Cisco has crossed the $1 billion mark in AI sales, according to CEO Charles Robbins
Following reports earlier this week that thousands of Cisco employees will soon be out of a job, the company has released its Q4 and fiscal year (FY) 2024 results, reporting a total quarter revenue of $13.6 billion — down 10% — and a FY revenue of $53.8 billion, a decrease of 6% year-over-year. Company CEO Charles Robbins told investors and analysts that AI, cloud and cybersecurity are Cisco’s priorities going into 2025.
Cisco hits AI milestone
On the same call, Robbins celebrated Cisco crossing the $1 billion mark in AI sales, sharing that three of the top four hyperscalers have deployed the company’s Ethernet AI fabric. He added that an additional $1 billion of AI product orders are expected in 2025.
Robbins continued: “We believe we are well-positioned to be the key beneficiary of AI application proliferation in the enterprise … We have a robust AI and automation framework that touches at least 50% of our service requests. In addition, we are incorporating AI assistance into our products so that our customer and partners have efficient options to access support.”
Splunk purchase paying off
In September 2023, Cisco bought cybersecurity firm Splunk for $28 billion in its largest acquisition to date as part of a larger effort to increase recurring software revenue to its bottom line. At the time, Robbins emphasized how the deal will increase Cisco’s AI capabilities, and so far, this remains his position.
Robbins attributed Cisco’s Q4 gross margin of 67.5% — the highest for the company in 20 years — to Splunk. “With Splunk now part of Cisco, we believe we have an unmatched capability to unlock the full power of the network with market-leading security and observability solutions to deliver even greater value for our customers,” he continued.
More specifically, Splunk contributed approximately $960 million of total revenue for the fourth quarter of fiscal 2024, and approximately $1.4 billion of total revenue for fiscal 2024. Overall, the company’s security segment was up 81%, thanks to Splunk.
Other takeaways
Of the job cuts, the company’s Executive VP and CFO Richard Herren told those on the call: “It’s not about cost saving.” He explained that the layoffs, which equal out to more than 6,300 jobs — or 7% of the company’s global workforce — are “much more about finding efficiencies” to enable the company to “pivot more resources … into the fastest growth areas within the company … Think of it more as reallocating.”
The Q4 results also show a total product revenue of $9.9 billion, down 15% due to “customer inventory issues,” while services revenue was up 6% at $3.8 billion. Finally, networking, which is Cisco’s largest product category, was down 28% when compared to its Q4 ’23 networking revenues.
