Some companies are struggling to cope with the impacts of tariffs, the slowdown in China's economy, the U.S. federal government shutdown, and general economic uncertainty. Not Cisco (NASDAQ:CSCO). The dominant networking hardware provider continued its growth streak in its fiscal second quarter, and its outlook for the third quarter makes clear that the tech giant is successfully navigating a difficult and complicated environment.

Revenue and earnings growth

Cisco's second-quarter results edged out analyst expectations:

Metric

Q2 2019

Change (YOY)

Compared to Average Analyst Estimate 

Revenue

$12.4 billion

4.7%

Beat by $30 million

Non-GAAP earnings per share

$0.73

15.9%

Beat by $0.01

Data source: Cisco. GAAP = generally accepted accounting principles.

Cisco's second-quarter revenue was negatively affected by the divestiture of the service provider video software solutions business. Excluding that divested revenue, Cisco's sales increased by 7% year over year, the high end of the company's guidance.

All of Cisco's core product segments grew revenue during the quarter, while services revenue was up slightly when adjusted for divestitures.

Segment

Revenue

Change (YOY)

Infrastructure platforms

$7.13 billion

6%

Applications

$1.47 billion

24%

Security

$658 million

18%

Services

$3.17 billion

1%

Data source: Cisco. Excludes divestitures.

Subscription software is driving some of Cisco's growth, particularly in the applications and security segments. Subscriptions now account for 65% of Cisco's total software revenue, up 10 percentage points year over year.

An envious outlook

Cisco expects to grow third-quarter revenue by 4% to 6% year over year, excluding divested revenue. Third-quarter non-GAAP earnings per share are expected to be between $0.76 and $0.78, up from $0.66 in the prior-year period. Analysts were expecting revenue growth of just 3%, along with non-GAAP EPS of $0.76.

A man looking through binoculars.

Image source: Getty Images.

Cisco CEO Chuck Robbins called the current situation "one of the more complex macro geopolitical environments that I think we've seen in quite a while" during the earnings call. But none of the issues affecting other companies are making a dent in Cisco's business. "But to be honest, from the first day of the quarter to the last day of the quarter, we saw zero difference. We saw very steady demand throughout the quarter and just saw great execution by our teams," Robbins explained.

Cisco's confidence is apparent in its updated capital return programs. Cisco announced a 6% boost to its quarterly dividend along with its second-quarter results, bringing the payout to $0.35 per share. On top of that dividend increase, Cisco added $15 billion to its share repurchase authorization. Cisco spent more than $10 billion in the first six months of fiscal 2019 buying back its own shares, and the company now has another $24 billion slated for buybacks.

Cisco's lack of problems so far doesn't mean it won't run into issues later this year. If customers start delaying orders due to economic uncertainty, Cisco's results will suffer. There's no sign of that so far -- product orders were up 8% year over year in the second quarter, with exceptional strength from public sector customers. But things can change quickly.

For now, Cisco's business is holding up well despite no shortage of potential headwinds.