As per reports, Cisco Systems Inc. (CSCO) forecasts that within four years, about half its revenue will come from software and other recurring sales, however, the high chip prices in its hardware business will keep pressuring overall profits, informed its chief financial officer. The company is shifting toward selling recurring subscriptions for software such as its WebEx collaboration service and cybersecurity services.
Cisco expects revenue coming from subscriptions to increase from 44% for its fiscal 2021 ended July 31 to 50% by fiscal 2025. The company gave a fiscal 2025 revenue forecast expecting a compound annual growth rate of 5% to 7%, with a midpoint of $62.9 billion.
Scott Herren, Cisco Chief Financial Officer informed that the company’s software units do have higher margins than its hardware business, but some subscription revenue is also expected from services that have lower margins than software. Also, a global shortage of parts such as computing chips, memory chips, and even power supplies will pressure gross margins in the company’s hardware business, which the company forecasts will keep growing.
Cisco Systems, Inc. (CSCO) is a global technology leader that designs, manufactures, and sells Internet Protocol-based networking and other communications technology. To learn more about Cisco Systems, Inc. (CSCO) and to continue to track its progress please visit the Vista Partners Cisco Systems, Inc. Coverage Page
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