Cisco System’s Security Segment: Its Performance in Fiscal 4Q16


Aug. 19 2016, Published 2:53 p.m. ET

Revenue growth of 16% YoY

In fiscal 4Q16, Cisco (CSCO) continued to maintain significant YoY (year-over-year) growth of 16% in its network security business segment. Deferred revenue rose 29% YoY driven by Cisco’s ongoing shift from hardware to more software and subscription services. Revenues rose from $466 million in fiscal 4Q15 to $540 million in fiscal 4Q16.

Charles Robbins, Cisco’s chief executive officer, said, “Security is the number-one priority for every customer. As the global leader in networking, Cisco is uniquely positioned to deliver security at scale with leading-edge innovation, as we lead the transition to cloud-delivered security.”

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Cisco expands security business through acquisition

In fiscal 4Q16, Cisco expanded its offerings in the cloud-based security platform by acquiring CloudLock, a company that enables enterprises secure cloud applications. Cisco stated that it will add “significant features and functionality” to its security portfolio by focusing on innovation as well as inorganic growth through mergers and acquisitions.

The company has established a firm foothold in the security appliance market. Cisco’s AMP (advanced malware protection) solution has now been deployed by more than 17,000 customers throughout the world. In fiscal 4Q16, Cisco added 6,000 customers after the company launched its “full-featured next-generation” firewall in March 2016.

According to IDC (International Data Corporation), Cisco Systems continued to dominate the security appliance market in 1Q16 with a 17.4% share. Other top players in this space include Check Point Software Technologies (CHKP), Palo Alto Networks (PANW), Fortinet (FTNT), and Blue Coat, with shares of 13.8%, 12.4%, 10%, and 4.6%, respectively, at the end of 1Q16.

In 1Q16, Cisco’s revenue in this segment rose by 5.4% YoY to $429 million. Palo Alto Networks was the biggest gainer with a revenue increase of 40.9% YoY. It was followed by Fortinet and Check Point at 29.6% and 11.1%, respectively.


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