For the first time in six quarters, Cisco finally reported revenue growth. For its fiscal second quarter that ended Jan. 27, 2018, Cisco reported revenue of $11.9 billion, a 3 percent increase from the same quarter a year ago. The company also reported non-GAAP net income of $3.1 billion or $0.63 per share.
The company plans to repatriate $66 billion, virtually all of its overseas cash. With the infusion, Cisco is taking steps to please shareholders. It boosted its dividend, and it plans to repurchase shares of its own stock.
The company declared a quarterly dividend of $0.33 per share, a 14 percent increase over the previous quarter’s dividend. And Cisco’s board of directors approved a $25 billion increase to its its stock repurchase program. This boosts the available share buy-back funds to about $31 billion.
On the earnings call with investors, Cisco’s CFO Kelly Kramer said the company would probably buy back the $31 billion in shares over the next 18 to 24 months. That will leave the company with about $10 billion, which might be used to make acquisitions.
Intent-Based Networking Thrives
Company executives said its intent-based networking initiative, announced in June 2017, was doing very well. “We saw strong adoption of our subscription-based Catalyst 9000 switching platform as we more than doubled our customer base from last quarter to over 3,100 customers,” said Cisco CEO Chuck Robbins, according to a Seeking Alpha transcript. “This is the fastest ramping new product introduction we have had in our history.”
Robbins also said the company plans to extend the capabilities of its intent-based networking beyond campus switching to other parts of its portfolio, including routing, “bringing the Viptela SD-WAN capabilities to play.” And Cisco is integrating its intent-based networking technology backwards into ACI in the data center and also within its security portfolio.
This expansion of intent-based networking was alluded to in January when Cisco announced three new assurance software products that use intent-based networking technology.
“The real story of this quarter was continued solid uptake of the new Catalyst 9K lineup, which we believe drove 14 percent order growth in the commercial sector,” wrote Goldman Sachs analyst Rod Hall, in a research note. “This is particularly good news in our opinion as it confirms the wisdom of moving to a mandatory software license for campus switches.”
The company is also making steady progress transitioning to more subscription revenue. In the second quarter it generated 33 percent of its total revenue from recurring offers, an increase of 2 points from a year ago. Revenue from subscriptions was 52 percent of its software revenue.
For its guidance, Cisco expects revenue growth of 3 percent to 5 percent during the current quarter. The company’s stock price is up about 3.5 percent today in mid-day trading.