Cisco‘s collaboration sales have grown for the first time in a year.
As recorded in its latest earnings call for Q1 FY24, Cisco posted a three percent rise in collaboration sales, crediting an increase in calling and contact centre revenues, which have compensated for the ongoing decline in sales produced by its meetings business.
Scott Herren, Chief Financial Officer at Cisco, stated:
Collaboration was up three percent, driven by growth in calling and contact centre, partially offset by a decline in meetings.”
There were brief allusions to Webex’s operational quarter, with Cisco CEO and Chairman Chuck Robbins highlighting Webex’s new AI-powered features as well as the hybrid workspaces illustrated at this year’s WebexOne conference: “In our Collaboration portfolio, we recently introduced a range of truly game-changing AI capabilities spanning the entire Webex suite, as well as new devices for reimagined workspaces at our WebexOne event.”
More broadly, Cisco reported fiscal first-quarter net income of $3.6 billion, compared to $2.7 billion the previous year’s Q1. Revenue grew to $14.7 billion from $13.6 billion the year prior, an increase of eight percent.
Non-GAAP net income was $4.5 billion, up 28 percent year over year, and the non-GAAP operating margin was reported as 36.6 percent. “Our disciplined expense management and the tailwinds from our business model transformation resulted in our highest non-GAAP gross margin in over 17 years and record non-GAAP operating margin,” was Robbins’ analysis.
Robbins described these results as “the strongest first quarter results in Cisco’s history in terms of revenue and profitability”.
However, despite the business reporting adjusted earnings for Q1 of $1.11 per share versus estimates of $1.03, as well as revenue of $14.67 billion compared to an expectation of $14.63 billion, the market didn’t respond well to Cisco’s revised guidance for Q2 the rest of the year.
Cisco’s revenue outlook for Q2 is $12.6 billion-$12.8 billion, well below a $14.2 billion estimate. Cisco also reduced its full-year revenue outlook to $53.8 billion-$55.0 billion, again a cut from the initial estimate of $57 billion-$58.2 billion. As a result, Cisco’s stock fell 11 percent in after-hours trading.
What Were the Biggest Stories at This Year’s WebexOne?
Cisco Webex highlighted its new AI strategy to revolutionise communication and collaboration at this year’s Webex One event. Webex’s AI strategy entails real-time media models (RMMs) and the Webex AI Codec.
Webex aims to leverage real-time audio and video communications to address common challenges, such as ensuring crystal-clear audio and video calls even with low bandwidth. Cisco also unveiled its new Webex AI Assistant with features to improve customer productivity and accuracy.
Also announced at the event, Webex meetings will soon be available on Apple TV 4K and Apple Watch. The Webex app will soon be available in the Apple TV App Store, including a QR code system that offers users a seamless login experience. Large displays are supported using Continuity Camera support in tvOS 17 to wirelessly connect their iPhone or iPad to Apple TV 4K and leverage the device’s camera and microphone to engage in meetings.
Additionally, Cisco and Bang & Olufsen partnered to produce wireless earbuds designed for secure hybrid working. The Bang & Olufsen Cisco 950 earbuds are built with advanced security and manageability features with premium sound quality to provide high-quality, customised audio experiences for professionals on the go.
Lastly, Cisco and NVIDIA expanded their partnership by launching an artificial intelligence-powered room kit. Cisco promised simple deployment, enhanced video and sound and improved meeting operability with Microsoft Teams. The kit’s power is powered by NVIDIA’s Jetson edge AI platform.