Cisco, a company that produces telecommunications equipment, has seen its revenue decline for three consecutive quarters, and for the first time since 2020, it is facing an annual revenue decline for the current fiscal year. In February, Cisco announced a 5% reduction in its workforce, and in the next couple of quarters, it plans to cut an additional 7% of its employees.

This information was revealed following Cisco's quarterly earnings report, as noted by CNBC. The company's fourth quarter of the 2024 fiscal year ended on July 27. During this period, revenue decreased by 10% to $13.64 billion, surpassing analysts' expectations. However, annual revenue declined overall for the first time since 2020. In the upcoming fiscal quarter, the company also expects a revenue drop to around $13.75 billion. Nonetheless, since analysts had predicted a decline to $13.7 billion, Cisco's own forecast was higher than expected.

According to Cisco's management, revenue had been declining in the past few quarters due to customers holding substantial stocks of equipment previously purchased. In the networking equipment segment, the company's revenue fell by 28% to $6.8 billion last quarter, while in the security systems segment, it grew by 81% to $1.8 billion. The company's net income for the period decreased by 45% to $2.2 billion year-over-year.

The upcoming workforce reductions will require Cisco to write off around $1 billion, with losses of $700 to $800 million to be recognized in the current quarter and the remaining amount over the course of the 2025 fiscal year, which has already begun. At the end of the 2023 fiscal year, Cisco had 84,900 employees. In February, the company announced plans to reduce its workforce by 5%, and now it will further decrease the number of employees by 7%. The release of the quarterly report, with more favorable revenue forecasts, led to a 5% increase in Cisco's stock price after U.S. markets closed.