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What Drove Cisco’s Infrastructure Revenue in the Third Quarter?

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Infrastructure revenue rose 2% YoY in fiscal Q3

Cisco Systems (CSCO) managed to increase its Infrastructure Business segment by 2% YoY (year-over-year) in the third quarter to $7.2 billion. Infrastructure revenue accounts for over 57% of its total revenue. It is one of the heavyweights in Switching and Routing verticals and has the majority market share in these markets.

Cisco is losing market share to China’s (FXI) Huawei and is targeting growth in emerging markets (EEM) including India (INDA). However, Cisco remains a market leader in this space and is leading industry transformation towards intent-based networking across campus, data center, branch, and edge segments.

Cisco aims to simplify and manage networks for enterprises and offers end-to-end intent-based networking portfolio solutions delivering security and automation. Cisco continued to lead the enterprise infrastructure market in four of six segments.

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Strong adoption of Catalyst 9000

Cisco’s Catalyst 9000 continued to experience strong adoption and has seen the fastest ramp-up in the company’s history. In the third quarter, this product witnessed a high uptake in subscription offers. The Catalyst 9000 has over 5,800 customers, up from 3,100 in the second quarter.

Cisco CEO Chuck Robbins stated, “This is an excellent example of how we’ve begun to scale our enterprise networking business into a subscription model. We’ve also recently introduced additional intent-based networking innovations. These include new access solutions and routing software subscriptions, which expand our software-defined WAN capabilities onto any platform.”

Cisco has also extended its leadership in data center and cloud by providing secure and differentiated offerings such as the ACI SDN solution. There has been an increase in 100-GB deployments in cloud infrastructure, and Cisco is optimistic about future growth in data center switching and intent-based portfolio.

In the third quarter, Cisco announced new hybrid cloud workload management solutions with Application Centric Infrastructure (or ACI) multi-side management and flexible consumption models such as SaaS (software as a service) delivery for its titration platform.

Enterprises are now looking at Cisco’s unique architectural approach, which has led to strong demand for its complete platform (UCS) and hyper-converged offering (HyperFlex). Clients want to leverage Cisco’s expertise and benefit from the firm’s scalability and support for hybrid cloud strategies.

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