Cisco could shift to ‘as a service’ model amid Covid-19 downturn
Cisco CEO Chuck Robbins is considering a transition to “focus on new areas” amid a decrease in profits of 5% in the 2020 financial year.
Cisco generated $49.3 billion in total revenue throughout the 2020 fiscal year, with a total of 51% of the company’s entire earnings generated from software and services.
Chuck Robbins, CEO, Cisco, commented: "By the end of fiscal 2020, we achieved our goal of more than half of our revenue coming from software and services, and this strategy continues to resonate with customers as they digitise their organisations.Throughout fiscal 2020, Cisco has demonstrated operational resilience based on our strong customer relationships, solid financial foundation, and differentiated innovation.
"As we focus on the future, we are rebalancing our R&D investments to focus on new areas so we can continue to offer customers the best, most relevant technology in simpler, more easily consumable ways."
Looking at Cisco’s decrease in earnings in the fiscal year, product revenue had dropped by 13% whereas service revenue remained flat.
Kelly Kramer, CFO, Cisco, added: "Software subscriptions now make up 78% of our software revenue and remaining performance obligations continued to grow strongly in the quarter, reflecting the strength of our portfolio of software and services. We are seeing the returns on our investments in innovation as we focus on delivering long term growth and shareholder value."