Dive Brief:
- Cisco’s $28 billion acquisition of Splunk, is quickly showing up in financial results and underscoring security’s importance to the company’s outlook. The deal, which marked Cisco's largest in its 40-year history, closed in March.
- Security revenue was up 100% year over year to $2 billion, accounting for 20% of total product revenue during the first quarter of Cisco’s fiscal year 2025, which ended Oct. 26. Excluding Splunk’s contribution to the quarter, security revenue was up 2%.
- “There's a lot that has been going on that I think is contributing to that energy in security,” Chair and CEO Chuck Robbins said during Wednesday’s earnings call. “In general, I think the market, the analysts, the customers all believe that where we are today versus where we were three, four years ago in security is just fundamentally different.”
Dive Insight:
Cisco positioned its big bet on Splunk as a chance to accelerate the enterprise giant’s ability to grow its business and capture broader opportunities in the cybersecurity market.
The company is making strides toward that objective as its core networking business continues to decline. Networking revenue was down 23% to $6.8 billion.
Total revenue was down 6% to $13.8 billion, and without Splunk total revenue would have been down 14%, the company said in its earnings report.
Cisco’s shift to a security-first business is key to the company’s future, but it isn’t quite there yet, said Zeus Kerravala, founder and principal analyst at ZK Research.
“Security is the biggest needle-moving opportunity for Cisco,” Kerravala said. “Security is a massive, fragmented market. They have a unique position if they can tie networking to security and observability with Splunk.”
Cisco’s security business during Q1 was driven by growth in threat intelligence offerings from Splunk and cross-selling opportunities continue to materialize, the company said.
“We now have a dozen updated data integrations between Cisco and Splunk across our security and networking portfolio,” Robbins said.
Cisco also acquired two security companies, DeepFactor and Robust Intelligence, during the quarter.
