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Why Did Cisco’s Collaboration Revenues Fall in Fiscal 1Q17?

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Nov. 23 2016, Updated 12:38 a.m. ET

Revenues fell 3% YoY

Cisco’s (CSCO) Collaboration business posted a 3% revenue decline on a YoY (year-over-year) basis in fiscal 1Q17. Revenues in this segment fell from $1.11 billion in fiscal 1Q16 to $1.08 billion in fiscal 1Q17. The CEO of Cisco, Charles Robbins, stated, “The revenue decrease was driven by TelePresence and unified communications endpoint partially offset by strong growth of 10% in conferencing as we see more customers each quarter committing to WebEx. We saw good momentum again in the transition to subscriptions and SaaS offers with deferred revenue up 14%.”

Cisco’s Collaboration business helps individuals work together and achieve a common business purpose. It can be synchronous where everyone interacts in real time such as online meetings, instant messaging, or video conferencing like Skype (MSFT).

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What impacted revenue in fiscal 1Q17?

Cisco stated that its Communications segment plans to offer services and add capabilities in the IoT (Internet of Things) segment through acquisitions and partnerships. Cisco announced a strategic partnership with Salesforce (CRM) that will integrate Cisco’s cloud collaboration platform with the Lightning platform of the latter.

Another major alliance that Cisco announced in fiscal 1Q17 was with IBM (IBM). This alliance is expected to enhance the Collaboration experience of customers by integrating Cisco’s WebEx offerings with IBM’s cloud collaboration solutions.

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