-year software licenses, is another hot topic.
The Catalyst 9000 has positive implications for other Cisco products, KeyBanc Capital Markets analyst Alex Kurtz noted in an earnings preview.
Sentiment is growing that the Catalyst 9000 could prompt new investment in other network products, a KeyBanc survey showed. Just 14% of respondents expected the new router to refresh spending on other products in the third calendar quarter. By the end of the year, 33% saw a broader revival of spending on related products.
The newly-closed $1.9 billion purchase of cloud communications outfit BroadSoft Inc. will add to software revenues. Cisco completed the deal in early February, so the BroadSoft numbers won't contribute to the second fiscal-quarter results. The new acquisition will figure into guidance, however.