Bloomberg Audio Studios, Podcasts, Radio News ed you're looking at the company that's adding the most in points upside.
Yeah. One of the big movers to the upside is Cisco shares currently up around four percent. They'd open much higher than that. The key bit is they're trading at their highest level since the year two thousand, after the company raised its outlook and showed progress on capturing more of the global AI spend. Let's get the details with Cisco's CEO, Chuck Robins. Chuck, in the year two thousand, Cisco was one of the original four horsemen of technology.
Based on the numbers you gave and what you said on the call, do you feel like customers, the new ones and investors now understand Cisco's place in this new AI era.
Well, first of all, thanks for having me, and you know, I'm super proud of what the teams have accomplished. We had a record quarter and set ourselves up for what's likely going to be the best year we've ever had.
So it was just a great performance.
And as I've been asked a lot over the last twenty four hours to reflect back on two thousand and it's kind of an interesting comparison, but I think that, Look, the hyperscalers are some of the most advanced customers in the world. They do the deepest analysis of the technology before they make decisions, and I think that their decisions to continue spending more with us speaks volumes about the innovation and the technology that our teams are building right now.
So I'm really proud of them, and I think it'll just extend into the enterprise over time.
Chuck, who are some of those new customers that you've been able to sign in the air context.
Well, we're just talking about the major hyperscalers, primarily in the United States, but we've also announced these sovereign deals in the Middle East with G forty two and the Emirates as well as Humane in Saudi There's a lot of work going on in the neo cloud space. We're seeing sovereign players start pop up now in parts of Europe as well as Southeast Asia and India. So it's
a broad swath of customers. But the one point three billion that we talked about is strictly the top hyperscalers that we're doing business with.
So you're talking about five companies and.
They're good for the money, as you can tell from the cash flow that they have chuck not two hundred million dollars. That you are expanding into sovereign, you are expanding into enterprise and neoclouds. How do you bake in some of the risks that the market just cannot get enough of talking about this circular economy.
Well, so we did talk about the fact that we have over two billion dollars now in our pipeline through the end of the fiscal years, over the next three quarters in neo cloud, sovereign cloud, enterprise, and we just we see that continue to accelerate. We took two hundred million dollars in orders in Q one, and it's just it's a natural way the technology technologies have been evolving
over the last decade or more. They start in the hyperscalers, they moved through the telco space in this in this case the neo clouds and the sovereign players, and then into the enterprise, and it's happening exactly that way. And our bread and butter over the years has been in
the enterprise. And we have lots of technolo knowlogy, we have a partner ecosystem, we have full stack solutions, we have security, we have all the things that they're looking forward to actually build out AI workloads and deal with AI with confidence.
Let's just go to that security a little bit of a fly in the ointment. Let's say, I know you've talked clearly about perhaps how the booking of revenue can be misinterpreted, but how are you going to sell that more holistically? How do you think the security part of the offering can really start firing on all cylinders.
Well, I started by saying clearly we're not pleased with where we are yet, but I will say over the last two to three years, we've made a lot of progress. It's a major decision for customers to make big platform decisions. In security, We've had a lot of great wins. I'm proud of what the teams have built. And we saw our next generation firewalls, we saw mid teens growth and orders there.
We saw double arr growth and Splunk.
We saw our new and refreshed products on the security side continue to show growth. And the issue we had in the quarter was really it's an accounting issue around
how cloud delivered Splunk versus on prem delivered Splunk. The cloud stuff is ratable and realize revenues realized over the life of the term, and the on prem stuff gets recognized immediately, and we just had a major shift in how our customers consume it, which is great for us in the long term that they're buying more cloud based solutions, but it creates a little bit of a challenge on
revenue during the quarter. The good news is the networking business is doing incredibly well and can cover that for us.
Chug it is fair to say at a minimum that the Cisco of today isn't the same as the Cisco of two thousand. What you've done is kind of been open about the product lineup and you've used M and A to change the footprint of the company. What's your latest thinking on that, the products that you offer and what you need to do, either organically or inorganically to offer what the world of once.
I think the big things that we did we obviously introduced a lot more software into our portfolio in areas that are strategic, like security, and this Plunk acquisition has been a great one. I think the other thing that's worth calling out is this investment that we started in twenty sixteen. To be clear on our silicon strategy that is absolutely the reason that we're having success today in
the hyperscaler space. If we did not have our silicon and develop and design our own silicon, we wouldn't be participating at all.
It's just black and white.
And so as we as we look at both internal innovation as well as or inorganic opportunities. We're very focused on security, We're very focused on AI. We've made some tech and talent deals. Anything that can help us accelerate our solutions in those areas, we're open to look at Shuck.
I do not apologize for this next question. We or are we not in an AI bubble?
Oh, it's just it's so funny. Look, the customers that are buying the predominant amount of this technology have incredible balance sheets, have incredible cash flow, have incredible profitability. I think Caroline said that they actually pay their bills and and so, and they view it as an existential issue for them. That's that's a really key element. They don't view this as something that's nice to have. They don't view it as something that is okay, if we if we if we're successful.
Great, if we're not great.
They view it as existential, which you see with the level of spending that they're putting into it.
So it's it's a lot and it's moving fast.
And but the difference between now in two thousand is that these are massive companies with strong financial performance and they believe in this one hundred percent. So I don't think it's going to change. We haven't gotten into physical AI. We have, we're just getting into synthetic training. We haven't gotten into robotics. We haven't gotten into the enterprise in a big way yet, and so there's a there's a huge opportunity ahead for all of us.
I believe.
Chuck Bluemberg Intelligence Analysis says your projections are conservative. Briefly are the conservative?
Well, I think you said that last quarter, so you proved to be correct ninety days ago. But look, I think based on what we know today we're ninety days into the year, were taking what we have in our backlog, what we see in the forecast. But again, we have three more quarters to play out. Lots of things can change. The World's very dynamic, but we're very confident in the numbers that we put up yesterday.
Cisco CEO Chuck Robins, was a joy to catch up with you.