Q2 2025 Cisco Systems Inc Earnings Call Transcript
Key Points
- Strong demand growth in the Nexus portfolio and data center switching, with significant year-over-year growth in key segments.
- Innovation in product development, particularly in security and networking, has been at an unprecedented pace over the last 12 to 18 months.
- AI-driven demand is contributing to increased orders, with significant investments in AI infrastructure by enterprises and telcos.
- Successful integration and performance of Splunk, with double-digit growth and profitability ahead of expectations.
- Continued strength in the telco segment, driven by network upgrades in anticipation of AI-driven demand.
- Gross margin guidance indicates a potential decline due to proposed tariffs, impacting cost structures.
- Concerns over potential impacts of tariffs on demand, although no current evidence of demand pull-forward.
- Enterprise orders showed slower growth compared to previous quarters, raising concerns about demand consistency.
- Security and observability segments are still ramping up, with some products needing more time to gain traction.
- Competitive pressures from white box ODMs and other alternatives in the market could pose risks to Cisco's market share.
Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold.
Thank you for your patience.
(Music hold)
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Demand growth in our Nexus portfolio, our data center switching, which predominantly goes into private cloud infrastructure into the enterprise. And then obviously, the web-scale performance that we saw with five out of the -- or, I'm sorry, three out of the six growing over 100% year-over-year, two of the six growing over 50% year-over-year, so it was very balanced.
And so far, I think that despite the geopolitical risk, despite the uncertainty that's going on in the US and in the marketplace around the world, I think the one thing our customers understand is that their need to continue spending on technology is just there. And there's so much change going on right now from a technology
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