Cisco returns to growth, says software shift is finally paying off

Chuck Robbins talks up software success as transition away from legacy business continues

Cisco's shift to a software approach is paying dividends, according to CEO Chuck Robbins, after the vendor returned to revenue growth in Q2.

For the three months ending 27 January, Cisco saw its revenue creep up three per cent year on year to $11.9bn.

Hardware sales still accounted for the lion's share of Cisco revenue, at $6.7bn, with revenue in the applications and security segments both up six per cent.

On an earnings call, transcribed by Seeking Alpha, Robbins said that Cisco is starting to reap the rewards of the shift in focus it has talked up over recent years.

Cisco has been shifting away from its traditional business since Robbins (pictured) took to the helm in 2015, and last quarter stopped breaking out specific numbers for its hardware business to increase the attention on its other businesses.

"We continued to drive momentum in our intent-based networking portfolio and saw strength across the business," Robbins said. "We made continued progress in shifting more of our business towards software and subscriptions.

"We are clearly seeing the results of the strategy we've articulated to you over the last ten quarters.

"We also increased the dividend and share repurchase authorisation, reinforcing the confidence we have in our future."

Cisco does not break out revenue figures for its software business as a whole, but said that 52 per cent of software revenue came from subscriptions.

Recurring revenue made up 33 per cent of total turnover, a year-on-year increase of two percentage points.

Cisco's share price rose over seven per cent in after-hours trading yesterday.