How the Meraki Acquisition Benefits Cisco

Cisco Systems (CSCO) acquired Meraki for $1.2 billion in November 2012. Meraki initially provided solutions to control Wi-Fi networks through the cloud. Last year, Meraki expanded its services portfolio and entered the cloud communications market, which can help customers forge calls with data networks. Meraki’s client base has grown from 15,000 in 2012 to 140,000 in 2017 with more than 1.0 million active networks.

Meraki provides products and services in several business verticals, including security, switching, routing, and wireless. Meraki has bookings for more than $1.0 billion with an R&D (research and development) headcount of 250 employees. Cisco stated that Meraki’s R&D efficiency of 12.0x outpaces that of technology heavyweights such as Google (GOOG) (GOOGL) and Facebook (FB).

Cisco’s acquisition of Meraki has been one of the primary revenue growth drivers in the WLAN (wireless local area network) segment. In fiscal 3Q17, Cisco’s WLAN revenue rose 13.0% YoY (year-over-year) to $703.0 million. This growth was attributed to Meraki and the ramp-up of its 11 ac Wave 2 portfolio.

In the first nine months of fiscal 2017, Cisco’s wireless segment’s revenue rose 5.0% YoY to $2.0 billion. It accounts for 5.5% of the company’s total revenue.