Cisco Expects Double-Digit Revenue Growth after 4Q15 Slowdown
Collaboration segment achieves revenue growth of 14% in 4Q15
After the switching and routing business, enterprise collaboration is Cisco Systems’ (CSCO) most valuable business. The collaboration segment includes products such as enterprise content management, enterprise voice, enterprise email, and enterprise social networks. Cisco derived more than 8% of its revenues from the collaboration business in fiscal 4Q15.
Year-over-year revenue growth from Cisco Collaboration accelerated in 4Q15 to 14%. During the 4Q15 earnings call, Cisco management mentioned that Cisco Collaboration had a deferred revenue growth in excess of 20%. This means that we can expect an even larger revenue growth from this segment in the future.
Microsoft, a major competitor in the collaboration market
Cisco’s management also said it has shifted the business model of Cisco Collaboration to a subscription-based model where revenues are earned on a recurring basis. In the past, management credited the positive growth to the fast growth in the telepresence or video conferencing business. During its 3Q15 earnings call, Cisco’s management reported that its telepresence business experienced 60% growth in units and 35% growth in revenues.
Microsoft (MSFT) has started to give stiff competition to Cisco in the collaboration market. According to a report from Synergy Research Group, Cisco’s share in this market was 14% as of calendar 1Q15. Microsoft was a close second at 13% market share, while Avaya, International Business Machines (IBM), Polycom (PLCM), and Verizon (VZ) were some of the smaller players in this market.
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