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Quarterly Cisco Earnings Release: Software Subscription Up 20%

Security revenue was flat year-over-year, but CEO Chuck Robbins pointed to a big customer the provider recently landed.

James Anderson

August 16, 2023

4 Min Read
Cisco earnings release
Tendo/Shutterstock

The latest Cisco earnings release shows double-digit growth in software and subscription revenue.

Cisco on Wednesday shared results from the fourth quarter of its fiscal year, which ended July 29. The IT giant reported a record setting $15.2 billion revenue in its latest quarter – a year-over-year improvement of 11% – with profit of $4 billion.

The latest numbers show that Cisco is making progress toward more software-based, recurring revenue business. Software revenue increased 17% over the quarter a year prior, and software subscription revenue grew 20%. CEO Chuck Robbins added that Cisco saw the most enterprise software agreements in its history.

In the meantime, Cisco reported a total annualized recurring revenue of $24.3 billion, representing a 5% growth.

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“This past year was a milestone year for Cisco with record performance in both the full year and Q4,” Robbins said. “We are seeing solid customer demand, gaining market share, and innovating in key areas like AI, security, and cloud. This momentum gives us confidence in our ability to capture the many opportunities ahead.”

Cisco Earnings Release by Segment

Overall product revenue increased grew 20%, while services went up 4%.

Cisco’s networking business was the big winner with growth of 33%, raking in $8.1 billion. Next came its much smaller optimized application experiences segment revenue ($214 million), which grew grew 15%.

The security segment did not change quarter over quarter, although it grew 4% for the entire year. Robbins did note, however, that Cisco landed a cybersecurity order in the tens of millions of dollars from a Fortune 10 company in its fourth quarter.

Cisco’s collaboration practice declined 12% in revenue for the quarter and 9% for the year; however, cloud contact center is growing in a big way for the provider. Robbins pointed to “triple-digit” growth in such orders.

Wireless saw double-digit growth, according to Cisco executives.

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Logicalis’ Brandon Harris

That lines up with what Cisco channel partner Logicalis is seeing. Brandon Harris, LogicalisUS vice president of hybrid data center, said his company sees big opportunities in private wireless and private 5G networks. Harris said customers in multiple verticals, including mining, education and retail, have reached out to express their interest in using private 5G to connect their workers.

“Being one of one of the few partners that has been selected to initially take that to market with Cisco gives us … an early access to that technology and early access to taking that to market,” Harris told Channel Futures. “Private 5G, while it’s still somewhat in its infancy, it’s a huge opportunity for us, and we’re seeing a ton of traction in that space.”

The Cisco earnings release comes weeks after the company issued a series of layoffs in conjunction with the restructuring plan it announced last year.

Partner Perspective: Logicalis

Brandon Harris holds responsibility for Logicalis‘ U.S. relationship with Cisco. He said Logicalis has seen three “pretty solid” quarters with Cisco in the last year.

“We had a great Q4 with Cisco. We saw some some good growth in Q4, and that’s after we’ve had two years of pretty significant growth with Cisco,” Harris told Channel Futures. “To continue to see growth for three years in a row is pretty positive overall for our relationship.”

Harris said Logicalis sees Cisco’s increasingly layering software into its portfolio, including with SASE (secure access service edge) and ACI (application centric infrastructure) and Intersight. Moreover, as Cisco is making more software offerings available, Logicalis is moving to provide licenses in more of consumption model, Harris said.

“It allows us to not only sell the enterprise agreement but actually help the customer adopt the enterprise agreement, adopt those licenses and make sure they’re using those licenses,” Harris said. “Every time we identify an opportunity for them to consume more licenses, that that drives more professional services opportunity for us. So I think that’s one element that’s really positive for us.”

Logicalis said has tapped into an existing foundation to expand its lifecycle capabilities for customers. For one, the partner has run an MSP business for years and historically engaged with the Cisco Smart Net technical support service. It also several years ago established a customer experience team, which in recent years added licensing specialists run the enterprise agreements and licensing.

“To some degree, the investment in resources hasn’t been that big of a lift. Probably the biggest investment is just the time to define the process, teach the process and those kinds of things,” he said.

Logicalis last week announced that it earned renewal of its Cisco Advanced CX certification. The partner in 2020 achieved the specialization, which denotes a high level of support it provides to end users across the technology life cycle.

WG2 Acquisition

Cisco last week announced its intention to buy mobile services platform provider Working Group Two for $150 million.

The acquiree, which spun out of a Norwegian telco several years ago, runs its AWS-based platform over the top of the communications services provider’s radio network to help them configure their products.

Want to contact the author directly about this story? Have ideas for a follow-up article? Email James Anderson or connect with him on LinkedIn.

 

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About the Author(s)

James Anderson

Senior News Editor, Channel Futures

James Anderson is a news editor for Channel Futures. He interned with Informa while working toward his degree in journalism from Arizona State University, then joined the company after graduating. He writes about SD-WAN, telecom and cablecos, technology services distributors and carriers. He has served as a moderator for multiple panels at Channel Partners events.

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