Cisco Hits High Gear: Strong Q1 Results Mark a Return to Normalcy for the Tech Giant
Cisco Systems, Inc. has kicked off its fiscal year 2025 on a high note, delivering $13.8 billion in revenue for the first quarter and exceeding expectations with non-GAAP EPS of $0.91.
In his opening remarks, Chuck Robbins, Cisco's Chair and CEO, highlighted the company's strong performance, citing solid growth in annualized recurring revenue, remaining performance obligations, and subscription revenue, which now accounts for 57% of total revenue. This trend, he noted, is helping to fuel profitability and drive a return of $3.6 billion in value to shareholders through share repurchases and cash dividends.
Robbins also emphasized the company's commitment to innovation, pointing to product orders growth of 20% year-over-year in Q1, with a 9% organic increase, as evidence that demand for Cisco's solutions is normalizing. Enterprise product orders were up 33%, driven by strong performances in the Americas and EMEA across various customers.
Within this context, Robbins highlighted some key trends and achievements: web scale customers placed AI infrastructure orders exceeding $300 million in Q1; public sector orders saw a 2% year-over-year increase despite lower federal spending due to continuing resolutions discussions and fiscal responsibility Act impacts. Both EMEA and APJC showed strong year-over-year growth.
He also touched on specific product areas, such as networking, where double-digit order growth was driven by switching, wireless, and Internet infrastructure. Data center switching saw 3 consecutive quarters of double-digit order growth, with an acceleration from Q4 into Q1, demonstrating Cisco's competitive strength in this key market.
The combination of Cisco and Splunk is driving operating leverage for the company, resulting in a non-GAAP gross margin that has not been seen in more than 20 years. Robbins concluded by emphasizing the importance of innovation, execution, and capital returns to shareholders, highlighting Cisco's strong start to fiscal '25.
These results demonstrate Cisco's resilience and adaptability in an evolving tech landscape and mark a positive beginning for the company in its new fiscal year.
