Cisco Ramps Up Dividend as Demand for Software Subscriptions Drives Higher Second Quarter Earnings

Technology and consulting company Cisco Systems (CSCO) raised its dividend after markets closed on Wednesday as it posted higher revenue and earnings for its fiscal second quarter which was supported by rising demand for its subscriptions software.

The San Jose, California-headquartered company, which divested its Service Provider Video Software Solutions (SPVSS) business during the period, generated $12.45 billion in sales excluding SPVSS during the quarter ended January 26, up from $11.88 billion in the corresponding quarter of the prior year, according to results.

Adjusted earnings per share came in at $0.73, up from $0.63 per share in the prior year period. Estimates from analysts were not immediately available for comparison.

The results were supported by rising demand for the company’s software subscriptions, now 65% of Cisco’s total software revenue compared to 54% a year earlier.

Broken down by geography, total revenue in America was up by 7%, in Europe, the Middle East and Africa (EMEA) it was 8% higher and in Asia Pacific, Japan and Greater China (APJC) up 5%.

Product revenue performance was also broad based with growth in Cisco’s applications up 24% to $1.47 billion, while the security segment was up 18% to $658 million and infrastructure platforms – which generated the lion’s share of group sales- was up by 6% to $7.13 billion.

For the third quarter, the company is targeting year-on-year revenue growth of 4% to 6% and adjusted earnings of $0.76 to $0.78 per share. The company also increased its quarterly dividend by 6% to $0.35 per share and added $15 billion to its stock buyback program.

“We are very pleased with our strong performance in the quarter,” Chuck Robbins, chief executive of Cisco, said. “Our teams are executing incredibly well, aggressively transitioning to a software model and accelerating our pace of innovation.”