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1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problemsCisco’s fiscal fourth-quarter 2024 report, released on August 14, 2024 for the quarter ended July 27, answered five investor questions: whether Splunk could become a durable growth engine, whether Cisco’s security portfolio could compete with specialists, whether networking demand was bottoming, whether AI orders were becoming material, and whether cloud migration was more threat than opportunity. Cisco reported revenue of $13.6 billion and non-GAAP EPS of $0.87. Revenue was at the top of its guidance range but still down 10% year over year, so the quarter showed stabilization signals rather than a broad return to growth.
What Cisco was expected to report
Before the call, Cisco guided to fourth-quarter revenue of $13.4 billion to $13.6 billion, non-GAAP EPS of $0.84 to $0.86, non-GAAP gross margin of 66.5% to 67.5%, and non-GAAP operating margin of 31.5% to 32.5%. The company expected Splunk to contribute $950 million to $1 billion of revenue and said acquisition financing would reduce non-GAAP EPS by approximately $0.03. The quarter was Cisco’s first full reporting period after completing the Splunk acquisition in March 2024.
The earnings call was scheduled for Wednesday, August 14, 2024, at 1:30 p.m. Pacific Time. Guidance details come from Cisco’s third-quarter release: Cisco Q3 FY2024 earnings release.
| Metric | Q4 FY2024 guidance |
|---|---|
| Revenue | $13.4 billion–$13.6 billion |
| Non-GAAP EPS | $0.84–$0.86 |
| Non-GAAP gross margin | 66.5%–67.5% |
| Non-GAAP operating margin | 31.5%–32.5% |
| Splunk revenue contribution | $950 million–$1.0 billion |
1. Splunk: contribution or growth engine?
The acquisition changed Cisco’s reported growth rate and product mix, but reported revenue alone could not show whether integration was working. Investors needed to separate revenue acquired from Splunk from organic Cisco performance and look for evidence that customers were buying combined networking, security and observability offerings.
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What mattered
- Whether Splunk revenue was accelerating beyond the acquisition model or merely meeting the forecast.
- How quickly Cisco and Splunk products were being bundled and cross-sold.
- Whether management could show stronger annual recurring revenue, lower churn or improved sales productivity.
- How financing and integration costs affected earnings.
- Whether customers were adopting integrated offerings rather than continuing to buy the portfolios separately.
Splunk ultimately contributed approximately $1.4 billion of fiscal 2024 revenue. Acquisition financing reduced fourth-quarter GAAP EPS by $0.16 and non-GAAP EPS by $0.04, according to Cisco’s results release: Cisco FY2024 earnings release. Those figures demonstrate the distinction between strategic value and near-term earnings accretion; they do not by themselves prove successful cross-selling.
2. Security: could Cisco compete with specialists?
Cisco was using Splunk to strengthen network security, threat detection, SIEM, observability and incident response. The competitive test was not simply whether security revenue grew, but whether Cisco could win budget against Palo Alto Networks, CrowdStrike, Zscaler, Check Point, Fortinet and Microsoft Sentinel.
Signals investors needed
- Security growth excluding Splunk’s acquired revenue.
- Bookings and renewal trends, distinguished from recognized revenue.
- Evidence that Splunk improved Cisco’s SASE, firewall and detection proposition.
- Customer preference for a consolidated platform versus best-of-breed tools.
- Progress in endpoint security, where Cisco has been less prominent than CrowdStrike and SentinelOne.
Channel surveys cited by CRN portrayed Cisco as a leading networking vendor but a less favored provider in some security categories than Palo Alto Networks and CrowdStrike. Survey sentiment is directional evidence from resellers, not audited market share or proof of revenue momentum.
3. Networking demand, communications spending and inventory
Cisco’s core networking business had been constrained by customer inventory digestion, delayed projects and longer sales cycles. A recovery in orders could precede a recovery in reported revenue because channel partners might sell existing stock before placing new orders.
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Questions for the quarter
- Were product orders improving without Splunk?
- Were enterprise and service-provider projects restarting, or merely benefiting from easier comparisons?
- Was excess channel inventory declining?
- Were customers beginning replacement cycles after extending the life of existing equipment?
- Was Cisco holding share against HPE, Arista and white-box alternatives?
The eventual revenue result reached the $13.6 billion ceiling of guidance, but total revenue still fell 10% year over year. Product orders rose 14%, or 6% excluding Splunk. That combination indicates improving demand indicators without establishing that shipments or the installed-base cycle had fully recovered.
4. AI infrastructure: orders or real revenue?
AI was a major valuation question, but the important accounting distinction was between orders and recognized revenue. Orders can ship over several periods, be delayed or canceled, and do not establish current-period profit.
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What management needed to clarify
- Whether orders came from webscale customers, enterprises or both.
- Which products were involved, including Ethernet switching, data-center networking, optics and routing.
- When orders were expected to convert into shipments and revenue.
- Whether Cisco was gaining enterprise AI deployments even if hyperscale switching remained competitive.
- How much AI demand could offset weakness in conventional campus, enterprise and service-provider networking.
Cisco’s fourth-quarter materials later disclosed approximately $1 billion of AI orders with webscale customers to date and expected another $1 billion. The company also announced Cisco Nexus HyperFabric AI clusters with Nvidia. These disclosures support a meaningful demand opportunity, but they are not equivalent to $1 billion of quarterly AI sales. See the Q4 FY2024 earnings slides and the CRN preview.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.5. Cloud exposure: threat, opportunity or both?
Cloud migration has mixed effects on Cisco. Moving workloads to public cloud can reduce some on-premises hardware purchases, while expanding demand for data-center networking, security, observability and hybrid-cloud connectivity.
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The investment test
- Whether Cisco was losing incremental IT budget as workloads moved to public cloud.
- Whether customers viewed Cisco as a strategic hybrid-cloud and security provider.
- Whether hyperscale and data-center expansion created demand that offset weaker traditional enterprise networking.
- Whether Cisco’s integrated portfolio could compete with cloud-native specialists.
Survey data cited by CRN indicated that Microsoft was more popular for hybrid-cloud management and that Cisco was not among the leading choices in that category. That does not mean cloud migration is uniformly negative for Cisco: its effect depends on the mix of legacy hardware, data-center networking, security and observability spending.
What Cisco ultimately reported
Cisco reported fourth-quarter revenue of $13.6 billion, down 10% year over year; GAAP EPS of $0.54, down 44%; and non-GAAP EPS of $0.87, down 24%. GAAP gross margin was 64.4% and non-GAAP gross margin was 67.9%.
| Metric | Fiscal 2024 result |
|---|---|
| Fiscal-year revenue | $53.8 billion, down 6% |
| Non-GAAP EPS | $3.73, down 4% |
| Total subscription revenue | $27.4 billion, 51% of total revenue |
| Total ARR | $29.6 billion, including $4.3 billion from Splunk; up 22% |
| Total software revenue | $18.4 billion, up 9% |
| Software subscription revenue | $16.4 billion, up 15% |
| Remaining performance obligations | $41.0 billion, up 18%; 51% expected within 12 months |
For fiscal 2025, Cisco guided to revenue of $55.0 billion to $56.2 billion, GAAP EPS of $1.93 to $2.05 and non-GAAP EPS of $3.52 to $3.58. First-quarter guidance was revenue of $13.65 billion to $13.85 billion and non-GAAP EPS of $0.86 to $0.88. Cisco also announced a restructuring plan intended to create efficiencies and fund investment in growth areas. Results and guidance are documented in Cisco’s newsroom release and investor-relations release.
How to interpret the quarter
- Guidance beat versus recovery: Revenue reached the guidance ceiling, but a 10% year-over-year decline is not a return to growth.
- Orders versus revenue: Ex-Splunk order growth of 6% suggested stabilization, while recognized revenue remained weak.
- ARR versus sales: ARR and subscription revenue growth improved visibility but did not erase pressure in product revenue.
- AI orders versus AI revenue: The disclosed orders established customer interest, not current-period sales or profitability.
- Acquisition contribution versus integration: Splunk added recurring revenue and capability, while financing and integration affected earnings.
The Bottom Line
Cisco’s Q4 FY2024 report showed a company in transition: core networking was still contracting, orders and recurring revenue were improving, Splunk materially changed the software and security mix, and AI created a potentially significant but immature growth channel. The central follow-up for investors was whether Cisco could convert those orders, subscriptions and cross-selling opportunities into sustained organic revenue growth.
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