The shares of Cisco Systems, Inc. (NASDAQ:CSCO) climbed more than 7% to $24.45 per share after hours driven by its strong financial results for its fiscal third quarter and better outlook for the next quarter.

Third quarter financial performance

For the third quarter, Cisco Systems, Inc. (NASDAQ:CSCO) delivered $0.51 adjusted earnings per share on $11.5 billion revenue. Analysts polled by Thomson Reuters estimated for the company to post $0.48 adjusted earnings per share on $11.36 billion.

According to the largest manufacturer of computer-networking equipment, its gross margin during the three months period increased to 62.7% from 53.3% in the previous quarter. It is higher than the 61% to 62% guidance.

ZK Research analyst Zeus Kerravalla commented, “Seeing gross margin get back up above 62 percent is certainly good news for investors and should help alleviate some of the concern that their business is being commoditized.”

Cisco Systems, Inc. (NASDAQ:CSCO) reported a 7% increase in total product orders in the United States and 4% higher in northern Europe from last year.  Product orders in emerging markets dropped by 7%. The company said orders in Brazil and Russia fell by 27% and 28%, respectively. Orders for its enterprise and commercial products rose over 10%.

According to the company, its cash flows from operations for the third quarter were$3.2 billion, higher than the $2.9 billion recorded in the previous quarter and the $3.1 billion in the same period a year ago. Cisco Systems, Inc. (NASDAQ:CSCO) has $50.5 billion cash, cash equivalents and investments by the end of the quarter.

Fourth quarter outlook

For the fourth quarter, Cisco Systems, Inc. (NASDAQ:CSCO) forecasted that it will experience a decline in revenue of around 1% to 3% year-over-year, which is better compared with the 6% year-over-year decline estimated by analysts at UBS.

In a statement Cisco Chairman and CEO John Chambers said, In a statement, Cisco’s Chairman and CEO John Chambers said, “I’m pleased with our performance in Q3. Our financial results exceeded the guidance we provided last quarter as we demonstrated clear progress on returning to growth. The entire team is focused on moving Cisco forward aggressively and we remain confident in our long-term goal to be the #1 IT company.”

Cisco Systems, Inc. (NASDAQ:CSCO) has an active portfolio worth $2 billion with over 80 direct investments and limited-partner positions in more than 35 funds worldwide. Early this month, the company announced that it allocated $150 million for startups dedicated in Internet of Things (IoT) over the next two to three years.