On Monday, February 8, 2021, a runner passed by the headquarters of the Sisco Systems in San Jose, California, USA

David Paul Morris | Bloomberg | Getty Images

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Cisco Systems Reported mixed first quarter results after Wednesday’s bell closing. Revenue rose 8% from $ 89.9 billion to $ 12.984 billion, while fixed-income earnings rose 8% to $ 0.82 per share and exceeded the target by one cent.

Adjusted overall margins 64.5% are fine, 65.8% lower than last year but slightly better than 64.1%. Cisco is currently putting pressure on its cost structure due to a number of supply chain related issues. High inputs and commodity prices are also a factor. Although Cisco has carefully increased prices to offset these headaches, the benefits are not immediate, and will be known in the coming quarters.

We can divide Cisco’s total revenue into two categories: product and service. Revenue rose to about $ 9,529 billion, about 11 percent, and $ 9.538 billion was not lost. Meanwhile, YOY was flat at $ 3.371 billion, short of the estimated $ 3.442 billion in services revenue.

Cisco divides its product revenue into five main buckets.

  • Secure Agile Networks Revenue increased 10% YoY to $ 5.967 billion thanks to double-digit campus switching, led by Cisco’s Catalyst 9000 and Meraki Switch offerings. The turnover portfolio of the enterprise has worked well, growing in a large single digit range. Wireless has doubled in price thanks to its WiFi 6 products and Mercury wireless offerings.
  • Mixed work Revenue fell 7 percent to $ 1.109 billion. Revenues have declined as a result of the rejection of Cisco’s Eternal Call, Meeting and Communication Center supplies. But not all segments of the business have failed, as the communications platform has hampered some setbacks, such as the development of services and collaborative tools. Significantly, Cisco’s SaaS revenue (software as registry) grew by single digits.
  • Security from end to end Revenue from cloud-based solutions has grown from 4% YoY to $ 895 million due to the growth of cloud computing and their supply of hardware. The security subscription segment was good for the quarter, with revenue up 15%, driven by Cloud Security and Zero Trust platforms.
  • Internet for the future Revenue 46% YoY to $ 1.374 billion Thanks to the strength of their customers.
  • Optimized apps experience Revenue rose from 18% Yoi to $ 181 million, thanks to a three-eye three-digit growth and Intersight strong double-digit growth.
  • With a quarter of a year limited by the challenges in the supply chain, we think the best way to understand how the business is doing is to grow sequentially. Think of system development as a measure of Cisco’s backlog. Total production orders increased by 33% YoY during the quarter, accelerating the growth of the third straight quarter and making more comparable comparisons. Cisco is seeing demand everywhere. Each geographic region had an order of more than 30% and three of the four consumer markets grew by more than 30%.

Total software revenue for the quarter was $ 3.7 billion, as the company’s growth slowed as it switched from regular licensing to subscription.

  • Eighty percent of the $ 3.7 billion software revenue was sold to subscribers. That figure dropped by 81% in the last quarter. ARR, or Annual recurring income, 10% YoY increased to $ 21.6 billion.
  • The rest of Cisco Obligation to perform, Or RPO, ended the quarter with $ 30.1 billion, down $ 30.9 billion from the previous quarter but still 10% yoi. 53% of the total RPO is short-term, which means that the company expects to realize this revenue over the next twelve months.
  • Total software, subscription revenue, ARR and RPO are all major focus of investors because these metrics help investors measure the company’s business from package hardware sales to high margins and predictable software sales. Broadly speaking, we see this business model transition as a great value-for-money expansion because it makes investors more valued and stable, and they can expand the margins.

Cisco returns $ 1.8 billion to shareholders By division and by purchase. However, the rate of returns has dropped dramatically. After buying an average of $ 53.30 per share in the previous quarter, the CCC acquired an average of $ 56.49 in the reported quarter, worth $ 256 million. The current management is $ 7.7 billion.

Sorry for the inconvenience. The management directive on Wednesday evening made investors want more as the supply chain did not reach the highest level due to the supply chain. For the second quarter of the fiscal year, Siscoisco expects revenue to grow by 4.5% to 6.5% YoY, total revenue between $ 12.50 billion and $ 12.74 billion, less than the $ 12.835 billion road model. Regarding the relationship between the directive and the road, CFO Richard Heren said in a call that supply issues are “headache”. Adjusted gross margins are expected to be in the range of 63.5% to 64.5%. Cisco expects adjusted earnings per share in the $ 0.80 to $ 0.82 range, which is easy to estimate from $ 0.81 to $ 0.82.

Despite a difficult second-quarter guidance, their year-round attitude has not changed. The company expects revenue growth of 5% to 7% YoY and adjusted earnings per share from $ 3.38 to $ 3.45. The year-round outlook shows that the company is expecting a stronger second half of the year than expected.

It is important to remember that this year, even for the first time, offers an annual view of management. All of this is new to Cisco and the management has been able to make predictions for investors because the subscriptions and recurring revenue streams are sufficient to provide forecasting for the entire company. At the outset, management is conservative, so it might come as no surprise that management dropped all year-round numbers at the beginning of the year.

In general, we regret how the quarter traded and the stock traded after hours.. How can we not be? Although some issues in the supply chain are out of the company’s control, we think it is important to look back and remember that Cisco is playing in the right markets and trends. Combined work is driving recovery in corporate costs, and the company is seeing a lot of business from 5G, digital transformation, security and cloud. The impetus for these trends has strengthened the demand for Cisco products and services.

The order book is there, and the back record has never been higher in the history of the company. They are winning a new business and have recently gained a new customer Meta (Formerly Facebook) An architecture of silicon.

The current situation is that the company is very limited in what it does and offers to its customers. These challenges will not last forever, so the question we must ask ourselves is, How long are we willing to wait for this to happen? We would like to stick with Cisco, believing that the severe pain in the supply chain will occur next quarter and that there will be some improvement in the second half of the fiscal year.

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