⚠ Software Growth Fell From 21% to 4%Moderate threat

Cisco Systems (CSCO) — threat to the moat

Cisco's software grew faster before it bought Splunk than it did in the first full year after.

The software growth that justified Splunk lasted one year. Cisco's software revenue grew 21% in fiscal 20251, when Splunk was added, and 4% in fiscal 20262. Before the deal it grew 12% in fiscal 20233 and 9% in fiscal 20244, so the organic rate has fallen too.

Software revenue growth (%)12FY239FY2421FY254FY26Cisco Forms 10-K FY2023-FY2026
Below where it started.

Total annual recurring revenue grew 3% and services recurring revenue 2%5. The fourth quarter was better, with software revenue of $6.2 billion, up 11%6, partly on the long Splunk contracts discussed under Security.

A software growth rate below the rate before the acquisition means Cisco paid for revenue it would otherwise have had to build, and the combined business is growing slower than the parts did.

Organic growth would have been lower still. Splunk's revenue was included for only part of fiscal 2024, about $1.4 billion7, so fiscal 2025's 21% growth included a large acquired step. Adjusting for that, the software business grew slowly throughout, and fiscal 2026's 4% is closer to the underlying rate than fiscal 2025's 21%.

Software growth in fiscal 2027 below the 9% of fiscal 2024 would mean the combination destroyed growth rather than adding it.

References
  1. ReportedCisco's software revenue grew 21% in fiscal 2025, when Splunk was added, and 4% in fiscal 2026.
    Cisco Systems Form 10-K for fiscal 2025 - the supplier settlement of 26 August 2025, Security growth of 59% and fiscal 2025 net income of $10,180 million. — FY2025 · publ. 3 September 2025 · source ↗
  2. ReportedCisco's software revenue grew 21% in fiscal 2025, when Splunk was added, and 4% in fiscal 2026.
    Cisco Systems Form 10-K for fiscal 2026 (year ended 25 July 2026) - financial statements and notes: balance sheet, cash flow, commitments, customers and acquisitions. — FY2026 · publ. 2 September 2026 · source ↗
  3. ReportedBefore the deal it grew 12% in fiscal 2023 and 9% in fiscal 2024, so the organic rate has fallen too.
    Cisco Systems Form 10-K for fiscal 2023 - revenue on the old product categories, net income for fiscal 2021-2023 and about 84,900 employees. — FY2023 · publ. September 2023 · source ↗
  4. ReportedBefore the deal it grew 12% in fiscal 2023 and 9% in fiscal 2024, so the organic rate has fallen too.
    Cisco Systems Form 10-K for fiscal 2024 - the new product categories with fiscal 2022-2023 restated, segment revenue and margins, and the Splunk acquisition. — FY2024 · publ. September 2024 · source ↗
  5. ReportedTotal annual recurring revenue grew 3% and services recurring revenue 2%.
    CX Foundation, recap of Cisco's Q4 FY2026 results - services ARR up 2% and total ARR up 3%. — Q4 FY2026 · publ. 13 August 2026 · source ↗
  6. ReportedThe fourth quarter was better, with software revenue of $6.2 billion, up 11%, partly on the long Splunk contracts discussed under Security.
    GuruFocus via Yahoo Finance, highlights of Cisco's Q4 FY2026 earnings call - ARR, price increases, hyperscaler growth, Acacia and fiscal 2027 margin comments. — Q4 FY2026 · publ. 13 August 2026 · source ↗
  7. ReportedSplunk's revenue was included for only part of fiscal 2024, about $1.4 billion, so fiscal 2025's 21% growth included a large acquired step.
    Cisco Systems Form 10-K for fiscal 2026 (year ended 25 July 2026) - financial statements and notes: balance sheet, cash flow, commitments, customers and acquisitions. — FY2026 · publ. 2 September 2026 · source ↗
Sources
Generated September 25, 2026