Cisco Sees Strong AI Momentum, Expects Over $1 Billion in AI Orders for Fiscal 2025

Cisco Systems Analysts Raise Forecasts On 'Meaningful Traction' Across 3 AI Investments - Cisco Systems (NASDAQ:CSCO)

The company raised its FY25 revenue guidance by $200M at the midpoint and EPS guidance to $3.60-$3.66. Shares of Cisco Systems Inc CSCO declined in early trading on Thursday, even after the company reported upbeat fiscal first-quarter earnings. The company reported its results amid an exciting earnings season. Here are some key analyst takeaways. Goldman Sachs analyst Michael Ng maintained a Neutral, while raising the price target higher from $51 to $56. Piper Sandler analyst James Fish reiterated a Neutral, while lifting the price target from $52 to $57. Morgan Stanley analyst Meta Marshall reaffirmed an Overweight rating, while raising the price target from $58 to $62. Check out other analyst stock ratings. Goldman Sachs: Cisco Systemsreported its fiscal first-quarter earnings at 91 cents per share, higher than consensus of 87 cents per share, with the beat being driven by better-than-expected gross margins and in-line revenue of $13.8 billion, Ng said in a note. Order growth ex-Splunk accelerated to 9% year-on-year, with 17% growth in Enterprise and 22% in Service Provider & Cloud, he added. "Webscale, which is a subset within Service Provider & Cloud, was a bright spot with orders growing triple digits," including more than $300 million of AI orders, the analyst wrote. The AI momentum puts Cisco Systems "well on track" to exceed its fiscal 2025 target of $1 billion in AI orders, he further stated. Piper Sandler: Cisco Systems posted total revenues of $13.84 billion, which represents a 6% year-on-year decline but came in higher than expectations by around 1%, Fish said. "The upside again came via Product, though primarily was due to ~ $20M higher Splunk contribution," he further wrote. Management raised their annual revenue guidance by $200 million at the midpoint, "given the demand environment, but more likely the upside of recurring Splunk revenue," the analyst stated. This led Cisco Systems to raise its earnings guidance to $3.60-$3.66 per share, he added. Morgan Stanley: Cisco Systems reported higher-than-expected quarterly results, largely due to Splunk's outperformance, Marshall said. "Upending on networking is improving coming out of inventory digestion," he added. The company benefited from "meaningful traction" across three AI investments, the first being more than $300 million in AI orders, the analyst stated. Second was double digit growth in networking orders due to improving connectivity ahead of AI and the third was "in terms of data center modernization for enterprises ahead of AI investments," he further wrote. Price Action: Shares of Cisco Systems had declined by 1.30% to $58.41 at the time of publication on Thursday. Read More: Cisco Earnings On Deck As AI, Cybersecurity Drive Growth Potential Image: Shutterstock Market News and Data brought to you by Benzinga APIs

Cisco Systems Beats Estimates Despite Lower 1Q Revenue, Profit -- Update

Cisco Systems posted lower revenue and profit in its fiscal first quarter, but results beat analyst estimates, boosted by investments to support artificial intelligence. The networking-equipment company on Wednesday said webscale customers spent over $300 million on infrastructure orders to support AI, prompting the company to back its view that it would exceed $1 billion of AI orders in fiscal 2025. "Our AI pipeline continues to be strong," Chief Executive Chuck Robbins said. These gains contributed to a fiscal second-quarter outlook that beat analyst estimates and a slight increase to the company's fiscal-year guidance. They were, however, tempered by charges relating to the company's restructuring plan. In August, Cisco said it would cut 7% of its global workforce, or about 6,000 jobs, citing a need to cut costs and invest in growth areas, such as AI, the cloud and cybersecurity. Under this restructuring plan, the company expects to pay up to $1 billion in severance and other costs. The recent quarter was hurt by $665 million in restructuring and other charges, up from $123 million last year. Future quarters are likely to contain more restructuring-related costs. Shares fall 2.5%, to $57.75, in after-hours trading. In its fiscal first quarter, Cisco reported a profit of $2.71 billion, or 68 cents a share, compared with $3.64 billion, or 89 cents a share, in the same quarter a year earlier. On an adjusted basis, the company posted a profit of 91 cents a share, beating the 87 cents a share that analysts surveyed by FactSet expected. Revenue fell 5.6%, to $13.84 billion, but came in ahead of the $13.78 billion that analysts were looking for, according to FactSet. Networking sales fell 23%, to $6.75 billion, while collaboration sales slid 1%, to $1.09 billion. These losses were slightly offset by the company's security unit, which doubled its revenue. For its fiscal second quarter, Cisco forecast revenue between $13.75 billion and $13.95 billion, as well as adjusted per-share earnings between 89 cents and 91 cents. Analysts surveyed by FactSet are looking for revenue of $13.77 billion and adjusted earnings of 87 cents a share. For fiscal 2025, the company slightly increased its revenue outlook to between $55.3 billion and $56.3 billion from between $55 billion and $56.2 billion. It now expects adjusted per-share earnings between $3.60 and $3.66, up from between $3.52 and $3.58. Wall Street is expecting revenue of $55.83 billion and adjusted earnings of $3.57 a share.

Cisco delivers a solid earnings beat, but revenue declines again - SiliconANGLE

Cisco delivers a solid earnings beat, but revenue declines again Although it reported solid first quarter financial results that came in ahead of expectations and raised its fiscal 2025 full year revenue outlook, Cisco Systems Inc. couldn't prevent a fourth successive quarter of declining revenue, and its stock was trading lower after hours. The networking giant reported earnings before certain costs such as stock compensation of 91 cents per share, coming in ahead of Wall Street's analyst consensus estimate of 87 cents. Revenue came to $13.84 billion, down 6% from a year earlier, but above the analysts' target of $13.77 billion. The lower revenue had an impact on Cisco's bottom line, with net income falling from $3.64 billion one year earlier to $2.71 billion at the end of the quarter. Cisco said its networking business was the main reason for the decline. Revenue there declined 23% from the year-ago quarter to just $6.75 billion, just below the Street's consensus of $6.8 billion. The company also reported security revenue of $2.02 billion, up 50% and comfortably ahead of the Street's consensus of $1.93 billion, while sales from its collaboration software and tools came to $1.09 billion, just below the $1.04 billion analyst target. Elsewhere, revenue from services rose 6% to $3.72 billion, while observability sales - a small but fast growing segment - came to $258 million, up 36% from a year ago. In a conference call, Cisco Chief Executive Chuck Robbins (pictured) said the company saw more than $300 million in revenue from orders for artificial intelligence infrastructure made by "large-scale clients". Similarly, Cisco's rivals Dell Technologies Inc. and Hewlett-Packard Enterprise Co. have also placed a lot of emphasis on sales of AI-related hardware. "We have earned more design wins and remain confident that we will exceed our target of $1 billion of AI orders this fiscal year from web-scale customers," Robbins told analysts on the call. In recent months, Cisco has unveiled new data center hardware powered by Nvidia Corp.'s graphics processing units, which are the most popular processors for AI workloads, Robbins added. He promised that the company will start to support other kinds of GPUs in future, as the market demands, such as the new MI325X accelerator announced by Nvidia's main rival, Advanced Micro Devices Inc. Better, he added that the company is only just starting to see the fruits of its AI investments. "That partnership [with Nvidia] is still going fine, and it's still early," Robbins added. "I think 2025 is when we'll start to see enterprise's real deployment of some of these technologies." At present, most enterprises are still scrambling to upgrade their data center infrastructures to prepare for more widespread deployment of AI-powered apps, Robbins told analysts. Cisco Chief Financial Officer Scott Herren spoke of certain deals with U.S. government agencies that were delayed rather than canceled. According to him, this is due to the passing of the recent Fiscal Responsibility Act, which has curtailed government spending in the information technology sector. However, that's likely to change in the wake of the recent election results. "It looks like the Republicans will carry both houses of Congress and the White House, and so I would expect to get a budget in place relatively soon," Herren said. During the quarter, Cisco announced the acquisitions of several startups. The most significant were the AI-focused security company Robust Intelligence Inc., which sells tools for protecting large language models and the data they use, and that of a second security firm called DeepFactor Inc., which provides container security and secure access tools. The company also launched new Wi-Fi 7 solutions during the quarter, and introduced a series of AI agents for its Webex collaboration platform to help workers increase productivity by automating a range of call center tasks. Looking to the next quarter, Cisco said it's anticipating earnings of 89 cents to 91 cents per share on revenue of between $13.75 billion and $13.95 billion. Both numbers are just above the Street's targets, with analysts calling for earnings of 87 cents on sales of $13.8 billion. For the full year, Cisco said it's lifting its earnings guidance to a range of $3.60 to $3.66, up from an earlier range of $3.52 to $3.58 per share. In terms of revenue, it's now looking at sales of $55.3 billion to $56.3 billion, up from its prior forecast of $55 billion to $56.2 billion. The new guidance suggests a return to growth, with revenue expected to increase by around 3% year-over-year. The new targets are both ahead of the Street's forecasts, with analysts modeling full-year earnings of $3.58 per share on sales of $55.89 billion. Despite the positive numbers, investors appeared disappointed that the company didn't do better. Cisco's stock was down just over 2% in extended trading, though it's still up 17% in the year to date.

Cisco CEO: Tech Giant Anticipates $1B in AI Orders In Latest Fiscal Year

'Partners around the world are anticipating a transformative wave of AI technology demand driven by infrastructure, cyber security and customer experience, which they expect to fuel the majority of the revenue over the next four to five years. With the breadth of our portfolio, we are uniquely positioned to capitalize on this AI technology demand,' Cisco CEO Chuck Robbins said during the company's Q1 2025 earnings call. Cisco Systems will ride the AI wave to new growth as customers invest in critical infrastructure to prepare for AI and refresh opportunities abound, according to the company's executives. In fact, the tech giant is on track to garner $1 billion in AI orders during its fiscal 2025 year, Cisco's CEO Chuck Robbins said during the company's Q1 2025 earnings call on Wednesday evening. "Our Q1 results highlight continued strong demand for Cisco technologies, driven by the need for modern, resilient networks as AI begins to scale," Robbins said. "Partners around the world are anticipating a transformative wave of AI technology demand driven by infrastructure, cyber security and customer experience, which they expect to fuel the majority of the revenue over the next four to five years. With the breadth of our portfolio, we are uniquely positioned to capitalize on this AI technology demand." Robbins said that during the first fiscal quarter, Cisco's webscale customers placed AI infrastructure orders in excess of $300 million. Big opportunities are presenting themselves with enterprise customers too, Robbins said, adding that the company's data center switching portfolio had its third consecutive quarter of double-digit order growth as enterprises ready themselves for AI deployments. "Our customers continue to be balanced between which workloads they move to the public cloud and which they move they build into the private infrastructure," he said. "The majority of the [AI] buildout is way ahead of us on the enterprise side ... It's a very dynamic market, and [enterprises] have a lot of rapidly changing requirements. As we see these opportunities arise and we get we get these design wins, as we talk about, ultimately they become bookings, and then ultimately they become revenue." [Related: Cisco's Revamped Leadership To Pave The Way Toward Becoming A 'Meaningfully Different' Company: Exec] Cisco Q1 2025 Financial Results Cisco's networking segment includes the core switching and routing businesses, as well as the company's telecommunications, cloud, and optical networking products. Networking, a typically strong category for Cisco, posted a 23 percent decline in revenues of $6.75 billion compared to Q1 2024's result. This quarter, the segment was impacted primarily by the elevated level of shipment that the company saw a year ago, said Cisco CFO R. Scott Herren. The tech giant's acquisition of unified security and observability platform developer Splunk for $28 billion, Cisco's biggest acquisition to date, is already paying off for the company, which has been integrating Splunk technology into its security and observability segments. To that end, Cisco's security segment rose a whopping 100 percent year over year with revenues of $2.02 billion, which was attributed to the company's renewed security strategy and product pipeline, with offerings such as zero trust and extended detection and response (XDR), Secure Access and Multicloud Defense, Robbins said. The observability segment continued its strong momentum, posting 36 percent revenue growth quarter over quarter of $258 million. Excluding Splunk, the security and observability segments grew 2 percent and 1 percent, respectively, in the first quarter of fiscal 2025, according to the company. The security portfolio was impacted by delays in U.S. Federal spending, Herren said. Cisco's collaboration segment declined 3 percent year over year to $1.09 billion in revenue compared to Q1 2024, which the company attributed to declines in declines in on-prem Webex and collaboration devices, partially offset by growth in contact center and CPaaS offerings. The company's product revenues, which is often led by the networking business, declined 9 percent and service revenues increased by 6 percent during Q1 2024, said Herren. Subscriptions now make up about 57 percent of Cisco's total revenue and grew 21 percent year over year, Robbins said. For Cisco's fiscal Q1 2025, which ended October 26, revenue slipped 6 percent to $13.8 billion compared to the same period a year ago. Cisco posted non-GAAP earnings per share of 91 cents, an 18 percent decrease compared to a year ago and non-GAAP net income of $3.7 billion in the first fiscal quarter of the year, which was down 19 percent year over year. Excluding Splunk, total revenue was down 14 percent. In the first quarter of fiscal 2025, Cisco closed two software acquisitions, including DeepFactor Inc., a privately held cloud-native application security company, and Robust Intelligence, Inc., a privately held AI security solutions company. Cisco's stock sank by a little more than 2 percent in after-hours trading Wednesday following the networking giant's earnings release.

Cisco CEO Chuck Robbins predicts more than $1 billion in AI infrastructure orders coming over the current fiscal year

When we last checked in with Cisco, the infrastructure giant had just announced plans for a further 6,000 job cuts, losses that came on top of 4,000 back in February. Flash forward to this week and the news is more upbeat as the firm announced that on the back of Q1 AI orders north of $300 million, it expected to pull in over a billion dollars of such business in fiscal 2025. The Q1 numbers are an interesting snapshot of how Cisco's business focus is shifting. While AI infrastructure represented just less than half of the total business from the webscale customers, overall, revenues declined six percent year-on-year to $13.8 billion. Collaboration tech revenue was down three percent, while networking fell 23%. In contrast, the observability revenue stream - fuelled by Cisco's acquisition of Splunk - was up three percent, while the security operation revenue rose by 100%. Picking up on the last two, CEO Chuck Robbins noted Splunk's contribution: Security orders more than doubled year-over-year, driven by the advanced threat intelligence capabilities of Splunk. Excluding Splunk, growth in security product orders was driven by our renewed security strategy and new product pipeline, which continues to be well received by customers and analysts. We continue to see momentum around our new security products like XDR, Secure Access and Multicloud Defense with now over 1,000 customers deploying these products thus far. In Q1, we had a marquee win for over 75,000 cloud security seats with a multi-national IT services and consultancy company. The customer largely replaced an SSE competitor with our solution and moved from planning to implementation in 120 days, highlighting how fast our teams can implement our solutions at scale. We also booked our first seven-figure Hypershield deal in Q1...this was a very large financial institution that was part of the early adopter planning and that's what we're seeing. This is a very high-impact solution that actually is very effective in some of the most, I'd say, advanced data centers in the world. So, we see very large customers that have been deploying it. So, we're going to see, I think, a gradual uptick in customers adopting it. And we have a bit of a white glove program right now that we're using to help these customers get up and running. So, we're really pleased to see that because when a large bank makes a commitment like that, that tells you the technology is real. And in many cases, they will lead the rest of the enterprise and actually deploy in these new security technologies. So, that's a good sign. But it was to the "transformative wave of AI technology demand" that most attention was paid on the post earnings analyst call. Robbins said: As we look at what's occurring with AI, there are three key things happening. First, there is significant investment in back-end AI networks with hyperscalers focused on training. Second, as enterprises look to adopt and deploy AI, they need to modernize and secure their infrastructure to prepare for pervasive deployment of AI applications. Finally, the combination of mature back-end models with enterprise AI application deployment will lead to increased capacity requirements on both private and public front-end cloud networks. Cisco is already playing a major role across all three of these significant opportunities and are uniquely positioned to win with the breadth of our product portfolio and our trusted customer relationships. He highlighted three main areas of opportunity: First, AI training infrastructure for webscale customers: AI networks demand scalable, programmable, low-power switches with advanced load balancing and observability. These characteristics in our products are driving hyperscalers to deploy the Cisco 8000 with Cisco's Silicon One G200 for maximum power efficiency in their back-end AI training networks. As further proof, we also won a new Super Spine AI networking use case with one of our webscale customers this quarter. Second, AI network connectivity: This quarter, we booked further platform sales with global enterprise customers who are leveraging our technology platforms to modernize and automate their network operations to prepare for large scale connectivity to AI applications. Our technology platforms across switching, routing, security, and observability will help enable our customers by leveraging cutting-edge innovations like AI-powered robotics and unmatched supply chain visibility. Third, AI network inference and enterprise clouds: Most of the CIOs and technology leaders we talk to say that their organizations are planning full gen AI adoption within the next two years, yet only 13% of organizations say their infrastructure is ready for AI today, according to the Cisco AI Readiness Index. It's a very dynamic market, and [customers] have a lot of rapidly changing requirements. And so, as we see these opportunities arise and we get designed in. So, when we get the design wins as we talk about, then, ultimately, they become bookings and then ultimately they become revenue. It's a more complicated world these days and whatever the potential revenue boom offered by AI, there are hoops to be jumped through even for the likes of Cisco. But what's interesting is that Robbins and Co appear to be 'getting away with' the demands to 'show us the money' from Wall Street short termists in a way that other firms have not.