Cisco posts solid Q3 as it grows software business
Cisco published its third quarter financial results on Wednesday, coming in just ahead of market expectations.
Non-GAAP net income came to $3.2 billion or earnings of 66 cents per share. The networking giant posted revenue of $12.5 billion, up 4 percent year over year.
Wall Street was looking for earnings of 65 cents per share on revenue of $12.44 billion.
"We are executing well against our strategy, our innovation pipeline has never been stronger, and we continue to make great progress in transforming towards more software and subscriptions," CEO Chuck Robbins said in a statement.
Recurring revenue was 32 percent of total revenue, up 2 points year-over-year.
By segment, Infrastructure Platforms revenue grew by 2 percent to bring in $7.16 billion. Applications revenue increased 19 percent to reach $1.3 billion, and Security revenue grew 11 percent to $583 million. The "other" category fell 6 percent to $249 million. Services, meanwhile, grew 3 percent to bring in $3.16 billion in revenue.
In the Infrastructure Platforms segment, Robbins touted strong adoption of the the Catalyst 9000 series, a family of enterprise switches. The Catalyst 9000 now has over 5,800 customers, up from 3,100 last quarter, Robbins noted on a conference call Wednesday.
"This is an excellent example of how we've begun to scale our Enterprise Networking business into a subscription model," he said.
Robbins also said Cisco is growing its data center and cloud business, pointing to relatively new offerings like Cisco's ACI multisite management for multi-cloud and hybrid cloud workload management.
In the Security segment, Robbins noted that Cisco is leveraging AI and machine learning to reduce time to detection and remediation.
Within Applications, Cisco has updated its collaboration portfolio, converging the Cisco Spark and WebEx platforms, combined with new WebEx meetings and WebEx teams applications. Cisco also added more AI capabilities to Applications with the $270 million acquisition of Accompany, a platform designed to improve meeting and team experiences.
For the fourth quarter, Cisco projects non-GAAP earnings between 68 cents per share and 70 cents per share with revenue growth of 4 percent to 6 percent year-over-year.