Cisco beats earnings and revenue estimates
Cisco Systems (CSCO) reported its fiscal 2Q18 (quarter ended January 27, 2018) results on February 14. The company topped both earnings and revenue estimates, and its stock rose 6% that day in after-hours trading.
Between 2Q17 and 2Q18, the company’s revenue grew 3% to $11.9 billion, whereas analysts were expecting the company to generate revenue of $11.8 billion. The quarter marked the company’s first with growth after eight consecutive quarters of YoY (year-over-year) decline. The company’s stock price has surged ~60% over the last 24 months despite the declining revenue. Cisco reported EPS (earnings per share) of $0.63, while analysts were expecting EPS of $0.59.
Cisco is trying to diversify its businesses
Cisco has been trying to diversify its revenue away from networking equipment. However, the company still generated 56% of its revenue from its infrastructure platforms segment, which includes its core switch and router business, as of fiscal 2Q18. The segment grew 2% YoY, generating $6.7 billion in revenue in fiscal 2Q18.
Cisco has made a number of acquisitions in the last couple of years to fuel growth, including that of AppDynamics. In fiscal 2Q18, Cisco’s application revenue grew 6% to $1.2 billion. In fiscal 2Q18, Cisco’s application and security businesses represented 15% of the company’s revenue, compared with 12% in 2Q15.