Software sales surpassed $4 billion and accounted for almost 31% of Cisco’s total revenue during its fiscal year 2021 fourth quarter. 

The vendor reported a 7% sequential and 6% year-over-year increase in software revenue, adding that software subscriptions grew 9% from the year-ago period. 

“For perspective, software represented 31% of our business in Q4, and for the full year, when combined with our services business, they represent over 53% of revenue, clearly highlighting the success of our continued business transformation,” CEO Chuck Robbins said during the earnings call. 

Cisco said 81% of that $4 billion in software revenue is recurring. The company ended the fiscal year with $15 billion in software revenue.

CFO Scott Herren noted underlying growth in software, services, and a recurring revenue base also provides Cisco with greater visibility into revenue forecasts and confidence in future growth opportunities. 

“That $4 billion of software revenue over the last 90 days, we’re one of the biggest software companies in the world,” Herren said. “Annualize that or look at the trailing 12 months, it makes us somewhere in the top 10 in software companies in the world.”

 “As we move to more and more of a software and services and recurring revenue base, we have greater visibility.”

Cisco banked $3 billion in net income on $13.1 billion in revenue during the quarter, marking a 14% year-over-year increase in profit and 8% revenue growth. 

Products generated $9.7 billion in revenue, representing 74% of total revenue during the quarter, and services generated $3.4 billion in revenue, accounting for 26% of total revenue.

The vendor’s infrastructure platforms’ revenue jumped 13% year over year to nearly $7.55 billion, applications revenue dipped 1% to $1.34 billion, security revenue increased 1% to $823 million, and services revenue grew 3% to $3.4 billion.

Cisco’s cloud security and zero-trust portfolios achieved greater than 20% growth, and recurring subscription-based security revenue jumped 13%, Herren said.

Despite the optimistic outlook for Cisco’s financial performance, Robbins noted COVID-19 and supply chain constraints continue to weigh on the company and society at large.

“With the rise of COVID variants and the inconsistent pace of vaccine deployment around the globe, organizations must be resilient and adaptable, as we’ve seen how quickly the world around us can change,” he said. 

“No matter how or when the global recovery takes shape, we're executing on our vision of rebuilding a better world, one that is digital, sustainable, inclusive, and highly secure,” Robbins said. “I believe we're at a pivotal moment in our company's history, as we have a massive opportunity to transform what has been the traditional office and define the future of hybrid work.”

IT budgets are growing and business confidence is up, “however, we do recognize that uncertainty remains around COVID-19, and we’re closely monitoring the Delta variant and its impact on customer spending,” he added. “Right now we are not seeing any additional impact to our business aside from the components shortage we’ve been facing over the past several months.” 

The vendor reiterated that it expects supply chain disruptions and cost impacts to continue through the remainder of 2021, but added those problems could remain through the first half of 2022.

The vendor spent $1.7 billion on research and development during the quarter, and closed its acquisitions of Slido, Sedona Systems, Kenna Security, Involvio, and Socio Labs. 

Annual revenue during Cisco’s fiscal year 2021 jumped 1% year over year to $49.8 billion, including $36 billion on products and $13.8 billion on services. The company said it expects revenue to grow 7.5% to 9.5% during the current quarter, and up to 7% for the full fiscal year 2022.