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Cisco Earnings Report: Fiscal Year 2017-Q3

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Cisco Earnings Report: Fiscal Year 2017-Q3
    

By: -
24 May 2017
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For the period ended April 29, 2017, Cisco reported revenues of $11.9 billion, down 1% from the same quarter a year earlier.  Recurring revenue (subscriptions) was 31% of total revenues, a sure sign of the company’s ongoing transformation of its business.  GAAP net income for the quarter was actually up 7% to $2.5 billion.  We should note that apples to apples comparisons are somewhat tricky here, since Q3/17 had 13 weeks of business activity compared with 14 weeks in Q3/16.  The company also reported, “Product revenue performance was led by Wireless and Security, which increased by 13% and 9%, respectively. Switching revenue increased by 2%. NGN Routing, Collaboration, Data Center, and Service Provider Video revenue decreased by 2%, 4%, 5%, and 30%, respectively.”

Readers of this blog are undoubtedly more interested in the Collaboration side of Cisco than in the others.   For Cisco, or course, the collaboration segment itself, which generates about $1B in quarterly revenues, has multiple components, including:

As can be seen, the different elements that make up the overall collaboration business have very different growth trajectories.  Web collaboration, positive annual growth this quarter, together with the video conferencing components (negative Y/Y growth) make up about half of the overall revenue total while contact center is a small-but-growing contributor.

Figure 1 Data provided by Cisco for company’s fiscal quarters. Source is SEC Edgar data base

Figure 2 Data provided by Cisco for company’s fiscal quarters. Source is SEC edgar data base

It’s not clear at this time where Spark sits in the financial reports. But the cloud service clearly should impact the company’s web conferencing, VoIP, communications manager, and video conferencing businesses. From the video conferencing perspective, it is tempting to interpret the numbers as demonstrating a shift away from traditional on-prem room endpoints and infrastructure towards personal endpoints (software) and cloud services. Tempting – yes; logical – yes, but far from a proven fact.