Cisco's Q1 Beats Wall Street Expectations

Scott Ferguson
11/15/2017
50%
50%

After several quarters of less-than-stellar results, Cisco managed to beat analysts' expectations with a better-than-expected report for its first quarter of fiscal 2018.

For the quarter that ended October 28, Cisco reported GAAP revenue of $12.1 billion, a 2% year-over-year decline. However, GAAP net income increased 3% year-over-year from $2.3 billion to $2.4 billion. Earnings per share stood at $0.48, a 4% increase.

Non-GAAP net income stood at $3 billion, a 2% year-over-year decline, and non-GAAP earnings per share came in at $0.61, according to the company's first quarter financial report released November 15.

Cisco Systems Inc. (Nasdaq: CSCO) managed to beat Wall Street expectation by a penny, giving the company something to crow about and pushing its stock up about 4% in after-hours trading. But Wednesday's report marked the eighth consecutive quarter in which Cisco's year-over-year revenues declined.

Google's Diane Greene and Cisco's Chuck Robbins discuss their recent partnership
(Source: ECN)
Google's Diane Greene and Cisco's Chuck Robbins discuss their recent partnership
(Source: ECN)

"Our results in Q1 demonstrate the continued progress we're making on our strategy," CEO Chuck Robbins wrote in a statement. "The network has never been more critical to business success. Cisco is delivering more insights and intelligence as we help our customers build highly secure, intelligent platforms for digital business."

Before Wednesday's announcement, Wall Street analysts were calling for $0.60 in earnings per share and $12.1 billion in revenue, according to Thompson Reuters. During the same quarter a year ago, Cisco reported earnings per share of $0.61 on revenue of $12.4 billion.

During these last two years of financial hardship, Cisco has been looking to transform itself from a company that dominated the market for networking gear and hardware to one that is focused on cloud computing, machine learning, intuitive networks, application performance, the Internet of Things and security. (See Cisco's ACI Could Close the Cloud, SDN Gap.)

During his call with analysts, Robbins noted that the company's recent partnership with Google (Nasdaq: GOOG) is the latest example of the company's new focus on these priorities. (See Google Teams With Cisco for Hybrid Cloud.)

In its first quarter financial report, Cisco also reorganized its product revenues into four categories: Infrastructure Platforms, Applications, Security and Other Products. These reflect the company's shift to report revenues from recurring and subscription models.


Keep up with the latest enterprise cloud news and insights. Sign up for the weekly Enterprise Cloud News newsletter.


Under Infrastructure, Cisco includes its network intuitive platform, which includes its Catalyst 9000 switches. With Applications, the company includes revenue from different software ventures, including its AppDynamics acquisition. (See AppDynamics Complementing Cisco's Intent-Based Networking Vision.)

For the quarter, Infrastructure Platforms had revenues of $6.97 billion, a 4% decline. In his report, Robbins noted that the network intuitive platform now has 1,100 customers. During the last report, the number of customer numbered about 200. (See Cisco Revenue Decline Continues Into Q4.)

The Applications category posted revenue of $1.2 billion, a 6% increase. The Security division had revenues of $585 million, an 8% increase, while the Other Products category declined 16% year-over-year with revenue of $296 million.

Services, a category separate from the four product groupings, had revenues of $3.1 billion, a 1% year-over-year increase.

During Wednesday's presentation, Robbins noted that many of the hyper-scale and web-scale companies are continuing to revamp their infrastructures and Cisco is trying to work with these types of customers to meet their needs. He noted that deals with Google and Microsoft reflect that outlook. (See Cisco & Microsoft Are Collaborating: Arista Should Be Worried.)

"They have made major architectural decisions and have franchises, we're trying to re-enter, but if you look at the announcements we have made with Microsoft a couple of quarters ago or the announcement with Google... we continue to make progress on what we talked about over the last year-and-a-half, which is trying to go deeper," Robbins said, adding that edge computing is going to mission critical for these customers going forward.

Looking ahead over the next three months, Cisco is calling for a revenue increase of 1% to 3% year-over-year and earnings per share of $0.46 to $0.51 on a GAAP basis, and $0.58 to $0.60 on a non-GAAP basis.

Related posts:

— Scott Ferguson, Editor, Enterprise Cloud News. Follow him on Twitter @sferguson_LR.

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
11/24/2017 | 1:18:41 PM
Re: Turning the ship
Don't know how much of this is Cisco and how much is the entire market (especially tech) going up. A rising tide lifts all boats. When market corrects, it will be interesting to see if Cisco stays with the market or stays ahead of the correction.
maryam@impact
100%
0%
[email protected],
User Rank: Light Sabre
11/17/2017 | 1:48:45 PM
Turning the ship
Cisco finally appears to be turning the ship! Many had written off Cisco when it couldn't adapt to the new technology infrastructure and their stock tanked. It's good to see they didn't let that stop them from retoolinging and reinventing themselves lets hope they can continue to carve out space in the market that they can lead in.
More Blogs from Scott Ferguson

For the last several years, CIOs and IT professionals have been wrestling with two specific issues as they work toward a cloud-centric future: Agile IT and the rush toward digital transformation. While enterprises want to keep innovating, finding a starting point and knowing which projects to tackle first remain a major obstacle.

To get a better handle on Agile IT and digital transformation, Light Reading Managing Editor Scott Ferguson recently spoke to two experts in these fields: Dan Kearnan, senior director of marketing for cloud at SAP, and Roy Illsley, a distinguished analyst with Ovum.

From its roots in industrial farm machinery and other equipment, John Deere has always looked for a technological edge. About 20 years ago, it was GPS and then 4G LTE. Now it's turning its attention to AI, machine learning and IoT.
Artificial intelligence and automation will become more integral to the enterprise, and 90% of all apps will have integrated AI capabilities by 2020, according to Oracle CEO Mark Hurd.
IBM is now offering access to Nvidia's Tesla V100 GPUs through its cloud offerings to help accelerate AI, HPC and other high-throughput workloads.
CIO Rhonda Gass is spearheading an effort to bring more automation and IoT to the factories making Stanley Black & Decker tools and other equipment.
Featured Video
Flash Poll
Upcoming Live Events
September 17-19, 2019, Dallas, Texas
October 1, 2019, New Orleans, Louisiana
October 2-22, 2019, Los Angeles, CA
October 10, 2019, New York, New York
November 5, 2019, London, England
November 7, 2019, London, UK
December 3-5, 2019, Vienna, Austria
December 3, 2019, New York, New York
All Upcoming Live Events
Partner Perspectives - content from our sponsors
Transform Beyond Borders to Lead the Innovation
By Ben Zhou, CEO, Whale Cloud
Reject Limits. Build the Future.
By David Wang, Huawei
China Telecom & Huawei Jointly Complete the World's First End-to-End 5G SA Voice & Video Call
By Jay Liu, Senior Marketing Manager, Cloud Core Product Line, Huawei Technologies
All Partner Perspectives