Cisco Hits $1 Billion in AI Sales, CEO Charles Robbins Says
Following reports Earlier this week, thousands of Cisco employees will soon be out of work, the company released its Fourth Quarter and Full Year 2024 Resultsreporting total quarterly revenue of $13.6 billion, down 10%, and annual revenue of $53.8 billion, down 6% from a year earlier. The company’s CEO, Charles Robbins, told investors and analysts that AI, cloud and cybersecurity are Cisco’s priorities going into 2025.
Cisco Reaches Milestone in AI
On the same conference call, Robbins celebrated Cisco’s passing the $1 billion mark in AI sales, announcing that three of the top four hyperscalers have deployed the company’s Ethernet AI fabric. He added that additional $1 billion in AI product orders are expected in 2025.
Robbins added: “We believe we are well positioned to be major beneficiaries of the proliferation of AI applications in the enterprise… We have a robust AI and automation framework that covers at least 50% of our service requests. In addition, we are integrating AI support into our products so that our customers and partners have efficient options for accessing support.”
Splunk Purchase Proves Profitable
In September 2023, Cisco purchased a cybersecurity company Splunk for $28 billion, its largest acquisition to date, as part of a broader effort to increase recurring software revenue relative to its bottom line. At the time, Robbins highlighted how the deal would boost Cisco’s AI capabilities, and so far, that’s still his position.
Robbins attributes Cisco’s fourth-quarter gross margin of 67.5 percent, the company’s highest in 20 years, to Splunk. “With Splunk now part of Cisco, we believe we have an unmatched ability to harness the power of the network with industry-leading security and observability solutions to deliver even greater value to our customers,” he continued.
Specifically, Splunk contributed approximately $960 million to total revenue in the fourth quarter of fiscal 2024, and approximately $1.4 billion to total revenue in fiscal 2024. Overall, the company’s security segment grew 81%, driven by Splunk.
Other points to remember
“This is not about cutting costs,” Richard Herren, the company’s executive vice president and chief financial officer, said of the job cuts. He said the layoffs, which represent more than 6,300 jobs — or 7% of the company’s global workforce — are “more about finding efficiencies” to allow the company to “redirect more resources … to the fastest-growing areas of the business … Think of it more as a reallocation.”
The fourth-quarter results also showed total revenue of $9.9 billion, down 15% due to “customer inventory issues,” while services revenue increased 6% to $3.8 billion. Finally, networking, which is Cisco’s largest product category, fell 28% compared to its fourth-quarter 2023 revenue.
