In Q2 2024, Cisco Systems Inc (CSCO) reported a revenue of $12.791 billion, reflecting a 6% decrease year-over-year. The decline was anticipated given macroeconomic uncertainties and inventory digestion challenges faced by enterprise and service provider customers. Despite the revenue drop, Cisco demonstrated strong operating leverage with an impressive non-GAAP operating margin of 33%. Management emphasized ongoing strategic transformation towards software subscriptions, showcasing ARR growth of 6% and a notable shift towards recurring revenue streams.
Notably, management maintained a stable outlook and raised its quarterly dividend to $0.40 per share, indicating confidence in the company’s cash flow generation and commitment to returning value to shareholders. The pending acquisition of Splunk is positioned as a catalyst for significant software growth by adding approximately $4 billion in ARR once completed, although it remains subject to regulatory approval.