HITS

Cisco CEO: Company Sees Continued Growth Opportunity with Intent-Based Networking

Cisco continues to see customer acceptance of its intent-based networking solutions that use automation, network analytics and machine learning, and the company still sees a major growth opportunity from the intent-based portfolio, according to CEO Chuck Robbins.

“We’re incredibly pleased with the early acceptance of this intent-based portfolio,” he said Feb. 15, on an earnings call for Cisco’s second quarter (ended Jan. 27).

Adoption has also been “fairly balanced across the geographic regions, probably pretty much in line with what percentage of the business they represent,” he said.

Cisco ended the quarter with 3,100 customers that have already adopted the intent-based platform, he pointed out, adding: “We obviously have the opportunity and we will extend the capabilities across the rest of our portfolio so that our customers who are driving automation can drive it across not only campus switching, but also routing.”

Cisco is also integrating it backwards “in the data center as well as within our security portfolio,” he said, noting the company’s strategy is to “continue to enhance our customers’ ability to drive intent across all of their technology areas as well as to gain context through analytics out of all of their technologies.”

Because Cisco’s “total customer population is well over 800,000 … we obviously have room to run” with expanding the intent-based networking solutions, he said. “From a segment perspective, the commercial marketplace has been a great adopter of the technology, and what I would tell you is that the enterprises have been evaluating it because it represents a different architectural approach with automation and analytics and security built into the network,” he said.

Cisco “saw strong adoption” of its subscription-based Catalyst 9000 switching platform as it “more than doubled our customer base from last quarter to over 3,100 customers,” he said, calling it “the fastest-ramping new product introductions we have had in our history and a fantastic example of the innovation we’ve delivered over the past two years.”

When Robbins became CEO, he “challenged” the Cisco team to “increase the pace of innovation in this space and I could not be more proud of what they’ve accomplished,” he went on to say, adding: “The network is also a key enabler for our customers as they increasingly adopt a multi-cloud strategy. They need a unified, automated and scalable environment across their data centers, private clouds and public clouds. Cisco’s cloud management analytics, automation and security combined with strategic partnerships such as Microsoft and Google position us very well to meet customer needs.

Cisco overall had “a great quarter,” returning to revenue growth, he also said on the call, adding: “We continued to drive momentum in our intent-based networking portfolio and saw strength across the business. We made continued progress in shifting more of our business towards software and subscriptions. This performance led to strong margins, solid cash flow, and double digit non-GAAP EPS growth. We are clearly seeing the results of the strategy we’ve articulated to you over the last 10 quarters.”

Cisco reported Q2 revenue grew 3% from a year ago, to $11.9 billion. But the company swung to an $8.8 billion loss (-$1.78 a share) from a profit of $2.3 billion (47 cents a share).

Product revenue and service revenue each increased 3% in the quarter. Of total revenue, 33% came from recurring offers, up 2 percentage points from a year earlier. Revenue in the Americas grew 5%, but Europe, the Middle East and Africa (EMEA) was flat and Asia Pacific/Japan/greater China (APJC) declined 2%. The product revenue performance “reflected solid growth” in applications and security, which each increased 6%, Cisco said in an earnings news release. Infrastructure platforms increased 2%.

Cisco recently closed on its purchase of BroadSoft for $1.9 billion and that acquisition “provides us with access to its strong user base of 20 million and greatly strengthens our cloud-based collaboration subscription portfolio,” Robbins said.

“I’m very pleased with the traction we’re seeing in our business, the progress we’re making against our strategy, and I’m very optimistic about our future,” he told analysts.