Cisco’s second quarter earnings were in line with expectations, although its product revenue from switching and routing took a hit.
For its second quarter, Cisco’s routing product revenue was down 10 percent from the previous year, while switching product revenue was down 5 percent and data center product revenue was down 4 percent. The company’s total product revenue was almost $8.5 billion — down 4 percent sequentially. This is happening as the company tries to shift its switching and routing products toward subscription-based revenue, as company officials noted on the call.
Product revenue performance was led by security, which increased 14 percent. Collaboration and Wireless revenue increased 3 and 4 percent, respectively.
For its second quarter, which ended Jan. 28, Cisco reported revenue of $11.6 billion, compared with $11.9 billion in the same quarter a year ago; the decline was on par with what the company had predicted previously. Non-GAAP earnings per share of 57 cents beat the consensus estimate of 56 cents, according to Thomson Financial.
Cisco is trying to make more moves into software because it gives the company higher margins, said company officials on its earnings call. The AppDynamics acquisition is an example of the company leveraging software revenue. Cisco plans to benefit from the application performance monitoring (APM) vendor’s recurring software and subscription-based revenues.