What To Expect From Cisco’s Q1 Results

by Trefis Team
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Cisco (NASDAQ:CSCO) is scheduled to report its fiscal Q1 earnings after the market closes on Wednesday, November 14. The company reported broad-based growth in Q4 of fiscal 2018, and guided for stronger-than-expected growth for Q1. We expect the themes of network transitioning to cloud and momentum in Cisco’s recurring revenues to continue driving growth for the company.

We have a price estimate of $54 per share for Cisco, which is around 10% higher than the current market price. Our interactive dashboard on Cisco’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation.

Relevant Trends

The company saw a return to growth in 2018 predicated on strength in infrastructure platforms (ex-routing), applications and security. In the infrastructure platforms segment, data centers helped drive +7% y-o-y revenue growth (in Q4) which is expected to continue given the secular cloud adoption trends.

The applications area was also strong, with upticks in unified communications, telepresence, conferencing, and AppDynamics. While the company did not break out the growth between AppDynamics and remote access solutions, even if AppDynamics was the driver of +10% y-o-y growth in revenue (Q4), remote access also appeared to witness at least mid- to high-single digit growth.

The +12% y-o-y growth in revenue (Q4) for the security division was attributed to strength across network security, unified threat, policy and access, and web security. Meanwhile, momentum on the product side also helped services revenue grow by +3% y-o-y (Q4). Furthermore, the company guided for 5-7% y-o-y growth in Q1 revenue for fiscal 2019. For Q1, we will be listening for some color around growth in deferred revenue and sustainability of momentum.

As Cisco increasingly transitions to a subscription-based revenue model, delivering a larger portion of its products through software (and incrementally through the cloud), the company is likely to continue seeing improvements in growth.

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