Cisco expects revenue growth in fiscal second quarter after four straight quarters of continuous decline

The American supplier of enterprise-class network equipment Cisco reported results in the first quarter of the 2025 fiscal year, which ended on October 26. The company’s revenue fell 6% year-on-year to $13.84 billion, but beat the $13.77 billion consensus of analysts surveyed by LSEG.

Cisco’s revenue fell for the fourth quarter in a row, but for the current quarter it expects revenue to be in the range of $55.3 billion to $56.3 billion, up from its previous forecast of $55 billion to $56.2 billion and an average increase of 3.3 year over year. %. Despite the optimistic outlook, the company’s shares fell 2.5% in extended trading.

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Net income (GAAP) fell 24% to $2.71 billion, or 68 cents per share, from $3.64 billion, or 89 cents per share, a year earlier. Adjusted net income (Non-GAAP) fell 19% to $3.7 billion, or $0.91 per share, above Wall Street expectations of $0.87 per share. Orders rose 20% after a 14% increase in the previous quarter.

Revenue from sales of various products fell by 9% to $10.11 billion, and revenue from services increased by 6% year-on-year to $3.73 billion. Revenue from network solutions fell by 23% to $6.75 billion, which is slightly below consensus – forecast of $6.8 billion by analysts surveyed by StreetAccount. Security division revenue doubled to $2.02 billion, beating the StreetAccount consensus of $1.93 billion. Collaboration division revenue fell 3% to $1.09 billion. Observability division had $258 million in revenue, up 36%.

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For the current fiscal quarter, Cisco expects revenue to range from $13.75 billion to $13.95 billion, which compares with analysts’ average estimate of $13.74 billion. The company also raised its forecast for adjusted earnings to $3.60 to $3.66 per share. Analysts’ forecast is $3.58 in adjusted earnings per share.

CFO Scott Herren said Cisco is seeing strong growth in corporate spending across all sectors and regions. The company is also benefiting from customer spending on hardware needed to support AI computing and is well ahead of its $1 billion target in orders from major data center operators for this type of equipment, he said. In turn, Cisco CEO Chuck Robbins said during the reporting conference that orders from large customers for AI infrastructure in the past quarter exceeded $300 million.

Scott Herren noted that the change in power in the White House has brought uncertainty with some orders, adding that US government agencies have delayed deals with Cisco rather than abandoning them completely. He expressed the hope that after the adoption of the budget, everything will return to normal and orders will resume.