Can Cisco’s Security Business Keep Growing in Fiscal 3Q17?



Major players in the security space

According to IDC, tech (QQQ) heavyweight Cisco Systems (CSCO) continues to dominate the security appliance market with a 13.7% share. Other top players in this space include Check Point Software Technologies (CHKP), Palo Alto Networks (PANW), Fortinet (FTNT), and Huawei, with shares of 12.3%, 11.1%, 9.5%, and 4.7%, respectively, as of 4Q16.

Network security consists of measures adopted to prevent and monitor unauthorized access and the misuse of computer networks. It involves authorization of access to data in a network that’s controlled by a network administrator.

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Cisco’s revenue growth in fiscal 2Q17

In fiscal 2Q17, Cisco maintained a significant YoY (year-over-year) rise of 14% in its Network Security Business segment. The business saw double-digit growth for the fifth consecutive quarter. Its deferred revenue rose 45% YoY, driven by Cisco’s ongoing shift from hardware-based to software- and subscription-based services. Its revenue rose from $463 million in fiscal 2Q16 to $528 million in fiscal 2Q17. Cisco’s Security business saw double-digit growth for the fifth consecutive quarter in 2Q17.

Cisco added over 5,500 next-generation firewall customers in fiscal 2Q17, bringing its total customer base to 67,500.

Why cyber security is growing in importance

Cisco’s Cybersecurity Report states that revenue for more than one-third of the companies that experienced a security breach fell 20%. More than 90% of firms are improving threat detection technology for use after cyberattacks.

According to the report, 22% of organizations with a security breach lost customers, and 40% of these firms lost over 20% of their customers. However, 29% of companies with a security breach lost revenue, and 38% of these firms lost over 20% of revenue.


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