Cisco Systems has revised its full-year revenue and profit projections, signaling a deceleration in demand for its networking equipment.
In recent years, Cisco has grappled with challenges in its supply chain alongside a slowdown in demand following the pandemic. This shift has spurred the company’s strategic pivot towards software offerings, particularly in cybersecurity, to diversify its portfolio.
Cisco announced in September its acquisition of cybersecurity firm Splunk for approximately $28 billion to expedite this diversification and tap into the burgeoning artificial intelligence wave.
Cisco attributed the revised forecast to a slowdown in new product orders during the first quarter, citing customer focus on the installation and implementation of products in their environments as the primary reason.
The company estimates that a significant volume of shipped product orders—spanning one to two quarters—remains pending implementation by customers. However, CFO Scott Herren expressed optimism, anticipating a rebound in order growth in the latter half of the year.
For the full year, Cisco now anticipates revenue between $53.8 billion and $55.0 billion, with adjusted per-share earnings projected in the range of $3.87 to $3.93. These figures mark a downward revision from the previous forecast of annual revenue ranging from $57.0 billion to $58.2 billion, with adjusted per-share earnings of $4.01 to $4.08.
Cisco’s latest projections diverge from the positive results reported by rivals Juniper Networks and Arista Networks last month, both of which showcased strong enterprise spending.
For the upcoming second quarter, Cisco foresees revenue ranging between $12.6 billion and $12.8 billion.
While acknowledging persistent macro challenges, company executives noted progress in addressing supply chain constraints, asserting that most hurdles are now in the rearview mirror. They highlighted a return to normalcy in shipment lead times and backlog levels.
Cisco, a global technology leader, unveiled its first-quarter results for the period ending October 28, 2023, marking a historic achievement in revenue and profitability. The company reported a first-quarter revenue of $14.7 billion, showcasing remarkable growth across multiple segments.
The Americas saw a substantial 14 percent growth, while EMEA remained flat, and APJC experienced a 3 percent decline.
Financial Performance Overview:
Networking: $8.822 billion (10 percent growth)
Security: $1.01 billion (4 percent growth)
Collaboration: $1.117 billion (3 percent growth)
Observability: $190 million (21 percent growth)
Total Product Revenue: $11.139 billion (9 percent growth)
Services: $3.529 billion (4 percent growth)
Total Revenue: $14.668 billion (8 percent growth)
Key Insights from Cisco Leadership:
Chuck Robbins, Chair and CEO of Cisco, expressed confidence in the company’s robust foundational strength and future growth prospects. He highlighted the role of AI, Security, Cloud, and Observability in driving these opportunities.
During Q1 FY 2024, Cisco closed several strategic acquisitions, including companies specializing in network performance monitoring, cloud-native mobile services, identity threat detection and response technology, as well as broadband network monitoring.