Cisco CEO praises 'record quarter' in security and Webex following revenue boost in Q3

Chuck Robbins also claims Cisco has ‘one of the largest software businesses in the industry’

Cisco recorded a seven per cent year-on-year increase in revenue in its Q3 results, which CEO Chuck Robbins said gives him an "enormous sense of optimism moving forward".

The vendor posted revenues of $12.3bn in Q3, up from $12bn in 2020, with product revenue up six per cent and service revenue up eight per cent.

It gave the company a net income of $2.9bn, up three per cent from Q3 last year which had one less week, with Robbins attributing the rise to an increase in "hybrid work, digital transformation, cloud and continued strong uptake of our subscription-based offerings".

But despite Robbins' positive outlook, Cisco's share price fell after the results emerged due to its earnings guidance falling behind Wall Street estimates.

"We had impressive momentum in Q3, which gives me a great sense of optimism going forward," Robbins said.

"These results reflect a return to a strong spending environment and an economic recovery that has gained momentum driven by vaccine rollouts and the easing of restrictions."

The increase in revenue was driven by several factors including a 10 per cent growth in product orders, which Robbins said was the highest since Q1 of 2012.

He also said the "aggressive" shift towards recurring revenue is paying off, with 81 per cent of the total $3.8bn software revenue recurring, which was up from 76 per cent in the last quarter.

Robbins credited the company for the "significant progress" in its software business and claimed Cisco now has "one of the largest software businesses in the industry with an annual run-rate well over $14 billion".

The company had a "record quarter" in security and in its Webex offering, he said, with the company surpassing $875m in revenue which included a 13 per cent jump in its security business.

Operating cash flow was $3.9 billion, down eight percent, while the company ended Q3 with total cash, cash equivalents and investments of $23.6bn, down $7bn sequentially, which Robbins said was "driven by $5.5 billion in payments for acquisitions, as well as $3bn in repayments of our long-term debt".

"We are partnering with our key suppliers, leveraging our volume purchasing and expending supply commitments as we address the supply chain challenges which we expect will continue." Robbins added.

Robbins also said he expects year-on-year revenue growth in Q4 to be between six and eight per cent.