Shares of Cisco dip following mixed Q1 results

Shares of Cisco were down on Wednesday, after the company published mixed first quarter financial results. Sales were up across Cisco’s newly-organized product categories, except for “hybrid work” products, which faced tough year-over-year comparisons.

Total product order growth in Q1 was up 33% year-over-year, while product revenue was up 11%

Cisco’s Q1 non-GAAP earnings per share came to 82 cents on revenue of $12.9 billion, up 8% year-over-year.

Wall Street was expecting first-quarter earnings of 80 cents per share on revenue of $12.98 billion.

“In Q1, we had robust growth and continued strong demand despite the very dynamic supply environment,” CEO Chuck Robbins said in a statement. “Cisco’s technology sits at the heart of the accelerated digital transformation happening today. Our breakthrough innovation, strong demand, and the success of our business transformation position us well for another year of growth in fiscal 2022.”

Overall, product revenue in the first quarter was up 11% year-over-year, totaling $9.53 billion.

Effective for the first quarter of fiscal 2022, Cisco began reporting revenue in the following categories: Secure, Agile Networks; Hybrid Work; End-to-End Security; Internet for the Future; Optimized Application Experiences; Other Products and Services.

The change reflects remarks from Robbins, who said at Cisco’s 2021 Investor Day that the future of the business would stand on six technology areas: secure, agile networks; hybrid work; security; internet for the future; optimized application experiences; and capabilities at the edge.

For Q1, product revenue was led by sales in Secure, Agile Networks, which was up 10% to $5.97 billion. “Internet for the Future” revenue was up 46% to $1.37 billion. End-to-End Security revenue was up 4% to $895 million. Optimized Application Experiences was up 18% to $181 million. Hybrid Work was down 7% to $1.11 billion. Other product revenue was up 9% to $3 million.

Service revenue in Q1 was up 1% year-over-year, reaching $3.37 billion.

Deferred revenue in Q1 was $22.1 billion, up 8% in total, with deferred product revenue up 19%. Deferred service revenue was flat.

For the second quarter, Cisco expects revenue growth of 4.5% to 6.5% year-over-year.

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