Shares of Cisco Systems (CSCO) initially fell in after-hours trade when the company reported second-quarter results, but then hit rarely charted highs on Thursday once investors realized it was actually a strong quarter.
It was clear to "Mad Money" host Jim Cramer that the quarter was initially misunderstood. Cisco did deliver a top and bottom line beat, but sales were down 2 percent year over year.
Cramer clarified the results, stating that worries were based on the misperception that Cisco is still a networking equipment play. Deferred revenue is what is important to consider in the software business, and it was up 13 percent. Deferred revenue from software subscriptions were up 51 percent.
Cisco's CEO Chuck Robbins told Cramer there were three important takeaways for investors to understand about the quarter.
The first is that the 51 percent growth in software subscriptions is evidence that the company's strategy is working.
The second was the importance of Cisco's internet of things connectivity platform, Jasper, which now has 40 million connected devices and is adding 1.5 million a month.
"As the infrastructure gets more distributed, over the next few years the network is actually going to be more important because you've got to apply security in the network, everything else in the network," Robbins said.
The third takeaway from Robbins was the various ways that the company is embracing innovation, such as launch next-generation firewalls and its spark board device.
"Then you saw us leverage our M&A capability with what I think is one of the most important acquisitions we made with AppDynamics," Robbins said.
Cisco announced its acquisition of AppDynamics for $3.7 billion in January, a platform for intelligence software that could be used to respond to customer needs at a rapid pace.
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