Cisco Reports Software Growth, Stays Mum on Splunk Rumors

Cisco Systems beat analyst expectations in its fiscal second-quarter earnings, but falling collaboration revenue leaves room for improvement.

Cisco drove $12.7 billion in revenue, an increase of 6% from the year-ago quarter. The company had said last quarter that it was anticipating revenue growth between 4.5% and 6.5%. CEO Chuck Robbins said Cisco still faces supply chain issues. Those challenges offset the 30% product order growth Cisco reported in its second quarter.

Cisco saw solid growth in multiple product categories. The company reported 9% year-over-year growth for software product revenue. In addition, Cisco’s Internet for the Future category increased 42% year-over-year ($1.3 billion). Its optimized application experiences improved 12% year-over-year to $180 million, and its networking business increased 7%, to $5.9 billion.

Not all product categories grew, however. Enterprise routing dipped down, despite growth in SD-WAN. In addition, the networking business dropped slightly from its fiscal first quarter.

Moreover, Cisco’s hybrid work product portfolio (which it will rename as “Collaboration”) dropped 9%, to $1.07 billion. This portfolio includes its Webex unified communications offering.

Cisco’s disappointing collaboration numbers might explain why it has been working to expand partner efforts in that area. The company has also been expanding its agent/commission-based partner model. Telarus recently joined Intelisys as technology solutions brokerages that offer Cisco Webex to their subagents.

“They’re just not seeing the cloud adoption from some of their traditional channels, and they really see this channel as the future of cloud sales,” Telarus vice president of UCaaS Shane Speakman said earlier this month.

Splunk Acquisition?

Media reports circled last weekend that Cisco offered Splunk $20 billion for a buyout.

When pressed about Cisco’s rumored acquisition offer for Splunk, Robbins said Cisco does not comment on rumors. However, he said Cisco will take a “disciplined” approach to inorganic growth.

“We are constantly evaluating potential opportunities,” Robbins said on an earnings call.

Chris Ichelson runs 360 SOC, an MSSP and Cisco partner. He said a Splunk buyout would help his business immensely. Specifically, it would help him break into the Splunk partner base.

360 SOC’s Chris Ichelson

“That’s a game-changer for me, because then it opens Splunk up to us,” Ichelson told Channel Futures. “Splunks wants a $100 million commitment. If you don’t give them $100 million, you can’t be an MSSP with them.”

However, Ichelson said Cisco would probably need to up its offer to $30 billion. He referenced IBM’s $34 billion acquisition of Red Hat.

“I think it calls for parallel money,” he said.

Cisco executives have been working to make the company offer more software and services.

You can check out Cisco’s financial information for yourself.