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

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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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