Cisco Systems reported its fourth consecutive quarter of revenue decline, with quarterly earnings surpassing expectations but revenues down by 6% year-over-year. Cisco’s adjusted earnings per share reached 91 cents, above analysts’ forecast of 87 cents, while revenue came in at $13.84 billion, just over the expected $13.77 billion. Despite beating estimates, Cisco’s stock fell by 2.5% in after-hours trading.
The revenue drop was most pronounced in networking, Cisco’s largest segment, which declined by 23% to $6.75 billion. In contrast, security revenue doubled to $2.02 billion, outpacing the $1.93 billion forecasted, while collaboration revenue was slightly below projections at $1.09 billion. CEO Chuck Robbins attributed growth in security to strong AI-driven demand from large-scale clients, noting over $300 million in AI infrastructure orders from prominent customers. Robbins also projected more significant enterprise AI deployments by 2025, as companies like Cisco and partners such as Dell and HPE focus on expanding AI-ready data center hardware.
While Cisco raised its full-year guidance, predicting $3.60 to $3.66 in adjusted earnings per share and revenue of $55.3 billion to $56.3 billion, challenges remain. U.S. government spending constraints have delayed certain deals, though Finance Chief Scott Herren expressed optimism for future approvals as the government’s budget solidifies.
Cisco’s stock has gained 17% year-to-date, trailing the S&P 500’s 26% rise. Recent acquisitions, including cybersecurity firms DeepFactor and Robust Intelligence, and new AI partnerships position Cisco for a broader push in high-growth areas as it seeks to counterbalance ongoing revenue declines in core networking.
