Cisco recently unveiled its Q4 and fiscal year 2024 results, showing a mixed performance. The company reported a total quarterly revenue of $13.6 billion, a 10% decline, and a fiscal year revenue of $53.8 billion, down 6% from the previous year. Despite the setbacks, CEO Charles Robbins emphasized their strategic focus on AI, cloud, and cybersecurity for 2025.
One significant achievement was reaching over $1 billion in AI sales. Robbins highlighted that three of the top four hyperscalers are using Cisco’s Ethernet AI fabric. He projects another $1 billion in AI product orders for the next year. The company believes this milestone positions it as a key player in the growing enterprise AI sector. “We have a robust AI and automation framework that touches at least 50% of our service requests,” Robbins said, adding that AI assistance is now integrated into their products to enhance customer support.
Another major highlight was the contribution from Splunk. Acquired for $28 billion in September 2023, Splunk has been essential in bolstering Cisco’s AI and cybersecurity capabilities. The firm contributed approximately $960 million to the total revenue for Q4 2024 and around $1.4 billion for the fiscal year. Robbins attributed Cisco’s highest gross margin in two decades, 67.5%, to Splunk’s impact. “We have an unmatched capability to unlock the full power of the network with market-leading security and observability solutions,” he added.
However, these technological and financial achievements come at a human cost. The company announced plans to lay off over 6,300 employees, about 7% of its global workforce. According to Executive VP and CFO Richard Herren, the layoffs aim to find efficiencies and reallocate resources to growth areas. “It’s not about cost saving. It’s much more about finding efficiencies. Think of it more as reallocating,” Herren explained.
In terms of financial specifics, the company’s total product revenue fell to $9.9 billion, a 15% decrease attributed to customer inventory issues. However, service revenue rose by 6% to $3.8 billion. On the downside, Cisco’s largest product category, networking, saw a significant decline of 28% compared to Q4 2023.
The mixed financial results underscore the challenges and opportunities that Cisco must navigate. While the company strengthens its position in AI, cloud, and cybersecurity, it must balance these advancements with human and logistical considerations. The layoffs, in particular, signal a strategic pivot aimed at aligning resources with growth areas, albeit at a considerable human cost. As Cisco moves into 2025, its focus on these evolving technologies promises both innovation and disruption.
