Enterprise networking major Cisco said its revenue fell 6 percent to $13.8 billion during the first quarter that ended October 26, 2024.
Cisco revealed that its total revenue would have dropped 14 percent, excluding the contribution from Splunk which was acquired for $28 billion. The first-quarter result indicated that AI strategies of Cisco are not working well.
Cisco revenue from different verticals
Networking $6,753 million (down 23%)
Security $2,017 million (up 100%)
Collaboration $1,085 million (down 3%)
Observability $258 million (down 36%)
Services $3,727 million (up 6%)
AI focus of Cisco
Cisco has recorded over $300 million in AI-related orders for Q1, with projections to reach $1 billion in AI orders by the end of FY25.
Cisco did not reveal the specific contribution of its AI-capable solutions to its total revenue in the first-quarter.
Cisco’s revenue from Americas was down 9 percent to $8,252 million, EMEA down 2 percent to $3,588 million, and APJC up 1 percent to $2,001 million. This shows that AI solutions from Cisco are not generating enough demand in these key markets.
Cisco has introduced high-density servers purpose-built for GPU–intensive AI workloads and plug-and-play industry-specific AI PODs, making it easier for customers to deploy AI infrastructure.
Cisco says it has reported growth in its AI network and infrastructure capabilities for the first quarter of FY25, driven by high demand from major hyperscalers and enterprise clients preparing for advanced AI deployments.
In the AI training infrastructure sector, Cisco secured a major network design win with a hyperscaler, reinforcing its role in the development of high-performance back-end networks for AI training clusters. Key platforms supporting these advances include Cisco’s Series 8K, Silicon One, and Optical solutions.
In AI connectivity, Cisco witnessed double-digit growth in networking product orders in Q1, reflecting a trend among enterprises to upgrade their network infrastructure to support the demands of incoming AI applications.
Cisco’s connectivity solutions, including its robust Switching, Routing, Wireless, and Security platforms, are proving essential for clients bolstering network resiliency in anticipation of AI integration.
Cisco also highlighted continued growth in its AI inference solutions, which focus on enabling enterprise private AI clouds for application inferencing. With three quarters of consecutive double-digit order growth in Data Center Switching, Cisco is positioning itself as a key player in AI inference technology, with platforms such as Hyperfabric, Nexus Switching, AI PODs, and Cisco UCS supporting these advancements. As enterprises finalize their proof-of-concept AI applications, Cisco expects further opportunities in the next-generation AI deployment space.
Cisco revenue target
Cisco expects marginal increase in its annual revenue to $55.3 billion – $56.3 billion, compared with its earlier forecast of $55 billion – $56.2 billion. Cisco estimates revenue of $13.75 billion – $13.95 billion for the second quarter of fiscal 2025.
Chuck Robbins, chair and CEO of Cisco, said: “Our customers are investing in critical infrastructure to prepare for AI, and with the breadth of our portfolio, we are uniquely positioned to capitalize on this opportunity.”
Cisco’s product revenue performance reflected growth in Security up 100 percent and Observability up 36 percent. Networking was down 23 percent and Collaboration was down 3 percent. Excluding Splunk, Security and Observability grew 2 percent and 1 percent, respectively, in the first quarter of fiscal 2025.
Remaining Performance Obligations (RPO) were $40 billion, up 15 percent, with 51 percent of this amount to be recognized as revenue over the next 12 months. Product RPO were up 24 percent and services RPO were up 7 percent.
Deferred Revenue was $27.5 billion, up 7 percent in total, with deferred product revenue up 11 percent. Deferred services revenue was up 4 percent.
Cisco closed the acquisitions of DeepFactor, a cloud-native application security company, and Robust Intelligence, a AI security solutions company, in the first quarter of fiscal 2025.
Baburajan Kizhakedath
