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Cisco Systems Inc. looks to be humming along nicely after delivering strong second-quarter earnings today that edged past Wall Street’s expectations.

The computer networking giant’s shares rose almost 4 percent in extended trading Wednesday after it reported a profit before certain costs such as stock compensation of 73 cents per share. Update: Shares closed up about 1.9 percent Thursday.

Revenue rose 5 percent from a year ago, to $12.45 billion. Wall Street had pegged Cisco’s earnings at 72 cents per share on revenue of $12.41 billion.

Cisco did well across all three of its main business segments. Its biggest business, Infrastructure Platforms, which accounts for its data center switches and routers, pulled in $7.13 billion in revenue, above the analyst consensus of $7.07 billion. The firm’s security business also did well, with quarterly revenue of $658 million easily beating the $629 million estimate.

More important, Cisco’s Applications business, which includes its collaboration tools and AppDynamics application performance monitoring software, also topped estimates. The segment is a vital one for Cisco because the company sees it as a key driver of growth. Sales hit $1.47 billion, well above the $1.35 billion estimate.

Cisco Chief Executive Officer Chuck Robbins noted a “strong performance” in a statement. “Our teams are executing incredibly well, aggressively transitioning to a software model and accelerating our pace of innovation,” he said.

The company’s strong showing notably seems to validate Cisco’s long-term strategy that involves transforming itself into more of a software company. That transition is aimed at supporting the new world of multicloud data center environments, with less reliance on its hardware sales.

Tech industry analyst Charles King of Pund-IT Inc. said the strong performance of Cisco’s software and security businesses helps bear out Robbins’ strategy and solidify his role at the company after replacing Silicon Valley legend John Chambers.

“It’s also worth noting that the economic and trade issues that many believed would roil markets during the past quarter or so haven’t been as dire or challenging as expected,” King said. “If those dynamics shift or the recession that many fear comes to pass, the outlook for Cisco and many other companies will be considerably gloomier. But for the time being, the company appears to deserve its cheers investors are bestowing.”

Cisco’s transition to a multicloud data center networking provider was a central theme at its Cisco Live event in Barcelona earlier this month. There, the company announced a key new architecture that extends the data center to everywhere customers’ data lives and everywhere that their applications are deployed.

The new architecture is based on an expanded Application Centric Infrastructure platform that now extends across multiple public clouds, including Amazon Web Services Inc. and Microsoft Corp.’s Azure. Fabio Gori, Cisco’s senior director of cloud solution marketing, said during an interview on theCUBE, SiliconANGLE’s mobile livestreaming studio, that the company is attempting to “close the gap” between what a business needs and what its network can deliver. That message seems to be resonating with Cisco’s customers, if its latest financial results are an indicator.

Cisco made a big acquisition in the quarter too, buying a company called Luxtera Inc. that makes specialized chips for high-speed optical networks for $660 million. Analysts said at the time that it was good move for Cisco, since Luxtera is the biggest maker of silicon photonics chips. They’re used to support the transmission of data over fiber optic cables, which are faster than traditional copper wiring. That puts Cisco in a strong position to cater to the demand for greater bandwidth for cloud-based “internet of things” applications.

“Cisco is in the middle of restructuring its offerings, away from networking and hardware more to software and services,” said Holger Mueller, principal analyst and vice president of Constellation Research Inc. “This effort seems to be well underway, and it looks like Cisco has turned back into growth mode. But before this is validated, we have to see some more quarters of solid to strong growth. In the meantime, Cisco offerings remain attractive to CxOs to power their next-generation applications.”

For the third quarter, Cisco said it expects revenue to increase by about 4 to 6 percent, with earnings of between 76 and 78 cents a share, bracketing analysts’ consensus of 77 cents.

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