In a more subdued environment for U.S. equities, the very mixed set of sales, earnings, guidance and product order figures shared by Cisco Systems  (CSCO - Get Report)  after the close on Wednesday might trigger some selling. But with indices surging to new highs almost daily and Cisco -- despite its recent rally -- still trading at moderate multiples, the networking giant apparently did enough to get a thumbs-up from investors.

Cisco reported fiscal second quarter (January quarter) revenue of $11.58 billion (down 2% annually) and adjusted EPS of $0.57, slightly topping consensus analyst estimates of $11.55 billion and $0.56. April quarter guidance is for revenue to be flat to down 2%, and for EPS to be in a range of $0.57 to $0.59; that's in line with consensus estimates for a 1% sales drop and EPS of $0.58.

And as many expected given the company's history, Cisco hiked its dividend, raising its quarterly payout by $0.03/share to $0.29/share. The forward yield stands at 3.5%.

Shares initially slipped a little following Cisco's earnings release, but turned green after the company reported on its earnings call that product orders were flat last quarter, after having dropped 2% during the October quarter. The improvement seen in service provider orders -- they were down just 1%, after falling 12% in the prior quarter -- seems to have been especially well-received.

As of the time of publication, Cisco shares were up 2.1% after hours to $33.52, reaching levels last seen in 2007. They still only trade for 13.5 times a pre-earnings fiscal 2018 (ends in July 2018) EPS consensus of $2.49, and that's before accounting for $37 billion in net cash (mostly the result of a $62 billion offshore cash hoard) on the balance sheet.

Though Q2 sales beat estimates, Cisco's mainstay switching business was even weaker than expected, with revenue dropping 5% to $3.3 billion (39% of product sales). The company has blamed weak demand for the campus switches used to wire offices -- HP Enterprise (HPE - Get Report)  and Huawei have been competing aggressively in this space -- but it's hard to ignore the ongoing shift in IT spend towards cloud infrastructures that often use white-label switches. And looking ahead, the adoption of third-party software-defined networking (SDN) platforms such as VMware's  (VMW - Get Report) NSX, which is now a billion-dollar revenue run rate, could also be an issue.

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Routing revenue fell 10% to $1.8 billion (21% of product sales) due to weak carrier demand -- with top rival Juniper Networks (JNPR - Get Report) having reported its routing revenue rose 1% in the fourth quarter to $654 million, Cisco may have lost a bit of share. But it's worth adding routing orders were nonetheless higher, thanks partly to improving orders from U.S. carriers.

Data center (server) segment sales continue to be pressured amid the cloud shift, dropping 4% to $790 million; Cisco insists newer rack servers and hyperconverged (integrated server/storage) offerings will right the ship, but this is clearly a wait-and-see story. And even after backing out Cisco's divested set-top unit, service provider video sales tumbled 41% to $241 million thanks to the winding down of a Chinese program.

On the bright side, collaboration (e.g. videoconferencing products, WebEx) and wireless (Wi-Fi hardware and software) sales improved a bit, respectively growing 4% and 3% after dropping 3% and 2% in the October quarter. And security remains a strong spot, with sales growth improving from 11% to 14% and Cisco reporting healthy demand for newer offerings such as next-gen firewalls (a market where fast-growing Palo Alto Networks  (PANW - Get Report) has been the leader) and malware-protection products.

It's also worth keeping an eye "Other" product segment, which includes things like cloud services. With revenue of $116 million, this segment is still pretty small, but sales were up 53%.

But more than the quarterly revenue reported for any segment, it's the tremendous growth seen in Cisco's deferred revenue balances that should encourage bulls, as both internal investments and acquisitions lead its sales mix to shift more towards recurring non-hardware revenue streams. Though reported revenue fell 2%, deferred revenue grew 13% to $17.1 billion, with product revenue up 19% and services revenue 9%.

Importantly, product deferred revenue related to subscriptions and recurring software streams grew 51% to $4 billion, topping even the prior quarter's 48% growth. A 45% increase in security deferred revenue helped, as did growing sales of software offerings tied to Cisco's switching and routing hardware. Last year's $1.4 billion acquisition of IoT service provider Jasper Technologies, which is now said to be managing 40 million-plus devices and servicing over 9,000 customers through its platform, didn't hurt either.

CFO Kelly Kramer mentioned on the call the shift in sales from up-front payments to recurring streams continues having a 1% to 2% impact on Cisco's reported revenue growth. She added the share of product revenue to come from recurring streams has hit 10% for the first time, and that -- after factoring services streams such as maintenance contracts -- 31% of total revenue now comes from them, up from 28% a year ago.

Cisco's pending $3.7 billion acquisition of major app performance monitoring (APM) software firm AppDynamics will give a fresh boost to these numbers, given 75% of AppDynamics' product revenue is subscription-based. CEO Chuck Robbins repeatedly talked up the deal during the call, asserting the pairing of AppDynamics' APM tools with Cisco's data center, core networking infrastructure and security threat analytics offerings (some of which leverage Cisco hardware) will give businesses "unprecedented insights" into how their IT infrastructures are performing.

While software and services growth is propping up Cisco's top line in the face of switching and routing pressures, cost cuts and buybacks are still boosting EPS. Adjusted operating expenses fell 2% last quarter to $3.8 billion, and $1 billion was spent to repurchase 33 million shares at an average price of $30.33.

And if President Trump's plans for a one-time offshore cash tax holiday featuring a 10% tax rate go through, it looks as if Cisco will be returning a chunk of its repatriated cash to shareholders. While Robbins said "strategic investments" will be Cisco's first priority following repatriation, he added capital returns will also be addressed. And he added repatriation won't "fundamentally change" Cisco's M&A strategy.

There's still a lot in Cisco's top-line story to give pause. It's far from certain that the company will keep switching sales steady over the long run in the face of cloud growth, stiff competition and SDN adoption. And one can't get too enthusiastic about long-term router demand when it depends heavily on telecom carriers who are seeing little or no growth and (though it's often easier said than done) experimenting with ways to replace proprietary hardware with commodity gear.

However, Cisco's order data does show that the bottom isn't falling out of its business, and that one big pocket of weakness has stabilized for the time being. And its deferred revenue figures show that real progress continues to be made for Robbins' push to lower Cisco's hardware dependence.

In this market, that's more than good enough.