Cisco Product Bookings Boom As Component Shortages Continue To Impact Tech Giant

The networking giant posted its biggest product bookings quarter in more than a decade and strong 2021 earnings, but Cisco isn’t immune to supply chain issues, according to Cisco CEO Chuck Robbins.

Cisco Systems had its largest product bookings quarter in more than a decade, proving that enterprise IT spending is bouncing back from the COVID-19 pandemic. But supply chain issues continue to plague the tech giant.

Aside from product order growth of 31 percent, Cisco saw double-digit order growth across all of its customer markets and geographies, said Cisco Chairman and CEO Chuck Robbins during the company‘s fourth fiscal 2021 earnings call on Wednesday evening.

While demand is high for IT products right now, there’s no denying that Cisco, like most other companies, is facing component shortages. Robbins said that supply chain issues will impact the first half of fiscal 2022, if not trickle into the second half of the year as well.

“We’re seeing IT budgets grow as companies begin to implement their critical future plans … however, we do recognize that uncertainty remains,” Robbins said of the COVID-19 pandemic and delta variant spread. “While we’re seeing increasing demand for our technology, we’re also continuing to manage through component shortage challenges that nearly every company is experiencing.”

[Related: Cisco To Buy App Monitoring Specialist Epsagon For A Reported $500M]

Software subscriptions held steady at 81 percent of Cisco‘s total software revenue during Q4 2021. As interest in subscription-based solutions grows, the company’s overall subscription revenues climbed $15 billion for the year, Cisco said.

Cisco security, a bright spot in the tech giant’s financials throughout the pandemic, posted a modest 1 percent growth during fourth third quarter of 2021 of $823 million. The segment increased by 7 percent for the overall fiscal 2021 year. Security recurring revenue grew 13 percent during the fourth quarter, according to Cisco.

The company’s applications business segment, which includes AppDynamics and Cisco’s videoconferencing and collaboration portfolio, declined 1 percent year over year to $1.3 billion in revenue in the fourth quarter of the year. However, recurring subscription revenue for Webex grew 9 percent during the quarter, said R. Scott Herren, Cisco’s CFO. The segment also declined by 1 percent overall for the year. Cisco has rolled out more than 800 Webex innovations and features since September aimed at boosting meeting productivity, regardless of the end users’ location.

Security product bookings, as well as collaboration bookings, where both substantially higher than revenues during Q4, Robbins said.

“In both Applications and Security, we are seeing strong revenue growth in the strategic areas that we and our customers investing in,” Herren said.

Cisco’s Infrastructure segment, which includes the core switching and routing businesses, posted double-digit growth of 13 percent during the quarter following fallout from the COVID-19 pandemic that pulled down router and server revenues in past quarters. The Infrastructure segment rebounded with revenues of $7.5 billion compared to last year’s result. The segment’s growth was driven by service provider, cloud customers and double-digit growth for return to office products, such as Meraki wireless offerings and Cat 9k, Herren said. The infrastructure segment stayed flat for the overall 2021 fiscal year.

For Q4 2021 which ended July 31, Cisco’s revenue increased 8 percent to $13.1 billion compared to $12.2 in the year-ago quarter. Cisco posted non-GAAP earnings per share of 84 cents, up 5 percent year over year, and non-GAAP net income of $3.6 billion in Q4 2021, an increase of 5 percent compared to Q4 2020. The company‘s earnings surpassed Wall Street’s predictions of revenues of $13 billion and non-GAAP profits of 82 cents a share.

For the full 2021 fiscal year, Cisco posted $49.8 billion in revenues, a 1 percent increase from 2020‘s result of $49.3 billion.

Cisco during the quarter closed on four acquisitions, including its purchase of Involvio for its education-focused products, risk-based vulnerability management specialist Kenna Security for an undisclosed sum, events technology startup Socio Labs for an undisclosed sum, and Sedonasys Systems, also known as Sedona Systems, a maker of communications technologies, for a reported $100 million.