Feb 14, 2024

1. Cisco has adjusted its outlook for the latter half of the year, reflecting a prudent stance due to a challenging macroeconomic climate, the digestion of large inventories by customers, and persistent softness in the Service Provider segment.
2. The company is maintaining a strict discipline with an unwavering focus on operational leverage, prudent capital allocation, and expense management, despite external pressures.
3. With a portfolio that is becoming increasingly robust, Cisco is optimistic about its long-term strategy, committing to driving substantial value for shareholders and delivering cutting-edge innovations to customers.

Financial Highlights:

• Q2 revenue stood at $12.8 billion, a 6% decrease year-over-year, yet at the higher end of the forecasted range.
• Non-GAAP net income was reported at $3.5 billion, a slight decrease of 3%.
• Non-GAAP earnings per share (EPS) exceeded expectations at $0.87, down only 1%.

Revenue Breakdown:

• Product revenue saw a decrease of 9% to $9.2 billion.
• Service revenue bucked the trend, increasing by 4% to $3.6 billion.
• The Networking segment experienced a 12% contraction, particularly in Switching, Wireless, and Routed Optical Networking, mainly due to weaker demand in enterprise, service provider, and cloud markets.
• The Security sector showed resilience, with a 3% increase bolstered by significant double-digit growth in Zero Trust offerings.
• Collaboration revenue also increased by 3%, propelled by Collaboration Devices and Calling, with some offset from a decline in meeting-related revenues.
• The Observability sector enjoyed a notable surge of 16%, driven by robust performance throughout the portfolio, especially with ThousandEyes network services.

Cisco’s earnings call emphasized a cautious yet disciplined approach amidst a dynamic global environment, with strategic investments poised to support the company’s commitment to long-term growth and innovation.