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Inside Cisco’s Security Segment: Revenue Outlook for Fiscal 1Q18

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Nov. 9 2017, Updated 12:25 p.m. ET

Revenue rose 9% YoY in fiscal 2017

In fiscal 2017, Cisco Systems’ (CSCO) Security segment generated revenues of $2.2 billion—a rise of 9% YoY (year-over-year), compared with its revenues of $2 billion in fiscal 2016. Security revenues rose 13% YoY in fiscal 2016 and 12% YoY in fiscal 2015.

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Cisco’s share fell at the end of 2Q17

Market research firm IDC has estimated that worldwide security appliance market revenues rose 9.2% YoY (year-over-year) in 2Q17 to ~$3 billion, compared with $2.7 billion in 2Q16. Cisco Systems (CSCO) continues to lead the security market with a share of 15.9% at the end of 2Q17, down from 16.3% in 2Q16. Cisco’s revenues in 2Q17 only rose 6.9% YoY, which was lower than the overall industry growth.

Palo Alto Networks (PANW) and Fortinet (FTNT) saw a rise in market share to 14% and 10.6%, respectively. These two firms saw revenues rise significantly by 26.2% and 18.7%, respectively, for the quarter ended June 2017. Other major players include Check Point (CHKP) and Symantec (SYMC), with shares of 12.6% and 4.6%, respectively.

The US accounts for 41% of total revenues

According to IDC, the United States (SPY) accounted for 41% of the worldwide security appliance market, and revenues rose 9.2% YoY in this region. Asia-Pacific (excluding Japan) drove revenues in 2Q17, rising 21% YoY. The US and the EMEA (Europe, the Middle East, and Africa) region accounted for over 67% of the total security market.

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