Cisco reported uninspiring results for its latest third-fiscal quarter, but CEO Chuck Robbins predicts the networking giant will soon see momentum fueled by its recent Splunk acquisition and a shift in customer needs.

Cisco reported a 13% drop in overall revenues, which came in at $12.7 billion for the quarter. This drop was led by plunging product sales that mauled a slight gain in service revenues.

Robbins explained during Cisco’s earnings call that the drop in product sales was the tail end of customer digestion of a post-Covid sales surge that has worked its way through supply chain challenges.

“We currently expect customers to complete the installation of the majority of their inventory by the end of our fiscal year in July,” Robbins said.

This has been an ongoing battle for the security and networking giant, which was initially squeezed by supply chain constraints that impacted its ability to sell, and is now working through the delivery and deployment of that equipment, which is impacting new sales.

Cisco did manage to keep spending in check, which allowed it to moderate a reduced net profit that dropped from $3.2 billion during the same quarter last year to $1.9 billion this year.

Cisco set for Splunk surge Cisco is predicting a bump in sales for the final quarter of its fiscal 2024, boosted by up to $1 billion in revenues from Splunk.

That boost will come from a large untapped sales reservoir for its new security purchase. Robbins claimed that Splunk was looking to tap into roughly 5,000 Cisco customers who do not currently have a relationship with Splunk.

“The goal there is to have the Cisco sellers open the door for the Splunk team,” Cisco’s Gary Steele said during the call. “There's also a financial incentive or spiff in place to incent the Cisco sellers to support this activity. And that's really one aspect of where we see tremendous opportunity.”

Steele added that he was already seeing this opportunity in the market.

“Obviously there's a lot of overlap in our customers where the Cisco team may have higher, more strategic relationships where they can extend our footprint, assist in helping extend our footprint within the existing Splunk base and we're already seeing that activity right out of the gate. We feel like we're off to a very good start and I'm super encouraged by the level of collaboration we've seen so far.”

Steele, who was CEO of Splunk before the acquisition, will see this opportunity from his position in the newly created role of president of go-to-market for Cisco. Steele had been in an advisory role to Robbins, but will now have oversight of Cisco’s sales, partner and global marketing teams.

That move will see long-time Cisco veteran Jeff Sharritts leave Cisco this summer after 24 years with the company. Sharritts’ current role is chief customer and partner officer.

Analysts had previously noted that Cisco's history of acquisition integration has been spotty, and that uncertainty could concern current Splunk and Cisco security customers to the delight of rivals.

“Since Splunk will span two product groups in Cisco — security and observability — it runs the risk of being torn apart by internal forces,” Forrester Principal Analyst Allie Mellen noted in a report following the deal's announcement last year. “Operating it as a standalone will allow Splunk to serve both constituencies equally and continue growing and innovating. ... These markets and the vendors in them need the disruption that this acquisition will bring forth, but this all comes with a lot of uncertainty for practitioners.”

Cisco and Splunk security opportunities Jeetu Patel, EVP and GM of security and collaboration at Cisco, recently told SDxCentral that Splunk’s security offerings were “completely complementary” to Cisco’s.

“They were not overlapping, so one plus one equals three here … which is one of the reasons that we saw so much advantage in this acquisition,” he added. “We will utilize our data platform in even bigger ways than we’ve been doing to date.”

Robbins during the earnings call also touted Cisco’s security offerings outside of what Splunk can bring to the table.

“[The] security business is doing what we said it was going to do,” Robbins said. “We've launched new products there even before the acquisition of Splunk and those products are getting good traction. So that's a tailwind as we look at next year as well.”