Cisco Confirms 7% Layoffs, Revenue Down 10% in Latest Quarter

Service revenue growth wasn't enough to offset an overall decrease in Cisco revenue for the company's fiscal year fourth quarter. In its earnings report on Wednesday, Cisco confirmed that it is laying off about 7% of its workforce. 

Cisco revenue was $13.6 billion in the latest quarter, which ended July 27. That's a 10% decrease from $15.2 billion a year prior, driven in part by a 15% year-over-year shrinkage of its networking revenue ($6.8 billion).

Cisco did deliver a positive services revenue growth, increasing 6% year-over-year to $3.7 billion, but product revenue declined 15%.

The IT giant noted that its revenue scored in the higher end range of its guidance. CEO and chair Chuck Robbins noted a total product order growth of 14%. That suggested to him that "inventory digestion" by customers should be at an end, he said.

Cisco's Chuck Robbins

“We delivered a strong close to fiscal 2024,” said Robbins. “In our fourth quarter, we saw steady customer demand with order growth across the business as customers rely on Cisco to connect and protect all aspects of their organizations in the era of AI.”

Robbins on Cisco's earnings call revealed that Cisco is combining its networking, security and collaboration teams. Jeetu Patel, formerly executive vice president and general manager of security and collaboration, will lead the group. Patel's new position is executive vice president and chief product officer.

Related:Fresh Cisco Layoffs Would Impact 4,000 Employees or More

Jonathan Davison, who was executive vice president and general manager of Cisco networking, has stepped down into an advisory role.

"This new organization will help us accelerate our product innovation and bring our portfolio together in a more integrated way than ever before," Robbins wrote. "It will also allow us to provide a better, unified experience for our customers and partners, while delivering unique solutions to help them achieve their technology outcomes and drive business growth.

Robbins confirmed reports of a significant restructuring that will take place at the company to "both invest in key growth opportunities as well as drive more efficiency in our business."

Deeper Look at Cisco Revenue

Networking revenue struggled for Cisco, but other sides of the portfolio fared well. Specifically, security and observability grew 81% and 41%, respectively, although those numbers include Cisco's acquisition of Splunk. Removing Splunk from the equation, security and observability respectively grew 6% and 12%, respectively, year-over-year. Robbins said Cisco added 230 customers for its extended detection and response (XDR) platform.

Related:Cisco Chief Partner Officer Jeff Sharritts Leaving Company

Collaboration stayed the same at $1 billion.