| From: Eric | 11/12/2020 6:03:48 PM | | | | | | UPDATE: Cisco stock rallies 8% as results, outlook top Street view
5:49 PM ET 11/12/20
| Related Quotes | | |  | | 4:00 PM ET 11/12/20 | | Symbol | Last | % Chg |
CSCO
| 38.67 | -1.68% | | Real time quote. | | |
By Wallace Witkowski
Autodesk's Herren named new CFO
Cisco Systems Inc. shares surged in the extended session Thursday after the maker of network services, videoconferencing tools and security software's quarterly results and outlook topped Wall Street estimates, and it announced a new chief financial officer.
Cisco (CSCO) reported fiscal first-quarter net income of $2.17 billion, or 51 cents a share, compared with $2.93 billion, or 68 cents a share, in the year-ago period. Adjusted earnings were 76 cents a share, compared with 84 cents a share in the year-ago period.
Revenue declined to $11.93 billion from $13.16 billion in the year-ago quarter, marking the fourth quarter in a row Cisco has reported a year-over-year decline in revenue. Security sales helped make up for deficiencies in infrastructure sales.
Analysts surveyed by FactSet had forecast earnings of 70 cents a share on revenue of $11.85 billion, following Cisco's forecast of 69 cents to 71 cents a share on revenue of $11.71 billion to $11.97 billion.
Shares rallied as much as 8% after hours, and will add about $13 billion in market cap if the stock performs at those levels when it opens Friday. Shares declined 1.7% in the regular session to close at $38.67, for a market cap of $163.23 billion.
For the first quarter, infrastructure sales declined 16% to $6.34 billion and applications sales fell 8% to $1.38 billion, but security sales rose 6% to $861 million from the year-ago period. Analysts had forecast infrastructure sales of $6.45 billion, applications sales of $1.4 billion and security sales of $855.8 million.
On the analyst call, Chuck Robbins, Cisco chairman and chief executive, sounded a lot more optimistic going forward than he did in the earnings call three months ago marketwatch.com.
"When we did the last earnings call, we had seen actually good demand in the first couple weeks of the quarter, but clearly it was a couple weeks and so it was not anything that would have given us a trend, but the quarter started and it stayed, it was very linear," Robbins told analysts.
Cisco expects earnings of 74 cents to 76 cents a share on revenue of $11.36 billion to $12.01 billion for the fiscal second quarter. Analysts had forecast 73 cents a share on revenue of $11.6 billion for the quarter.
Cisco also appointed R. Scott Herren as its new CFO marketwatch.com effective Dec. 18.
"Most recently Scott served as the CFO for Autodesk (ADSK) and brings an incredible background in software and helped lead Autodesk's successful business model transformation from perpetual licenses to SaaS and subscription software," Robbins said on the call.
In its last earnings report, Cisco announced that CFO Kelly Kramer will retire from the company once a replacement is found and that it would undergo a $1 billion cost reduction "over the next few quarters."
Cisco reported $602 million in "restructuring and other charges" in the fiscal first quarter, and said it expects another $298 million to be reported in the second quarter. Cisco did not comment on the call as to how many of its last-reported 77,500 employees were affected by layoffs.
For the year, Cisco shares are down about 20%, compared with a 1.9% advance in the Dow Jones Industrial Average , of which Cisco is a component, a 9% rise by the S&P 500 index and a 30% gain by the tech-heavy Nasdaq Composite Index . |
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| From: Eric | 11/13/2020 4:17:26 PM | | | | | | Cisco Stock Is Rebounding After Earnings. Why There's Still Work To Do. -- Barrons.com
3:40 PM ET 11/13/20
| Related Quotes | | |  | | 4:00 PM ET 11/13/20 | | Symbol | Last | % Chg |
CSCO
| 41.40 | 7.06% |
IBM
| 116.85 | 2.05% | | Real time quote. | | |
By Eric J. Savitz
At least for now, Cisco Systems is out of the investment doghouse.
On Thursday, the networking giant posted better-than-expected results for the fiscal first quarter ended Oct. 24 and the company's guidance for the January quarter was a little better than the Street had been anticipating. As Cisco (ticker: CSCO) CEO Chuck Robbins said in an interview with Barron's , the numbers may not have looked great mathematically, but they were "better than we thought."
Cisco posted revenue for the quarter of $11.9 billion, down 9% year over year, which was at the high end of the company's guidance range. Non-GAAP profits of 76 cents a share exceeded the company's target range of 69 to 71 cents. Cisco projects January quarter revenues will be flat to down 2%, with non-GAAP earnings per share of 74 to 76 cents. That's above the old Wall Street analyst consensus, which had called for a 3% decline in revenue, and non-GAAP profits of 73 cents a share.
To be sure, this was no return to the Cisco of old. Revenue from the core infrastructure platforms business was down 16%. Enterprise orders were down 15%, and orders from Asia were off 14%. But there were some positive signs beyond the top and bottom lines. The severe recent order declines from commercial customers -- basically small- and medium-size businesses -- moderated. Demand from cloud customers was strong. Security revenue was up 6% and public sector revenue was robust.
Add it up, and you get a quarter that pleased analysts, though some remain cautious about the sustainability of the rebound.
New Street Research analyst Pierre Ferragu on Friday upped his rating on Cisco shares to Buy from Neutral, setting a Street-high $60 price target. In a research note, Ferragu notes that the company is exposed to legacy and on-premise IT spending, "which has made 2020 a difficult year." But he says the revenue decline has troughed, with January quarter revenues likely flat sequentially and down just 1% at the midpoint of the guidance range year over year.
"This to us is the beginning of a recovery in IT spending," Ferragu writes. "In our conversations with Fortune 500 companies and industry executives, we see reasons to expect a quick recovery in 2021. In 2020, spending was front-loaded and directed toward emergency responses to Covid and work from home, which led to a very weak second half, but 2021 IT budgets are unlikely to get cut, as in-depth transformation projects have only been postponed."
Evercore ISI analyst Amit Daryananai writes that "this one goes out to all the haters ... reduced uncertainty, improving revenue trajectory, and easy compares make Cisco an attractive large-cap asset to own especially for value investors." He keeps his Outperform rating and $54 target.
Barclays analyst Tim Long likewise writes that "both tone and visibility has improved since last quarter, and we believe CSCO has room to run in the post-pandemic recovery." He keeps his Overweight rating and $50 target.
And RBC Capital's Robert Muller writes that "with long-duration secular tailwinds intact, steady market leading positions, and favorable valuation ... we continue to view the long-term CSCO story favorably." He keeps his Outperform rating, and inches up his target to $49, from $48.
Other analysts saw the quarter as a step in the right direction, but want to see more evidence before jumping aboard.
William Blair analyst Jason Ader keeps his Market Perform rating. "We contend that pandemic or no pandemic, Cisco's business is not yet out of the woods, with the long-term structural pressures ... remaining in place," he writes in a research note. "While Cisco has been attempting to pivot its business toward a greater mix of software and recurring revenue, we believe the pandemic has spotlighted the firm's product deficiencies (especially in the cloud), nonstrategic assets (e.g., Cisco's compute portfolio), and competitive challenges (best-of-breed competition chipping away in multiple product areas)."
Ader adds that "without a bolder approach to addressing its strategic shortcomings in a rapidly changing technology landscape, we think that like IBM (pre-Red Hat), Cisco's growth rate will continue to languish and its relevance with CIOs could continue to erode."
Needham's Alex Henderson remains a skeptic, and keeps his Hold rating. "Cisco sounded much more upbeat on the call and all we can do is assume it is in the pipeline activity," he writes. "The numbers reported don't show much cause for optimism. Cisco reported a year-over-year decline in revenues of 9% on a steep decline of 13.1% in product revenues against a decline in the year-ago period....We consider Cisco fairly valued."
Citi's Jim Suva keeps his Neutral rating, though he inches up his target to $45, from $43. "We were impressed with the company's outlook as well as a clear change in tone that went from last quarter's cautious comments of not much improvement to current quarter comments of a more stable and improving demand environment," he writes in a research note Friday. But he adds that he still has some concerns, in particular the 5% drop in overall orders, and the sharp 15% decline in enterprise orders, which deteriorated from down 7% in the July quarter. |
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| From: Eric | 2/2/2022 5:12:31 PM | | | | | | Cisco Schedules Conference Call for Q2 Fiscal Year 2022 Financial Results
4:30 PM ET 2/2/22 | Dow Jones
SAN JOSE, Calif., Feb. 2, 2022 /PRNewswire/ -- Cisco has scheduled a conference call for Wednesday, February 16, 2022, at 1:30 PM (PT); 4:30 PM (ET) to announce its second quarter fiscal year 2022 financial results for the period ending Saturday, January 29, 2022.
Financial results will be released over PR Newswire via US National and European Financial distribution, after the close of the market on Wednesday, February 16, 2022.
Cisco's quarterly earnings press release will be posted at newsroom.cisco.com.
Date:
Wednesday, February 16, 2022
Time:
1:30 PM (PT); 4:30 PM (ET)
To Listen via Telephone:
888-848-6507
212-519-0847 (for International Callers)
RSVP:
No RSVP is necessary
To Listen via the Internet:
We are pleased to offer a live and replay audio broadcast of the conference call with corresponding slides at investor.cisco.com.
Replay: A telephone playback of the Q2 FY2022 conference call is scheduled to be available beginning at 4:00 PM (PT) on February 16, 2022, through 4:00 PM (PT) February 23, 2022. The replay will be accessible by calling 888-568-0332 (International callers: 203-369-3905). The call runs 24 hours/day, including weekends. |
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| From: Sr K | 2/11/2022 7:00:33 PM | | | | | | Cisco Made $20 Billion-Plus Takeover Offer for Splunk
Bid was made recently though companies aren’t currently in active talks, according to people familiar with the matter
San Jose, Calif.-based Cisco sells routers, switches and security services as well as software products.PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
By
Dana Cimilluca Follow
and
Cara Lombardo Follow
Updated Feb. 11, 2022 6:43 pm ET
Cisco Systems Inc. CSCO -1.77% has made a takeover offer worth more than $20 billion for software maker Splunk Inc., SPLK -2.76% according to people familiar with the matter.
The offer was made recently and the companies aren’t currently in active talks, some of the people said.
Should there be a deal, it would be Cisco’s biggest ever, eclipsing the roughly $7 billion acquisition of Scientific Atlanta in 2005. Its most recent deal of size was its nearly $5 billion purchase of Acacia Communications Inc. in 2021.
Splunk is currently searching for a chief executive after Doug Merritt stepped down from the role in November after roughly six years following a series of disappointing earnings reports. The company named Chairman Graham Smith as interim CEO, a position he still holds.
Splunk shares rose sharply early in the pandemic as did those of a number of other technology companies with strong growth potential, but have almost fallen in half since then.
It isn’t clear whether other potential suitors are circling Splunk.
Splunk, founded in 2003, makes software used by companies’ information-technology and security operations to monitor and analyze data.
San Jose, Calif.-based Cisco sells routers, switches and security services as well as software products such as its Webex meeting application.
Cisco’s interest shows that the networking giant—a serial acquirer, but usually of smaller companies—has an appetite for big deals.
And it has the wherewithal, with a market value of around $235 billion and more than $20 billion in cash and short-term investments.
Software has been a hot corner of the M&A market lately, with a number of companies in the sector being snapped up by private-equity firms or other industry players. In one of the latest examples, Citrix Systems Inc. agreed to be taken private by a pair of private-equity firms in an acquisition valued at $16.5 billion, including debt.
Splunk said in June that technology-focused private-equity firm Silver Lake was making a $1 billion investment in the company to help support the transformation of the business. Splunk has been shifting from a traditional software-licensing arrangement to a cloud-based subscription model. An increase in the shares on news of that investment had evaporated by the close of trading Friday.
Cisco is set to report its fiscal second-quarter earnings Feb. 16, while Splunk reports March 2.
Exc. |
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| From: Eric | 2/28/2022 4:10:39 PM | | | | | | DJ Top Companies for Customer Satisfaction -- Journal Report
3:04 PM ET 2/28/22 | Dow Jones
Cisco Systems Inc. is No. 1 for customer satisfaction in the latest Management Top 250 ranking, followed by Agilent Technologies Inc. and International Business Machines Corp.
The Management Top 250 ranking, developed by the Drucker Institute, measures corporate effectiveness by examining performance in five categories: customer satisfaction, employee engagement and development, innovation, social responsibility and financial strength.
Among the companies in the Top 250 with the highest scores for customer satisfaction, IBM ranks highest overall, at No. 4. Two others in this group also made the top 10 overall, Nvidia Corp. at No. 6 and Cisco at No. 8. Nvidia and Cisco also are among this year's eight All-Stars -- companies that excel in all five components of the overall ranking.
Nvidia also made the top 10 for financial strength and is No. 1 for employee engagement and development. Other top-10 performances for the leaders in customer satisfaction are Cisco for social responsibility and IBM for innovation.
You can explore the full, detailed rankings here. In the coming weeks we'll take a look at the leaders in each of the remaining ranking categories and the companies whose scores improved the most from the previous year in each category.
-- Gerard Yates |
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| From: Eric | 11/16/2022 4:12:15 PM | | | | | | 
Cisco Systems, Inc. has added a new press release to its website:
CISCO REPORTS FIRST QUARTER EARNINGS
SAN JOSE, Calif., Nov. 16, 2022 /PRNewswire/ --
News Summary:
$13.6 billion in revenue, up 6% year over year; GAAP EPS $0.65, down 7% year over year, and Non-GAAP EPS $0.86, up 5% year over yearContinued progress on business model transformation: Total annualized recurring revenue (ARR) at $23.2 billion, up 7% year over year and product ARR up 12% year over yearTotal software revenue up 5% year over year and software subscription revenue up 11% year over yearRemaining performance obligations (RPO) at $30.9 billion, up 3% year over year and product RPO up 5% year over year Q1 FY 2023 Results: Revenue: $13.6 billionIncrease of 6% year over yearEarnings per Share: GAAP: $0.65; Non-GAAP: $0.86GAAP EPS decreased (7)% year over yearNon-GAAP EPS increased 5% year over yearQ2 FY 2023 Guidance: Revenue: 4.5% to 6.5% growth year over yearEarnings per Share: GAAP: $0.59 to $0.64; Non-GAAP: $0.84 to $0.86 FY 2023 Guidance: Revenue: 4.5% to 6.5% growth year over yearEarnings per Share: GAAP: $2.63 to $2.76; Non-GAAP: $3.51 to $3.58 Cisco today reported first quarter results for the period ended October 29, 2022. Cisco reported first quarter revenue of $13.6 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.7 billion or $0.65 per share, and non-GAAP net income of $3.5 billion or $0.86 per share.
"Our fiscal 2023 is off to a good start as we delivered the largest quarterly revenue and second highest quarterly non-GAAP earnings per share in our history," said Chuck Robbins, chair and CEO of Cisco. "These results demonstrate the relevance of our strategy, our differentiated innovation, and our unique position to help our customers become more resilient."
"We delivered strong results in Q1 and continued to make progress on our business transformation," said Scott Herren, CFO of Cisco. "Our annualized recurring revenue increased to more than $23 billion, with product ARR growing 12%. This, together with our significant backlog, strong RPO, and easing supply situation, provides us with great visibility and predictability, and supports our increased full year guidance."
GAAP Results
|
|
|
| Q1 FY 2023
|
| Q1 FY 2022
|
| Vs. Q1 FY 2022
| Revenue
|
| $ 13.6
| billion
|
| $ 12.9
| billion
|
| 6 %
| Net Income
|
| $ 2.7
| billion
|
| $ 3.0
| billion
|
| (10) %
| Diluted Earnings per Share (EPS)
|
| $ 0.65
|
|
| $ 0.70
|
|
| (7) %
|
|
| Non-GAAP Results
|
|
|
| Q1 FY 2023
|
| Q1 FY 2022
|
| Vs. Q1 FY 2022
| Net Income
|
| $ 3.5
| billion
|
| $ 3.5
| billion
|
| 2 %
| EPS
|
| $ 0.86
|
|
| $ 0.82
|
|
| 5 %
| Reconciliations between net income, EPS, and other measures on a GAAP and non-GAAP basis are provided in the tables located in the section entitled "Reconciliations of GAAP to non-GAAP Measures."
Financial Summary
All comparative percentages are on a year-over-year basis unless otherwise noted.
Q1 FY 2023 Highlights
Revenue -- Total revenue was up 6% at $13.6 billion, with product revenue up 8% and service revenue was flat. Revenue by geographic segment was: Americas up 5%, EMEA up 11%, and APJC was flat. Product revenue performance was led by growth in Secure, Agile Networks up 12%, End-to-End Security up 9%, and Optimized Application Experiences up 7%. Internet for the Future was down 5% and Collaboration was down 2%.
Gross Margin -- On a GAAP basis, total gross margin, product gross margin, and service gross margin were 61.2%, 59.2%, and 67.3%, respectively, as compared with 62.4%, 61.5%, and 65.2%, respectively, in the first quarter of fiscal 2022.
On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 63.0%, 61.0%, and 68.8%, respectively, as compared with 64.5%, 63.8%, and 66.5%, respectively, in the first quarter of fiscal 2022.
Total gross margins by geographic segment were: 63.0% for the Americas, 63.3% for EMEA and 62.3% for APJC.
Operating Expenses -- On a GAAP basis, operating expenses were $4.8 billion, up 4%, and were 35.3% of revenue. Non-GAAP operating expenses were $4.2 billion, up 5%, and were 31.1% of revenue.
Operating Income -- GAAP operating income was $3.5 billion, up 3%, with GAAP operating margin of 26.0%. Non-GAAP operating income was $4.3 billion, up 1%, with non-GAAP operating margin at 31.8%.
Provision for Income Taxes -- The GAAP tax provision rate was 23.2%. The non-GAAP tax provision rate was 19.0%.
Net Income and EPS -- On a GAAP basis, net income was $2.7 billion, a decrease of 10%, and EPS was $0.65, a decrease of 7%. On a non-GAAP basis, net income was $3.5 billion, an increase of 2%, and EPS was $0.86, an increase of 5%.
Cash Flow from Operating Activities -- $4.0 billion for the first quarter of fiscal 2023, an increase of 16% compared with $3.4 billion for the first quarter of fiscal 2022.
Balance Sheet and Other Financial Highlights
Cash and Cash Equivalents and Investments -- $19.8 billion at the end of the first quarter of fiscal 2023, compared with $19.3 billion at the end of fiscal 2022.
Remaining Performance Obligations (RPO) -- $30.9 billion, up 3% in total, with 53% of this amount to be recognized as revenue over the next 12 months. Product RPO were up 5% and service RPO were up 1%.
Deferred Revenue -- $23.0 billion, up 4% in total, with deferred product revenue up 7%. Deferred service revenue was up 2%.
Capital Allocation -- In the first quarter of fiscal 2023, we returned $2.1 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.38 per common share, or $1.6 billion, and repurchased approximately 12 million shares of common stock under our stock repurchase program at an average price of $43.76 per share for an aggregate purchase price of $0.5 billion. The remaining authorized amount for stock repurchases under the program is $14.7 billion with no termination date.
Guidance
Cisco expects to achieve the following results for the second quarter of fiscal 2023:
Q2 FY 2023
|
|
| Revenue
|
| 4.5% – 6.5% growth Y/Y
| Non-GAAP gross margin rate
|
| 63% – 64%
| Non-GAAP operating margin rate
|
| 31.5% – 32.5%
| Non-GAAP EPS
|
| $0.84 – $0.86
| Cisco estimates that GAAP EPS will be $0.59 to $0.64 for the second quarter of fiscal 2023.
Cisco expects to achieve the following results for fiscal 2023:
FY 2023
|
|
| Revenue
|
| 4.5% – 6.5% growth Y/Y
| Non-GAAP EPS
|
| $3.51 – $3.58
| Cisco estimates that GAAP EPS will be $2.63 to $2.76 for fiscal 2023.
Our Q2 FY 2023 guidance assumes an effective tax provision rate of 19% for GAAP and non-GAAP results. Our FY 2023 guidance assumes an effective tax provision rate of 20% for GAAP and 19% for non-GAAP results.
A reconciliation between the Guidance on a GAAP and non-GAAP basis is provided in the tables entitled "GAAP to non-GAAP Guidance" located in the section entitled "Reconciliations of GAAP to non-GAAP Measures."
Editor's Notes:
Q1 fiscal year 2023 conference call to discuss Cisco's results along with its guidance will be held on Wednesday, November 16, 2022 at 1:30 p.m. Pacific Time. Conference call number is 1-888-848-6507 (United States) or 1-212-519-0847 (international). Conference call replay will be available from 4:00 p.m. Pacific Time, November 16, 2022 to 4:00 p.m. Pacific Time, November 23, 2022 at 1-800-835-5808 (United States) or 1-203-369-3353 (international). The replay will also be available via webcast on the Cisco Investor Relations website at u27227478.ct.sendgrid.net. Additional information regarding Cisco's financials, as well as a webcast of the conference call with visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, November 16, 2022. Text of the conference call's prepared remarks will be available within 24 hours of completion of the call. The webcast will include both the prepared remarks and the question-and-answer session. This information, along with the GAAP to non-GAAP reconciliation information, will be available on the Cisco Investor Relations website at u27227478.ct.sendgrid.net.
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per-share amounts)
(Unaudited)
|
|
| Three Months Ended
|
| October 29,
2022
|
| October 30,
2021
| REVENUE:
|
|
|
| Product
| $ 10,245
|
| $ 9,529
| Service
| 3,387
|
| 3,371
| Total revenue
| 13,632
|
| 12,900
| COST OF SALES:
|
|
|
| Product
| 4,179
|
| 3,673
| Service
| 1,107
|
| 1,174
| Total cost of sales
| 5,286
|
| 4,847
| GROSS MARGIN
| 8,346
|
| 8,053
| OPERATING EXPENSES:
|
|
|
| Research and development
| 1,781
|
| 1,714
| Sales and marketing
| 2,391
|
| 2,261
| General and administrative
| 565
|
| 551
| Amortization of purchased intangible assets
| 71
|
| 84
| Restructuring and other charges
| (2)
|
| 5
| Total operating expenses
| 4,806
|
| 4,615
| OPERATING INCOME
| 3,540
|
| 3,438
| Interest income
| 169
|
| 121
| Interest expense
| (100)
|
| (89)
| Other income (loss), net
| (134)
|
| 187
| Interest and other income (loss), net
| (65)
|
| 219
| INCOME BEFORE PROVISION FOR INCOME TAXES
| 3,475
|
| 3,657
| Provision for income taxes
| 805
|
| 677
| NET INCOME
| $ 2,670
|
| $ 2,980
|
|
|
|
| Net income per share:
|
|
|
| Basic
| $ 0.65
|
| $ 0.71
| Diluted
| $ 0.65
|
| $ 0.70
| Shares used in per-share calculation:
|
|
|
| Basic
| 4,108
|
| 4,218
| Diluted
| 4,116
|
| 4,243
|
CISCO SYSTEMS, INC.
REVENUE BY SEGMENT
(In millions, except percentages)
|
|
|
| Three Months Ended
|
|
| October 29, 2022
|
|
| Amount
|
| Y/Y %
| Revenue :
|
|
|
|
| Americas
|
| $ 7,914
|
| 5 %
| EMEA
|
| 3,675
|
| 11 %
| APJC
|
| 2,043
|
| — %
| Total
|
| $ 13,632
|
| 6 %
|
| Amounts may not sum and percentages may not recalculate due to rounding.
|
CISCO SYSTEMS, INC.
GROSS MARGIN PERCENTAGE BY SEGMENT
(In percentages)
|
|
|
| Three Months Ended
|
|
| October 29, 2022
| Gross Margin Percentage :
|
|
| Americas
|
| 63.0 %
| EMEA
|
| 63.3 %
| APJC
|
| 62.3 %
|
CISCO SYSTEMS, INC.
REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES
(In millions, except percentages)
|
|
|
| Three Months Ended
|
|
| October 29, 2022
|
|
| Amount
|
| Y/Y %
| Revenue :
|
|
|
|
| Secure, Agile Networks
|
| $ 6,684
|
| 12 %
| Internet for the Future
|
| 1,310
|
| (5) %
| Collaboration
|
| 1,086
|
| (2) %
| End-to-End Security
|
| 971
|
| 9 %
| Optimized Application Experiences
|
| 193
|
| 7 %
| Other Products
|
| 2
|
| (47) %
| Total Product
|
| 10,245
|
| 8 %
| Services
|
| 3,387
|
| — %
| Total
|
| $ 13,632
|
| 6 %
|
| Amounts may not sum and percentages may not recalculate due to rounding.
|
CISCO SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
|
|
| October 29, 2022
|
| July 30, 2022
| ASSETS
|
|
|
| Current assets:
|
|
|
| Cash and cash equivalents
| $ 7,292
|
| $ 7,079
| Investments
| 12,492
|
| 12,188
| Accounts receivable, net of allowance of $88 at October 29, 2022 and $83 at July 30,
2022
| 5,439
|
| 6,622
| Inventories
| 2,664
|
| 2,568
| Financing receivables, net
| 3,683
|
| 3,905
| Other current assets
| 4,571
|
| 4,355
| Total current assets
| 36,141
|
| 36,717
| Property and equipment, net
| 1,972
|
| 1,997
| Financing receivables, net
| 3,618
|
| 4,009
| Goodwill
| 38,160
|
| 38,304
| Purchased intangible assets, net
| 2,360
|
| 2,569
| Deferred tax assets
| 4,891
|
| 4,449
| Other assets
| 5,912
|
| 5,957
| TOTAL ASSETS
| $ 93,054
|
| $ 94,002
| LIABILITIES AND EQUITY
|
|
|
| Current liabilities:
|
|
|
| Short-term debt
| $ 1,249
|
| $ 1,099
| Accounts payable
| 2,316
|
| 2,281
| Income taxes payable
| 890
|
| 961
| Accrued compensation
| 2,907
|
| 3,316
| Deferred revenue
| 12,578
|
| 12,784
| Other current liabilities
| 4,956
|
| 5,199
| Total current liabilities
| 24,896
|
| 25,640
| Long-term debt
| 7,629
|
| 8,416
| Income taxes payable
| 7,835
|
| 7,725
| Deferred revenue
| 10,441
|
| 10,480
| Other long-term liabilities
| 1,981
|
| 1,968
| Total liabilities
| 52,782
|
| 54,229
| Total equity
| 40,272
|
| 39,773
| TOTAL LIABILITIES AND EQUITY
| $ 93,054
|
| $ 94,002
|
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
|
|
| Three Months Ended
|
| October 29,
2022
|
| October 30,
2021
| Cash flows from operating activities:
|
|
|
| Net income
| $ 2,670
|
| $ 2,980
| Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
| Depreciation, amortization, and other
| 415
|
| 533
| Share-based compensation expense
| 496
|
| 453
| Provision (benefit) for receivables
| 7
|
| 1
| Deferred income taxes
| (366)
|
| (98)
| (Gains) losses on divestitures, investments and other, net
| 131
|
| (211)
| Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
|
|
|
| Accounts receivable
| 1,119
|
| 427
| Inventories
| (108)
|
| (275)
| Financing receivables
| 556
|
| 672
| Other assets
| (316)
|
| (170)
| Accounts payable
| 42
|
| (93)
| Income taxes, net
| 20
|
| 17
| Accrued compensation
| (384)
|
| (585)
| Deferred revenue
| (78)
|
| (95)
| Other liabilities
| (242)
|
| (129)
| Net cash provided by operating activities
| 3,962
|
| 3,427
| Cash flows from investing activities:
|
|
|
| Purchases of investments
| (1,943)
|
| (2,951)
| Proceeds from sales of investments
| 407
|
| 580
| Proceeds from maturities of investments
| 971
|
| 1,856
| Acquisitions, net of cash and cash equivalents acquired and divestitures
| —
|
| (336)
| Purchases of investments in privately held companies
| (48)
|
| (101)
| Return of investments in privately held companies
| 10
|
| 53
| Acquisition of property and equipment
| (176)
|
| (122)
| Proceeds from sales of property and equipment
| —
|
| 1
| Other
| (20)
|
| —
| Net cash used in investing activities
| (799)
|
| (1,020)
| Cash flows from financing activities:
|
|
|
| Repurchases of common stock - repurchase program
| (556)
|
| (273)
| Shares repurchased for tax withholdings on vesting of restricted stock units
| (108)
|
| (133)
| Short-term borrowings, original maturities of 90 days or less, net
| (602)
|
| —
| Repayments of debt
| —
|
| (2,000)
| Dividends paid
| (1,560)
|
| (1,561)
| Other
| (29)
|
| (3)
| Net cash used in financing activities
| (2,855)
|
| (3,970)
| Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
| (95)
|
| —
| Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
| 213
|
| (1,563)
| Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period
| 8,579
|
| 9,942
| Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
| $ 8,792
|
| $ 8,379
| Supplemental cash flow information:
|
|
|
| Cash paid for interest
| $ 114
|
| $ 124
| Cash paid for income taxes, net
| $ 1,150
|
| $ 758
|
CISCO SYSTEMS, INC.
REMAINING PERFORMANCE OBLIGATIONS
(In millions, except percentages)
|
|
| October 29, 2022
|
| July 30, 2022
|
| October 30, 2021
|
| Amount
|
| Y/Y%
|
| Amount
|
| Y/Y%
|
| Amount
|
| Y/Y%
| Product
| $ 14,013
|
| 5 %
|
| $ 14,090
|
| 6 %
|
| $ 13,384
|
| 18 %
| Service
| 16,897
|
| 1 %
|
| 17,449
|
| (1) %
|
| 16,751
|
| 4 %
| Total
| $ 30,910
|
| 3 %
|
| $ 31,539
|
| 2 %
|
| $ 30,135
|
| 10 %
|
| We expect 53% of total RPO at October 29, 2022 will be recognized as revenue over the next 12 months.
|
CISCO SYSTEMS, INC.
DEFERRED REVENUE
(In millions)
|
|
| October 29,
2022
|
| July 30,
2022
|
| October 30,
2021
| Deferred revenue:
|
|
|
|
|
| Product
| $ 10,404
|
| $ 10,427
|
| $ 9,681
| Service
| 12,615
|
| 12,837
|
| 12,391
| Total
| $ 23,019
|
| $ 23,264
|
| $ 22,072
| Reported as:
|
|
|
|
|
| Current
| $ 12,578
|
| $ 12,784
|
| $ 12,017
| Noncurrent
| 10,441
|
| 10,480
|
| 10,055
| Total
| $ 23,019
|
| $ 23,264
|
| $ 22,072
|
CISCO SYSTEMS, INC.
DIVIDENDS PAID AND REPURCHASES OF COMMON STOCK
(In millions, except per-share amounts)
|
|
|
| DIVIDENDS
|
| STOCK REPURCHASE PROGRAM
|
| TOTAL
| Quarter Ended
|
| Per Share
|
| Amount
|
| Shares
|
| Weighted-
Average Price
per Share
|
| Amount
|
| Amount
| Fiscal 2023
|
|
|
|
|
|
|
|
|
|
|
|
| October 29, 2022
|
| $ 0.38
|
| $ 1,560
|
| 12
|
| $ 43.76
|
| $ 502
|
| $ 2,062
| Fiscal 2022
|
|
|
|
|
|
|
|
|
|
|
|
| July 30, 2022
|
| $ 0.38
|
| $ 1,567
|
| 54
|
| $ 44.02
|
| $ 2,402
|
| $ 3,969
| April 30, 2022
|
| $ 0.38
|
| $ 1,555
|
| 5
|
| $ 54.20
|
| $ 252
|
| $ 1,807
| January 29, 2022
|
| $ 0.37
|
| $ 1,541
|
| 82
|
| $ 58.36
|
| $ 4,824
|
| $ 6,365
| October 30, 2021
|
| $ 0.37
|
| $ 1,561
|
| 5
|
| $ 56.49
|
| $ 256
|
| $ 1,817
|
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
|
| GAAP TO NON-GAAP NET INCOME
(In millions)
|
|
| Three Months Ended
|
| October 29,
2022
|
| October 30,
2021
| GAAP net income
| $ 2,670
|
| $ 2,980
| Adjustments to cost of sales:
|
|
|
| Share-based compensation expense
| 81
|
| 69
| Amortization of acquisition-related intangible assets
| 153
|
| 198
| Acquisition-related/divestiture costs
| 2
|
| 1
| Total adjustments to GAAP cost of sales
| 236
|
| 268
| Adjustments to operating expenses:
|
|
|
| Share-based compensation expense
| 415
|
| 383
| Amortization of acquisition-related intangible assets
| 71
|
| 84
| Acquisition-related/divestiture costs
| 75
|
| 112
| Russia-Ukraine war costs
| 3
|
| —
| Significant asset impairments and restructurings
| (2)
|
| 5
| Total adjustments to GAAP operating expenses
| 562
|
| 584
| Adjustments to interest and other income (loss), net:
|
|
|
| (Gains) and losses on equity investments
| 109
|
| (219)
| Total adjustments to GAAP interest and other income (loss), net
| 109
|
| (219)
| Total adjustments to GAAP income before provision for income taxes
| 907
|
| 633
| Income tax effect of non-GAAP adjustments
| (192)
|
| (138)
| Significant tax matters
| 164
|
| —
| Total adjustments to GAAP provision for income taxes
| (28)
|
| (138)
| Non-GAAP net income
| $ 3,549
|
| $ 3,475
|
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
|
| GAAP TO NON-GAAP EPS
|
|
| Three Months Ended
|
| October 29,
2022
|
| October 30,
2021
| GAAP EPS
| $ 0.65
|
| $ 0.70
| Adjustments to GAAP:
|
|
|
| Share-based compensation expense
| 0.12
|
| 0.11
| Amortization of acquisition-related intangible assets
| 0.05
|
| 0.07
| Acquisition-related/divestiture costs
| 0.02
|
| 0.03
| (Gains) and losses on equity investments
| 0.03
|
| (0.05)
| Income tax effect of non-GAAP adjustments
| (0.05)
|
| (0.03)
| Significant tax matters
| 0.04
|
| —
| Non-GAAP EPS
| $ 0.86
|
| $ 0.82
|
| Amounts may not sum due to rounding.
|
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
|
| GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET,
AND NET INCOME
(In millions, except percentages)
|
|
| Three Months Ended
|
| October 29, 2022
|
| Product
Gross
Margin
|
| Service
Gross
Margin
|
| Total
Gross
Margin
|
| Operating
Expenses
|
| Y/Y
|
| Operating
Income
|
| Y/Y
|
| Interest and other income (loss), net
|
| Net Income
|
| Y/Y
| GAAP amount
| $ 6,066
|
| $ 2,280
|
| $ 8,346
|
| $ 4,806
|
| 4 %
|
| $ 3,540
|
| 3 %
|
| $ (65)
|
| $ 2,670
|
| (10) %
| % of revenue
| 59.2 %
|
| 67.3 %
|
| 61.2 %
|
| 35.3 %
|
|
|
| 26.0 %
|
|
|
| (0.5) %
|
| 19.6 %
|
|
| Adjustments to GAAP amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation expense
| 31
|
| 50
|
| 81
|
| 415
|
|
|
| 496
|
|
|
| —
|
| 496
|
|
| Amortization of acquisition-related intangible assets
| 153
|
| —
|
| 153
|
| 71
|
|
|
| 224
|
|
|
| —
|
| 224
|
|
| Acquisition/divestiture-related costs
| 2
|
| —
|
| 2
|
| 75
|
|
|
| 77
|
|
|
| —
|
| 77
|
|
| Significant asset impairments and restructurings
| —
|
| —
|
| —
|
| (2)
|
|
|
| (2)
|
|
|
| —
|
| (2)
|
|
| Russia-Ukraine war costs
| —
|
| —
|
| —
|
| 3
|
|
|
| 3
|
|
|
| —
|
| 3
|
|
| (Gains) and losses on equity investments
| —
|
| —
|
| —
|
| —
|
|
|
| —
|
|
|
| 109
|
| 109
|
|
| Income tax effect/significant tax matters
| —
|
| —
|
| —
|
| —
|
|
|
| —
|
|
|
| —
|
| (28)
|
|
| Non-GAAP amount
| $ 6,252
|
| $ 2,330
|
| $ 8,582
|
| $ 4,244
|
| 5 %
|
| $ 4,338
|
| 1 %
|
| $ 44
|
| $ 3,549
|
| 2 %
| % of revenue
| 61.0 %
|
| 68.8 %
|
| 63.0 %
|
| 31.1 %
|
|
|
| 31.8 %
|
|
|
| 0.3 %
|
| 26.0 %
|
|
|
| Three Months Ended
|
| October 30, 2021
|
| Product Gross Margin
|
| Service Gross Margin
|
| Total Gross Margin
|
| Operating Expenses
|
| Operating
Income
|
| Interest and other income (loss), net
|
| Net
Income
| GAAP amount
| $ 5,856
|
| $ 2,197
|
| $ 8,053
|
| $ 4,615
|
| $ 3,438
|
| $ 219
|
| $ 2,980
| % of revenue
| 61.5 %
|
| 65.2 %
|
| 62.4 %
|
| 35.8 %
|
| 26.7 %
|
| 1.7 %
|
| 23.1 %
| Adjustments to GAAP amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation expense
| 25
|
| 44
|
| 69
|
| 383
|
| 452
|
| —
|
| 452
| Amortization of acquisition-related intangible assets
| 198
|
| —
|
| 198
|
| 84
|
| 282
|
| —
|
| 282
| Acquisition/divestiture-related costs
| 1
|
| —
|
| 1
|
| 112
|
| 113
|
| —
|
| 113
| Significant asset impairments and restructurings
| —
|
| —
|
| —
|
| 5
|
| 5
|
| —
|
| 5
| (Gains) and losses on equity investments
| —
|
| —
|
| —
|
| —
|
| —
|
| (219)
|
| (219)
| Income tax effect/significant tax matters
| —
|
| —
|
| —
|
| —
|
| —
|
| —
|
| (138)
| Non-GAAP amount
| $ 6,080
|
| $ 2,241
|
| $ 8,321
|
| $ 4,031
|
| $ 4,290
|
| $ —
|
| $ 3,475
| % of revenue
| 63.8 %
|
| 66.5 %
|
| 64.5 %
|
| 31.2 %
|
| 33.3 %
|
| — %
|
| 26.9 %
|
| Amounts may not sum and percentages may not recalculate due to rounding.
|
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
|
| EFFECTIVE TAX RATE
(In percentages)
|
|
| Three Months Ended
|
| October 29,
2022
|
| October 30,
2021
| GAAP effective tax rate
| 23.2 %
|
| 18.5 %
| Total adjustments to GAAP provision for income taxes
| (4.2) %
|
| 0.5 %
| Non-GAAP effective tax rate
| 19.0 %
|
| 19.0 %
|
GAAP TO NON-GAAP GUIDANCE
|
| Q2 FY 2023
|
| Gross Margin Rate
|
| Operating Margin Rate
|
| Earnings per Share (2)
| GAAP
|
| 61% – 62%
|
| 22.5% – 23.5%
|
| $0.59 – $0.64
| Estimated adjustments for:
|
|
|
|
|
|
| Share-based compensation expense
|
| 1.0 %
|
| 4.5 %
|
| $0.12 – $0.13
| Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs
|
| 1.0 %
|
| 2.0 %
|
| $0.05 – $0.06
| Significant asset impairments and restructurings (1)
|
| —
|
| 2.5 %
|
| $0.05 – $0.06
| Non-GAAP
|
| 63% – 64%
|
| 31.5% – 32.5%
|
| $0.84 – $0.86
|
FY 2023
|
| Earnings per Share (2)
| GAAP
|
| $2.63 – $2.76
| Estimated adjustments for:
|
|
| Share-based compensation expense
|
| $0.46 – $0.48
| Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs
|
| $0.21 – $0.23
| Significant asset impairments and restructurings (1)
|
| $0.09 – $0.11
| (Gains) and losses on equity investments
|
| $0.02
| Significant tax matters
|
| $0.04
| Non-GAAP
|
| $3.51 – $3.58
| (1) On November 16, 2022, Cisco announced a restructuring plan in order to rebalance the organization and enable further investment in key priority areas. This rebalancing will include talent movement options and restructuring. Additionally, Cisco will optimize its real estate portfolio, aligned to the broader hybrid work strategy. Cisco will take action under this plan beginning in the second quarter of fiscal 2023. Cisco currently estimates that it will recognize pre-tax charges to its GAAP financial results of approximately $600 million consisting of severance and other one-time termination benefits, real estate-related charges, and other costs. These charges are primarily cash-based. Cisco expects to recognize approximately $300 million of these charges in the second quarter of fiscal 2023, approximately $200 million of these charges during the second half of fiscal 2023, and the remaining amount of these charges primarily through the first quarter of fiscal 2024.
(2) Estimated adjustments to GAAP earnings per share are shown after income tax effects.
Except as noted above, this guidance does not include the effects of any future acquisitions/divestitures, asset impairments, Russia-Ukraine war costs, restructurings, (gains) and losses on equity investments and significant tax matters or other events, which may or may not be significant unless specifically stated.
Forward Looking Statements, Non-GAAP Information and Additional Information
This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as the relevance of our strategy, our differentiated innovation, our ability to help our customers become more resilient, our continued progress on our business model transformation, and the visibility and predictability provided by backlog, RPO, easing of the supply situation and the growth of annualized recurring revenue) and the future financial performance of Cisco (including the guidance for Q2 FY 2023 and full year FY 2023) that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: the impact of the COVID-19 pandemic and related public health measures; business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth and evolution of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market and other customer markets; the return on our investments in certain priorities, key growth areas, and in certain geographical locations, as well as maintaining leadership in Secure, Agile Networks and services; the timing of orders and manufacturing and customer lead times; significant supply constraints; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; our ability to achieve expected benefits of our partnerships; increased competition in our product and service markets, including the data center market; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, other intellectual property, antitrust, stockholder and other matters, and governmental investigations; our ability to achieve the benefits of restructurings and possible changes in the size and timing of related charges; cyber-attacks, data breaches or malware; vulnerabilities and critical security defects; terrorism; natural catastrophic events (including as a result of global climate change); any other pandemic or epidemic; our ability to achieve the benefits anticipated from our investments in sales, engineering, service, marketing and manufacturing activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during economic downturns; risks related to the global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws and regulations or adverse outcomes resulting from examinations of our income tax returns; potential volatility in operating results; and other factors listed in Cisco's most recent report on Form 10-K filed on September 8, 2022. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco's most recent report on Form 10-K as it may be amended from time to time. Cisco's results of operations for the three months ended October 29, 2022 are not necessarily indicative of Cisco's operating results for any future periods. Any projections in this release are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.
This release includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share data for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.
These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco's results of operations in conjunction with the corresponding GAAP measures.
Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations.
For its internal budgeting process, Cisco's management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related/divestiture costs, significant asset impairments and restructurings, significant litigation settlements and other contingencies, Russia-Ukraine war costs, gains and losses on equity investments, the income tax effects of the foregoing and significant tax matters. Cisco's management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results. For additional information on the items excluded by Cisco from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.
Annualized recurring revenue represents the annualized revenue run-rate of active subscriptions, term licenses, and maintenance contracts at the end of a reporting period, net of rebates to customers and partners as well as certain other revenue adjustments. Includes both revenue recognized ratably as well as upfront on an annualized basis.
About Cisco
Cisco (Nasdaq: CSCO) is the worldwide leader in technology that powers the Internet. Cisco inspires new possibilities by reimagining your applications, securing your data, transforming your infrastructure, and empowering your teams for a global and inclusive future. Discover more at newsroom.cisco.com and follow us on Twitter at @Cisco.
Copyright © 2022 Cisco and/or its affiliates. All rights reserved. Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. To view a list of Cisco trademarks, go to: www.cisco.com/go/trademarks. Third-party trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.
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| | Cisco Systems, Inc. (CSCO) | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
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| From: Eric | 5/17/2023 4:13:08 PM | | | | | |
Cisco Systems, Inc. has added a new press release to its website:
CISCO REPORTS THIRD QUARTER EARNINGS
SAN JOSE, Calif., May 17, 2023 /PRNewswire/ --
News Summary:
$14.6 billion in revenue, up 14% year over year; GAAP EPS $0.78, up 7% year over year, and Non-GAAP EPS $1.00, up 15% year over yearQ3 FY 2023 operating cash flow of $5.2 billion, up 43%Continued progress on business model transformation:Total software revenue up 18% year over year and software subscription revenue up 17% year over yearTotal annualized recurring revenue (ARR) at $23.8 billion, up 6% year over year and product ARR up 10% year over yearRemaining performance obligations (RPO) at $32.1 billion, up 6% year over year and product RPO up 9% year over yearQ3 FY 2023 Results: Revenue: $14.6 billionIncrease of 14% year over yearEarnings per Share: GAAP: $0.78; Non-GAAP: $1.00GAAP EPS increased 7% year over yearNon-GAAP EPS increased 15% year over yearQ4 FY 2023 Guidance: Revenue: 14% to 16% growth year over yearEarnings per Share: GAAP: $0.82 to $0.87; Non-GAAP: $1.05 to $1.07FY 2023 Guidance: Revenue: 10% to 10.5% growth year over yearEarnings per Share: GAAP: $2.93 to $2.98; Non-GAAP: $3.80 to $3.82 Cisco today reported third quarter results for the period ended April 29, 2023. Cisco reported third quarter revenue of $14.6 billion, net income on a generally accepted accounting principles (GAAP) basis of $3.2 billion or $0.78 per share, and non-GAAP net income of $4.1 billion or $1.00 per share.
"We once again delivered a strong quarter in a dynamic environment," said Chuck Robbins, chair and CEO of Cisco. "In Q3, we delivered record revenue and double-digit growth in both software and subscription revenue. As key technologies like cloud, AI and security continue to scale, Cisco's long-established leadership in networking, and the breadth of our portfolio position us well for the future."
"Our operational discipline and focused execution resulted in strong top and bottom-line growth, margin expansion and record operating cash flow," said Scott Herren, CFO of Cisco. "Our healthy backlog, recurring revenue streams and RPO, as well as the improving availability of supply, underpin our confidence to increase full year guidance."
GAAP Results
|
|
|
| Q3 FY 2023
|
| Q3 FY 2022
|
| Vs. Q3 FY 2022
| Revenue
|
| $
| 14.6 billion
|
| $
| 12.8 billion
|
| 14 %
| Net Income
|
| $
| 3.2 billion
|
| $
| 3.0 billion
|
| 6 %
| Diluted Earnings per Share (EPS)
|
| $
| 0.78
|
| $
| 0.73
|
| 7 %
|
Non-GAAP Results
|
|
|
| Q3 FY 2023
|
| Q3 FY 2022
|
| Vs. Q3 FY 2022
| Net Income
|
| $
| 4.1 billion
|
| $
| 3.6 billion
|
| 13 %
| EPS
|
| $
| 1.00
|
| $
| 0.87
|
| 15 %
| Reconciliations between net income, EPS, and other measures on a GAAP and non-GAAP basis are provided in the tables located in the section entitled "Reconciliations of GAAP to non-GAAP Measures."
Cisco Declares Quarterly Dividend
Cisco has declared a quarterly dividend of $0.39 per common share to be paid on July 26, 2023, to all stockholders of record as of the close of business on July 6, 2023. Future dividends will be subject to Board approval.
Financial Summary
All comparative percentages are on a year-over-year basis unless otherwise noted.
Q3 FY 2023 Highlights
Revenue -- Total revenue was up 14% at $14.6 billion, with product revenue up 17% and service revenue was up 3%. Revenue by geographic segment was: Americas up 13%, EMEA up 16%, and APJC was up 11%. Product revenue performance was led by growth in Secure, Agile Networks up 29%, Internet for the Future up 5%, End-to-End Security up 2%, and Optimized Application Experiences up 12%. Collaboration was down 13%.
Gross Margin -- On a GAAP basis, total gross margin, product gross margin, and service gross margin were 63.4%, 62.7%, and 65.4%, respectively, as compared with 63.3%, 61.8%, and 67.3%, respectively, in the third quarter of fiscal 2022.
On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 65.2%, 64.5%, and 67.3%, respectively, as compared with 65.3%, 64.1%, and 68.9%, respectively, in the third quarter of fiscal 2022.
Total gross margins by geographic segment were: 64.2% for the Americas, 66.6% for EMEA and 66.4% for APJC.
Operating Expenses -- On a GAAP basis, operating expenses were $5.3 billion, up 17%, and were 36.3% of revenue. Non-GAAP operating expenses were $4.6 billion, up 16%, and were 31.3% of revenue.
Operating Income -- GAAP operating income was $3.9 billion, up 9%, with GAAP operating margin of 27.1%. Non-GAAP operating income was $4.9 billion, up 11%, with non-GAAP operating margin at 33.9%.
Provision for Income Taxes -- The GAAP tax provision rate was 18.8%. The non-GAAP tax provision rate was 19.0%.
Net Income and EPS -- On a GAAP basis, net income was $3.2 billion, an increase of 6%, and EPS was $0.78, an increase of 7%. On a non-GAAP basis, net income was $4.1 billion, an increase of 13%, and EPS was $1.00, an increase of 15%.
Cash Flow from Operating Activities -- $5.2 billion for the third quarter of fiscal 2023, an increase of 43% compared with $3.7 billion for the third quarter of fiscal 2022.
Balance Sheet and Other Financial Highlights
Cash and Cash Equivalents and Investments -- $23.3 billion at the end of the third quarter of fiscal 2023, compared with $19.3 billion at the end of fiscal 2022.
Remaining Performance Obligations (RPO) -- $32.1 billion, up 6% in total, with 53% of this amount to be recognized as revenue over the next 12 months. Product RPO were up 9% and service RPO were up 4%.
Deferred Revenue -- $24.3 billion, up 9% in total, with deferred product revenue up 11%. Deferred service revenue was up 7%.
Capital Allocation -- In the third quarter of fiscal 2023, we returned $2.9 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.39 per common share, or $1.6 billion, and repurchased approximately 25 million shares of common stock under our stock repurchase program at an average price of $49.45 per share for an aggregate purchase price of $1.3 billion. The remaining authorized amount for stock repurchases under the program is $12.2 billion with no termination date.
Acquisitions
In the third quarter of fiscal 2023, we closed the acquisition of Valtix, a privately held cloud network security company.
Guidance
Cisco expects to achieve the following results for the fourth quarter of fiscal 2023:
Q4 FY 2023
|
|
| Revenue
|
| 14% – 16% growth Y/Y
| Non-GAAP gross margin rate
|
| 64.5% – 65.5%
| Non-GAAP operating margin rate
|
| 34% – 35%
| Non-GAAP EPS
|
| $1.05 – $1.07
| Cisco estimates that GAAP EPS will be $0.82 to $0.87 for the fourth quarter of fiscal 2023.
Cisco expects to achieve the following results for fiscal 2023:
FY 2023
|
|
| Revenue
|
| 10% – 10.5% growth Y/Y
| Non-GAAP EPS
|
| $3.80 – $3.82
| Cisco estimates that GAAP EPS will be $2.93 to $2.98 for fiscal 2023.
Our Q4 FY 2023 guidance assumes an effective tax provision rate of 18% for GAAP and 19% for non-GAAP results. Our FY 2023 guidance assumes an effective tax provision rate of 20% for GAAP and 19% for non-GAAP results.
A reconciliation between the Guidance on a GAAP and non-GAAP basis is provided in the tables entitled "GAAP to non-GAAP Guidance" located in the section entitled "Reconciliations of GAAP to non-GAAP Measures."
Editor's Notes:
Q3 fiscal year 2023 conference call to discuss Cisco's results along with its guidance will be held on Wednesday, May 17, 2023 at 1:30 p.m. Pacific Time. Conference call number is 1-888-848-6507 (United States) or 1-212-519-0847 (international). Conference call replay will be available from 4:00 p.m. Pacific Time, May 17, 2023 to 4:00 p.m. Pacific Time, May 24, 2023 at 1-800-395-6236 (United States) or 1-203-369-3270 (international). The replay will also be available via webcast on the Cisco Investor Relations website at u27227478.ct.sendgrid.net. Additional information regarding Cisco's financials, as well as a webcast of the conference call with visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, May 17, 2023. Text of the conference call's prepared remarks will be available within 24 hours of completion of the call. The webcast will include both the prepared remarks and the question-and-answer session. This information, along with the GAAP to non-GAAP reconciliation information, will be available on the Cisco Investor Relations website at u27227478.ct.sendgrid.net.
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per-share amounts)
(Unaudited)
|
|
| Three Months Ended
|
| Nine Months Ended
|
| April 29, 2023
|
| April 30, 2022
|
| April 29, 2023
|
| April 30, 2022
| REVENUE:
|
|
|
|
|
|
|
| Product
| $ 11,092
|
| $ 9,448
|
| $ 31,492
|
| $ 28,330
| Service
| 3,479
|
| 3,387
|
| 10,303
|
| 10,125
| Total revenue
| 14,571
|
| 12,835
|
| 41,795
|
| 38,455
| COST OF SALES:
|
|
|
|
|
|
|
| Product
| 4,136
|
| 3,606
|
| 12,353
|
| 10,848
| Service
| 1,203
|
| 1,108
|
| 3,437
|
| 3,384
| Total cost of sales
| 5,339
|
| 4,714
|
| 15,790
|
| 14,232
| GROSS MARGIN
| 9,232
|
| 8,121
|
| 26,005
|
| 24,223
| OPERATING EXPENSES:
|
|
|
|
|
|
|
| Research and development
| 1,962
|
| 1,708
|
| 5,598
|
| 5,092
| Sales and marketing
| 2,526
|
| 2,209
|
| 7,301
|
| 6,736
| General and administrative
| 641
|
| 517
|
| 1,788
|
| 1,612
| Amortization of purchased intangible assets
| 70
|
| 77
|
| 212
|
| 240
| Restructuring and other charges
| 87
|
| —
|
| 328
|
| 8
| Total operating expenses
| 5,286
|
| 4,511
|
| 15,227
|
| 13,688
| OPERATING INCOME
| 3,946
|
| 3,610
|
| 10,778
|
| 10,535
| Interest income
| 262
|
| 115
|
| 650
|
| 347
| Interest expense
| (109)
|
| (90)
|
| (316)
|
| (267)
| Other income (loss), net
| (142)
|
| 166
|
| (265)
|
| 446
| Interest and other income (loss), net
| 11
|
| 191
|
| 69
|
| 526
| INCOME BEFORE PROVISION FOR INCOME TAXES
| 3,957
|
| 3,801
|
| 10,847
|
| 11,061
| Provision for income taxes
| 745
|
| 757
|
| 2,192
|
| 2,064
| NET INCOME
| $ 3,212
|
| $ 3,044
|
| $ 8,655
|
| $ 8,997
|
|
|
|
|
|
|
|
| Net income per share:
|
|
|
|
|
|
|
| Basic
| $ 0.79
|
| $ 0.73
|
| $ 2.11
|
| $ 2.15
| Diluted
| $ 0.78
|
| $ 0.73
|
| $ 2.11
|
| $ 2.14
| Shares used in per-share calculation:
|
|
|
|
|
|
|
| Basic
| 4,089
|
| 4,152
|
| 4,100
|
| 4,184
| Diluted
| 4,110
|
| 4,170
|
| 4,111
|
| 4,204
|
CISCO SYSTEMS, INC.
REVENUE BY SEGMENT
(In millions, except percentages)
|
|
|
| April 29, 2023
|
|
| Three Months Ended
|
| Nine Months Ended
|
|
| Amount
|
| Y/Y %
|
| Amount
|
| Y/Y %
| Revenue :
|
|
|
|
|
|
|
|
| Americas
|
| $ 8,634
|
| 13 %
|
| $ 24,372
|
| 9 %
| EMEA
|
| 3,806
|
| 16 %
|
| 11,209
|
| 11 %
| APJC
|
| 2,131
|
| 11 %
|
| 6,214
|
| 4 %
| Total
|
| $ 14,571
|
| 14 %
|
| $ 41,795
|
| 9 %
|
| Amounts may not sum and percentages may not recalculate due to rounding.
|
CISCO SYSTEMS, INC.
GROSS MARGIN PERCENTAGE BY SEGMENT
(In percentages)
|
|
|
| April 29, 2023
|
|
| Three Months Ended
|
| Nine Months Ended
| Gross Margin Percentage :
|
|
|
|
| Americas
|
| 64.2 %
|
| 63.4 %
| EMEA
|
| 66.6 %
|
| 65.4 %
| APJC
|
| 66.4 %
|
| 64.2 %
|
CISCO SYSTEMS, INC.
REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES
(In millions, except percentages)
|
|
|
| April 29, 2023
|
|
| Three Months Ended
|
| Nine Months Ended
|
|
| Amount
|
| Y/Y %
|
| Amount
|
| Y/Y %
| Revenue :
|
|
|
|
|
|
|
|
| Secure, Agile Networks
|
| $ 7,550
|
| 29 %
|
| $ 20,980
|
| 18 %
| Internet for the Future
|
| 1,392
|
| 5 %
|
| 4,007
|
| — %
| Collaboration
|
| 985
|
| (13) %
|
| 3,029
|
| (8) %
| End-to-End Security
|
| 958
|
| 2 %
|
| 2,872
|
| 6 %
| Optimized Application Experiences
|
| 204
|
| 12 %
|
| 597
|
| 10 %
| Other Products
|
| 3
|
| 19 %
|
| 7
|
| (7) %
| Total Product
|
| 11,092
|
| 17 %
|
| 31,492
|
| 11 %
| Services
|
| 3,479
|
| 3 %
|
| 10,303
|
| 2 %
| Total
|
| $ 14,571
|
| 14 %
|
| $ 41,795
|
| 9 %
|
| Amounts may not sum and percentages may not recalculate due to rounding.
|
CISCO SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
|
|
| April 29, 2023
|
| July 30, 2022
| ASSETS
|
|
|
| Current assets:
|
|
|
| Cash and cash equivalents
| $ 8,044
|
| $ 7,079
| Investments
| 15,244
|
| 12,188
| Accounts receivable, net of allowance of $83 as of each of April 29, 2023 and July 30, 2022
| 5,104
|
| 6,622
| Inventories
| 3,474
|
| 2,568
| Financing receivables, net
| 3,402
|
| 3,905
| Other current assets
| 4,682
|
| 4,355
| Total current assets
| 39,950
|
| 36,717
| Property and equipment, net
| 2,047
|
| 1,997
| Financing receivables, net
| 3,393
|
| 4,009
| Goodwill
| 38,369
|
| 38,304
| Purchased intangible assets, net
| 1,966
|
| 2,569
| Deferred tax assets
| 5,817
|
| 4,449
| Other assets
| 5,987
|
| 5,957
| TOTAL ASSETS
| $ 97,529
|
| $ 94,002
| LIABILITIES AND EQUITY
|
|
|
| Current liabilities:
|
|
|
| Short-term debt
| $ 1,731
|
| $ 1,099
| Accounts payable
| 2,442
|
| 2,281
| Income taxes payable
| 3,132
|
| 961
| Accrued compensation
| 3,352
|
| 3,316
| Deferred revenue
| 13,249
|
| 12,784
| Other current liabilities
| 4,813
|
| 5,199
| Total current liabilities
| 28,719
|
| 25,640
| Long-term debt
| 6,663
|
| 8,416
| Income taxes payable
| 6,725
|
| 7,725
| Deferred revenue
| 11,011
|
| 10,480
| Other long-term liabilities
| 2,116
|
| 1,968
| Total liabilities
| 55,234
|
| 54,229
| Total equity
| 42,295
|
| 39,773
| TOTAL LIABILITIES AND EQUITY
| $ 97,529
|
| $ 94,002
|
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
|
|
| Nine Months Ended
|
| April 29,
2023
|
| April 30,
2022
| Cash flows from operating activities:
|
|
|
| Net income
| $ 8,655
|
| $ 8,997
| Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
| Depreciation, amortization, and other
| 1,304
|
| 1,527
| Share-based compensation expense
| 1,720
|
| 1,407
| Provision (benefit) for receivables
| 11
|
| 49
| Deferred income taxes
| (1,343)
|
| (167)
| (Gains) losses on divestitures, investments and other, net
| 243
|
| (470)
| Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
|
|
|
| Accounts receivable
| 1,494
|
| (134)
| Inventories
| (894)
|
| (683)
| Financing receivables
| 1,126
|
| 1,431
| Other assets
| (428)
|
| (1,295)
| Accounts payable
| 156
|
| (54)
| Income taxes, net
| 1,120
|
| (730)
| Accrued compensation
| 25
|
| (730)
| Deferred revenue
| 1,055
|
| 292
| Other liabilities
| (324)
|
| 109
| Net cash provided by operating activities
| 13,920
|
| 9,549
| Cash flows from investing activities:
|
|
|
| Purchases of investments
| (7,652)
|
| (5,383)
| Proceeds from sales of investments
| 802
|
| 2,488
| Proceeds from maturities of investments
| 3,789
|
| 4,308
| Acquisitions, net of cash and cash equivalents acquired and divestitures
| (96)
|
| (373)
| Purchases of investments in privately held companies
| (162)
|
| (158)
| Return of investments in privately held companies
| 72
|
| 149
| Acquisition of property and equipment
| (616)
|
| (338)
| Proceeds from sales of property and equipment
| 2
|
| 6
| Other
| (26)
|
| (15)
| Net cash (used in) provided by investing activities
| (3,887)
|
| 684
| Cash flows from financing activities:
|
|
|
| Issuances of common stock
| 316
|
| 306
| Repurchases of common stock - repurchase program
| (3,029)
|
| (5,347)
| Shares repurchased for tax withholdings on vesting of restricted stock units
| (444)
|
| (546)
| Short-term borrowings, original maturities of 90 days or less, net
| (602)
|
| 9
| Issuances of debt
| —
|
| 1,049
| Repayments of debt
| (500)
|
| (3,050)
| Dividends paid
| (4,713)
|
| (4,657)
| Other
| (4)
|
| (108)
| Net cash used in financing activities
| (8,976)
|
| (12,344)
| Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
| (90)
|
| (122)
| Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
| 967
|
| (2,233)
| Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period
| 8,579
|
| 9,942
| Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
| $ 9,546
|
| $ 7,709
| Supplemental cash flow information:
|
|
|
| Cash paid for interest
| $ 306
|
| $ 292
| Cash paid for income taxes, net
| $ 2,414
|
| $ 2,960
|
CISCO SYSTEMS, INC.
REMAINING PERFORMANCE OBLIGATIONS
(In millions, except percentages)
|
|
| April 29, 2023
|
| January 28, 2023
|
| April 30, 2022
|
| Amount
|
| Y/Y%
|
| Amount
|
| Y/Y%
|
| Amount
|
| Y/Y%
| Product
| $ 14,681
|
| 9 %
|
| $ 14,517
|
| 7 %
|
| $ 13,416
|
| 13 %
| Service
| 17,401
|
| 4 %
|
| 17,255
|
| 2 %
|
| 16,789
|
| 3 %
| Total
| $ 32,082
|
| 6 %
|
| $ 31,772
|
| 4 %
|
| $ 30,205
|
| 7 %
|
| We expect 53% of total RPO at April 29, 2023 will be recognized as revenue over the next 12 months.
|
CISCO SYSTEMS, INC.
DEFERRED REVENUE
(In millions)
|
|
| April 29, 2023
|
| January 28, 2023
|
| April 30, 2022
| Deferred revenue:
|
|
|
|
|
| Product
| $ 10,895
|
| $ 10,679
|
| $ 9,835
| Service
| 13,365
|
| 13,248
|
| 12,458
| Total
| $ 24,260
|
| $ 23,927
|
| $ 22,293
| Reported as:
|
|
|
|
|
| Current
| $ 13,249
|
| $ 13,109
|
| $ 12,249
| Noncurrent
| 11,011
|
| 10,818
|
| 10,044
| Total
| $ 24,260
|
| $ 23,927
|
| $ 22,293
|
CISCO SYSTEMS, INC.
DIVIDENDS PAID AND REPURCHASES OF COMMON STOCK
(In millions, except per-share amounts)
|
|
|
| DIVIDENDS
|
| STOCK REPURCHASE PROGRAM
|
| TOTAL
| Quarter Ended
|
| Per Share
|
| Amount
|
| Shares
|
| Weighted-
Average Price
per Share
|
| Amount
|
| Amount
| Fiscal 2023
|
|
|
|
|
|
|
|
|
|
|
|
| April 29, 2023
|
| $ 0.39
|
| $ 1,593
|
| 25
|
| $ 49.45
|
| $ 1,259
|
| $ 2,852
| January 28, 2023
|
| $ 0.38
|
| $ 1,560
|
| 26
|
| $ 47.72
|
| $ 1,256
|
| $ 2,816
| October 29, 2022
|
| $ 0.38
|
| $ 1,560
|
| 12
|
| $ 43.76
|
| $ 502
|
| $ 2,062
| Fiscal 2022
|
|
|
|
|
|
|
|
|
|
|
|
| July 30, 2022
|
| $ 0.38
|
| $ 1,567
|
| 54
|
| $ 44.02
|
| $ 2,402
|
| $ 3,969
| April 30, 2022
|
| $ 0.38
|
| $ 1,555
|
| 5
|
| $ 54.20
|
| $ 252
|
| $ 1,807
| January 29, 2022
|
| $ 0.37
|
| $ 1,541
|
| 82
|
| $ 58.36
|
| $ 4,824
|
| $ 6,365
| October 30, 2021
|
| $ 0.37
|
| $ 1,561
|
| 5
|
| $ 56.49
|
| $ 256
|
| $ 1,817
|
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
|
| GAAP TO NON-GAAP NET INCOME
(In millions)
|
|
| Three Months Ended
|
| Nine Months Ended
|
| April 29,
2023
|
| April 30,
2022
|
| April 29,
2023
|
| April 30,
2022
| GAAP net income
| $ 3,212
|
| $ 3,044
|
| $ 8,655
|
| $ 8,997
| Adjustments to cost of sales:
|
|
|
|
|
|
|
| Share-based compensation expense
| 106
|
| 83
|
| 293
|
| 233
| Amortization of acquisition-related intangible assets
| 156
|
| 176
|
| 462
|
| 571
| Acquisition-related/divestiture costs
| 1
|
| 1
|
| 4
|
| 3
| Russia-Ukraine war costs
| —
|
| 5
|
| —
|
| 5
| Total adjustments to GAAP cost of sales
| 263
|
| 265
|
| 759
|
| 812
| Adjustments to operating expenses:
|
|
|
|
|
|
|
| Share-based compensation expense
| 518
|
| 394
|
| 1,431
|
| 1,173
| Amortization of acquisition-related intangible assets
| 70
|
| 92
|
| 212
|
| 255
| Acquisition-related/divestiture costs
| 55
|
| 29
|
| 178
|
| 261
| Russia-Ukraine war costs
| 2
|
| 62
|
| 7
|
| 62
| Significant asset impairments and restructurings
| 87
|
| —
|
| 328
|
| 8
| Total adjustments to GAAP operating expenses
| 732
|
| 577
|
| 2,156
|
| 1,759
| Adjustments to interest and other income (loss), net:
|
|
|
|
|
|
|
| (Gains) and losses on investments
| 123
|
| (159)
|
| 188
|
| (478)
| Total adjustments to GAAP interest and other income (loss), net
| 123
|
| (159)
|
| 188
|
| (478)
| Total adjustments to GAAP income before provision for income taxes
| 1,118
|
| 683
|
| 3,103
|
| 2,093
| Income tax effect of non-GAAP adjustments
| (219)
|
| (95)
|
| (623)
|
| (435)
| Significant tax matters
| —
|
| —
|
| 164
|
| —
| Total adjustments to GAAP provision for income taxes
| (219)
|
| (95)
|
| (459)
|
| (435)
| Non-GAAP net income
| $ 4,111
|
| $ 3,632
|
| $ 11,299
|
| $ 10,655
|
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
|
| GAAP TO NON-GAAP EPS
|
|
| Three Months Ended
|
| Nine Months Ended
|
| April 29,
2023
|
| April 30,
2022
|
| April 29,
2023
|
| April 30,
2022
| GAAP EPS
| $ 0.78
|
| $ 0.73
|
| $ 2.11
|
| $ 2.14
| Adjustments to GAAP:
|
|
|
|
|
|
|
| Share-based compensation expense
| 0.15
|
| 0.11
|
| 0.42
|
| 0.33
| Amortization of acquisition-related intangible assets
| 0.06
|
| 0.06
|
| 0.16
|
| 0.20
| Acquisition-related/divestiture costs
| 0.01
|
| 0.01
|
| 0.04
|
| 0.06
| Russia-Ukraine war costs
| —
|
| 0.02
|
| —
|
| 0.02
| Significant asset impairments and restructurings
| 0.02
|
| —
|
| 0.08
|
| —
| (Gains) and losses on investments
| 0.03
|
| (0.04)
|
| 0.05
|
| (0.11)
| Income tax effect of non-GAAP adjustments
| (0.05)
|
| (0.02)
|
| (0.15)
|
| (0.10)
| Significant tax matters
| —
|
| —
|
| 0.04
|
| —
| Non-GAAP EPS
| $ 1.00
|
| $ 0.87
|
| $ 2.75
|
| $ 2.53
| Amounts may not sum due to rounding.
|
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
|
| GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET,
AND NET INCOME
(In millions, except percentages)
|
|
| Three Months Ended
|
| April 29, 2023
|
| Product
Gross
Margin
|
| Service
Gross
Margin
|
| Total
Gross
Margin
|
| Operating
Expenses
|
| Y/Y
|
| Operating
Income
|
| Y/Y
|
| Interest
and
other
income
(loss), net
|
| Net Income
|
| Y/Y
| GAAP amount
| $ 6,956
|
| $ 2,276
|
| $ 9,232
|
| $ 5,286
|
| 17 %
|
| $ 3,946
|
| 9 %
|
| $ 11
|
| $ 3,212
|
| 6 %
| % of revenue
| 62.7 %
|
| 65.4 %
|
| 63.4 %
|
| 36.3 %
|
|
|
| 27.1 %
|
|
|
| 0.1 %
|
| 22.0 %
|
|
| Adjustments to GAAP amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation expense
| 40
|
| 66
|
| 106
|
| 518
|
|
|
| 624
|
|
|
| —
|
| 624
|
|
| Amortization of acquisition-related intangible assets
| 156
|
| —
|
| 156
|
| 70
|
|
|
| 226
|
|
|
| —
|
| 226
|
|
| Acquisition/divestiture-related costs
| 1
|
| —
|
| 1
|
| 55
|
|
|
| 56
|
|
|
| —
|
| 56
|
|
| Significant asset impairments and restructurings
| —
|
| —
|
| —
|
| 87
|
|
|
| 87
|
|
|
| —
|
| 87
|
|
| Russia-Ukraine war costs
| —
|
| —
|
| —
|
| 2
|
|
|
| 2
|
|
|
| —
|
| 2
|
|
| (Gains) and losses on investments
| —
|
| —
|
| —
|
| —
|
|
|
| —
|
|
|
| 123
|
| 123
|
|
| Income tax effect/significant tax matters
| —
|
| —
|
| —
|
| —
|
|
|
| —
|
|
|
| —
|
| (219)
|
|
| Non-GAAP amount
| $ 7,153
|
| $ 2,342
|
| $ 9,495
|
| $ 4,554
|
| 16 %
|
| $ 4,941
|
| 11 %
|
| $ 134
|
| $ 4,111
|
| 13 %
| % of revenue
| 64.5 %
|
| 67.3 %
|
| 65.2 %
|
| 31.3 %
|
|
|
| 33.9 %
|
|
|
| 0.9 %
|
| 28.2 %
|
|
|
| Three Months Ended
|
| April 30, 2022
|
| Product
Gross
Margin
|
| Service
Gross
Margin
|
| Total
Gross
Margin
|
| Operating
Expenses
|
| Operating
Income
|
| Interest
and
other
income
(loss), net
|
| Net
Income
| GAAP amount
| $ 5,842
|
| $ 2,279
|
| $ 8,121
|
| $ 4,511
|
| $ 3,610
|
| $ 191
|
| $ 3,044
| % of revenue
| 61.8 %
|
| 67.3 %
|
| 63.3 %
|
| 35.1 %
|
| 28.1 %
|
| 1.5 %
|
| 23.7 %
| Adjustments to GAAP amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation expense
| 30
|
| 53
|
| 83
|
| 394
|
| 477
|
| —
|
| 477
| Amortization of acquisition-related intangible assets
| 176
|
| —
|
| 176
|
| 92
|
| 268
|
| —
|
| 268
| Acquisition/divestiture-related costs
| 1
|
| —
|
| 1
|
| 29
|
| 30
|
| —
|
| 30
| Russia-Ukraine war costs
| 4
|
| 1
|
| 5
|
| 62
|
| 67
|
| —
|
| 67
| (Gains) and losses on investments
| —
|
| —
|
| —
|
| —
|
| —
|
| (159)
|
| (159)
| Income tax effect/significant tax matters
| —
|
| —
|
| —
|
| —
|
| —
|
| —
|
| (95)
| Non-GAAP amount
| $ 6,053
|
| $ 2,333
|
| $ 8,386
|
| $ 3,934
|
| $ 4,452
|
| $ 32
|
| $ 3,632
| % of revenue
| 64.1 %
|
| 68.9 %
|
| 65.3 %
|
| 30.7 %
|
| 34.7 %
|
| 0.2 %
|
| 28.3 %
|
| Amounts may not sum and percentages may not recalculate due to rounding.
|
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
|
| GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET,
AND NET INCOME
(In millions, except percentages)
|
|
| Nine Months Ended
|
| April 29, 2023
|
| Product
Gross
Margin
|
| Service
Gross
Margin
|
| Total
Gross
Margin
|
| Operating
Expenses
|
| Y/Y
|
| Operating
Income
|
| Y/Y
|
| Interest
and
other
income
(loss), net
|
| Net Income
|
| Y/Y
| GAAP amount
| $ 19,139
|
| $ 6,866
|
| $ 26,005
|
| $ 15,227
|
| 11 %
|
| $ 10,778
|
| 2 %
|
| $ 69
|
| $ 8,655
|
| (4) %
| % of revenue
| 60.8 %
|
| 66.6 %
|
| 62.2 %
|
| 36.4 %
|
|
|
| 25.8 %
|
|
|
| 0.2 %
|
| 20.7 %
|
|
| Adjustments to GAAP amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation expense
| 111
|
| 182
|
| 293
|
| 1,431
|
|
|
| 1,724
|
|
|
| —
|
| 1,724
|
|
| Amortization of acquisition-related intangible assets
| 462
|
| —
|
| 462
|
| 212
|
|
|
| 674
|
|
|
| —
|
| 674
|
|
| Acquisition/divestiture-related costs
| 4
|
| —
|
| 4
|
| 178
|
|
|
| 182
|
|
|
| —
|
| 182
|
|
| Significant asset impairments and restructurings
| —
|
| —
|
| —
|
| 328
|
|
|
| 328
|
|
|
| —
|
| 328
|
|
| Russia-Ukraine war costs
| —
|
| —
|
| —
|
| 7
|
|
|
| 7
|
|
|
| —
|
| 7
|
|
| (Gains) and losses on investments
| —
|
| —
|
| —
|
| —
|
|
|
| —
|
|
|
| 188
|
| 188
|
|
| Income tax effect/significant tax matters
| —
|
| —
|
| —
|
| —
|
|
|
| —
|
|
|
| —
|
| (459)
|
|
| Non-GAAP amount
| $ 19,716
|
| $ 7,048
|
| $ 26,764
|
| $ 13,071
|
| 10 %
|
| $ 13,693
|
| 4 %
|
| $ 257
|
| $ 11,299
|
| 6 %
| % of revenue
| 62.6 %
|
| 68.4 %
|
| 64.0 %
|
| 31.3 %
|
|
|
| 32.8 %
|
|
|
| 0.6 %
|
| 27.0 %
|
|
|
| Nine Months Ended
|
| April 30, 2022
|
| Product
Gross
Margin
|
| Service
Gross
Margin
|
| Total
Gross
Margin
|
| Operating
Expenses
|
| Operating
Income
|
| Interest
and
other
income
(loss), net
|
| Net
Income
| GAAP amount
| $ 17,482
|
| $ 6,741
|
| $ 24,223
|
| $ 13,688
|
| $ 10,535
|
| $ 526
|
| $ 8,997
| % of revenue
| 61.7 %
|
| 66.6 %
|
| 63.0 %
|
| 35.6 %
|
| 27.4 %
|
| 1.4 %
|
| 23.4 %
| Adjustments to GAAP amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation expense
| 84
|
| 149
|
| 233
|
| 1,173
|
| 1,406
|
| —
|
| 1,406
| Amortization of acquisition-related intangible assets
| 571
|
| —
|
| 571
|
| 255
|
| 826
|
| —
|
| 826
| Acquisition/divestiture-related costs
| 3
|
| —
|
| 3
|
| 261
|
| 264
|
| —
|
| 264
| Russia-Ukraine war costs
| 4
|
| 1
|
| 5
|
| 62
|
| 67
|
| —
|
| 67
| Significant asset impairments and restructurings
| —
|
| —
|
| —
|
| 8
|
| 8
|
| —
|
| 8
| (Gains) and losses on investments
| —
|
| —
|
| —
|
| —
|
| —
|
| (478)
|
| (478)
| Income tax effect/significant tax matters
| —
|
| —
|
| —
|
| —
|
| —
|
| —
|
| (435)
| Non-GAAP amount
| $ 18,144
|
| $ 6,891
|
| $ 25,035
|
| $ 11,929
|
| $ 13,106
|
| $ 48
|
| $ 10,655
| % of revenue
| 64.0 %
|
| 68.1 %
|
| 65.1 %
|
| 31.0 %
|
| 34.1 %
|
| 0.1 %
|
| 27.7 %
|
| Amounts may not sum and percentages may not recalculate due to rounding.
|
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
|
| EFFECTIVE TAX RATE
(In percentages)
|
|
| Three Months Ended
|
| Nine Months Ended
|
| April 29, 2023
|
| April 30, 2022
|
| April 29, 2023
|
| April 30, 2022
| GAAP effective tax rate
| 18.8 %
|
| 19.9 %
|
| 20.2 %
|
| 18.7 %
| Total adjustments to GAAP provision for income taxes
| 0.2 %
|
| (0.9) %
|
| (1.2) %
|
| 0.3 %
| Non-GAAP effective tax rate
| 19.0 %
|
| 19.0 %
|
| 19.0 %
|
| 19.0 %
|
GAAP TO NON-GAAP GUIDANCE
|
| Q4 FY 2023
|
| Gross Margin
Rate
|
| Operating Margin
Rate
|
| Earnings per
Share (2)
| GAAP
|
| 62.5% – 63.5%
|
| 26.5% – 27.5%
|
| $0.82 – $0.87
| Estimated adjustments for:
|
|
|
|
|
|
| Share-based compensation expense
|
| 1.0 %
|
| 4.0 %
|
| $0.11 – $0.12
| Amortization of acquisition-related intangible assets and
acquisition/divestiture-related costs
|
| 1.0 %
|
| 2.0 %
|
| $0.05 – $0.06
| Significant asset impairments and restructurings (1)
|
| —
|
| 1.5 %
|
| $0.04 – $0.05
| Non-GAAP
|
| 64.5% – 65.5%
|
| 34% – 35%
|
| $1.05 – $1.07
|
FY 2023
|
| Earnings per
Share (2)
| GAAP
|
| $2.93 – $2.98
| Estimated adjustments for:
|
|
| Share-based compensation expense
|
| $0.45 – $0.46
| Amortization of acquisition-related intangible assets and
acquisition/divestiture-related costs
|
| $0.22 – $0.23
| Significant asset impairments and restructurings (1)
|
| $0.10 – $0.11
| (Gains) and losses on investments
|
| $0.03
| Significant tax matters
|
| $0.04
| Non-GAAP
|
| $3.80 – $3.82
|
|
| (1)
| On November 16, 2022, Cisco announced a restructuring plan in order to rebalance the organization and enable further investment in key priority areas. We expect to recognize approximately $200 million of restructuring charges in the fourth quarter of fiscal 2023.
| (2)
| Estimated adjustments to GAAP earnings per share are shown after income tax effects.
| Except as noted above, this guidance does not include the effects of any future acquisitions/divestitures, asset impairments, Russia-Ukraine war costs, restructurings, (gains) and losses on investments and significant tax matters or other events, which may or may not be significant unless specifically stated.
Forward Looking Statements, Non-GAAP Information and Additional Information
This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as key technologies like cloud, AI and security continuing to scale, our continued leadership in networking, the breadth of our portfolio to position us well for the future, our healthy backlog, recurring revenue streams, RPO and the continued improving availability of supply) and the future financial performance of Cisco (including the guidance for Q4 FY 2023 and full year FY 2023) that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: the impact of the COVID-19 pandemic and related public health measures; business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth and evolution of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market and other customer markets; the return on our investments in certain priorities, key growth areas, and in certain geographical locations, as well as maintaining leadership in Secure, Agile Networks and services; the timing of orders and manufacturing and customer lead times; significant supply constraints; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; our ability to achieve expected benefits of our partnerships; increased competition in our product and service markets, including the data center market; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, other intellectual property, antitrust, stockholder and other matters, and governmental investigations; our ability to achieve the benefits of restructurings and possible changes in the size and timing of related charges; cyber-attacks, data breaches or malware; vulnerabilities and critical security defects; terrorism; natural catastrophic events (including as a result of global climate change); any other pandemic or epidemic; our ability to achieve the benefits anticipated from our investments in sales, engineering, service, marketing and manufacturing activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during economic downturns; risks related to the global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws and regulations or adverse outcomes resulting from examinations of our income tax returns; potential volatility in operating results; and other factors listed in Cisco's most recent reports on Forms 10-Q and 10-K filed on February 21, 2023 and September 8, 2022, respectively. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco's most recent reports on Forms 10-Q and 10-K as each may be amended from time to time. Cisco's results of operations for the three and nine months ended April 29, 2023 are not necessarily indicative of Cisco's operating results for any future periods. Any projections in this release are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.
This release includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share data for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.
These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco's results of operations in conjunction with the corresponding GAAP measures.
Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations.
For its internal budgeting process, Cisco's management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related/divestiture costs, significant asset impairments and restructurings, significant litigation settlements and other contingencies, Russia-Ukraine war costs, gains and losses on investments, the income tax effects of the foregoing and significant tax matters. Cisco's management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results. For additional information on the items excluded by Cisco from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.
Annualized recurring revenue represents the annualized revenue run-rate of active subscriptions, term licenses, operating leases and maintenance contracts at the end of a reporting period, net of rebates to customers and partners as well as certain other revenue adjustments. Includes both revenue recognized ratably as well as upfront on an annualized basis.
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| From: Glenn Petersen | 9/22/2023 4:44:18 AM | | | | | | Cisco makes largest ever acquisition, buying cybersecurity company Splunk for $28 billion in cash
PUBLISHED THU, SEP 21 20237:53 AM EDT
UPDATED THU, SEP 21 20234:52 PM EDT
Rohan Goswami @IN/ROHANGOSWAMICNBC @ROGOSWAMI
KEY POINTS
- Cisco is acquiring cybersecurity firm Splunk for $157 per share in an all-cash deal.
- Cisco will finance the deal using a combination of cash and debt.
- The acquisition is by far Cisco’s largest ever and deepens the company’s bet on security software.
Ciscois acquiring cybersecuritysoftware company Splunkfor $157 per share in a cash deal worth about $28 billion, the company said Thursday, in its largest acquisition ever.
Splunk shares ended Thursday up 21%, while Cisco shares closed down 4%.
Splunk’s technology helps businesses monitor and analyze their data to minimize the risk of hacks and resolve technical issues faster. Cisco has long been the world’s largest maker of computer networking equipment and has been bolstering its cybersecurity business to meet customer demands and fuel growth.
Cisco CEO Chuck Robbins emphasized the importance of artificial intelligence and using the power of AI that comes with Splunk’s technology to protect networks.
“Our combined capabilities will drive the next generation of AI-enabled security and observability,” Robbins said, in a statement. “From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient.”
The deal is expected to close in the third quarter of 2024, and Cisco says it should improve gross margins in the first year and non-GAAP earnings in year two.
The purchase price is equivalent to about 13% of Cisco’s market cap, a big number for a company that has historically avoided blockbuster deals. Prior to Splunk, Cisco’s biggest deal ever was the $6.9 billion purchaseof cable set-top box maker Scientific Atlanta in 2006. At the time, Cisco’s market cap was just over $100 billion.
But as the public cloud has gobbled more of Cisco’s traditional back-end business, the company has needed to find new and big revenue streams. Cybersecurity has been the biggest bet.
In fiscal 2022, Cisco changed the name of its core switching and routing business from Infrastructure Platforms to Secure, Agile Networks, focusing on the need to have security built into networking gear. The company has a separate reporting unit called End-to-End Security, consisting specifically of security products.
Revenue in the core business climbed 22% in the fiscal yearended July 29, to $29.1 billion, and the security unit saw sales rise 4% to $3.9 billion.
Cisco shares have underperformed the Nasdaq this year, rising 12% while the tech-heavy index has jumped 27%. Over the past five years, it’s been an even worse investment relative to the broader sector. The stock is up about 10% over that stretch, trailing the Nasdaq’s 66% gain.
Splunk logo displayed on a phone screen and a laptop keyboard are seen in this illustration photo taken in Krakow, Poland on October 30, 2021. (Photo by Jakub Porzycki/NurPhoto via Getty Images) / Jakub Porzycki | Nurphoto | Getty Images
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Robbins told CNBC’s “Squawk on the Street” on Thursday that he expects organizational synergies between Cisco and Splunk to become clear within 12 to 18 months. The company will finance the deal with a combination of cash and debt, he said.
“Together, we will become one of the largest software companies globally,” Robbins said in a conference call with analysts.
Following the announcement, some analysts raised concerns about potential product overlap, regulatory scrutiny and the price Cisco paid. Oppenheimer’s Ittai Kidron noted on the call that Splunk’s pivot to the cloud has been “underwhelming.”
In recent years, Splunk turned away from an on-premises “customer-managed” approach to focus on a cloud-oriented offering.
Splunk CEO Gary Steele, who will join Cisco’s executive team after the deal closes, said on the call with analysts that, “We still have many large customers who are very dependent upon the capabilities that we allow for in a customer managed environment.”
Steele joined Splunk a little over a year ago. Prior to that, he was CEO of Proofpoint, a cybersecurity firm that was acquired by private equity firm Thoma Bravo in 2021 for $12.3 billion.
If Cisco backs out of the deal or if it’s blocked by regulators, Cisco will pay Splunk a termination fee of $1.48 billion, according to a regulatory filing. Should Splunk walk away, it will pay a $1 billion breakup fee to Cisco.
In 2023, Cisco has acquired four companies focused on security: Armorblox, a threat detection platform; Oort, which does identity management; and Valtix and Lightspin, both in cloud security.
Tidal Partners, Simpson Thacher, and Cravath, Swaine & Moore advised Cisco. Qatalyst Partners, Morgan Stanley, and Skadden, Arps, Slate, Meagher & Flom advised Splunk
Cisco acquires Splunk in cash deal worth $28 billion (cnbc.com) |
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