During its Investor Day, Cisco CSCO provided Optimistic revenue forecast thanks to continued momentum in the software and subscription industry. The company plans to report a 5-7% CAGR for its revenue through fiscal year 2025.
Cisco expects emerging trends such as hybrid cloud, web scale, WiFi 6 and 400G, hybrid work, cloud security, 5G deployment, full stack observability, The Internet of Things (IoT) and advanced computing will drive the company’s revenue in the coming days.
Cisco focuses on creation a portfolio of âcloud-first and app-centricâ solutions to provide customers with comprehensive solutions to accelerate digital transformation. The company is also focused on improving revenue from software and subscription services. Subscriptions guarantee a constant stream of income.
The company noted that software and services revenue contributed 53% of total revenue in fiscal 2021. For the fourth quarter of fiscal 2021, software revenue rose 6% to $ 4 billion. Software subscription revenue increased 9%. Subscriptions contributed 81% of Cisco’s software revenue in the last quarter. Remaining performance bonds (“RPO”) at the end of the fiscal fourth quarter stood at $ 30.9 billion, up 9%.
Cisco Systems, Inc. Price and consensus
Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote
Going forward, the company will publish revenue around six new product categories: Secure, Agile, Optimized Application Experiences, Hybrid Work, Internet for the Future, End-to-End Security, and Capabilities at the Edge. Currently, the company reports its revenue in the Infrastructure Platforms, Applications, Security, and Other Products categories.
Cisco also underscored its commitment to reducing greenhouse gas (GHG) emissions. The company strives to achieve net zero for GHG emissions by 2040 and net zero for global scopes 1 and 2 emissions by 2025.
Many opportunities for Cisco
Cisco is an IP networking company that provides products and services to service providers, businesses, business users, and individuals.
The strength of the company’s Catalyst 9000 and Nexus 9000 switch solutions drives the company’s revenue. The accelerated rollout of 5G, the growing adoption of Wi-Fi 6 products and the increased demand for Meraki solutions are key enablers.
The Acacia acquisition will allow Cisco to expand its portfolio of optical systems, including coherent optical solutions to support its âInternet for the Futureâ strategy.
The pursuit of remote work and the adoption of a flexible working model bodes well for the company’s business communications platform, Webex. In the last reported quarter, recurring subscription revenue for Webex grew 9% year over year.
The company is constantly add new functionalities to the Webex suite to consolidate its competitive position in the face of Zoom video ZM and Microsoft‘s MSFT Teams App.
Cisco’s security solutions portfolio enjoys consistent traction in cloud-based and zero-trust security offerings, as well as strong momentum for Duo and Umbrella solutions. The company’s differentiated end-to-end approach across network, cloud and endpoints helps it expand its customer base. The company is witnessing a healthy adoption of identity and access solutions, advanced threats, and unified threat management solutions. Recurring subscription revenue from the Security business increased 13% year-over-year in the last quarter.
During the fourth quarter of fiscal 2021 conference call, management warned that ongoing component shortages and the resulting supply chain issues and higher costs will continue into the first half of the fiscal year. 2022 and could continue over the remaining half. Low demand for servers is another concern, along with stiff competition from Arista ANET and Juniper in the area of âânetwork infrastructure.
In the past year, Cisco stocks have returned 42.6% versus industrygrowth of 41.8%.
Cisco is currently wearing a Zacks Rank # 3 (Hold). You can see The full list of today’s Zacks # 1 (strong buy) stocks here.
Zacks names “the best single pick to double”
Among thousands of stocks, 5 Zacks experts each chose their favorite to soar + 100% or more in the coming months. Of these 5, research director Sheraz Mian chooses one to have the most explosive advantage of all.
You’ve known this company from its past glory days, but few would expect it to be ready for a monster turnaround. Fresh out of a successful repositioning and flush with A-List celebrity mentions, it could rival or overtake other recent Zacks stocks which are expected to double as Boston Beer Company which climbed + 143.0% in just a bit. more than 9 months and Nvidia which climbed + 175.9% in a year.
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