Cisco reports record Q1 revenue results as CFO steps down

13 Nov 2014

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Cisco facility in Silicon Valley, California. Photo by Ken Wolter via Shutterstock

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Cisco is hopeful of a return to growth following its strongest first quarter ever in terms of revenue, non-GAAP operating income and non-GAAP earnings per share.

Cisco’s first-quarter earnings for 2015 (period ending 25 October 2014) cite revenue of US$12.2bn, a year-on-year increase of 1.3pc and just above analysts’ predictions.

As the IT giant had forecast flat sales for Q1 2015, the figures came as no surprise. What was unexpected was a change in leadership.

During the earnings call, it was announced by executive vice-president and chief financial officer Frank Calderoni that he will step down as of 1 January 2015.

“We had a solid quarter delivering results for Q1 consistent with our expectations. Our strong cash flow, balance sheet, and ongoing commitment to return capital to shareholders demonstrates the strength of our financial strategy,” said Calderoni, as he heads out on a high note.

Calderoni’s replacement will be Kelly A Kramer, currently senior vice-president of Cisco’s business technology and operations finance division.

Revenue growth

Cisco generated US$2.5bn in operating cash flow and returned close to US$2bn to shareholders though share repurchases and dividends in the first quarter of 2015.

The firm’s GAAP net income dropped 8.4pc year-on-year to US$1.8bn, equating to US$0.35 earnings per share (EPS).

Non-GAAP net income totalled US$2.8bn, down a more modest 2.3pc, resulting in a single-cent increase in non-GAAP EPS at US$0.54.

Cisco highlighted these results as the result of more than three years of transforming from a business selling boxes to selling solutions. Its big earners were data centre revenue, which grew 15pc to US$693m, and security revenue, which grew 25pc to US$455m.

EMEA markets were a particular area of strength for Cisco in Q1 2015, with orders up 6pc year-on-year. In the UK in particular, sales performance increased by 20pc.

Internet of things

Looking ahead, Cisco is likely to continue to grow its internet of things (IoT) business.

The first quarter of 2015 brought with it the unveiling of Cisco Connected Transportation Solutions and the establishment of an IoT innovation centre in Berlin. Cisco also outlined an expansion of its fog computing strategy with the second phase of its IOx platform for industrial-scale IoT deployments, while the Cisco Networking Academy revealed the first global IoT curriculum, which intends to address the growing demand for skills in this area.

“We are pleased with our results and are very comfortable in our strategy to deliver innovative solutions which enable the next generation of IT and the ‘internet of everything’,” said chair and CEO John Chambers.

“We are still in a tough environment, but seeing encouraging trends as cities, businesses, governments and schools are becoming more digitised.”

Cisco image via Ken Wolter/Shutterstock

Elaine Burke is managing editor of Siliconrepublic.com

editorial@siliconrepublic.com