Cisco saw its shares rise in extended trading on Wednesday after the networking giant announced a 7% reduction in its global workforce while reporting stronger-than-expected quarterly earnings.
In the fiscal fourth quarter, Cisco posted adjusted earnings of 87 cents per share, slightly beating the 85 cents per share projected by analysts, according to LSEG. The company also reported revenue of $13.64 billion, exceeding the expected $13.54 billion. However, Cisco’s sales declined 10% from the $15.2 billion reported during the same period last year, marking the third consecutive quarter of revenue decline.
Cisco attributed the decline to some customers installing equipment purchased in previous quarters. However, subscription revenue from its $28 billion acquisition of Splunk helped offset the downturn. Splunk contributed $960 million to the quarter, pushing security revenue up by 81% to $1.8 billion, while networking revenue fell 28% to $6.8 billion.
To streamline operations and bolster growth, Cisco announced a restructuring plan that will result in $1 billion in pre-tax charges, with $700 million to $800 million hitting this quarter and the remainder across fiscal 2025. Cisco stated the restructuring will help “invest in key growth opportunities and drive more efficiencies.”
Looking forward, Cisco expects another period of revenue decline in the first quarter of fiscal 2025, projecting revenue between $13.65 billion and $13.85 billion, down from $14.7 billion in the same period last year.
Cisco’s pivot to software, cybersecurity, and recurring subscription services reflects its strategy to diversify away from its legacy networking hardware business as enterprises continue to migrate to the cloud.
