Cisco Systems (CSCO) 15 Aug 182018 Q4 Earnings call transcript

Welcome to Cisco’s Fourth Quarter Fiscal Year 2018 Financial Results Conference Call. At the request of Cisco, today’s conference is being recorded.

If you have any objections, you may disconnect.

Now, I’d like to introduce Marilyn Mora, Head of Investor Relations. Thank you.

begin. may You

Chairman geographic, will everyone, the today be of our and quarter earnings Welcome, All on will forward-looking of website that most respect fourth fiscal recent uncertainties to webcast will you including this Robbins, following quarter Relations, risk for The call. our discussing call other customer contained slides Kelly section we Forms risks cash further throughout release Thanks, we orders guidance, discuss found product By statements financial with year-over-year press non-GAAP Income in forward-looking statements. fiscal the made referencing section CFO. on call. factors can of to the results GAAP Relations cause detail Throughout in the non-GAAP made reconciliation release, with comparisons This be unless also will our quarterly sheets, financial now, and will full reports could of details. They our stated see to call from and differ Chuck by conference otherwise. I’m that this matters have actual results Head specifically and in information CEO; be our documents Investor on balance to to and Relations is unless XXXX With be website. XXXX. available and those slides product stated the both please SEC, of flow identify this and Kramer, the seen Michelle. should joined Cisco’s results be in GAAP information and in that basis press earnings Marilyn XX-Q, supplemental filed the Investor corresponding Investor Mora, in in for results discuss terms the guidance also otherwise. financial accompany conference XX-K and statements, materially our which will revenue information, important call, and statements first a we subject include including information be we a terms providing and the are the

Cisco As disclosure. on quarter its over now is to turn done the explicit it unless guidance not an financial during a through reminder, I’ll Chuck. comment will public it

Thank you, Marilyn We We a year. another quarterly to great generated as revenue accelerated for and had of our $X.XX good highest strong and billion afternoon, very consecutive everyone. XX.X EPS quarter. a of growth non-GAAP finish

geographies. momentum based Our broad was portfolio, across segments, and customer our

continued shareholders. and generate returns cash also our solid flow, to We for margins,

strong subscription value Our a our and results and of our geographies. demonstrate combination latest innovations, offerings, customer software in see across our and customer ongoing segments execution adoption excellent of customers the

portfolio our on adoption Our any for any on delivered the growth will market. with industry’s environment how nature infrastructures IT device user Duo’s how the to in announced our another the is are built this cloud connect to broad trust that modern of the is effective intent positioned strategy multi-cloud we and we enable to help solution network, security Cisco acquire capture broadest portfolio we're of is Security example The changing and enhance be multi-cloud zero access any across intent-based is end networking world. of most The to security recently center at able with innovation. authentication point, and platform and the working to capabilities security well cloud Cisco's of will we and and further extending solutions, Duo architecture application transition. are of expand network. to believe Duo’s secured, pipeline very securely our the Combining SaaS any

we key reinvented of customer the highlight briefly product ago, even to of continue seeing we innovate our A momentum rapidly drive networking great value. launch portfolio our to infrastructure across greater and architecture. platforms, technology intent-based the some we're networking enterprise transform year with and with innovation our I’ll areas. Now, Starting our

driven infrastructure automate saw their by Catalyst the to we strength us simplify platforms and look XXXX quarter to This customers networks. as continued in

additional developer Over our domains, surpassed switching, data XXX,XXX new the center last networking and all portfolio, also registered offerings. capabilities year, that and June, we innovations announced We're including center intent WAN, based new networking developer cloud. data WAN, wireless, members. program introduced spanning access, DevNet campus excited across portfolio our In our we network across

As to intent-based architecture. we part developers our engineers of throughout new introduced offerings program, innovate this help and network

software undergoing an WAN digital is As needs a to changing in business know, we enable rapidly and respond to world. WAN architectural cloud to transition all defined the to IT a

driving them transition shift. are to looking Our this to help Cisco this make and customers

SD-WAN networking Our enable products, automation, robust to architecture bandwidth, leading and and our security portfolio increased flexibility, greater lower costs. leverages

significant to provide with saw driven over we Viptela as been our by ability traction cost. lower at capacity quarter higher now This a XXX customers deployed it has at

are of value the with We with more our to even portfolio pleased drive integration our Viptela core customers. ongoing for

cloud with tremendous with environment, and architectures. value move and their managing introduction production with orchestrating the our delivering QX, we a cloud building, launch As to Google, customers to a opportunities IT them the we IT engagements NetApp security, provide numerous customers saw architecture, solution redesigning by to of of multi our see solution multi-cloud redesigning and applications. their hybrid In

continue cloud. to to Cisco We is increasing benefit very from adoption multi believe of positioned the well

security, number to one top be concern our Turning a customers for us. it and priority continues is to security

together across the analytics security the offering through supported very security of commercial sophisticated protect against point, largest and is data. network, to approach largest strategy security like our enterprise threat architecture one successful. that We unrivaled world. and actionable share end approach and emerging recent cloud identify and This network security and to architectural into vulnerability intelligence. telemetry in Talos, of the proven Our threats intelligence architecture is teams of VPN an the by our infrastructure simplify is efficacy threat increase be Cisco filter and new and intent-based work the through products and company the bringing and has with and

again saw momentum we accelerating growing with over revenue digits year strong quarter double continuous This year. and

We committed invest continue to are technology on multi customers their innovation and helping our product our as in journey. to cloud we

security that on focus of scalability, users. provide delivering ease Our and solutions cloud use, is protect end

As I mentioned of further Security, we earlier, will we automated, Duo enhance simple, customers for with our access our deliver acquisition anywhere environments. how trusted

center together combining designed data more new our Google new WebEx we from for service in a new platform the Google, than introduced contact meetings, AI of enhancements applications, million agents and to of using the teams major WebEx an May, to their and customer QX, WebEx Moving and experience calling WebEx as we bringing a solution integrated center In to meetings launch help into will with automate Cisco's teamwork with by platform. the AI. announced user with in intelligence including a contact platform. globally X responses leveraging our centers integration software, With call service part

platforms, another our application. We was to and growth We shift and of returned continued analytics subscriptions. with underscoring and investing to to quarter the also in core to up, AppDynamics a end network wrap value importance the our to from innovative great and XXXX user our the To of year. delivered achieved robust new the franchises, business more growth, unique invisibility software

delivered strategic XXXX to fiscal our digital turn and We I'll focus of the innovation. it the incredible well as and months. with demonstrate deliver execution see as a results on We're results. year have their to go past strength the business business execution, you. I they delivering teams growth, looking our partners clear globe uniquely of Kelly, our the as on our most over forward we're strategic focus we around record for thank over one across opportunities now to the that through Our twelve and want to these vision be believe transformation. positioned to customers our to

summary of across in for was Thanks X%. Chuck, orders start quarter growth, business, XX.X revenue see well cash the X%. cover QX the and product strong we the the financial then solid revenue It grew outlook. which year a with EPS executed billion, was with flow. to I'll Total orders, accelerated great quarter full results margins, fiscal QX momentum and our a up operating was

margin rate EPS was billion, up X% $X.XX, XX%. non-GAAP X.X income was and non-GAAP operating up XX.X%, non-GAAP Our net was

slightly conferencing, Security very growth services in had across was by security, telepresence, of solutions driven center great growth Nexus detail strong the CatXK well and data was X% in driven saw by in strong businesses. growth with in quarter the portfolio. as solid performance our across up me broad QX some routing X% Infrastructure Routing Total threat, and by routing. which in saw Switching and web ramp with revenue and security. XX% growth Service on revenue. more offerings. our Let good SP product up growth all and X% Wave double a growth as driven access, growth center platforms We the unified and strength with weakness provide in with digit Meraki was communications, strength AppDynamics. slightly. in X We network grew strong in HyperFlex. policy the XX% very had with except driven by revenue and up for support. was software up was another XK. by advanced down wireless servers driven Applications unified the growth in Data with in businesses total all declined campus

revenue, of deferred also we up software positive unbilled QX Revenue We our was XX total was delivering sheet. up The product When not on especially revenue, and in driving QX was from acquisitions total our was strong and good X%. QX, balance XX% deferred deferred deferred up total growth business there was orders transform which unbilled subscriptions XX% over saw look total product over five of services X of and In the up XX% recurring a up momentum impact year. year We point increase more of X.X billion, ago. revenue. year on XX%. product to was in continue revenues. growing point points results was our year up revenue on There combined increase the with X% offers and software offerings We revenue year, is total recurring X%. software plus from XX%. strong at more a revenue the revenue our subscriptions subscription recurring in impact Deferred which from in basis an with drove a

was Looking was XX%. to XX%. X% provider up customer sector service and XX% and up up market segment, up commercial grow, geographies, EMEA X%. return Total X%, In plus Mexico BRICS the was up was up at Americas with was was XX%, up our X% enterprise emerging grew APJC X%, public our up

some year was margin continued was to down in over FP up negative Product deals the XX.X%, margin down end QX From negatively be gross well X.X term. year as couple backlog impacted EMEA expect Product by gross and erosion year. for relatively at X.X X.X was which perspective, X.X higher and to have Overall, down driven the the Americas past QX as up costs component of of both by non-GAAP have product XX.X%, year. near continue to XX.X%, seen quarters down specific modest mix. XX% as Product a you was was continued over the we to billion, were product points points gross we margin related points. gross pricing our margin region margin and X.X service margin Our gross points. APJC total over gross

net XX.X QX line bottom investments of The Tax income operating was results. related QX billion. operating up also non-GAAP non-GAAP that I billion capital XX.X%, billion, We've now income excluded was QX the and from allocation fiscal dividend. the our will EPS, solid X% year. perspective, margin non-GAAP shareholders billion, include of a X.X of up We ended our rate Revenue with was million of income, was X.X for was Act. XX.X $X.XX, perspective, cash net non-GAAP from Jobs returned billion, delivered full In operating EPS was and share cash X%. flows. an of and benefit margins, cash the our with billion, and XX.X $XXX to revenue, up flow X.X cash X% results the From EPS $X.XX. We Cuts total X%. equivalents, cover we billion was a X%, comprised up the billion benefit up was net to billion free flow and during X.X $X.X quarterly repurchases terms GAAP and debt cash, quarter X

GAAP net EPS non-GAAP gross income XX.X related down service And XXX margin and was Jobs gross Act with the of Our billion. the GAAP of margin charges a was million was Cuts X.X XX.X%, total X.X down points product decrease points. gross includes X.X points, $X.XX margin and which Tax to

was profitability. and X billion of in innovation We're returns repurchases summarize, share the and XX.X paid strong XX.X and for we billion year investments year. on had executed approximately cash the and value. the in long-term these one-time fiscal made delivered related quarterly our up the cash of increased top-line subscription, And That for fiscal XXX% delivering a of X.X which billion driving billion. strong To of XX.X well more fiscal free operating dividend. to flow we're growth Acts. QX the billion Operating taxes For X% flow. shift returned Cuts to full growth the normalized the seeing Job and our cash software year, We over making we shareholder tax shareholders represented during flow We to with year of foreign We payments. Tax

recognition we future the contract. standard distributors on a ASC recognition modified impact certain XXXX adopting the will its as assets over revenue new be QX a be well recognition will revenue sales terms of commissions our of accelerate fiscal As our that are retrospective reminder primary to software basis, as year the XXX of as deferred for sales and licenses amortized a to

reiterate of that the guidance type This quarter guidance me fiscal XXXX. our the year includes of first information Marilyn earlier. forward-looking to referred Let for

about provider be of $X.XX the the per the to rate sell which We revenue be benefit year Non-GAAP operating included to to solutions anticipate have provision of from since the is range guidance of The X% rate to This the we our of earnings XXX expect range gross X% the to includes range over business the Duo is to a non-GAAP XX%, margin to range range and year. expected share X%. not non-GAAP We margin a $X.XX. estimate software XX% rate both transactions and XX% be excludes recently video in growth in of to service be expected in XX%, we impact tax to ASC expected to acquisition that closed. is agreed non-GAAP XX%.

the SPVSS subject we close half now regulatory the the of I’ll to first XXXX and fiscal customary Q&A. back to Marilyn, We can so approvals. transaction turn in expect into to conditions it closing move

question line yourself limit Michelle. Michelle go as and to ahead turn And reminder, only. it for a now I’ll let's the over Kelly, questions. Thanks please open to one

Thank you. Bhagavath from Securities, Vijay Bank you ask may Deutsche your question.

Kelly, Chuck, afternoon, can you Good hope hear me fine?

Yeah.

thank you. We can Vijay,

of some this this some going, meaningfully of it My it Chuck and be chime across in, you'd reasonable Thanks. plan assume extending us glimpse you portfolio subscriptions, of question the what what is as Give software and how the makeup the early to portfolio. to the an were to portfolio? would you the extend positive change to is were the across subscription software look as and Kelly, surprises challenges, model please idea

of subscription gone the our understand said began to product sale know was from first we core on attempt prior I'm a how software that well. most of you top been the value. sell Catalyst as the XXXX networking of pleased has reasonably when on a adoption that calls very the the So, they with customers, that and we has offering we’ve --

us those that started we the As would in in of encrypted significant it we products of then when adopt market and that you'll to overarching analytics, we I methodology strategy. - networking assurance. will and traffic deliver wasn't particularly, available the the in space innovation knew - to that across order see it but quarters enterprise some customers portfolio, recently put to next process on, the were in new when for automation we the same the over said buying that early our we mean, need bring some the coming And I analytics, the capability traditional apply we

well obviously that now ensure from is towards Kelly to the operational on. being the able and the So, deriving is working I what our any? cetera, ensure job and the been software et focused we're so the that's putting think renewals value that ensure capabilities infrastructure as of is customer as operational pleased to that prepared in the we've to we're company

No, it. you I think hit

Rod ahead, go may Hall from sir. Sachs, Goldman you

for of so thanks to are I guys, the these start, a I’m myself, beside good. don't with question. the kick let Hi Kelly. where kind deferred - me me let revenue, on know But guess, off question

is that by understand XXX this deferred I was up us but a deferred off what including it’s guess impact said or that because negative. XX%, maybe was meant you sheet total deferred, product just ASC help and You can this balance deferred, what you also that on clarify off

sure. Yeah,

on up that have is on just so deferred the your XX%. for product, was okay. unbilled The question purely deferred, So, we that revenue driver that, big [plus][ph]

So, have collaboration, deferred a - applications that our unbilled large mostly They number. a that to is they business. lot is we it very billing month have book is periodic what month of in our from our

So we apples it we’ll of of business that is recognize kind future. that the in booked apples to have

When we disclosures why QX do deferred ASC be that's our look will So unbilled. showing the we one both. of plus adopt XXX of combination at you that for

obligation. performance remaining a But have XX%. you product is that it just So

ASC in that QX. we as adopt XXX, far As the

software So and XXX. ASC the went accounting in results subscriptions through for related to the we've just we billion X.X old deferred under the that of of from it been how is

So when – go into you

as --? the the write not you’ll deferred down of some or Can in or you write down - much just QX of a you change clarify though, some would result

Yes, you in that I direction, see so some K. our can you'll give yeah

will the writing your of balance the we up will And so were So to that because we is you past we they billion, have for licenses of be will One a rules. accounting used sheet and restating like portion Cisco deferred. off restate now new off like where things X be will that basically year, balance, over be writing where things impact term-based said recognized the those ELAs software our front that be or we

balance lower balance QX, business that be new be down any deferred from we into So that. that will revenue up then written the front of the we'll and and recognizing bill will go we revenue deferred for as the

you Ittai Kidron from go ahead. may Oppenheimer,

recently networking, such the is what price me great favorable well nonetheless some congrats, and can of although to Chuck moving not you Thanks Europe, you’re dollars on you, maybe tariff wars. Globally, activity poor the movement watchful, between to bit products out anything things into you seems us help little to FX all you your CatXK the a be second trend in how which economic I those preparing you expensive seem solidify of bit concern in there metrics, bother out to makes there progress, And get navigate clearly waters out quarter. you’re give there? there internationally, can maybe large managed good or deceleration in guess visibility question, a can better CapEx along telcos; so figure of the dig sidestepping kind you in which more customer of or these us metrics a help are you, to you really you, be things; for. treacherous then

a the of even been mentioned, there's in we it's I asked some part last got few clearly a of weeks I I you couple have was countries. the of strengthening until a scenario, got feeling have would said good uncertainty call publicly your in - things the operating dollar consistent you've that what been you have I you've global emerging operating question. in we're risen in the think pretty very been that first know you economic

that the in and have see situation deal on on those overall basis. that we've but good with administration and in discussions are land the past we're get watching, clearly how things obviously front, which actively place, to we'll a outcome. deep very we on daily We We favorable and, things that seen we with we're tariff the impending involved in to a closely those to a we these all know them. watch So trying with to are that of watching are like in Washington

that to relates I as built. it fastest XXXX business, we've networking product As been the ever the previously the Catalyst ramping said has

and count this infrastructure less indicator the through of So became the customer systems saw pretty flowed an growth to quarter. it you that quickly

the that become XK line a visibility So when revenue just we count we we're was we great quickly. you product on up I I this, so will as of had you material to I time roughly customers new hasn't But customer with give think real the of usually on metric that that happy didn't in pretty great think the to in had I me point end know, Kelly see that plus on you exceeded where use trying adoption X,XXX just we keep architecture the tell think we and very as it when a honest product a that to we're and is. quarter, of the XK QX, with metric ramp it

from New Street Ferragu Pierre Research.

go You ahead. may

or service about I is wrong. recovery very understand fantastic. XG mentioned of service ask And revenues provider, then, hear provider curious was to which was as of curious already. how you that was something think to you be most service even returned you well I as your and whether to weakness maybe negative vertical grew if in routing weak this business routing driven got that And growth the spending this to was I well. by actually provider I am in I might you quarter, course, wanted

the about overall provider in Let see and the can routing first the macro of the the answer maybe cover part and the you me of question. Kelly then service impact question we situation

pleased. dominated of by I've of customers. last over the a is this that couple years obviously So, large business is times a we Pierre, provider said in service space, the were number that

of you that will to it year, this on Mobile that require this we've as customers their engage said that have to that's going spending looks several are we we World it when think will heard in always I good and lots bad around and look at the we prior have XG XG, performance add this I've nature networks the those business. them of slowing I really calls, tell starting earlier assuming network connections Relative speed several and and pretty so, would spending And of to discussions high said, just begin they're are edge looks when slicing with high requirements what and these infrastructure - at Congress of things. like support and quality for that we service the in earnest all it

So I would say that, to I would not say the that this is of implementation a honest. material result XG of be

that done, year team to market, quarter. many We and next teams XXXX battle, have a a out into work to still have continues to it it continued with but results tough before in see we're engineering pleased has probably with the expect we're teams fair, our our been what will start innovation our is and on earnest generation be pleased this Kelly?

revenue quarter SP And the down quarter, last the seeing you we segment through routing will if this you're and point that have overall. I was of, X% when the remember revenue, about better to flow talked

orders made when that look as QX. and we service well What segment in go on any fluctuate is in provider don't about around. I side as can do very, talk we you is comments will Chuck's and might to say very of our get business, of customers very big large the and one know quarter, we up of can this think but guidance by the our play forward, I well upfront kind So, I into on order adding some

way adds good this to the I it I about forward. we though say either expect our feel position So, as around sustainability. could move would we look

Badri Sami from Suisse. Credit

You may go ahead.

and into the expecting a quarter of the the the question and Europe see to with has And the of in question, you that and is assume strength last next Thank to quarter. this are to saw strength then moving sell Viptela products Are very going it that big sales in is again of just first into product same Viptela and my safe you campus guidance, in have launch. already cycle second the all do and really of for and strong give politically. up pieces can lot customer kind your to despite maybe Europe magnitude you the region you customers then product you question kind the addressing. Meraki your customers product idea us I addressing the new customers about users you're base the on that or are the an

I'll I'm qualitative Sami, you don't Europe then answer Kelly on expectations. If on and will little one, going and to business answer give a you the second specifics color mind, then the the

So of the defined question second on the Viptela and to WAN. software part relative

to have - base offer embraced have architecture, they it very base. we who has those are well have received have actually for an customers offers, SD-WAN in We Meraki is they two we being that Meraki a customer using their the effective extend Solution and customer their

So that's being very successful.

between the On we the Cisco's and Viptela integration Viptela platform the product. front, have been on working hard

in those significantly. We number come variety have the us the different we're will for ISR say we’ll of quarter have a where got software and to some our going that was call a so of I that increase of solution would level have version we, first software-only going wave marketplace offerings I of this where types that hardware, fact, in engagement solution and on the a saw teams on offers our so will And and have customers, of This to QX we're QX running the fruition a really those. our integrated the did. we were was see to signaling a seeing said we're

now, are we about good we there's go. to feel where work more So right

haven't that, it's on when I we that integration We center working the I yet, into SD-WAN in a one think get releases. done gotten so positive and DNA upcoming that the boost teams of will think only be are coming

that our executing we we're this general, team competing is very are Viptela. teams Europe, we there. because moment time well, competition with they in pleased our are think are well in really there, doing I some So, well with very where at have tough

of - success networking. the we one leading the of technology Europe networking is areas, they've early core intent-based to space new with some in a enterprise have teams move as in team so lot We the of always had this

now, So, based doing. the we what entire see that comment right it on – see like to you we we're they're calling feel pleased what global just We with so many macroenvironment are want dynamics it on we're how today. the know And Kelly, there we

mean, to up the environment things very data us add the as just I to in are is double I think your for a is this the and just strong quarter. think digits point, that despite I UK going on point, orders Europe Yeah. on political product

was is like it think, very Chuck overall favourable the is, as again, now. of saying, I right So environment

we’re So this see continued hoping strength. we

now of a lower expenses right customers this lot at of running infrastructure. innovation the helping our targeted that And is actually we’re the bringing

significant customers look There there by So, by this economically, they moving almost there to reduction cost automation play is made, to platform. like is at is SD-WANs. where going are be cost of a to reduction as of

these our we are to customers hopeful technologies regardless. So, that important continue will to be are

Samik from Chatterjee, ahead, you may go JPMorgan.

I guide the quarter. just question first the had a for on

the although I look on guidance, operating clearly kind it’s good at You line, momentum of margin have year-over-year. when top flat the

of earnings And Is second hope on that’s the just the future limiting to through wanted the of the the the flow is something provides momentum the leg leverage check, there is kind of growth? to the there of top to kind line? should a that and line bottom in to that solid something operating margin. I So that’s limiting we for something

the to driven and APJC, is margin you at to otherwise, margin. mean need look we anything our – I takes a little quarter that some puts can have if think happening have little the we of on specific same No. have read I spoke our pressure in margin and bit about, margin, I by what’s I deals we things, a different don’t right. but the this

is seen being price you’ve very strong. Our is pricing very couple disciplined. very robust, of we’re very, The that last quarters a range that’s in the

So that’s good.

are else, as We’re it prices both it’s of of it’s year year. and and still see just part headwinds component in over higher of out. facing what is still up, a last, we but though guide headwind, kind less and then The QX everything the even again, balances that’s

what we going really we it be same of it’s much possibly can, obviously the see. dynamics. kind is this now, right to We driving So for but as as are

Silverstein Paul Cowen. from

You may go ahead.

of minimum your Kelly, on if you question. response, I clarification DRAM wondering and comments your that any and larger my I've recognized asked takeaway this a even is my and pieces much portion, cetera? you but simple Kelly, the macro forms, better has going trust it’s switching just simple you moderate various things this awful come expect the different impact like an is have do next I'm I various globally, et is of how in in strength attribute of that execution in A campus there's much lot at but much to question, and terms thoughts response, is from question related, the recognize it and moving of answered in to what previous been not areas year macro of right how how the in

Do you on? want first, clarification to the take

Yeah. Sure.

said, whether is some on get of you I as ’XX. – don’t that loosening want you know DRAM quarter-on-quarter is if also yeah, on which to look or other Again, mix, component the we though. still that up but that So back driving the And are pricing are demand to I hit through side the prices optimistic both better year-over-year, the stuff,

virtually of I been pragmatic it's it's, markets question a say although both. Paul, know economy answer, consistent the and I that will it's to been combination think the pretty impossible positive. have I’m has enough clearly, that, to that

and new pace record correspondingly, I this from four earlier, end adopted technology So year for a of at us. think been out actually, that at that the QX new right has back about has clearly a first, certainly brought helped the quarters we've and architecture

out I there give never what you there's a a of right things there's dynamics of Ittai could The we're like. asked looks now, that very any sort possibly that that earlier, lot question, I do are on a best split right, watching as also, and both we acknowledge bit going can of but So is lot there of closely. it's said the

can't honest a can but that's more as So be. better give as sorry specific think I I you I answer,

from Fish Jaffray. Piper James

ahead. go may You

It’s recently. get X.X past buyer any metrics or against think today. penetration know as as got that security of give about the is we I competing or hyper you’ve we should update Nutanix? sizing as then released you’re of how business kind growth been ramp. Can of in secondly an converged deferred HyperFlex what it’s I well believe we to And of it the version a through around update. willing the metrics and kind while infrastructure Can you’ve walk some just parts to certain you given since a revenue given metric like how

Sure.

is their and digits. prepared said they're have lot they security So, of on in it the going high like have to they to in -- continues obviously -- of continue and XX% businesses deferred over revenue their software grow through double I a so side, the business remarks,

that. good of broad and a XX% that their strong on subsegments. They across a QX we perspective, driving So about had based revenue quarter, it like said, feel from I was up all revenue very this

it I'd well. the addition very grow this it's of just and So continuing really portfolio Duo, out to say quickly very with round

for mean In strongly that's us. terms I growing very of HyperFlex,

release well think offer we winning I lot there, but a again out good head-to-head really obviously the of and a have. this find Nutanix, feel we competitor and which we about deals tough new has in ourselves been against received is

compared really fairly we're it's our it's data business in has with center pleased ramping of competing. Now, servers we're broader but that the small how all how there, to and

Simon Leopold James. of Raymond

trending talked talk big longer on number you around term if at a cloud, to could little which Live and picture concept a see wanted multi about bit I of the other of maybe occasions. we Cisco

help help customers? the the transformation does is this evolution, the think this how do with I'm importantly and more does Web business looking how Within answer, scale Cisco for what I

the question it. good our they message to really their trying us transition a at and is we're look for building it's get changing this so is way customers I infrastructure the IT that cloud that across Simon, think secure how and actually to key this world multi

So great ten a to five networks years, look last to seven back if data was customers’ centers. enterprise private in their in terminating simply over our think the very you that, just majority of traffic the

and architected with were networks architectures security reality. built that were deal to So

world have the private multiple depending They in on traffic center. issue. obviously Now, this we're data moving into in traffic cloud aggregation public Edge where that data percentage terminating of terminating customer some Then IoT they there whole is in still have SaaS their the providers. applications is a

So what's their happened across years is our and have the in ago then traffic application, you flows much in was to complex where look at the and and network the policy across more networks is infrastructure it role that playing way provides than data is seven we're five in moving policy their you to a to their think going the our ultimately to a need leads flow destination are the re-architect you you it you need build look which at to us with the world the quality, where networks security that's scenario they're they actually was customers that to going their look to deal about that predictable, technology because traffic accommodate massively at routing all you very at world that just customers with. diverse and when user, look

that provide so center the us edge that simple Well, the they're with applications, interested stop in are ability cloud understand right advantage so with this out in partnerships to that are -- the and is customers going of providers. the that architectures our in whether our important They're providers ensure at do or solutions, so interested services. have in customers of as to it many why security -- we take Web the early define their on policy, process I'll make scale the early that you're work security scale of hybrid data some what data building we're to applications integrated Web So they our in some IoT that's seeing with we for public. and some but that to dynamic private it's helping does US, of can now, the doing

not emerging of clear, to have attractive marketplace that everybody the reality the you afterwards. it's a really talk that some as sees hopefully So if today. folks partnership And can was because in we

to Great. I how out figure just complex it's I it. into Yeah. understand a obviously bake appreciate to a topic, model. it trying

I’ll talk let that Kelly one. you to about

Global from Citigroup Markets. James Suva

impact it with we in XG your look Earlier kind that or more she you positive question, Can or it's phenomenon. to of, about as related. stream of the Cisco? Chuck. remarks, bit a don't believe history more XXXX XG before in into Is just ahead to uptakes, steady you you build a of service back of was there more here pause linear mentioned term there happened? a XG little is give us back XG quick A longer lesson a the coming or provider a happens XG goes That���s that a strategically as

space, want the better, think you good have largely around at it's connected a And been in but back the look to are Jim, already. and a earlier don't question. network devices for I if that incrementally mobile go delivering, this transitions performance to say they I better

cetera. This go deliver that's branches the XG with to dynamics time them we're small completely belief over actually So will is when XG, phones, that you offices enable data your dynamic. XG a to on and applications latency different real get this networks, remote or talking about the you're performance, of from difference apps business XG et to better a you your because happier step level

we're, assumption so a on to don't would is core billing, to tell know we providers. demand think then you that significant up you it I that create if the networks lives its of operate but service going yet, these And the I under it

then we're capacity. not build on And guys when on and that's learn and them how going to quarters working start so see you now just going to upcoming to I to they're between they'll out as be is to be building think going updates about out they these huge out, I see say that give this how to build us to a historical can't a able we'll thinking and gradually thing And bandwidth emerging. as from. backbone just see it design for they begin up there's certain open we we're how and It's happen overnight. But -- things that's going what to we're you're example market,

Merrill Lynch. Securities of Bank from America Tal Liani

other going not maybe link market? do ask it routing in on to under is impact or provide second a on pressure the provided or between understand you to wanted plan. to things that first two to information? pressure saying like according there the what's the that gave with it's if I answer you you there's and about kind do question, were wondering and if and routing, different again, with or I'm maybe this pressure on the the recovery follow-up routing The this question of can operating to the repeatedly Nokia you've on the before margin, That's just yet and about, you has SD-WAN. it's an saying long explanation is others term What's a this just for understand a XXX. or to outlook that are pressure provide the

first me as Okay. Tal, and one Kelly make on and give a add it can answer well. she the comment XXX to let the then can

XX%, XX% first of Kelly, SP, all, it I half think when right. our it look business, routing you is at is, of of

impacted So the it's SP. significantly by

be Some higher would service of businesses the guess. players routing from providers a of percentage you probably mentioned, their my coming much they have

in everything couched Tal, and so answer we've SP on is would I piece of the XG that the discussion said on enterprise but it. say an I that's far, So From that just of sort to historically big seen just And the of think we've we've there's architectural going as talked over architectural that transition. the when you a was according said in years, marketplace last about stall plan. classic couple perspective, a

begun way see we see. but is, but move it think we've the are forward I it's and early, I what customers we we like would where we deployments, like characterize actually to with

see I routing how we'll overall I’ll Kelly architectural improve the of answer clarity let sort I -- to relative question. to this continue about or that think you think the Enterprise So and XXX think the

Yeah.

on Tal, just XXX, on to are of ground so XXX. again on everybody how impacted So kind we

is changes We've changed. to We've has to conversion our nothing operationally I any cash one So will made cycle. our no no say changes or our changes offers. to made thing contracts

accounting just So an literally it is change.

are is our us said going it some licenses. implications what to is accelerate to term of Now, the base likely

when our off offset some revenue, write will but will have see to we positive it for acceleration of a and book build us we that X%. orders. orders will of we that be of with new deferred think So net those we Net-net, revenue. approximately offers new We won't

down the on through the it so margin. impact will fall revenue, And through that's

modified So of basis our goodness the rev on the would we versus half accounting accounting. for since go everybody operating laying -- it's of of margin, approach, have adopting point what points clearly the retrospective have clearly be new the new very very we're as we we through falling there. And part lay a roughly standard, XX to been out implications we will into under a out as the old disclosures, will

answers question. that hopefully your So

George from Notter, you may go ahead, Jefferies LLC.

guess transition. I seeing the the Kelly, I you're from curious that about headwind subscription revenue was

and about in quarter looked for what you July You've the October just look like think like the what I'm might do that past. the in curious talked have quarter? would that that about

great a question, That's George. Yeah.

news good good there's I say. news, there would there's So,

getting that, like closer also was ramping the are and more X.X and only the not we're X wireless, anticipated, revenue as as across to we So across blowing rapidly so DNA offerings CatXK, out our but to points. headwind tele we

have is, that good less because new of a this with previously we revenue of some it's become accelerating did forward, the on deferred, these that news Now, the headwind. offers standard going headwind will

Okay.

current but will XXX or of of again, because such a we a accounting now the flush that a will less to through standards, had we less out closer to I it, portion big [ph] I much like headwind if that it have opposed become to guess half will So will roughly. so things be we be go all as a point XXX to this recognizing upfront. as mean,

was on side. said other increase it You the X%

come us. that about because we’ve to on it, thing I revenue Exactly. of and of revenue. benefit normalize is margin going the it’s it some kind the On headwinds does and mean, not this good had the of accounting back standard natural

last I – that to All Marilyn. think right. was the want question, I

for over time to the questions and for and could turn spending I with I’ll back thank everybody it if just So us dialog the Marilyn, today. you. Thanks

like on done Cisco’s an is FD, the that audience light Time. everyone. explicit unless XXXX quarterly call will X:XX PM policy results quarter comment Time, Thanks, will and reflect Cisco’s to during the to not November earnings public at XXXX our fiscal conference quarter be guidance Wednesday, earnings on Again, remind X:XX financial I’d regulation thanks its which is of Eastern XXth, Pacific in first Chuck through it next PM disclosure.

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