Cisco Systems’ product demand is at a record high, but the company hasn’t been able to get these orders in the hands of customers.
Now, Cisco says it’s seeing early signs of a loosening supply chain which could open the floodgates for revenue for Cisco and its partners.
The tech giant currently has an order backlog worth well over US$15 billion.
Once Cisco is able to recognize those revenues — which doesn’t happen until the orders are shipped — revenues will be “off the charts,” according to Cisco partners.
The tech giant in May revealed that its backlog was at an all-time high at more than US$15 billion, up a whopping 130 per cent year over year.
The company didn’t disclose numbers for during its most recent fiscal quarter, which ended on July 30, but said it once again had triple-digit backlog growth that fueled the backlog to the highest level ever recorded in the company’s history, Cisco Chairman and chief executive Chuck Robbins said.
At the same time, Cisco reported Q4 2022 revenue that stayed relatively flat at US$13.1 billion compared to the same period a year ago.
Cisco posted non-GAAP earnings per share of 83 cents, a decline of 1 per cent year over year compared to 84 cents a year ago and net income of US$3.4 billion in Q4 2022, a decrease of 3 per cent.
Cisco chief financial officer R. Scott Herren said that the company isn’t “demand-constrained” but “supply-constrained.”
“If we could get more supply, we’d be growing more quickly,” Herren said.
Robbins told CRN in June that Cisco has been working behind the scenes to address supply constraints.
The company has escalated certain customers and use cases — something that partners could also make a case for in the early days of the crisis — including healthcare, government, and clients with regulatory requirements.
Cisco has also worked with partners to prioritize certain orders if they could agree to wait on others, Robbins said.
“In many cases, that conversation is around, ‘I need this stuff, I don’t need that—you can push it out, so don’t worry about that—but I need this stuff if you can help me.
’ And so, it’s actually allowed us to, in some cases, serve other customers.
"It’s just been complicated. It’s a daily triage for our team to try to get this done,” he said.
Cisco tightened up its order cancellation policy once customers began placing the same order across multiple vendors in hopes of getting hardware faster and then dropping them with the other vendors when one came through with a shipping date,