Net income on a generally accepted accounting principles (GAAP) basis of $2.4 billion or $0.48 per share, and non-GAAP net income of $3 billion or $0.59 per share.
“Q1 was a very strong quarter. We are accelerating our ability to deliver on growth opportunities, aggressively driving our cloud business, and delivering continued strength in our deferred product revenue, as we sell more of our portfolio in software and cloud models,” said Chuck Robbins, chief executive officer, Cisco.
“We guided to solid growth in Q2. Our guidance reflects lower than expected order growth in Q1, driven largely by the uncertainty of the macro environment and currency impacts. Despite these headwinds, I believe we are executing very well. We are moving very fast to capture new opportunities and I feel good about how we are positioned for the second half of the year,” added Robbins.
Product revenue increased by 4 percent and service revenue increased by 1 percent. Total revenue by geographic segment was: Americas up 4 percent, and each of EMEA and APJC up 3 percent. Product revenue growth was led by data center and collaboration at 24 percent and 17 percent respectively. Wireless and security each grew 7 percent, switching grew 5 percent, NGN Routing decreased 8 percent, and service provider video decreased 2 percent.
Non-GAAP operating expenses were $4.1 billion, down 1 percent, and at 32.7 percent of revenue. Headcount increased from the fourth quarter of fiscal 2015 by 230 to 72,063, reflecting additional headcount from acquisitions and investments in key growth areas such as security, cloud and software. On a GAAP basis, operating expenses were $4.8 billion, down 5 percent.
Non-GAAP operating income was $3.9 billion, up 8 percent, with non-GAAP operating margin at 30.5 percent. GAAP operating income was $3.1 billion, up 31 percent, with GAAP operating margin of 24.3 percent.
Deferred Revenue was $15.2 billion, up 10 percent in total, with deferred product revenue up 16 percent, driven largely by subscription based and software offerings, and deferred service revenue up 7 percent. Cisco continued to build a greater mix of recurring revenue as reflected in deferred revenue.
“We delivered a strong first quarter as we executed on our financial model of driving profitable growth, managing our portfolio and delivering shareholder value,” said Kelly Kramer, executive vice president and chief financial officer, Cisco.
“Despite a challenging environment, we are executing very well and making the right investments that position us for future growth. We are continuing our commitment to shareholders as we returned $2.3 billion of our free cash flow back through dividends and share repurchases in Q1,” added Kramer.