Cisco Systems: AI Investments, Integration and Continued Innovation between Cisco Systems and Splunk

Cisco Systems (Cisco) had a promising Q3, with organic revenue aligning with the higher end of guidance expectations. The company has transformed its business model, with over half of its total revenue now coming from subscription services, providing the company with a robust base for potential long-term growth. The acquisition of Splunk was also completed, adding over $4 billion in annualized recurring revenue and strengthening Cisco’s position as one of the world’s major software companies. A strong performance in Q3 drove Cisco’s gross margins to exceed the high end of expectations. This resulted in a better-than-expected earnings per share performance. The company delivered impressive growth in annualized recurring revenue, remaining performance obligations, and subscription revenue. The closing of the Splunk acquisition also significantly expands Cisco’s portfolio of software-based solutions.