Cisco’s CEO sees opportunities in hybrid cloud, hybrid work and edge computing
Networking giant Cisco late Wednesday reported second quarter results for the period ending January 29, 2022. Cisco reported second quarter revenue of $12.7 billion and earnings per share (EPS) of 84 cents, slightly higher than analyst projections. Cisco noted that its board of directors has authorized an additional $15 billion stock repurchase program, bringing the total up to $18 billion.
Chuck Robbins, Cisco chairman and CEO, told analysts that Cisco delivered 37% order growth in its enterprise business, the highest in more than 12 years.
“We believe the need for highly secure, seamless connectivity, hybrid cloud and hybrid work solutions, along with edge computing, will drive growth for Cisco,” said Robbins.
Cisco CFO Scott Herren said that the company’s zero-trust portfolio saw double-digit growth for the quarter.
“Our subscription portfolio continued to perform well, driven by cloud security and Zero Trust. Internet for the future was up 42%, driven in large part by the strength of our web scale customers,” said Herren.
The news was also rosy for the company’s webscale business, driven by brisk sales of Cisco’s 8000-series routers.
“Our order growth was up more than 70% year over year, which is over 100% growth on a trailing four-quarter basis,” said Robbins.
Semiconductor supply chain constraints remain a bottleneck for Cisco. Herren blamed the semiconductor shortage for a shortfall in Cisco’s reported software sales.
“I would expect you would see software growth and revenue growth growing faster,” Herren told analysts. “But right now, with our backlog so big, that may not happen for several quarters.”
Cisco sees customers spend focused on building out 5G, modernizing networks and securely connecting hybrid workers, said Robbins.
Hybrid work and hybrid cloud growth is driving demand
The rise of hybrid workers is creating a “massive” enterprise network architectural transformation that’s driving demand.
“So rearchitecting your entire network infrastructure to deal with distributed applications, distributed users, distributed data, a new security architecture to accommodate it…that creates traffic patterns that are not aligned with the architectures that our customers built over the last 15 years,” he explained.
“We continue to prioritize investments that will drive our long-term performance and capitalize on the mega-trends in the large growing markets, including cloud, full stack observability, 5G, 400-gig, WiFi 6 and security,” said Robbins.
Wall Street rumors recently suggested that Cisco wants big data analytics software maker Splunk and has made a $20 billion offer for the business. When asked, Robbins would not comment on Cisco’s current state of play with Splunk.
He said, “We base our decisions on, first and foremost, strategic fit; secondly, cultural fit; and equally as important, the financial and the valuation fit.”
