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Cisco Australia lands just shy of AU$2 billion in revenue for FY20

Company returns to profit following income tax adjustments that had wiped out last year's profit.
Written by Chris Duckett, Contributor
Image: ZDNet

Cisco Systems Australia has reported its yearly results for fiscal year 2020 to July 25, revealing it fell just shy of clearing the AU$2 billion revenue mark.

In a filing to the Australian Securities and Investments Commission (ASIC), the local Cisco arm saw its product revenue fall by AU$58 million to AU$1.21 billion while its service revenue increased by AU$24 million to AU$435 million. Once revenue from related entities and leases were taken into account, Cisco Australia reported total revenue of AU$1.997 billion.

With a lower cost of sales, the company reported a AU$78 million jump in pre-tax profit to AU$120 million, an income tax expense of AU$39.9 million compared to the AU$58 million booked last year, and AU$79.7 million in net profit compared to a AU$16.1 million loss reported last year.

In 2019, the Australian Taxation Office (ATO) caught up to the networking giant, with the company reporting that it paid AU$86.2 million in income tax and made a tax adjustment for prior periods of AU$44.7 million.

Cisco Systems Australia has an immediate parent of Cisco Systems Netherlands Holding B.V. before reaching its ultimate parent Cisco Systems Inc in the United States. In 2020, Cisco Australia paid a AU$43.4 million dividend to its owners.

Over the course of the year, Cisco Australia was charged a total of AU$1.3 billion in service fees and cost of sales expenses by its parents and related parties, with AU$308 million flowing in the opposite direction to the Australian arm. The company said it also purchased almost AU$50 million in "various goods and services" from its ultimate parent and related entities throughout the fiscal year.

Cisco Australia added that it was in the early stages of negotiating a new transfer pricing arrangement with the ATO and the United States Internal Revenue Service.

In January, Cisco Australia parted with AU$118 million to purchase Zomojo, which traded under the Exablaze label and designed and built field programmable gate array network devices.

As of July 25, Cisco Systems Australia had 1,378 employees.

Microcredentials as software updates

Speaking to ZDNet recently, Cisco ANZ general manager of education Reg Johnson said when it came to microcredentials, it is best to think of them as bite-sized software upgrades to knowledge.

"I don't think a credential is recognising a qualification in total, it's the sum of the parts, and if you think about cybersecurity and how fast paced the changing landscape is, you're constantly needing to do updates," he said.

"That's a great way of really you're ensuring that people have kept up to date."

A benefit of using microcredentials from universities for in-house training by companies is the ability for employees to have them recognised when they move onto their next job, Johnson said.

In July, the federal government said it would spend AU$4.3 million to build and run a microcredential marketplace.

"The microcredential marketplace will be a platform for job-seekers to see what skills they can gain by further study to help them get a new job or to get ahead in their current job," Minister for Education Dan Tehan said at the time.

For Johnson, the use of these credentials allows universities to shift business models, make up some missing revenue due to the pandemic limiting international students, and perhaps get students into more traditional qualifications.

"This isn't going away, I think the demands going to continue to increase, I think the quality of the credentials is going to continue to increase," he said.

"I do think we're going to see more of these bite-sized learning modules, but more about building blocks to bigger qualifications ... [there's] still a role obviously for degrees and those education programs, but I think it's a recognition of the pace of technology and the need for moving with that."

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