Cisco cuts 7% workforce by 7%, reports Q3 earnings

Cisco reported its third consecutive quarter of declining revenue, marking its first full fiscal year drop since 2020. The company is cutting 7% of its global workforce, with earnings and revenue topping analysts’ estimates. Cisco announced in a filing that it will implement a restructuring plan that will result in $1 billion in pre-tax charges to its financial results, allowing it to invest in growth opportunities and drive more efficiencies in its business. The company said $700 million to $800 million of charges will be recognized in the current quarter, with the rest hitting over the course of fiscal 2025.

Cisco has been mired in an extended stretch of declines, with sales falling for a third straight quarter. The company’s core networking business, which includes switches and routers, has been in decline since large enterprises started moving to the cloud years ago. The company has bolstered its software and securities business to diversify and bring in more recurring subscription revenue.

Revenue in the fourth quarter dropped 10% from $15.2 billion a year earlier, and sales for the fiscal year declined for the first time since 2020. The slide is projected to last for one more period. For the first quarter, Cisco said it expects revenue of $13.65 billion to $13.85 billion, down from $14.7 billion in the prior year. Analysts were expecting $13.7 billion.

While the downward trajectory has continued, Cisco outperformed expectations with the help of increased subscription revenue from the $28 billion acquisition of Splunk, which closed in March and was the company’s biggest deal ever. In the latest quarter, networking revenue plummeted 28% to $6.8 billion, security revenue rose 81% to $1.8 billion, and collaboration revenue was about flat at $1 billion. Splunk contributed $960 million in revenue.