Cisco has reported continued revenue declines for its collaboration meetings and device solutions, offset by cloud calling and contact centre growth.
In Cisco's latest earnings call for Q3 FY24, CFO Scott Herren outlined that collaboration sales were generally flat, with meeting revenues continuing to decline and a fall in devices. Growth in cloud calling and contact centre established this, ensuring collaboration revenues steadied at $987 million year over year.
Herren commented:
Collaboration was flat, driven by growth in our cloud calling and contact centre offerings, offset by declines in meetings and devices."
CEO Chuck Robbins stressed that collaboration product order growth was "positive, " suggesting that the long-term health of Cisco's collaboration business looks rosy.
"At a time where customers are ruthlessly prioritising their IT investments, we saw product order growth in two of our largest product portfolios, data centre switching and campus switching, as well as product order growth in our security and collaboration product categories," Robbins added.
"We see customer product implementations progressing in line with our expectations, and we expect these deployments to be largely complete by the end of our current fiscal year," Herren expanded. Cisco's fiscal year ends in July.
Collaboration sales had increased by three percent in both previous quarters, with Robbins and Herren crediting the growth to new collaboration software releases, collaboration devices, and calling, despite the ongoing decline in meeting sales.
Other Notable Operational Highlights
There was otherwise little mention of collaboration and Webex this quarter, with much of the earnings call celebrating the impact of Cisco's Splunk acquisition, which was confirmed this past quarter.
Cisco stresses that Splunk greatly enhances its security and observability portfolio, supported by its groundbreaking new security solution, Cisco Hypershield. Robbins says Cisco identified 5,000 existing customers who "have the potential to become meaningful Splunk customers" and noticed "significant opportunities for revenue synergies by leveraging Cisco's robust partner and customer ecosystem in markets where Splunk had limited or no presence."
"Splunk significantly expands our portfolio of software-based solutions, contributing over 4 billion in annualised recurring revenue, and adds to our position as one of the largest software companies in the world," Robbins said. "We are thrilled to welcome the Splunk team to Cisco and are very excited about what we can deliver for our customers as we integrate our complementary security and observability capabilities."
However, Robbins highlighted that even excluding Splunk, Cisco saw revenue growth in security and double-digit growth in observability year over year. Robbins credited customers looking to "enhance their digital resilience with Cisco's technologies".
Lastly, similar to product order maturation, Robbins highlighted that enterprise customers representing early adopters of AI would benefit from Cisco's NVIDIA partnership for easy-to-deploy cloud-based and on-prem networking solutions.
