| 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
---------------------------------
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) |
| | Cisco Systems, Inc. (CSCO) | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last ReadRead Replies (1) |
|
| From: Eric | 9/22/2023 9:06:48 AM | | | | | | MW By buying Splunk, Cisco is closer to becoming a software company
8:23 AM ET 9/22/23 | MarketWatch
| Related Quotes |
|  | | 4:00 PM ET 9/21/23 | | Symbol | Last | % Chg |
CSCO
| 53.34 | 0.00% |
SPLK
| 144.43 | 0.00% | | Real time quote. |
|
By Therese Poletti
Cisco's plan for 50% of its revenue to come from software by fiscal 2025 is still on track
With Cisco Systems Inc.'s pending acquisition of Splunk Inc., the networking giant is making another major step toward becoming a software company.
On Thursday, Cisco (CSCO) said it was buying Splunk (SPLK) in a deal valued at about $28 billion, or $157 a share in cash, for the cloud-security company. The match had been speculated about for years, and Cisco has been on a buying binge this year, as it seeks to grow with more security and software offerings.
"Together, we will become one of the largest software companies globally," Cisco Chief Executive Chuck Robbins said on a conference call with analysts early Thursday. "The combination of Cisco and Splunk further enhances and accelerates our strategy to securely connect to make everything possible."
Cisco's shares fell nearly 4% on Thursday, while Splunk soared nearly 25%.
Upon closing sometime next year, Cisco said it expects the deal will add an additional $4 billion in annual recurring revenue and will drive more software sales. In fiscal 2023, ended Jan. 31, Splunk reported $3.674 billion in revenue, up 18% from the year-earlier period. That growth rate will also help boost Cisco's overall revenue growth, which the company forecast at an anemic 2% for fiscal 2024.
Also read: Here's why Cisco may want to close the Splunk deal sooner rather than later
Citi analyst Atif Malik pointed out that the company's prior target of 50% of revenue coming from software by fiscal 2025 is still intact. For fiscal 2023, Cisco said it had $17 billion in software revenue, out of total revenue of $57 billion. In past years, Cisco has increased its software revenue through networking subscriptions combined with new routers, and has continued with other subscription-based products to enable recurring revenue, as opposed to sales of networking hardware that have no recurring revenue.
Another factor playing a role in the deal is artificial intelligence, which Cisco told analysts it plans to layer on top of data. Malik noted that the combination with Splunk will enable Cisco to have "a security operations-center intelligence, AI products, as well as a policy AI product, which when combined will be timely given the emergence of Gen AI."
While Cisco potentially acquiring Splunk has been bandied about for years, it's likely that the big push in the enterprise market toward more artificial intelligence was one big factor in finally moving the companies together. Whatever the actual driver, investors for the most part were pleased that Cisco is getting more software in its portfolio, especially security-focused software.
-Therese Poletti |
| | Cisco Systems, Inc. (CSCO) | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Eric | 5/15/2024 4:16:31 PM | | | | | | 
Cisco Systems, Inc. has added a new press release to its website:
CISCO REPORTS THIRD QUARTER EARNINGS
SAN JOSE, Calif., May 15, 2024 /PRNewswire/ --
News Summary:
- $12.7 billion in revenue, down 13% year over year, in line with expectations and reflects our customers' continued implementation of products on-hand
- Strong profitability with GAAP gross margin of 65.1% and non-GAAP gross margin of 68.3%
- Transformed business model, further enhanced by the Splunk acquisition:
- Total subscription revenue of $6.9 billion including Splunk, representing 54% of total revenue
- Total annualized recurring revenue (ARR) at $29.2 billion including $4.2 billion from Splunk, up 22% year over year, and product ARR at $15.5 billion, up 44% year over year
- Gary Steele, former Splunk CEO, named president of Go-to-Market, effective immediately
- Q3 FY 2024 Results:
- Revenue: $12.7 billion
- Decrease of 13% year over year
- Splunk contributed $413 million in revenue
- Earnings per Share: GAAP: $0.46; Non-GAAP: $0.88
- GAAP EPS decreased 41% year over year, which includes a negative $0.09 impact from the Splunk acquisition
- Non-GAAP EPS decreased 12% year over year, which includes a negative $0.01 impact from the Splunk acquisition
- Q4 FY 2024 Guidance:
- Revenue: $13.4 billion to $13.6 billion
- Earnings per Share: GAAP: $0.46 to $0.51; Non-GAAP: $0.84 to $0.86
- FY 2024 Guidance:
- Revenue: $53.6 billion to $53.8 billion
- Earnings per Share: GAAP: $2.46 to $2.51; Non-GAAP: $3.69 to $3.71
Cisco today reported third quarter results for the period ended April 27, 2024. Cisco reported third quarter revenue of $12.7 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.9 billion or $0.46 per share, and non-GAAP net income of $3.6 billion or $0.88 per share.
"We delivered a solid Q3 performance in what remains a dynamic environment" said Chuck Robbins, chair and CEO of Cisco. "Our unique ability to bring together networking, security, observability, and data enables Cisco to offer our customers unrivaled digital resilience for the AI era."
"Revenue, gross margin and non-GAAP EPS in Q3 were at the high end or above our guidance range, both including and excluding Splunk, resulting in continued operating leverage," said Scott Herren, CFO of Cisco. "Customers are consuming the equipment shipped over the last few quarters in line with our expectations and we are seeing stabilization of demand as a result. The addition of Splunk to our product line will be a catalyst for further growth."
Gary Steele Named President of Go-to-Market
Cisco has named Gary Steele as President of Go-to-Market, effective immediately. Steele is well known for his operational excellence, and in this new role, he will work closely with Robbins to set and execute against Cisco's strategic plans and goals. He will continue to lead the Splunk team through the integration process to ensure a seamless integration into Cisco.
Cisco also announced that Jeff Sharritts, Cisco's Chief Customer and Partner Officer, will depart Cisco after a successful 24-year career at the company. Sharritts will remain with Cisco until mid-July to ensure a seamless transition.
GAAP Results
|
|
|
| Q3 FY 2024
|
| Q3 FY 2023
|
| Vs. Q3 FY 2023
| Revenue
|
| $ 12.7 billion
|
| $ 14.6 billion
|
| (13) %
| Net Income
|
| $ 1.9 billion
|
| $ 3.2 billion
|
| (41) %
| Diluted Earnings per Share (EPS)
|
| $ 0.46
|
| $ 0.78
|
| (41) %
| The acquisition of Splunk, including financing costs, had a negative impact of $0.09 to GAAP EPS, for the third quarter of fiscal 2024.
Non-GAAP Results
|
|
|
| Q3 FY 2024
|
| Q3 FY 2023
|
| Vs. Q3 FY 2023
| Net Income
|
| $ 3.6 billion
|
| $ 4.1 billion
|
| (14) %
| EPS
|
| $ 0.88
|
| $ 1.00
|
| (12) %
| The acquisition of Splunk, including financing costs, had a negative impact of $0.01 to Non-GAAP EPS, for the third quarter of fiscal 2024.
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 $0.40 per common share to be paid on July 24, 2024, to all stockholders of record as of the close of business on July 5, 2024. 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 2024 Highlights
Revenue -- Total revenue was $12.7 billion, down 13%, with product revenue down 19% and service revenue up 6%. Cisco completed the acquisition of Splunk Inc. ("Splunk") in the third quarter of fiscal 2024. Splunk contributed $413 million of total revenue for the third quarter of fiscal 2024.
Revenue by geographic segment was: Americas down 15%, EMEA down 9%, and APJC down 12%. Product revenue performance reflected growth in Security up 36% and Observability up 27%. Networking was down 27%. Product revenue in Collaboration was flat. Security and Observability, excluding Splunk, grew 3% and 14%, respectively, in the third quarter of fiscal 2024.
Gross Margin -- On a GAAP basis, total gross margin, product gross margin, and service gross margin were 65.1%, 63.5%, and 69.2%, respectively, as compared with 63.4%, 62.7%, and 65.4%, respectively, in the third quarter of fiscal 2023.
On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 68.3%, 66.9%, and 71.6%, respectively, as compared with 65.2%, 64.5%, and 67.3%, respectively, in the third quarter of fiscal 2023.
Total gross margins by geographic segment were: 67.9% for the Americas, 69.6% for EMEA and 67.4% for APJC.
Operating Expenses -- On a GAAP basis, operating expenses were $6.1 billion, up 15%, and were 47.9% of revenue. Non-GAAP operating expenses were $4.3 billion, down 5%, and were 34.0% of revenue.
Operating Income -- GAAP operating income was $2.2 billion, down 44%, with GAAP operating margin of 17.2%. Non-GAAP operating income was $4.3 billion, down 12%, with non-GAAP operating margin at 34.2%.
Provision for Income Taxes -- The GAAP tax provision rate was 15.6%. The non-GAAP tax provision rate was 19.0%.
Net Income and EPS -- On a GAAP basis, net income was $1.9 billion and EPS was $0.46, each a decrease of 41%. On a non-GAAP basis, net income was $3.6 billion, a decrease of 14%, and EPS was $0.88, a decrease of 12%.
Cash Flow from Operating Activities -- $4.0 billion for the third quarter of fiscal 2024, a decrease of 24%, compared with $5.2 billion for the third quarter of fiscal 2023.
Balance Sheet and Other Financial Highlights
Cash and Cash Equivalents and Investments -- $18.8 billion at the end of the third quarter of fiscal 2024, compared with $26.1 billion at the end of fiscal 2023.
Remaining Performance Obligations (RPO) -- $38.8 billion, up 21% in total, with 52% of this amount to be recognized as revenue over the next 12 months. Product RPO were up 29% and service RPO were up 14%.
Deferred Revenue -- $27.5 billion, up 13% in total, with deferred product revenue up 18%. Deferred service revenue was up 9%.
Capital Allocation -- In the third quarter of fiscal 2024, we returned $2.9 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.40 per common share, or $1.6 billion, and repurchased approximately 26 million shares of common stock under our stock repurchase program at an average price of $49.22 per share for an aggregate purchase price of $1.3 billion. The remaining authorized amount for stock repurchases under the program is $7.2 billion with no termination date.
Acquisitions
In the third quarter of fiscal 2024, we closed the following acquisitions:
- Splunk Inc., a public cybersecurity and observability company
- Isovalent, Inc., a privately held cloud native solutions company
Guidance
Cisco estimates the following results for the fourth quarter of fiscal 2024:
Q4 FY 2024
|
|
| Revenue
|
| $13.4 billion - $13.6 billion
| Non-GAAP gross margin rate
|
| 66.5% – 67.5%
| Non-GAAP operating margin rate
|
| 31.5% – 32.5%
| Non-GAAP EPS
|
| $0.84 – $0.86
| Our Q4 FY 2024 guidance includes $950 million to $1 billion in revenue from Splunk and a negative impact to non-GAAP EPS of approximately ($0.03) as the interest impact from financing the acquisition more than offsets the operating benefit.
Cisco estimates that GAAP EPS will be $0.46 to $0.51 for the fourth quarter of fiscal 2024.
Cisco estimates the following results for fiscal 2024:
FY 2024
|
|
| Revenue
|
| $53.6 billion - $53.8 billion
| Non-GAAP EPS
|
| $3.69 – $3.71
| Cisco estimates that GAAP EPS will be $2.46 to $2.51 for fiscal 2024.
Our Q4 FY 2024 guidance assumes an effective tax provision rate of approximately 18% for GAAP and non-GAAP results. Our FY 2024 guidance assumes an effective tax provision rate of approximately 17% for GAAP and approximately 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 2024 conference call to discuss Cisco's results along with its guidance will be held on Wednesday, May 15, 2024 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 15, 2024 to 4:00 p.m. Pacific Time, May 21, 2024 at 1-800-391-9851 (United States) or 1-203-369-3268 (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 15, 2024. 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 27,
2024
|
| April 29,
2023
|
| April 27,
2024
|
| April 29,
2023
| REVENUE:
|
|
|
|
|
|
|
| Product
| $ 9,024
|
| $ 11,092
|
| $ 29,395
|
| $ 31,492
| Service
| 3,678
|
| 3,479
|
| 10,766
|
| 10,303
| Total revenue
| 12,702
|
| 14,571
|
| 40,161
|
| 41,795
| COST OF SALES:
|
|
|
|
|
|
|
| Product
| 3,295
|
| 4,136
|
| 10,695
|
| 12,353
| Service
| 1,134
|
| 1,203
|
| 3,419
|
| 3,437
| Total cost of sales
| 4,429
|
| 5,339
|
| 14,114
|
| 15,790
| GROSS MARGIN
| 8,273
|
| 9,232
|
| 26,047
|
| 26,005
| OPERATING EXPENSES:
|
|
|
|
|
|
|
| Research and development
| 1,948
|
| 1,962
|
| 5,804
|
| 5,598
| Sales and marketing
| 2,559
|
| 2,526
|
| 7,523
|
| 7,301
| General and administrative
| 736
|
| 641
|
| 2,050
|
| 1,788
| Amortization of purchased intangible assets
| 297
|
| 70
|
| 430
|
| 212
| Restructuring and other charges
| 542
|
| 87
|
| 677
|
| 328
| Total operating expenses
| 6,082
|
| 5,286
|
| 16,484
|
| 15,227
| OPERATING INCOME
| 2,191
|
| 3,946
|
| 9,563
|
| 10,778
| Interest income
| 411
|
| 262
|
| 1,095
|
| 650
| Interest expense
| (357)
|
| (109)
|
| (588)
|
| (316)
| Other income (loss), net
| (10)
|
| (142)
|
| (232)
|
| (265)
| Interest and other income (loss), net
| 44
|
| 11
|
| 275
|
| 69
| INCOME BEFORE PROVISION FOR INCOME TAXES
| 2,235
|
| 3,957
|
| 9,838
|
| 10,847
| Provision for income taxes
| 349
|
| 745
|
| 1,680
|
| 2,192
| NET INCOME
| $ 1,886
|
| $ 3,212
|
| $ 8,158
|
| $ 8,655
|
|
|
|
|
|
|
|
| Net income per share:
|
|
|
|
|
|
|
| Basic
| $ 0.47
|
| $ 0.79
|
| $ 2.01
|
| $ 2.11
| Diluted
| $ 0.46
|
| $ 0.78
|
| $ 2.00
|
| $ 2.11
| Shares used in per-share calculation:
|
|
|
|
|
|
|
| Basic
| 4,042
|
| 4,089
|
| 4,051
|
| 4,100
| Diluted
| 4,060
|
| 4,110
|
| 4,071
|
| 4,111
|
CISCO SYSTEMS, INC.
REVENUE BY SEGMENT
(In millions, except percentages)
|
|
|
| April 27, 2024
|
|
| Three Months Ended
|
| Nine Months Ended
|
|
| Amount
|
| Y/Y %
|
| Amount
|
| Y/Y %
| Revenue:
|
|
|
|
|
|
|
|
| Americas
|
| $ 7,372
|
| (15) %
|
| $ 23,904
|
| (2) %
| EMEA
|
| 3,458
|
| (9) %
|
| 10,606
|
| (5) %
| APJC
|
| 1,873
|
| (12) %
|
| 5,652
|
| (9) %
| Total
|
| $ 12,702
|
| (13) %
|
| $ 40,161
|
| (4) %
|
| Amounts may not sum and percentages may not recalculate due to rounding.
|
CISCO SYSTEMS, INC.
GROSS MARGIN PERCENTAGE BY SEGMENT
(In percentages)
|
|
|
| April 27, 2024
|
|
| Three Months Ended
|
| Nine Months Ended
| Gross Margin Percentage:
|
|
|
|
| Americas
|
| 67.9 %
|
| 66.5 %
| EMEA
|
| 69.6 %
|
| 69.1 %
| APJC
|
| 67.4 %
|
| 67.5 %
|
CISCO SYSTEMS, INC.
REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES
(In millions, except percentages)
|
|
|
| April 27, 2024
|
|
| Three Months Ended
|
| Nine Months Ended
|
|
| Amount
|
| Y/Y %
|
| Amount
|
| Y/Y %
| Revenue:
|
|
|
|
|
|
|
|
| Networking
|
| $ 6,522
|
| (27) %
|
| $ 22,425
|
| (11) %
| Security
|
| 1,304
|
| 36 %
|
| 3,288
|
| 14 %
| Collaboration
|
| 987
|
| — %
|
| 3,093
|
| 2 %
| Observability
|
| 211
|
| 27 %
|
| 589
|
| 21 %
| Total Product
|
| 9,024
|
| (19) %
|
| 29,395
|
| (7) %
| Services
|
| 3,678
|
| 6 %
|
| 10,766
|
| 5 %
| Total
|
| $ 12,702
|
| (13) %
|
| $ 40,161
|
| (4) %
|
| Security and Observability, excluding Splunk, grew 3% and 14%, respectively, in the third quarter of fiscal 2024, and 3% and 17%, respectively, for the first nine months of fiscal 2024.
|
| Amounts may not sum and percentages may not recalculate due to rounding.
|
|
CISCO SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
|
|
| April 27, 2024
|
| July 29, 2023
| ASSETS
|
|
|
| Current assets:
|
|
|
| Cash and cash equivalents
| $ 8,913
|
| $ 10,123
| Investments
| 9,857
|
| 16,023
| Accounts receivable, net of allowance of $81 at April 27, 2024 and $85 at July 29, 2023
| 5,127
|
| 5,854
| Inventories
| 3,118
|
| 3,644
| Financing receivables, net
| 3,443
|
| 3,352
| Other current assets
| 5,428
|
| 4,352
| Total current assets
| 35,886
|
| 43,348
| Property and equipment, net
| 2,000
|
| 2,085
| Financing receivables, net
| 3,251
|
| 3,483
| Goodwill
| 58,633
|
| 38,535
| Purchased intangible assets, net
| 11,819
|
| 1,818
| Deferred tax assets
| 5,527
|
| 6,576
| Other assets
| 5,882
|
| 6,007
| TOTAL ASSETS
| $ 122,998
|
| $ 101,852
| LIABILITIES AND EQUITY
|
|
|
| Current liabilities:
|
|
|
| Short-term debt
| $ 11,891
|
| $ 1,733
| Accounts payable
| 2,054
|
| 2,313
| Income taxes payable
| 1,867
|
| 4,235
| Accrued compensation
| 3,211
|
| 3,984
| Deferred revenue
| 15,751
|
| 13,908
| Other current liabilities
| 5,334
|
| 5,136
| Total current liabilities
| 40,108
|
| 31,309
| Long-term debt
| 20,102
|
| 6,658
| Income taxes payable
| 2,869
|
| 5,756
| Deferred revenue
| 11,724
|
| 11,642
| Other long-term liabilities
| 2,427
|
| 2,134
| Total liabilities
| 77,230
|
| 57,499
| Total equity
| 45,768
|
| 44,353
| TOTAL LIABILITIES AND EQUITY
| $ 122,998
|
| $ 101,852
|
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
|
|
| Nine Months Ended
|
| April 27,
2024
|
| April 29,
2023
| Cash flows from operating activities:
|
|
|
| Net income
| $ 8,158
|
| $ 8,655
| Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
| Depreciation, amortization, and other
| 1,684
|
| 1,304
| Share-based compensation expense
| 2,274
|
| 1,720
| Provision for receivables
| 19
|
| 11
| Deferred income taxes
| (245)
|
| (1,343)
| (Gains) losses on divestitures, investments and other, net
| 224
|
| 243
| Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
|
|
|
| Accounts receivable
| 1,286
|
| 1,494
| Inventories
| 530
|
| (894)
| Financing receivables
| 92
|
| 1,126
| Other assets
| (382)
|
| (428)
| Accounts payable
| (300)
|
| 156
| Income taxes, net
| (5,223)
|
| 1,120
| Accrued compensation
| (1,092)
|
| 25
| Deferred revenue
| 211
|
| 1,055
| Other liabilities
| (86)
|
| (324)
| Net cash provided by operating activities
| 7,150
|
| 13,920
| Cash flows from investing activities:
|
|
|
| Purchases of investments
| (3,044)
|
| (7,652)
| Proceeds from sales of investments
| 3,874
|
| 802
| Proceeds from maturities of investments
| 5,804
|
| 3,789
| Acquisitions, net of cash and cash equivalents acquired
| (25,874)
|
| (96)
| Purchases of investments in privately held companies
| (82)
|
| (162)
| Return of investments in privately held companies
| 146
|
| 72
| Acquisition of property and equipment
| (472)
|
| (616)
| Other
| (2)
|
| (24)
| Net cash used in investing activities
| (19,650)
|
| (3,887)
| Cash flows from financing activities:
|
|
|
| Issuances of common stock
| 347
|
| 316
| Repurchases of common stock - repurchase program
| (3,772)
|
| (3,029)
| Shares repurchased for tax withholdings on vesting of restricted stock units
| (765)
|
| (444)
| Short-term borrowings, original maturities of 90 days or less, net
| 1,547
|
| (602)
| Issuances of debt
| 24,159
|
| —
| Repayments of debt
| (2,195)
|
| (500)
| Repayments of Splunk convertible debt, net
| (3,140)
|
| —
| Dividends paid
| (4,778)
|
| (4,713)
| Other
| (52)
|
| (4)
| Net cash provided by (used in) financing activities
| 11,351
|
| (8,976)
| Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and
restricted cash equivalents
| (39)
|
| (90)
| Net (decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents
| (1,188)
|
| 967
| Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period
| 11,627
|
| 8,579
| Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
| $ 10,439
|
| $ 9,546
| Supplemental cash flow information:
|
|
|
| Cash paid for interest
| $ 350
|
| $ 306
| Cash paid for income taxes, net
| $ 7,150
|
| $ 2,414
|
CISCO SYSTEMS, INC.
REMAINING PERFORMANCE OBLIGATIONS
(In millions, except percentages)
|
|
| April 27, 2024
|
| January 27, 2024
|
| April 29, 2023
|
| Amount
|
| Y/Y%
|
| Amount
|
| Y/Y%
|
| Amount
|
| Y/Y%
| Product
| $ 18,876
|
| 29 %
|
| $ 16,249
|
| 12 %
|
| $ 14,681
|
| 9 %
| Service
| 19,898
|
| 14 %
|
| 19,407
|
| 12 %
|
| 17,401
|
| 4 %
| Total
| $ 38,774
|
| 21 %
|
| $ 35,656
|
| 12 %
|
| $ 32,082
|
| 6 %
|
| We expect 52% of total RPO at April 27, 2024 will be recognized as revenue over the next 12 months.
|
CISCO SYSTEMS, INC.
DEFERRED REVENUE
(In millions)
|
|
| April 27,
2024
|
| January 27,
2024
|
| April 29,
2023
| Deferred revenue:
|
|
|
|
|
| Product
| $ 12,856
|
| $ 11,640
|
| $ 10,895
| Service
| 14,619
|
| 14,131
|
| 13,365
| Total
| $ 27,475
|
| $ 25,771
|
| $ 24,260
| Reported as:
|
|
|
|
|
| Current
| $ 15,751
|
| $ 14,011
|
| $ 13,249
| Noncurrent
| 11,724
|
| 11,760
|
| 11,011
| Total
| $ 27,475
|
| $ 25,771
|
| $ 24,260
|
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 2024
|
|
|
|
|
|
|
|
|
|
|
|
| April 27, 2024
|
| $ 0.40
|
| $ 1,615
|
| 26
|
| $ 49.22
|
| $ 1,256
|
| $ 2,871
| January 27, 2024
|
| $ 0.39
|
| $ 1,583
|
| 25
|
| $ 49.54
|
| $ 1,254
|
| $ 2,837
| October 28, 2023
|
| $ 0.39
|
| $ 1,580
|
| 23
|
| $ 54.53
|
| $ 1,252
|
| $ 2,832
| Fiscal 2023
|
|
|
|
|
|
|
|
|
|
|
|
| July 29, 2023
|
| $ 0.39
|
| $ 1,589
|
| 25
|
| $ 50.49
|
| $ 1,254
|
| $ 2,843
| 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
|
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 27,
2024
|
| April 29,
2023
|
| April 27,
2024
|
| April 29,
2023
| GAAP net income
| $ 1,886
|
| $ 3,212
|
| $ 8,158
|
| $ 8,655
| Adjustments to cost of sales:
|
|
|
|
|
|
|
| Share-based compensation expense
| 139
|
| 106
|
| 381
|
| 293
| Amortization of acquisition-related intangible assets
| 249
|
| 156
|
| 605
|
| 462
| Acquisition-related/divestiture costs
| 12
|
| 1
|
| 13
|
| 4
| Total adjustments to GAAP cost of sales
| 400
|
| 263
|
| 999
|
| 759
| Adjustments to operating expenses:
|
|
|
|
|
|
|
| Share-based compensation expense
| 665
|
| 518
|
| 1,877
|
| 1,431
| Amortization of acquisition-related intangible assets
| 297
|
| 70
|
| 430
|
| 212
| Acquisition-related/divestiture costs
| 264
|
| 55
|
| 403
|
| 178
| Russia-Ukraine war costs
| (10)
|
| 2
|
| (12)
|
| 7
| Significant asset impairments and restructurings
| 542
|
| 87
|
| 677
|
| 328
| Total adjustments to GAAP operating expenses
| 1,758
|
| 732
|
| 3,375
|
| 2,156
| Adjustments to interest and other income (loss), net:
|
|
|
|
|
|
|
| (Gains) and losses on investments
| (7)
|
| 123
|
| 132
|
| 188
| Total adjustments to GAAP interest and other income (loss), net
| (7)
|
| 123
|
| 132
|
| 188
| Total adjustments to GAAP income before provision for income taxes
| 2,151
|
| 1,118
|
| 4,506
|
| 3,103
| Income tax effect of non-GAAP adjustments
| (484)
|
| (219)
|
| (1,045)
|
| (623)
| Significant tax matters
| —
|
| —
|
| —
|
| 164
| Total adjustments to GAAP provision for income taxes
| (484)
|
| (219)
|
| (1,045)
|
| (459)
| Non-GAAP net income
| $ 3,553
|
| $ 4,111
|
| $ 11,619
|
| $ 11,299
|
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
GAAP TO NON-GAAP EPS
|
|
| Three Months Ended
|
| Nine Months Ended
|
| April 27,
2024
|
| April 29,
2023
|
| April 27,
2024
|
| April 29,
2023
| GAAP EPS
| $ 0.46
|
| $ 0.78
|
| $ 2.00
|
| $ 2.11
| Adjustments to GAAP:
|
|
|
|
|
|
|
| Share-based compensation expense
| 0.20
|
| 0.15
|
| 0.55
|
| 0.42
| Amortization of acquisition-related intangible assets
| 0.13
|
| 0.06
|
| 0.25
|
| 0.16
| Acquisition-related/divestiture costs
| 0.07
|
| 0.01
|
| 0.10
|
| 0.04
| Significant asset impairments and restructurings
| 0.13
|
| 0.02
|
| 0.17
|
| 0.08
| (Gains) and losses on investments
| —
|
| 0.03
|
| 0.03
|
| 0.05
| Income tax effect of non-GAAP adjustments
| (0.12)
|
| (0.05)
|
| (0.26)
|
| (0.15)
| Significant tax matters
| —
|
| —
|
| —
|
| 0.04
| Non-GAAP EPS
| $ 0.88
|
| $ 1.00
|
| $ 2.85
|
| $ 2.75
|
| Amounts may not sum due to rounding.
|
CISCO SYSTEMS, INC.
GAAP TO NON-GAAP EPS
IMPACT OF SPLUNK ACQUISITION, INCLUDING FINANCING COSTS
|
|
| Three Months Ended
|
| April 27, 2024
| GAAP EPS Impact
| $ (0.09)
| Amortization of intangible assets
| 0.05
| Acquisition-related costs
| 0.05
| Income tax effect of non-GAAP adjustments
| (0.02)
| Non-GAAP EPS Impact
| $ (0.01)
|
| 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 27, 2024
|
| 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
| $ 5,729
|
| $ 2,544
|
| $ 8,273
|
| $ 6,082
|
| 15 %
|
| $ 2,191
|
| (44) %
|
| $ 44
|
| $ 1,886
|
| (41) %
| % of revenue
| 63.5 %
|
| 69.2 %
|
| 65.1 %
|
| 47.9 %
|
|
|
| 17.2 %
|
|
|
| 0.3 %
|
| 14.8 %
|
|
| Adjustments to GAAP amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation expense
| 57
|
| 82
|
| 139
|
| 665
|
|
|
| 804
|
|
|
| —
|
| 804
|
|
| Amortization of acquisition-related intangible assets
| 249
|
| —
|
| 249
|
| 297
|
|
|
| 546
|
|
|
| —
|
| 546
|
|
| Acquisition/divestiture-related costs
| 4
|
| 8
|
| 12
|
| 264
|
|
|
| 276
|
|
|
| —
|
| 276
|
|
| Significant asset impairments and restructurings
| —
|
| —
|
| —
|
| 542
|
|
|
| 542
|
|
|
| —
|
| 542
|
|
| Russia-Ukraine war costs
| —
|
| —
|
| —
|
| (10)
|
|
|
| (10)
|
|
|
| —
|
| (10)
|
|
| (Gains) and losses on investments
| —
|
| —
|
| —
|
| —
|
|
|
| —
|
|
|
| (7)
|
| (7)
|
|
| Income tax effect/significant tax matters
| —
|
| —
|
| —
|
| —
|
|
|
| —
|
|
|
| —
|
| (484)
|
|
| Non-GAAP amount
| $ 6,039
|
| $ 2,634
|
| $ 8,673
|
| $ 4,324
|
| (5) %
|
| $ 4,349
|
| (12) %
|
| $ 37
|
| $ 3,553
|
| (14) %
| % of revenue
| 66.9 %
|
| 71.6 %
|
| 68.3 %
|
| 34.0 %
|
|
|
| 34.2 %
|
|
|
| 0.3 %
|
| 28.0 %
|
|
|
| Three Months Ended
|
| April 29, 2023
|
| Product
Gross Margin
|
| Service
Gross Margin
|
| Total
Gross Margin
|
| Operating
Expenses
|
| Operating
Income
|
| Interest and
other income
(loss), net
|
| Net
Income
| GAAP amount
| $ 6,956
|
| $ 2,276
|
| $ 9,232
|
| $ 5,286
|
| $ 3,946
|
| $ 11
|
| $ 3,212
| % 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
|
| $ 4,941
|
| $ 134
|
| $ 4,111
| % of revenue
| 64.5 %
|
| 67.3 %
|
| 65.2 %
|
| 31.3 %
|
| 33.9 %
|
| 0.9 %
|
| 28.2 %
|
| 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 27, 2024
|
| 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
| $ 18,700
|
| $ 7,347
|
| $ 26,047
|
| $ 16,484
|
| 8 %
|
| $ 9,563
|
| (11) %
|
| $ 275
|
| $ 8,158
|
| (6) %
| % of revenue
| 63.6 %
|
| 68.2 %
|
| 64.9 %
|
| 41.0 %
|
|
|
| 23.8 %
|
|
|
| 0.7 %
|
| 20.3 %
|
|
| Adjustments to GAAP amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation expense
| 157
|
| 224
|
| 381
|
| 1,877
|
|
|
| 2,258
|
|
|
| —
|
| 2,258
|
|
| Amortization of acquisition-related intangible assets
| 605
|
| —
|
| 605
|
| 430
|
|
|
| 1,035
|
|
|
| —
|
| 1,035
|
|
| Acquisition/divestiture-related costs
| 5
|
| 8
|
| 13
|
| 403
|
|
|
| 416
|
|
|
| —
|
| 416
|
|
| Significant asset impairments and restructurings
| —
|
| —
|
| —
|
| 677
|
|
|
| 677
|
|
|
| —
|
| 677
|
|
| Russia-Ukraine war costs
| —
|
| —
|
| —
|
| (12)
|
|
|
| (12)
|
|
|
| —
|
| (12)
|
|
| (Gains) and losses on investments
| —
|
| —
|
| —
|
| —
|
|
|
| —
|
|
|
| 132
|
| 132
|
|
| Income tax effect/significant tax matters
| —
|
| —
|
| —
|
| —
|
|
|
| —
|
|
|
| —
|
| (1,045)
|
|
| Non-GAAP amount
| $ 19,467
|
| $ 7,579
|
| $ 27,046
|
| $ 13,109
|
| — %
|
| $ 13,937
|
| 2 %
|
| $ 407
|
| $ 11,619
|
| 3 %
| % of revenue
| 66.2 %
|
| 70.4 %
|
| 67.3 %
|
| 32.6 %
|
|
|
| 34.7 %
|
|
|
| 1.0 %
|
| 28.9 %
|
|
|
| Nine Months Ended
|
| April 29, 2023
|
| Product
Gross Margin
|
| Service
Gross Margin
|
| Total
Gross Margin
|
| Operating
Expenses
|
| Operating
Income
|
| Interest and
other income
(loss), net
|
| Net
Income
| GAAP amount
| $ 19,139
|
| $ 6,866
|
| $ 26,005
|
| $ 15,227
|
| $ 10,778
|
| $ 69
|
| $ 8,655
| % 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
|
| $ 13,693
|
| $ 257
|
| $ 11,299
| % of revenue
| 62.6 %
|
| 68.4 %
|
| 64.0 %
|
| 31.3 %
|
| 32.8 %
|
| 0.6 %
|
| 27.0 %
|
| 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 27,
2024
|
| April 29,
2023
|
| April 27,
2024
|
| April 29,
2023
| GAAP effective tax rate
| 15.6 %
|
| 18.8 %
|
| 17.1 %
|
| 20.2 %
| Total adjustments to GAAP provision for income taxes
| 3.4 %
|
| 0.2 %
|
| 1.9 %
|
| (1.2) %
| Non-GAAP effective tax rate
| 19.0 %
|
| 19.0 %
|
| 19.0 %
|
| 19.0 %
|
GAAP TO NON-GAAP GUIDANCE
|
| Q4 FY 2024
|
| Gross Margin
Rate
|
| Operating Margin
Rate
|
| Earnings per
Share (1)
| GAAP
|
| 63% – 64%
|
| 18.5% – 19.5%
|
| $0.46 – $0.51
| Estimated adjustments for:
|
|
|
|
|
|
| Share-based compensation expense
|
| 1.0 %
|
| 6.0 %
|
| $0.15 – $0.16
| Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs
|
| 2.5 %
|
| 6.5 %
|
| $0.19 – $0.20
| Significant asset impairments and restructurings
|
| —
|
| 0.5 %
|
| $0.01 – $0.02
| Non-GAAP
|
| 66.5% – 67.5%
|
| 31.5% – 32.5%
|
| $0.84 – $0.86
|
FY 2024
|
| Earnings per
Share (1)
| GAAP
|
| $2.46 – $2.51
| Estimated adjustments for:
|
|
| Share-based compensation expense
|
| $0.58 – $0.59
| Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs
|
| $0.46 – $0.47
| Significant asset impairments and restructurings
|
| $0.13 – $0.14
| (Gains) and losses on investments
|
| $0.03
| Non-GAAP
|
| $3.69 – $3.71
| (1) 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 our ability to bring together networking, security, observability, and data to enable us to offer digital resilience to our customers, the stabilization of demand for our products, and the addition of Splunk to our product line as a catalyst for future growth) and the future financial performance of Cisco (including the guidance for Q4 FY 2024 and full year FY 2024) 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: 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; our development and use of artificial intelligence; 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 Networking and services; the timing of orders and manufacturing and customer lead times; 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 other incidents; vulnerabilities and critical security defects; our ability to protect personal data; evolving regulatory uncertainty; terrorism; natural catastrophic events (including as a result of global climate change); any 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 20, 2024 and September 7, 2023, 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 27, 2024 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.
About Cisco
Cisco (Nasdaq: CSCO) is the worldwide technology leader that securely connects everything to make anything possible. Our purpose is to power an inclusive future for all by helping our customers reimagine their applications, power hybrid work, secure their enterprise, transform their infrastructure, and meet their sustainability goals. Discover more at newsroom.cisco.com and follow us on X at @Cisco.
Copyright © 2024 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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| From: Eric | 2/13/2025 4:05:12 PM | | | | | | DJ Cisco Could be 'the Next IBM,' Analyst Says -- Market Talk
12:50 PM ET 2/13/25 | Dow Jones
| Related Quotes | | |  | | 3:59 PM ET 2/13/25 | | Symbol | Last | % Chg |
CSCO
| 63.78 | 2.00% |
IBM
| 259.19 | 1.32% | | Real time quote. | | |
1250 ET -
Similarities are emerging between Cisco Systems and International Business Machines. IBM was unloved by investors until it started hitting numbers, buying software and posting growth, which has prompted a surge in stock price, Melius Research analysts say in a note. Cisco was similarly overlooked by Wall Street, but the networking-equipment company has struck a better tone in recent quarters, with orders trending upwards and solid gross margins. Now, orders are ramping, and the company's artificial-intelligence strategy is making real progress, analysts say. Shares rise 2.2%, one day after Cisco boosted its revenue outlook for the year, prompted by stronger-than-expected sales in its fiscal 2Q. (connor.hart@wsj.com) |
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