Cisco's Q1 was hit by weak US carrier spending and falling emerging market growth, but it still managed a record and was lifted by good figures in Europe. Total product orders rose 1% yr/yr in FQ1: Americas +2%, EMEA +6%, Asia-Pac/Japan -12%.
"We are pleased with our results and are comfortable in our strategy to deliver innovative solutions that enable the next generation of IT and the Internet of Everything," said Cisco Chairman and CEO John Chambers. "This was our strongest Q1 ever in terms of revenue, non-GAAP operating income, and non-GAAP EPS.
"We are still in a tough environment, but seeing encouraging trends as cities, businesses, governments and schools are becoming more digitised.
"EMEA was a highlight with growth of 6%. We saw strong performance in the UK, up 20% and strength in Germany, up 6%. Southern Europe grew approximately 20%. We saw some stabilisation in the emerging countries within an EMEA with growth of 2% in the emerging segment.
"Based on the role we play in the digitisation of countries and companies including our ability to bring innovation in job creation, we're more positive on the future business in Europe than perhaps some of our peers are."
Cisco saw a reduction in spend at several large US service providers, and the cloud is changing a lot of its business. "We are frequently asked what Cisco is doing differently in the crowded cloud markets," added Chambers. "Simply put, we see the same problem in cloud that we saw 20 years ago in networking, where numerous networks operated on different technologies that didn't talk to one another.
"As we blow down the silos with Ethernet we made the Internet pervasive. We are running the same play in cloud as only we can, unifying private, public and hybrid clouds.
"We will place this market as a solutions play, meeting the network requirements of enterprise class applications and providing the platform to deliver Cisco's growing portfolio of software-as-a-service offers. This would drive our strategic role with customers and over time our recurring revenue."
Security is the number one issue facing many customers. "Security revenues grew this quarter by 25%. We combined our security products more closely with the Sourcefire products and delivered a highly anticipated Cisco ASA with Firepower services, which combined Cisco's ASA firewall with Sourcefire into one platform.
"Customer receptivity has been positive. Our innovation and security is very strong. Security continues to be our customers' number one business priority at the CIO level, but perhaps even more important at the CEO level. And we are doing very well in this market. Nearly every initiative we have at Cisco has security as a key component."