Cisco managed to deliver revenue which was flat year over year in its fiscal Q4 2022 (ended July 30) despite having predicted a sales slide due to supply chain conditions. While net income fell 6% year on year in the quarter, executives said on an earnings call they’re starting to see a light at the end of the tunnel as supply constraints begin to ease.
Fiscal Q4 revenue came in at $13.1 billion, with profit dipping to $2.8 billion from $3.0 billion in the year-ago period. While sales were down 3% and 2% respectively in the Americas and Asia-Pacific, Japan and China regions, revenue jumped 8% in Europe, the Middle East and Africa.
By segment, Secure, Agile Networks accounted for the largest revenue share, though sales fell 1% to $6.1 billion. During an earnings call, CFO Scott Herren noted that while it saw growth in its Catalyst 9000, Nexus 9000 and Meraki switching products, enterprise routing declined primarily due to slides in edge and SD-WAN. Internet for the Future revenue dropped 10% to $1.26 billion, with Herren stating declines in cable, edge and optical outpaced growth in web-scale revenue.
Collaboration revenue rose 2% to nearly $1.2 billion. End-to-End Security posted the highest growth rate, with sales increasing 20% to $984 million. Optimized Application Experiences revenue rose 8% to $185 million and Other Product revenue fell 22% to $3 million.
“From an annual growth rate perspective, we clearly faced some very tough comparisons from the record orders we saw in Q4 last year, where we had over 30% growth,” Cisco CEO Chuck Robbins said on the call. “Based on that, the year-over-year decline was not a surprise nor is it concerning. It's important to keep in mind that in the near term, the rate and pace of our revenue growth is much more a function of component availability than on our quarterly product order growth.”
Robbins noted supply constraints began to ease in the latter half of FQ4 and those improvements have held into the start of its FQ1 2023. He added the company has had “hundreds of product redesigns going on” to cut out constrained components and it now expects “two of our high-volume products that also have good margins will begin to ship in the redesigned space sort of toward the latter into Q1 into the balance of the year.” That expectation is part of why it expects an improvement going forward.
For the current quarter, Cisco predicted revenue growth of between 2% and 4%, with full year fiscal 2023 revenue growth estimated to be between 4% and 6%.