Despite a growing range of incredible products and services, Cisco’s financial performance has remained somewhat challenging. An overall evaluation of the fourth quarter financial results show that Cisco’s revenue fell for the seventh quarter in a row, though Cisco reported that their results are “in-line” despite significant losses in various segments.
For the fourth quarter of 2017, the revenues for Cisco’s collaboration segment fell by a rate of 3% year-over-year. There has been some discussion that the reduction in this area might be due to a lack of UC endpoints in the marketplace, which was further offset by a growth in conferencing solutions. Ultimately, the Cisco collaboration segment accounted for about 9.1% of the total revenue for the fourth fiscal quarter in 2017. Overall, Cisco earned a net income of $2.4 billion.
Pushing into The Collaborative Sector
So far, Cisco is falling just beneath Wall Street expectations with non-GAAP earnings of 58 cents per share with $11.89 billion in revenue, compared to an expected 60 cents per share, and $12.06 in revenue. According to Cisco, their collaboration sector, which offers team-management solutions to enterprises such as online meetings, instant messaging, and video conferencing held a 48% share in the conference space at the end of 2016. The company also claimed to hold a 41% share in customer care and voice markets at the end of 2016.
Of course, Cisco is still looking forward to the future with hope for significant growth. Not so long ago, the communications brand announced that the Total Available Market (TAM) for collaboration should rise to about $21 billion or more in 2020, a significant upgrade from $11.3 billion in 2016. To put that a little further into perspective, the cloud market for collaboration is also expected to see a growth of about 17% CAGR up until 2020.
Growth in the Collaboration Segment
Of course, it’s worth looking at these numbers, while keeping mind that we’re still waiting to see the impact of Cisco’s new purchase of the AI company MindMeld, which was acquired in the fourth fiscal quarter, for $125 million. The deal for this purchase should close at the end of this year, and the AI platform is sure to bring new opportunities and potential to Cisco’s market.
MindMeld creates a dialogue management platform which allows computers to respond to voice and chat applications. Right now, the interface is being used by some of the biggest technology giants in the world, including Samsung, Google, and Intel.
The Future for Cisco
It seems that Cisco is coming to the end of their fourth fiscal quarter for 2017 on the right track when you consider their overall decision to move into the software segment. The company posted a 50% yearly growth rate in their deferred revenue for software and subscription services, and they’ve continued to expand on their strategy of moving away from hardware products.
Overall, it appears Cisco is doing relatively well on its transition into software. After all, such a huge transformation would hit any company hard. While there’s still more work to be done, the collaboration segment, and the software business is poised for growth – and for Cisco, that’s all that matters.