Cisco Systems Earnings Call Transcript: Remain Strong in the First Quarter, Committed to Growth

Cisco Systems, Inc. released its Q1 2024 earnings report on November 15th.

1. Cisco's Q1 FY24 conference call highlighted strong financial results and a focus on growth areas like AI, security, and observability. They remain confident despite a slowdown in orders due to customer onboarding and are committed to expense management and capital allocation.

2. CEO Chuck Robbins reports on strong Q1 revenue and profitability, with a focus on expense management and business model transformation towards software and recurring revenue streams. The acquisition of Splunk will enhance digital resilience, and they see growth potential in AI, security, and observability.

3. CFO Scott Herren reports solid Q1 financial results, including total revenue of $14.7 billion, up 8% YoY, and strong growth in product revenue and non-GAAP operating margin. Key growth areas include networking, security, collaboration, and observability. The company is also making progress in its transformation towards recurring revenue-based offerings, with solid performance in ARR, product ARR growth, and software revenue. Subscription revenue increased to 44% of total revenue, a 1 percentage point increase over last year.

4. Cisco experienced a slowdown in new orders due to customers taking time to onboard and deploy heightened product deliveries. For Q2, they expect revenue between $12.6 billion to $12.8 billion, assuming one to two quarters of lower revenue before returning to typical sequential growth rates.

5. Chuck Robbins discusses an inventory issue affecting large enterprise and service provider customers in Q2 and Q3, but expects order growth in the second half of the year, particularly in security and AI. SMBs were not affected by the consumption issue, and they provide data points and updates on their AI initiatives.