Cisco Systems Inc. reported solid fiscal first-quarter financial results that came in ahead of expectations and raised its 2025 full-year revenue outlook, but it couldn’t prevent a fourth successive quarter of declining revenue, and its stock traded lower after-hours.

The networking giant reported earnings before certain costs such as stock compensation of 91 cents per share, coming in ahead of Wall Street’s analyst consensus estimate of 87 cents. Revenue came to $13.84 billion, down 6% from a year earlier, but above the analysts’ target of $13.77 billion.

The lower revenue had an impact on Cisco’s bottom line, with net income falling from $3.64 billion one year earlier to $2.71 billion at the end of the quarter.

Cisco said its networking business was the main reason for the decline. Revenue there declined 23% from the year-ago quarter to just $6.75 billion, just below the Street’s consensus of $6.8 billion.

The company also reported security revenue of $2.02 billion, up 50% and comfortably ahead of the Street’s consensus of $1.93 billion, while sales from its collaboration software and tools came to $1.09 billion, just below the $1.04 billion analyst target. Elsewhere, revenue from services rose 6%, to $3.72 billion, while observability sales – a small but fast-growing segment – grew 36%, to $258 million.

In a conference call, Cisco Chief Executive Chuck Robbins (pictured) said the company saw more than $300 million in revenue from orders for artificial intelligence infrastructure made by “large-scale clients.” Similarly, Cisco’s rivals Dell Technologies Inc. and Hewlett-Packard Enterprise Co. have also placed a lot of emphasis on sales of AI-related hardware.

“We have earned more design wins and remain confident that we will exceed our target of $1 billion of AI orders this fiscal year from web-scale customers,” Robbins told analysts on the call.

In recent months, Cisco has unveiled new data center hardware powered by Nvidia Corp.’s graphics processing units, which are the most popular processors for AI workloads, Robbins added. He promised that the company will start to support other kinds of GPUs in future, as the market demands, such as the new MI325X accelerator announced by Nvidia’s main rival, Advanced Micro Devices Inc. Better yet, he added, the company is only just starting to see the fruits of its AI investments.

“That partnership [with Nvidia] is still going fine, and it’s still early,” Robbins added. “I think 2025 is when we’ll start to see enterprise’s real deployment of some of these technologies.”

At present, most enterprises are still scrambling to upgrade their data center infrastructures to prepare for more widespread deployment of AI-powered apps, Robbins told analysts.

Cisco Chief Financial Officer Scott Herren spoke of certain deals with U.S. government agencies that were delayed rather than canceled. According to him, this is the result of the passage of the recent Fiscal Responsibility Act, which has curtailed government spending in the information technology sector. However, that’s likely to change in the wake of the recent election results.

“It looks like the Republicans will carry both houses of Congress and the White House, and so I would expect to get a budget in place relatively soon,” Herren said.

During the quarter, Cisco announced the acquisitions of several startups. The most significant were the AI-focused security company Robust Intelligence Inc., which sells tools for protecting large language models and the data they use, and a second security firm called DeepFactor Inc., which provides container security and secure access tools.

The company also launched new Wi-Fi 7 solutions during the quarter, and introduced a series of AI agents for its Webex collaboration platform to help workers increase productivity by automating a range of call center tasks.

Looking to the next quarter, Cisco is anticipating earnings of 89 to 91 cents per share on revenue of between $13.75 billion and $13.95 billion. Both numbers are just above the Street’s targets, with analysts calling for earnings per share of 87 cents on sales of $13.8 billion.

For the full year, Cisco is lifting its earnings guidance to a range of $3.60 to $3.66, up from an earlier range of $3.52 to $3.58 per share. In terms of revenue, it’s now looking at sales of $55.3 billion to $56.3 billion, up from its prior forecast of $55 billion to $56.2 billion. The new guidance suggests a return to growth, with revenue expected to increase by about 3% year-over-year.

The new targets are both ahead of the Street’s forecasts, as analysts were modeling full-year earnings of $3.58 per share on sales of $55.89 billion.

Despite the positive numbers, investors appeared disappointed that the company didn’t do better. Cisco’s stock was down just over 2% in extended trading, though it’s still up 17% in the year to date.

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