As it relates to product revenue performance, the growth was broad-based, with Infrastructure Platforms increasing 2%, Applications surging 19%, and Security, a portfolio which the company has been beefing up in the recent past, jumped by 11%.
The company is continuing its acquisition spree to continue to build on its security portfolio, and early this month acquired Accompany, a privately held company that renders an AI-driven relationship intelligence platform. During the quarter, the communications equipment company closed on the BroadSoft and Skyport Systems acquisitions. Cisco has been looking for acquisition opportunities of late, despite its huge spending plans related to its share buybacks and dividends.
“We are executing well against our strategy, our innovation pipeline has never been stronger, and we continue to make great progress in transforming towards more software and subscriptions,” said Chuck Robbins, CEO.
Cisco is targeting revenue to grow 4% to 6% year-over-year in the fourth quarter, with adjusted earnings per share expected to come in the range of $0.68 to $0.70. On a non-GAAP basis, gross margin rate is expected to come in the 63% to 64% range, with operating margin expected to fall in the range of 29.5% to 30.5%.
Despite the upbeat earnings and revenue results, shares of Cisco fell 4% during the extended hours trading. The stock has risen 7% so far this year.