Cisco posted its largest quarterly revenue total in the company’s history during its first fiscal quarter of 2023, but still managed to lay off staff.
Cisco Chairman and CEO Chuck Robbins said the tech giant saw an easing of supply chain constraints and component shortages during Q1 2023. This shift allowed Cisco to deliver hardware, which has released software subscriptions that “were sitting in backlog,” the company’s CEO said during the company’s first quarter 2023 earnings call.
But despite a positive start to the fiscal year, Robbins took to the earnings call to confirm plans to fire staff including members of Cisco’s Collaboration segment. Employees will be notified on Thursday of the coming job cuts, Robbins said.
“The people impact is difficult … it’s always a difficult decision, but we have a lot of opportunity,” he said. “There’s nothing that’s a lower priority, but we are rightsizing certain businesses.”
Cisco’s Collaboration segment declined two percent year over year to $1.09 billion in revenue compared to Q1 2022, which the company attributed to declines in Meetings, offset by growth in Cloud Calling and Contact Centre.
Robbins said Cisco will be reinvesting in strategic areas that are primed for growth, such as the company’s security segment.
Cisco’s End-To-End Security segment posted nine percent growth during the first quarter to $971 million.
Robbins said it continues to make progress on its business transformation to software and subscriptions. The company’s total annual recurring revenue (ARR) was up seven per cent year-over-year, to $23.2 billion.
Both total software revenue and software subscription revenue climbed up five per cent and up 11 percent year over year, respectively.
Cisco’s product revenues climbed eight percent and service revenues stayed flat during the first quarter of 2022, said Herren.
Cisco’s Secure, Agile Networks segment, which includes the core switching and routing businesses, posted revenues of $6.68 billion during the quarter, a 12 percent rise compared to the first quarter of 2021.
The Secure, Agile Networks segment was impacted by supply chain constraints during the last quarter of Cisco’s fiscal 2022 year, but this quarter, the segment was buoyed by strength in the company’s popular Catalyst and Meraki product lines, while datacentre switching saw a modest decline, Herren said.
Cisco’s Internet for the Future segment, which includes the company’s telecommunications, cloud, and optical networking products, declined five percent year over year with revenues of $1.31 billion. Cisco’s Webscale businesses, on the other hand, saw a double-digit increase in orders during the quarter, according to the company.
For fiscal Q1 2023 which ended October 29, Cisco’s revenue climbed six percent to $13.63 billion compared to $12.90bn in the same period a year ago. Cisco posted diluted earnings per share of 65 cents, a seven per cent decline compared to 70 cents a year ago and net income of $2.7 billion in the first fiscal quarter of the year, a decline of ten percent compared to the same quarter a year ago.
