Shares of Cisco Systems Inc. (CSCO – Free Report) rallied to a 52-week high of $36.67, eventually closing a tad lower at $35.88 on Nov 16.

The share price momentum can be primarily attributed to the company’s fiscal first-quarter 2018 earnings that came ahead of expectations. The company’s encouraging guidance has also been one of the tailwinds.

Cisco reported non-GAAP earnings of 61 cents per share in fiscal first-quarter 2018, beating the Zacks Consensus Estimate by a penny. Notably, revenues of $12.14 billion were almost in line with the Zacks Consensus Estimate. Acquisitions contributed 60 basis points (bps) to revenue growth in the quarter. Security and Applications revenues increased in the quarter.

The company raised second-quarter fiscal 2018 guidance on the back of order strength and improving traction in the subscription-based model.

Cisco stock has gained 18.7% year to date, substantially outperforming the 11.6% rally of the industry it belongs to.

Key Factors

Notably, Cisco’s wireless revenues were strong and demand for the HyperFlex data-center solution was solid during the first quarter. The company’s recently launched platform Cisco Intersight, aimed to simplify data center operations and a new portfolio of subscription offers called Business Critical and High Value Services powered by AI to predict future IT failures. These are anticipated to boost the top line going ahead.

Management is optimistic about the new subscription-based Catalyst 9000 switching platform that has been adopted by more than 1,100 customers within a short span of time since its release. The continuing customer shift to 10 gig, 40 gig and 100 gig architectures is also another positive.

Additionally, the company’s Application Centric Infrastructure (ACI) solution is currently used by more than 4K customers. The ACI solution was recently enhanced with new features that have aided growth.