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Cisco Financial Results Q1-FY2018

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Cisco Financial Results Q1-FY2018
    

By: -
20 Nov 2017
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Cisco reported revenues of $12.1B for the quarter ending October 28, 2017, the company's first quarter for fiscal 2018.  On an annual basis, total revenues were down 2%.  Figures highlighted by the company included security revenues up 8%, although security is but 5% of the total revenue picture; services revenues of $3.05B, up 1% year over year to represent 32% of total revenues.

In previous blog entries I have highlighted the results of Cisco's collaboration business; starting with this quarter, however, Cisco has changed its reporting structure, a move announced in a press release last October.  Let me elaborate.

For the past several years, Cisco has reported its business in nine categories (see previous blog posts for details), with Collaboration generally generating about $1B each quarter:

1. Switching
2. NGN Routing
3. Collaboration

a. Contact Center
b. Unified Messaging (voicemail)
c. Communications Manager
d. IP phones
e. Analog station ports
f. Voice gateways
g. Web collaboration
h. Video conferencing systems and videophones
i. Video infrastructure

4. Data Center
5. Wireless
6. Security
7. Service Provider Video
8. Other Products
9. Services

Starting with this quarter, Cisco has revised its reporting categories into five segments:  Infrastructure Platforms (which includes switching and routing), Applications, Security, Other Products, and Services.  Recasting the past two years into the new reporting structure yields the following tables:

Note that Applications includes unified communications, conferencing, telepresense, IoT, Application Dynamics (cited by management as a growth driver), Jasper. Bottom line from the collaboration, UC, and video conferencing perspective: it won’t be easy to figure out what’s happening under the covers from the public financial statements. Figures for the past nine quarters certainly show ups and downs.

Bottom line from the overall Cisco perspective: It was not a game-changing quarter, even with the announced intention to acquire BroadSoft. But Cisco is making progress on multiple fronts and driving growth in recurring revenues, deferred product revenues, and software and subscription-related product revenues. On the earnings call, company management forecast a return to total revenue growth after a two-year hiatus, suggesting to me at least, steady profitability ahead. How do you spell “dividend yield” anyway?