Cisco delivered strong second quarter results powered by Splunk and strong demand for AI infrastructure.
The company has been a work in progress as it added Splunk to bolster its software and security reach with a lag in AI infrastructure sales. That lag appears to be over.
Cisco reported second quarter earnings of 61 cents a share on revenue of $14 billion, up 9% from a year ago. Non-GAAP earnings were 94 cents a share. Wall Street was looking for Cisco to report second quarter non-GAAP earnings of 91 cents a share on revenue of $13.78 billion.
For the third quarter Cisco projected revenue between $13.9 billion to $14.1 billion with non-GAAP earnings of 90 cents a share to 92 cents a share. For fiscal 2025, Cisco projected revenue of $56 billion to 56.5 billion with non-GAAP earnings of $3.68 to $3.74 a share.
CEO Chuck Robbins said that "as AI becomes more pervasive, we are well positioned to help our customers scale their network infrastructure, increase their data capacity requirements, and adopt best-in-class AI security."
Splunk adds genAI tools, more Cisco touchpoints across observability and security
Robbins added that Cisco is seeing strong demand despite macroeconomic concerns:
"Despite the uncertainty that's going on in the in the US and in the marketplace around the world, I think the one thing our customers understand is that their need to continue spending on technology is just there."
Regarding tariffs, Robbins said that the company has built them into its guidance.
"It's such a fluid environment right now, it's very difficult to say what's actually going to happen. I wanted to protect the guide and ensure that we built in the 25% that's been proposed. We have a supply chain team that, over the last several years, has built a lot of muscle around the tariff that we had in China and how do we work our way around that. We've game planned out several scenarios and steps we can take, depending on what actually goes into effect."
By the numbers:
- Cisco product orders in the second quarter were up 29% from a year ago and up 11% excluding Splunk.
- The company raised its dividend to 41 cents per share and stock buyback program with an additional $15 billion authorized.
- Security revenue in the second quarter was up 117% due to Splunk with observability up 47%. Networking revenue was down 3% from a year ago.
New switches, new demand
Cisco also recently launched new smart switches that aim to meld AI, security and networking together. Cisco announced the Cisco N9300 Series Smart Switches, which feature embedded DPUs for AI data centers. The switches features Cisco Silicon One E100 and AMD Pensando DPUs that can handle data processing to improve overall performance.
In addition, Cisco Hypershield is being embedded into the new switches in a move that brings together networking and security.
The launch of new switches is part of Cisco’s plan to reimagine data centers for AI training and inferencing. The first available Cisco N9300 Smart Switch, which features 24 100G ports, will ship in spring 2025. A higher-end model, which will feature 48 25G ports, two 100G ports, and six 400G ports, is targeted for summer 2025.
On the new switches, Robbins said that there are strong demand for networking gear that's more integrated. "This switch is a great example of the innovation that we are going to drive in our core networking portfolio," he said. "Security needs to be deployed everywhere. And it this really allows us to integrate security deeply into the network and at the speed of the network."
Robbins added that there will be more demand for networking as agentic AI tax networks. He said: "It's clear that agentic AI work streams are going to put more capacity onto the network."
