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Networking software and equipment designer Cisco Systems, Inc. (CSCOFree Cisco Systems Stock Report) reported solid results for the fiscal third quarter ended April 27, 2019. Total revenue increased 6% year over year to $13.0 billion, matching our estimate. Adjusted earnings per share of $0.78 beat our call by $0.02 and increased 18% over the previous year.

Total product revenue rose 7%, while product orders advanced 4%. The core Infrastructure Platforms division increased sales 5%, with all businesses contributing. The switching subdivision put forth a good performance, owing largely to the continued ramp up of the popular Catalyst 9000 line of switches, as well as its ACI portfolio. Routing was also positive, driven largely by gear for software-defined wide-area networks. Elsewhere, wireless had solid growth and data center was up thanks to HyperFlex and servers. The Applications unit increased its top line by 9%, owing to Unified Communications software, TelePresence, and AppDynamics. In general, customers have been looking to enhance their meeting experience. In the future, more data will be integrated into its collaboration products. Meanwhile, the Security business was up 21%, thanks to strong results from identity and access, advanced threat, and unified threat. Finally, Service revenue rose 3%, driven by software and solutions support.

Cisco continues to make progress transitioning to a more software-centric company. Indeed, software subscriptions were 65% of total software revenue, up nine percentage points year over year.

Taking a look at performance from a geographic perspective, The Americas recorded flat results, Europe, the Middle East, and Africa rose 9%, and Asia/Pacific was up 6%. Total emerging markets increased 5%.

Growth from customer groups varied. Sales to enterprises increased 9%, small and mid-sized businesses grew 5%, public sector was up 10%, and service provider decreased 13%.

For the fourth quarter, Cisco management is calling for revenue to rise between 4.5% and 6.5%, while earnings land between $0.80 and $0.82, in line with our $0.81 call.

Overall this was a solid report from Cisco. The company continues to do a good job of transitioning its business to more dependable subscription-based revenue. We also like its exposure to cutting-edge technologies like the cloud, artificial intelligence, Internet of things, 5G wireless, and sixth-generation Wi-Fi. Too, its focus on security and being a one-stop networking solutions provider are differentiators. We continue to recommend these shares to conservative investors.

About The CompanyCisco Systems Incorporated is a leading provider of Internet Protocol-based networking and other products for transporting data, voice, and video across geographically dispersed local-area networks, metropolitan-area networks, and wide-area networks. Devices are primarily integrated by Cisco IOS Software and include Routers, Switches, New Products, and Other. Provides services associated with these products.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.