Arthur J. Villasanta – Fourth Estate Contributor
San Jose, CA, United States (4E) – Cisco Systems, Inc, the largest networking company in the world, reported strong results for the first quarter of its 2019 fiscal year ending October 27.
The San Jose, California-based firm reported first quarter revenue of $13.1 billion; net income of $3.5 billion ($0.77 per share) and non-GAAP net income of $3.5 billion or $0.75 per share.
“We had a strong start to fiscal 2019 and we believe our opportunity has never been greater,” said Chuck Robbins, chairman and CEO of Cisco. “Our customers are looking to Cisco as a trusted partner to help them operate in a multi-cloud world and to transform their businesses.
“Our strategy is working and we are well positioned with our growing and differentiated portfolio across multiple domains to bring our customers a more secure, automated and simple IT infrastructure.”
CFO Kelly Kramer said Cisco executed well, with broad-based growth across all of its geographies, product categories and customer segments. He said Cisco delivered 8% revenue growth and 23% non-GAAP EPS growth
“We are seeing the returns on our investments in innovation as we continue to transform our business model.”
Total revenue was $13.1 billion, up 8%, with product revenue up 9% and service revenue up 3%. Revenue by geographic segment: Americas up 5%, EMEA up 11%, and APJC up 12%.
The company said its product revenue performance was generally broad based with growth in Applications, up 18%, Security, up 11%, and Infrastructure Platforms, up 9%.
Cisco’s largest business segment, Infrastructure Platforms, which includes hardware like data center networking switches, hit $7.64 billion in revenue, above analysts’ consensus of $7.4 billion.
Cisco’s Applications business posted $1.42 billion in revenue, higher than the $1.35 billion estimate. This unit includes collaboration tools and the AppDynamics software.
And Cisco’s Security segment did $651 million in revenue, slightly exceeding the estimate of $648 million.
Morgan Stanley said its checks suggest Cisco’s sales pipeline for 2019 “remains strong but the January quarter could see some drag from customers digesting outsized purchases in December to avoid potential price increases in 2019 (from tariffs potentially increasing to 25 percent on January 1st).”
It will likely view these headwinds as temporary. It said most of its contacts still see significant Cat9K [Catalyst 9000 networking switch] upgrade opportunities in 2019, while Meraki continues to drive growth in the commercial and SMB markets.
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