Cisco Systems, Inc.
Cisco Systems, Inc. designs, develops, and sells technologies to power, help, secure, and draw insights from the internet in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China. The company provides data center switching; network security, identity and access management, and secure access service edge; identity and agentic security solutions; interconnects public and private wireline and mobile networks, delivering connectivity to campus, data center, and branch networks; WEBEX suite, collaboration devices, and contact center; communication platform as a service software, including perpetual licenses, subscription arrangements, and hardware solutions; network assurance and observability suite; accelerated issue resolution, software support, and hardware replacement; professional services, such as planning, design, implementation, and high-value consulting; service and support packages, financing, and managed network services; and regional, national, and international wireline carriers, webscale products, internet, and cable. It also provides wireless products, including indoor and outdoor coverage designed for seamless roaming use of voice, video, and data applications; end-to-end collaboration solutions through cloud, on-premise, or within hybrid cloud environments. In addition, it offers technical support services. The company serves businesses, public institutions, governments, and service providers. It sells its products and services directly, through systems integrators, service providers, and resellers, and distributors. It has a collaboration with NVIDIA Corporation to develop Ultra-Dense Small Form Factor Pluggable (USFP), a high-density optical module pluggable transceiver. Cisco Systems, Inc. was incorporated in 1984 and is headquartered in San Jose, California.
What does it do?
Cisco makes the hardware and software that keeps the internet running — think of them as the plumbing company for the digital world. When you send an email, stream a video, or log into a work app, the data almost certainly travels through a Cisco router or switch at some point. They also make cybersecurity tools that protect companies from hackers, and software that lets businesses manage their networks from one place. If the internet is a highway system, Cisco builds the roads, traffic lights, and security cameras.
Cisco sits at the center of two of the biggest spending trends in tech right now: AI infrastructure and cybersecurity. Every company building out AI needs faster, more powerful networks — and Cisco sells exactly that equipment. With cyberattacks rising globally, their security business is also becoming harder for any large company to ignore.
How does it make money?
Cisco makes money in two main ways: selling hardware like routers and switches, and increasingly selling software subscriptions and services. Revenue grew from $53.8B to $56.7B last year, a healthy 5% jump. Their software and subscription business now makes up over half of total revenue, which matters because subscriptions bring in reliable, recurring cash — more predictable than one-off hardware sales. Net income of $10.5B means they keep about 19 cents of profit for every dollar they earn.
Why do investors care?
The growth story here is Cisco's shift from being a hardware company to a software and subscription company — a transition that investors tend to reward with higher valuations. Their $28B acquisition of Splunk in 2024 was a massive bet on data analytics and security, adding a new revenue engine. For the thesis to work, Cisco needs to keep growing its recurring software revenue, successfully integrate Splunk, and capitalize on AI-driven network upgrades at large enterprises and cloud providers.
Deep Dive
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