Cisco CEO Chuck Robbins emphasized the company’s commitment to delivering innovation on a global scale during the recent earnings call. Leveraging the strength of Cisco’s partner and customer ecosystem, Robbins aims to drive growth for their new security and observability subsidiary by tapping into markets where Splunk had limited presence.
The integration of Cisco and Splunk sales forces is already underway, with a focus on cross-selling and upselling to identified customer accounts. Cisco’s CFO, Scott Herren, highlighted potential operational cost increases in fiscal year 2025 due to new channel enablement resources and sales training for the combined teams. However, this investment is primarily driven by revenue synergies rather than cost savings.
Splunk’s positive contribution to Cisco’s quarterly revenue was evident, with the deal closing ahead of schedule in March. In terms of subscription revenue, Cisco saw growth both with and without the addition of Splunk, showcasing the company’s evolving business model. Total annualized recurring revenue (ARR) also saw a significant increase, with Splunk playing a key role in this growth.
Security and observability product sales, in particular, experienced substantial revenue growth year over year, indicating the success of the partnership between Cisco and Splunk. The alignment of the sales teams and the introduction of incentives to drive adoption among Cisco customers demonstrate a focused approach to leveraging the combined strengths of both companies.
Looking ahead, Cisco is poised to capitalize on the AI opportunity, with expectations of $1 billion in AI product orders in fiscal year 2025. The company’s recent design awards and investments in AI infrastructure position them well to drive growth in this area. Additionally, the partnership with Splunk reinforces Cisco’s competitive edge in offering integrated security and observability solutions.
Robbins expressed confidence in addressing deployment challenges and normalizing demand in the coming year. Despite a challenging global landscape, Cisco anticipates gradual improvements in customer product deployments and stabilization of demand across various sectors. The company is also optimistic about the prospects of their web-scale business, particularly in the hyperscaler space.
In conclusion, Cisco’s strategic focus on innovation, revenue synergies, and customer engagement through the integration of Splunk reflects the company’s commitment to driving growth and reinforcing its position as a leader in the industry. As they continue to navigate market dynamics and align their operations, Cisco aims to deliver value to customers and shareholders alike.
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https://www.crn.com/news/networking/2024/cisco-q3-2024-earnings-partners-part-of-splunk-growth-plans-deployment-woes-waning
