Cisco CEO Robbins: 'The Strategy We Laid Out Three Years Ago Is Working'

Cisco CEO Chuck Robbins touted growth in key business units, including applications and security, and discussed the success of its Catalyst 9000 series of switches.

Great Expectations

Cisco Systems Chairman and CEO Chuck Robbins drew a bold line under the company's third quarter results Thursday, telling CNBC anchor Jim Cramer that the company has just begun its journey toward a predominantly software-based recurring revenue business model and that he expects to report record earnings for the fourth quarter.

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In the Thursday television appearance, Robbins touted the growth in key business units, including applications and security, and discussed the success of its Catalyst 9000 series of switches, which he called the fastest-ramping product in the company's history.

The 68- to 70 cents-a-share guidance the company issued for non-GAAP Q4 earnings per share also represents a record for the company, Robbins said.

The company has high expectations now that its vision for itself as a software- and applications-focused firm that covers a wide swath of the market for next-generation networking and security solutions seems to have taken hold among customers.

Cisco Wednesday reported a third-quarter, non-GAAP profit of $3.2 billion on total revenue of $12.5 billion.

Here are a few of the key points Robbins made during the interview with Cramer this morning.

When A Plan Comes Together

"The strategy we laid out three years ago is working," Robbins said. "We delivered record EPS, we had continuing business momentum in our growth rate and top line, record shareholder returns during the quarter. If you look at the innovation we're driving right now in our core networking space with intent-based networking, that product is the fastest-ramping product in the history of the company. We had 19 percent growth in our applications business, 11 percent growth in our security business. The business model transition to software and subscriptions, software and subscription deferred revenue is up 29 percent. Fifty-five percent of our software business is now subscriptions. We're quite pleased with where we are."

The Impact Of The Acquisitions Of BroadSoft And Business Intelligence Startup Accompany

"If you look at our applications business, both of those acquisitions line up directly in that space," Robbins said. "BroadSoft has 20 million users out there today that we can bring the balance of our portfolio to, deliver cloud-based communications through our service providers. We see huge opportunity to bring the BroadSoft portfolio together with Cisco's collaboration portfolio and deliver that from the cloud in the future. That's the core part of what we plan to do there. On the Accompany side, on our collaboration portfolio, we've gone from an on-premise solution to a cloud architecture and the next wave is how do we bring data, artificial intelligence, machine learning even more-so into that portfolio. That's what Accompany brings."

Record Outlook

"We bought back $6 billion in the past quarter and last quarter we announced an additional $25 billion, which increased the total we have available to $31 billion and that would be over 18 to 24 months," Robbins said. "We began to execute on that, and as you look to next quarter, I believe if you look at the earnings per share we guided and the revenue we guided, it's one of the fastest-growing quarters we've had in quite a while and also the EPS next quarter is a record guide, as well. We're confident in the outlook. We're confident in the future. We believe in the strategy, and frankly, we've just begun the journey on intent-based networking and the first product we launched shows that customers are adopting that. They really buy into it, and we think that's going to be critical to the future."