Cisco's shares slid by over two per cent in after-hours trading last night after it lifted the veil on its Q4 and full-year numbers. Here are the four top takeaways:
Cisco hasn't grown for seven quarters
IBM hasn't grown for 21 quarters, but Cisco is doing a good job of chasing down this dubious record set by its fellow legacy tech giant.
The two vendors' efforts to reshape their businesses for the cloud and software-defined era have taken a toll on their top lines, with Cisco registering its seventh straight quarterly fall in sales in its Q4.
CEO Chuck Robbins' assertion that the latest results "demonstrate solid execution against our strategic priorities" doesn't alter the fact that its revenues fell four per cent year on year to $12.1bn (£9.4bn) in the three months to 29 July.
This is despite Cisco acquiring three firms since the start of 2017 and announcing its intention to acquire two more, in the form of software-defined WAN specialist Viptela and security vendor Observable Networks.
Cisco hasn't grown for nearly two years, but with the networking giant forecasting that revenue will slump by a further one to three per cent in its fiscal 2018, that downward trend shows no sign of abating.
Cisco's quest for recurring revenues is intensifying
Shifting from one-off product sales to a recurring revenue model lies at the heart of Cisco's transition under CEO Robbins, and the vendor claimed it had made further progress on this score in its Q4.
For the first time, over $1bn - or 11 per cent - of Cisco's product revenue came from recurring offers during the quarter, a 40 per cent leap year on year, Robbins said on an earnings call. This means that 31 per cent of its total sales are recurring, with revenue from subscriptions now making up 51 per cent of its software revenue.
The rationale behind Cisco's quest for recurring revenues was laid bare in the results as sales of the switching and routing portfolios on which it built its business both declined nine per cent during the quarter.
Robbins held up Cisco's recent 'Network Intuitive' launch as a prime example of how the vendor is moving its core business to a recurring revenue model. He claimed that the reception to the launch has been "incredibly positive", revealing that 200 customers ordered the new Catalyst 9000 switches that are at the heart of the new platform in the four weeks following its launch.
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