Cisco Systems (CSCO) 14 Aug 192019 Q4 Earnings call transcript

Welcome to Cisco's Fourth Quarter Fiscal and Year 2019 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 would like to introduce Marilyn Mora, Head of Investor Relations. Ma'am you may begin.

Michelle. Thanks Cisco's XXXX to call. earnings quarter fourth everyone quarterly fiscal conference Welcome Kelly is Investor our Chuck and of Mora, Chairman our and CEO; This Head by Relations Marilyn I'm joined and Kramer, CFO. Robbins,

webcast our have the should call. section will earnings a supplemental you now in with available the seen including on By slides made following site press our release corresponding Web be Relations information Investor

information, be balance financial Income in sheets, flow non-GAAP statements, full section other also GAAP statements, Relations information information financial reconciliation can Investor Web found to the and our cash of site.

conference will year-over-year and unless basis. this All comparisons results call, in Throughout a terms and both call this product results stated otherwise. will revenue of in we orders geographic GAAP financial and product throughout non-GAAP on terms discuss made customer referencing made will be and results be of

fiscal those results be to specifically differ we we will detail the first The our Forms the factors most with including matters actual discuss today filed of could guidance They the the documents statements in we contained risk include statements. uncertainties providing that for risks forward-looking and XXXX. be are will in discussing quarter and forward-looking the SEC, important cause XX-Q, recent XX-K reports from which in materially the identify that on to subject

on will it explicit comment and that unless accompany release through not an the financial this the press to further respect public slides also for details. please done With Cisco see guidance, guidance is call disclosure. quarter its during

that no SPVSS completed revenue of fiscal XXXX. had business accordingly October business on In QX XX, our we sale in QX, or expense from and the

today exclude and of be the information normalized results. from revenue, the to such, is orders our will product historical business all As non-GAAP, we SPVSS discussing

during site and earnings the impacts. has provided for today's information guidance The been normalized financial on our Web we our same QX that call way. call the historical slides business SPVSS help provided have understand in the to accompany this in and We these call

With that, I will now Chuck. turn over to it

afternoon Good Marilyn. everyone. you, Thank

marked Our a year. QX end strong great to results

executed portfolio at teams We our revenue, and year environment. the dynamic double-digit of very with now points up non-GAAP growth subscriptions total delivered per and share our continued entire across XX full business software delivered strong in Our a significant model software well XX% innovation quarter. fourth for the transition through we and We revenue earnings year-over-year.

for We also continue cash our generate to flow, returns healthy margins, and shareholders.

Our complexities for to IT transform manage fundamentally technology world customers our and the architectures help future. redefining is a multi-cloud the of

highlights recent across portfolio. our some cover me Let

platforms. Starting with infrastructure

with broad We next continue solutions. enterprise led see to networking our portfolio of majority strong the performance generation based across by growth our

two years, a entire foundation our platform. last capabilities the Over through portfolio new have our rearchitecting intent-based automation deliver networking to networking built for we by

more technology new IoT secure from networks users several launched area we and domains the networking Live, and and Cisco entire to enterprise applications and manage At networks, effectively campus across data innovations centers to across Edge. wide the

network analytics to several automation. AI software example of insights capability also our is which across greater through the We this delivers improve network. great and A entire capabilities network and visibility added AI enterprise ML new management

to Edge. In customers well our their data execute enable access we applications data we as securely from and anywhere at the as center, as to well to help private their cloud continue public environments

AI, offerings. into XXX-gig automation, switching our across security, platforms innovating our and of Nexus and assurance our every are We facet integrating portfolio

ability increase our providing quarter, through customers' automation center This to insights management we and remediate network data analytics their network environments. and troubleshoot to proactive delivered capabilities critical

and to for Acacia demand also silicon enable enhancing announced we consumer customers. optics good provider our next for intent data. operator and are growing data to to customers in our fast the We acquire recently optics to to service meet how example center today's continue invest build silicon a portfolio Internet is and of web The scale generation

to priority Cybersecurity security, an year. incredible the be of had top growth. double-digit turning for which another our Now to continues consecutive customers, quarter driving

and subscription-based domains in the in in security an WAN, end-to-end ability leader and center and we're industry all integrated cybersecurity, security campus, are extending trust the providing networking only our threats, to threats across extending across networking innovations investing today's company multi-cloud By data protecting environment. against detect by architecture and public the we environments. clouds across As our zero branch,

our the to expanded to to extending the which with flexible help secure protection to we've identity, designed year, SD-WAN move to also offices solutions the environments. solutions our this branch or as security has from they secure network, customers’ endpoints, cloud customer cloud. to adoption family We're and network roaming Throughout led expand of accelerating the users

secure when, and was in role During critical the full no were plays our access matter of or availability Security identity platform on-premise the dynamic we excited customer and differentiated market Duo's appliances. global continue reflecting proxy announce on to quarter, Duo connect. Trust of to a applications, a capability we SaaS market see to a and -- they power network umbrella the delivering platform. Web momentum This SaaS complement leading a to role where momentum acquisition, customers critical as how, consistent their our experience central our plays customer

to applications. Moving

the personalized believe vision well Earlier perform collaboration. we we collaboration to and to strategy foundation execute which we massively deliver work. work, cognitive year, our and is how for transform accelerate this quickly becoming Our communications, of collaboration, the shared continues future experiences as business we against to our

bringing smarter enterprise intelligence increase We to integrating context productivity. are and ML our in help collaboration work into customers market leading the and our AI. portfolio and

recognition improve recognition, innovations, enhance insights, customer's and enable artificial collaboration a market-leading entire experiences combining and With speech our to a intelligence facial we acquire driving actionable on service any voice-based enhance innovations technology, automated to integrated our meetings, with device our these Webex with Through Voicea's Webex solutions. expanded on transcription like process Building experiences. will and we Assistant, provider of intent more people portfolio powerful workflows. AI Voicea, our AI-driven business productivity, announced we're cognitive

customer We visibility the growth quarter the application. to of also demonstrating differentiated outstanding and network the to AppDynamics adoption from our rapid analytics our user end platform achieved end-to-end another of with

we accomplished. great teams a had of what quarter our fiscal have proud XXXX, finish and I'm year to summary, and In

are applications We well of differentiated in a market time portfolio, executing security. uncertainty, our and our delivering networking extending and across enterprise innovation leadership and

for as Our value performance relevance customers well providing we're ongoing our as transform future. they as reflects our the the

as with drive to right greater are providing success. and committed to ever We the as them innovation impact

in the could about confident not of As more I the tremendous position unique front us. I opportunity our be in look market ahead, and

it now turn over to Kelly, you. I'll

Thanks Chuck.

summary a financial with the executed year XX.X followed EPS. a was Total billion, We start quarter income, the with business. for results up guidance X%. revenue I'll QX revenue was fiscal the and quarter. full of QX. strong growth, net across great the our well for Then margins, cover by

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

center growth, provide with NexusXk. some the continued X% Total ramp of driven the to up had revenue revenue. data a with great campus double-digit more me of and grew QX quarter were infrastructure of businesses on our detail the XX.X CatXk the with by both of platforms exception and Let all routing. product Switching billion, the X%, was up strength

performance Web up Routing strong growth saw Security wireless HyperFlex Data threat, center across AppDynamics, Applications Servers. up both due XX% up in provider. in and and access, with service XX% to security. was was digits. the portfolio. with and declined IoT software weakness was with growth threat, in all solid up advanced collaboration, We in and double unified identity

Service revenue driven was software by up and solution support. X%

We business delivering continue to software transform more offerings and our subscriptions. more driving

XX XX% Software results When acquisitions look revenue. impact year-over-year, on our where was on XX point software points we positive the of revenue at subscriptions of there a year-over-year. impact total basis up QX

orders product In in terms flat. orders of growth was QX, total

was and up at down was XX% enterprise X% was up geographies EMEA In sector public plus up Americas provider customer Total our commercial XX%. grew X%, Mexico X%. was X% and Looking down the was was XX%. X%, down service was emerging APJC BRICS our markets segments, with down down X%,

obligations committed up and our points unbilled RPO profitability XX.X% the was margin performance From up non-gap gross a at billion. gross was plus is margin XX.X Product points. X.X total revenue. points. revenue and to QX deferred QX X.X was XX.X% X.X margin RPO future Remaining total end or non-cancelable was perspective, represents service of up deferred gross XX.X%

and during the results which include related Tax a of bottom-line $X.XX. relates Treasury X.X Jobs tax Regulations of a terms year approximately to the charge a income which QX to fiscal $XXX a Act. In of benefit perspective, is billion GAAP net quarter recorded issued million, EPS Cuts QX and in U.S. 'XX, was the reversal The from new was GAAP

was We a operating X with XX.X the share shareholders was for ended X.X X%. comprised billion billion investments quarter returned and quarterly our of capital during From down repurchases we dividend. cash, billion total and flow X.X that QX of billion, allocation X.X to equivalents of cash billion perspective, cash

earnings XX share XX fiscal QX to the our XX call, we said repurchases 'XX over we In return through would billion months. following

As of QX fiscal with share that of XX.X repurchases commitment 'XX, billion. we completed

to a to flow share capital repurchases annually of strategy XX% shareholders dividends. minimum allocation of return returning will our cash we our and forward, free Going through of

This that R&D to inorganically QX continue in pipeline, intent our and innovation invest We existing our Interconnect areas. for an growth Technologies. with and organically is and of move strategy our is on our consistent increasing supplier innovation Optical during focused announced to we Acacia, acquire investment

year income, non-GAAP billion cover XX.X now XX.X% operating XX.X% revenue We margin results. margins, our points growth X.X and I'll X%, total EPS margin the full up Revenue points. X.X delivered non-GAAP rate up was strong cash flow. was and up gross net operating was fiscal

XX.X XX.X perspective, was XX%. billion income $X.XX. GAAP and X% income bottom-line net up billion non-GAAP From non-GAAP a $X.XX was was and was net GAAP EPS up EPS

and legal to operating of normalized XX.X operating QX XX%, to up in each billion the the and settlement Act Arista, X%. flow Cuts Jobs delivered with related the related flow cash year We in received cash payments fiscal fiscal Tax the was tax 'XX cash for up

well QX and year. profitability executed growth We we had and value. we're delivering the we're growth subscriptions summarize, in strong To driving making investments in long-term the more shift in top-line a seeing fiscal to and strong shareholder software the a returns innovation, and

forward-looking in Note fiscal business information a to to QX XXXX. reiterate Marilyn we of includes divested Let for exclude we 'XX, that guidance refer first 'XX. first for our earlier. which quarter guidance of our have XX, the that type me fiscal October normalized This quarter guidance SPVSS the

provided We this have SPVSS historical for the business accompany that call. in the slides financial information

expected XX% of revenue We XX%. to XX% expected expected tax non-GAAP is and gross The expect X% The per rate X% year. from to to growth fiscal is of in to 'XX anticipate rate operating foreign range We forecasted a non-gap over in benefit to tax year Non-GAAP the is over margin the rate XX% to increase earnings of provision share the non-GAAP be to be rate is in in be to income. the tax to decrease $X.XX X% $X.XX. range range in margin due from range XX%. primarily

so Q&A. I'll back it into turn Marilyn, we the can move to

let's I'd the that doing Thanks questions. remind Kelly. line tee to for is audience Michelle open And go and yourself question. up the and like to one to ahead limit while Michelle

Thank Hall Sachs. Goldman you. Rod from

ahead. go may You

anticipated, I Yes. in I tough than, bit the obvious and guys. can maybe going I think know ask The question. we guess if Thanks Hi, get pepper of color environment. detailed then it. macro to for is had it's I'm the a little guidance weaker we a one

would Chuck maybe a and kind holding weaken bit with of on in comment be did well, why in usually is get And guys just to on? trend that the as the enterprise to that? And commercial if backlog could you up So, change be you maybe then, that on give which juxtapose which so well. orders Kelly, it K, fine Thanks. I as number would know quite that you hoping going in great comment it seems

Thanks Rod. for the Hey, question.

absolutely is right work and saying portfolio let the that strategy engagement to done in strategy our direction the is all first the start of progress on and make So, by our going with we've continue and and working. we the the customers me

that and So, what we with your quarter I'll space. couple and in now things of we're I'll to our that question outline where and quite in enterprise. have There's these, teams the accomplished we then answer the saw a happy Rod about are right

on click that, a in is continued we that provider double First challenges service had I'll moment. just in and

in As growth Kelly then, early the you that talked And about. in July quarter. of prior saw some didn't did see that we in the we some see macro order shifts indications slight

happened. that the two are those So, things

had on the continued click in real service players order in Europe a was of there. didn't outs quarter, provider build two major double service the In so Americas this China negative. replicate our year business me generally ago India provider complicated the shift positive in that actually was two same the provider That's not prior service just from Let the weakening and space. an that. or year situation net no it's the than we just a Asia, massive The saw bit. perspective more SP with from we positive

If you digits. our overall business, at orders service provider look mid-single of our outside grew

we the and customers. of the we're rest So, in portfolio feel work doing about to the good environment this that those

we what enterprise went little and to you than more it As normal and going sector a on. commercial you granularity just public relates with give so I'm probably believe understand to

being segments three that obviously all well being sold can is into is received. that You the those see of portfolio

basis Our on public business up sector a was XX%. global

enterprise, continue up we we see as want don't software weakness two an China, mentioned that to use I you was deals business in enterprise some was to in weakness for We X. success year commercial to and had which tough to excuse, as ago in then Rod, the we major it. saw saw a was in The and the were U.K. against. global So, really, much contributed compare as U.S. candidly compares

is everything about it. we rest really that's and the So, very we The we good business positive, are. of and see where feel still

Chuck. Thanks for that

collaboration which been is meaningful more didn't since with revenue our on problem Right, because again of businesses, ASC RPO, a so disclosing anything we've it didn't we Yes. our our on include question, future backlog or metric with the our backlog, adopted XXX, it security. subscription your include

has, XX.X to XX% expect it XX about that everything and we Qs, expect of in revenue billion, recognized has of that deferred we’ve deferred, disclosed months. revenue, and RPO future the over any So, like the unbilled our -- next be we the committed

Okay. Thanks lot a Kelly.

Yes.

please. question Next

Cowen. with Silverstein Paul

may You go ahead.

I appreciate it.

Rod's Just while. China a Chuck, been from follow-up for a I felt clarification. down had not or a question, was down

than less and X% zero. well, that's revenue So, not of I guess

you So, you suggested. have impacted it to extent But, exposure. I'm you still the surprised

want been should going I given with no you margins the and And on the we and pricing there's operating the in to about ask could then, shift gross in year. pricing environment, assume for up they're assume if change environment, that. line the throughout DRAM Kelly expect benign both I I along the what but comment on ongoing software,

Yes.

this down Let that our dramatically, when I because of China me zero. just much it's impact concern But, some below comment part on I very the at it not term, can greater it X, situation. have small but long than a obviously mean you're still it's worry right, falls business, it's about point. a is it

issue reduction the extent there. in the a saw And what the contributed mean really all that's enterprise point of us. for so, of we China I of to

business in impact we going with the was on trade now. our on that China war significant relates to definitely what's and right as it saw significant, So, it

on question. margin Paul your then, And

stays pricing, pricing. see good, very environment less good It we you on a give we that yes, So, had a actually Q. than when the the you'll was point quarter

margin. but been in that's can the also results from and our see, as are that benefiting been very not good. And the you're you we've and tailwind gross expected So, again, on from seeing we the only margins guiding DRAM we in OMs as

Appreciate it.

Paul. Thanks

please. Next question

Thank you. Tejas Venkatesh from UBS.

You may ahead. go

you. Thank

like revenue looks the seasonality, math guide I could tad seasonality. If is years. somewhat give sequential if order what obviously line I in with us grown sequentially sequential You sense in below have give historical growth a where my number you order but right growth you've quarter, recent every year-over-year a a but your versus looks of wonder

to So I just want confirm right. that's

on don't strong then, growth. about even X% I And but think how Thank very revenue revenue qualitatively were comment you high secondly, guide off expect you're growth. year year, investor you could -- for of if to wonder coming a expectations much. you I full the know year somewhat and

Tejas. Hey,

not So, but it's had dollar phenomena, QX growth us. from a a right if -- in we've quarter orders. double-digit a growth it's orders always for our this you're our I our perspective phenomena largest down yes, on QX, sequential on mean has

that -- So, it's in then double-digit and happen I down. QX again

change and phenomenon sequential account of So, kind the a the again we're year-over-year the isn't now. from into historical takes seeing

In we portfolio the margins terms we feel and issues the good of than earlier of think terms guide, that the give don't long-term how in on I planning near-term. the I I the The foresee and the certain again, feel would I'm one say like Chuck's more in we about changing don't macro point quarter. that. that that. about update not SP, and segment to

Thanks Michelle, Kelly. Okay. next question.

Credit Sami Badri Suisse. with

go may You ahead.

was where campus campus then, you. Hi. Thank could in switching an year your hoping some perhaps potentially update I on playing we'll even more deployments us cycle going the the as of next switching give consistent center play since industry. an through switching out just refresh. maybe you And and see you transitions kind data especially, maybe on out view be we're

that So, maybe what and first where I see or in really ending like I maybe for cycle, switching wish fifth are where for understand you the it customers? then we equivalent the way where the we guess second of all data even maybe we sixth in the center we is, see your

It's Thanks. great a Sami. question. Hey,

the XXX, those in And have of completed across switching, I where in refresh So, enterprise. now XXX all subscriptions. full the we mandatory portfolio our in mean and routing last the we're wireless days, of position a

customers. So development we've now the all perspective are a product marketplace transition those in made and our from that with out

in the than prior. was in QX quarter more -- for the QX catalyst customers XXXX, XXXX any catalyst the On added we

suggest continues I is we In we're this you say I'd that transition see move maybe in our forward that customers. the campus we're the of at would that favorably. -- inning second to what to this point So, from

As to entire flows accommodate rearchitecting applications these traffic massive that from they're you know the enterprise infrastructure running. presented are their they're number of all that cloud

built completely architecture is requires And this is so for. which it portfolio different a what

And into data to are upgrades center, us for the I the management campus, the gig the of some the next from differentiator out center this things relates believe area, security policy that the big it you'll we're to cloud pure a that the extending wide we of data As see portfolios. is year transitions the available. into when optics XXX area wide think begin that campus into probably one is from

think able policy see we the being center cloud all to the the So, deploying branch next into campus we'll is the and as our we to differentiator from in for adopting to year deliver the enable that a unique very customers And think, the begin to us. sometime way data across customers well.

how we that's playing So out. that see

you. Thank it. Got

Next question please.

Thank Liani Bank America. you. from Tal of

ahead. go may You

guys. Hi, Yes.

at look it's growth quarter, this a ago. X%. you And quarters the If about few then,

Can speak bit? Tal. just little up a you Hey,

Yes. Can you hear me?

Yes. Better, yes.

here up it go. pick you I'll

Now better. it's

forward. a This about growing ago, quarter X%, did reported the but all growing environment to you you on that few you're now X% today roughly X.X%. things more for and going you see build were you is X% Can X% had growth what's to it organically quarters -- growth, that of you're guiding the now, take the you then have sustainable top seeing

And mentioned are are ago. be? it it's a just that things X% major to other deceleration the levels China, within you not like so X.X% in quarters what that the few I'm we've bringing are seen from quarters. from much to So could that trying are down X%, three growth QX a happening the have environment the if what to today -- go growth I difficulties unique

we've crack guide based everything with [ph] a it day, And it. the take the is, of at the provider are end it's and the few seeing when of else. last we're the I'll over and at Tal. biggest seen the in [around] the orders the is service on guiding what I mean massive we Hey, decline pipeline quarters. driver where

the of Again, and we biggest comparison, the perspective it, [indiscernible] like driving the good said, digits. still of that's outlook driver. risk said in from that business it's Chuck feel seeing. growing the this like small But, part is China but -mid in but part portfolio is single again is you're about that SP we a So, large

and you to So, what's you related mentioned quantify is the what correct? decline China. Am growth point I you related service -- can think you is one this, the in quantify can to providers the

about talking for for that at X rate are down for We had down over alone. of was enterprise that point the was that rates quarter adjusted China we overall -- level being for global just points, China X orders is, this order XX% the us. the

are always Got just have you --w what's Chinese it. in compete some can in thought on you in types you China, And position were but follow service selling up into if that selling providers, know products of China. in China. It's you're here selling not routers impacted hard that much the a China. being you're I We are and have China. to did I to in you the selling Where market. where China are what

precipitously give the just us, earlier trade market play give I Kelly just then in little you can the bit certainly discussions. Chinese tell me of it said some color dropped but overall you major light Let not I has mean for of a I is as numbers. a

it it -- decline declining sold has years -- infrastructure more to China, selling even you we just the quarter. were in So, where rapidly which has and impact a if we carriers for are been saw short-term last we've large slowly and it's

even we're what enterprises in anymore, to the anymore. we're we've allowed bid. then, being being And not to participate seen uninvited is state-owned We're being just

decline faster the it expected. what are that's just quarter, a where So this the those impact large so candidly past we of was was much enterprises

would that. to And add Yes. just I

through being we products. all was which talk everything in overall from the had enterprise. big security second down provider is sell provider routers down we service of It largest impact product part and switches, the Meraki perspective, -- a the again way on that service about there So, was But, down. our from

is everything China sell everything collab including being impacted. in and we So

you. Thank

Thanks Tal.

question. Next

Thank Citigroup Research. Investment Suva you. Jim from

You ahead. may go

Kelly, in the offer you of a quarters. and when been Chuck talked much, very provider, has not to lot When you you've for been a past outlook, theme new very clear it be about you've the softness service and about seems revenues. the outlook Thank several softness it the think that about

starting out, there we kind service and a that they're saying, to sweat their and been assets where potentially. bottom. it is Or thinking at looking get Could for is there or of headwinds. of still this or pretty kind it's it risk some it lot a get risk looking along of it that at about today near could of you hey trends worse worse, you low have, is they're kind a just for provider provider service because we're chugging we're sit So, you saying calling looking bottom the

into business you certainly models types there of think across this when service pressure area I that, there, in Look all the different is get providers.

going not particularly I if they're I networks I But XG build have focus. enterprise transition consumer the in on they telco don't most off that's today to focused Americas, and come build consumer side. XG profit come of deliver after a the -- going XG to infrastructure -- they customers, they'll the that do when early of where anticipate mean more that's built also being say look services out. consumer that robust we broader the think would the then that driver don't they huge XG outs, they're primary And getting you their XG at the trials is

percentage in not and it business represents I'd will we're us now business a in it a going tough it's when near last don't clearly modeling bit it any the to it's It's we're So, of for significant wait have years quarter. obviously point five business take our years in unclear us was place. much did see. smaller and this for say to But and a than -- for just been anticipate a weakness the very ago. major And improvement term. that of

much. you Thank very

that Do to you add want anything Kelly? to

it. I you think got

Thanks Chuck.

next take ahead Let's question. go the and

from Faucette James Stanley. you. Thank Morgan

sir. ahead go may You

looks that had related a the we've I margins just quarter little one the questions, seen for couple good, guiding and Kelly, least flat bit the Thanks. margins, and gross historically both sequentially margins On like though to is one down Great. of gross at deferred to improvement. very July even it gross some a was revenue. to to be you're

second quite wondering I'm may a my looks there. question is, good. what deferred help if you revenue can So actually going parse bit be on And little

So, that give can may bit more much aspects, into us a on or insight little driving you ELAs so can Thanks. or get of deferred how software some be what's we revenue? the other color

the have tariffs. So, good end actually it. can we mitigate, them to I think I great. in the list that on which is raised going guide. you a OM margins everything are down But, I've on to through other four doing take yes, we for little into the XX% the And bit in mean I'd continue good. account say continue kept we to again see we range, the the margin, actually falls to feel -- as about to XX% We cutting do. do I we're that we be all of and we'll range tariffs that Again, that that are well the of look the going as run and same pretty play and

as deferred as unbilled which deferred month-to-month key revenue, both is I that So tariffs the continue software to deferred shows contracts, RPO which the when which at metric it again, from look revenue we've I a revenue. is think think again we why add we're have from to offset benefit deferred of has well continued was able made. point again I Yes, to your headwinds you again the to leads progress mean the the

ASC the X.X you're billion And adopted since XXX have entire continue you from sequential deferred balance the the remind portfolio that increases as for to just subscriptions. we we again, just big new to guys, for enterprise fiscal Just portfolio year, wrote-off with the the of all accounting rule. we our ramp revenue at seeing like then beginning example

great performance have the we of great in We So had based, strong adoption adoption all really to products, ELAs have continue of broad and software we subscriptions QX. new of it's the ELAs. the

right all of direction we're going why overall the again strategy So, the which any an why macro company that's on it's is transformation. so environment bullish we're despite the in still we're doing a what

has had years Hey, I I like of I And top to subscription our subscription. portfolio business that a we've a know like really And felt window we and is the add one we figured comment might products. that I away. year in networking are on so out a we the got calls ago, product James. made in every of the on renewal If think really first years I could still earnings drive started now how we mandatory two now three networking that showing ago, here that, enterprise

-- what in a transition been the We're track we'd what in has good. our seeing has software. done that think well. we RPO on relative be you're as team where metrics told to with the Analyst that's everyone great up job So that's And I Financial Conference the show

Chuck. Thanks

question. Next

Barclays. you. Long Thank from Tim

You may go ahead.

Thank Yes. you.

transition? that in little optics in-house to as XXX competition Cisco talk month you helps you was this seeing strategy the are Chuck, of about talk deals these little question and gig in and follow-up then, that XXX upgrades had early kind center that more and fare another anything to like move next I if will take Just how also a bit as internally, data down pushing about to think the year. of what XXX bit mentioned we And also to we scaling gig do July. related out, Could a some you of you little bit Thank weakness gig a shifts mentioned with think you you more could. that? to move as you. Could the macro or develop deals

Tim. Thanks Yes.

there. thinking how just we think in felt I. and the basically Kelly do the we six difference I've So and QX with I what would as the relative changed and it and I how rates mean five, technology flags a in just to that's they're playing we and particularly off nothing's set days slight expect customers and a last what finish of July. met about business close kind about as -- role of normally we're in for wasn't strong just XX

see. we're similar this, indicate that the in what lot we seen what players the have So and we've a last things watching weeks in think few hear some I others worse. other some markets we're from monitoring we'll seen it, would Obviously, the of

position and with And our feel very five, in our about that. do years are ago good now we I are I customers six think playing we and versus level of where that criticality the

and whether that get But, feel So, any piece. plays some resolution see that's geopolitical have are major what felt and how about lingering good sort we'll really these just we out we of issues out I on that to it of there.

some on to some the said we to and clarity that at get if like issues of people I -- it hedging resolution of hopefully months -- quick relative can XX are some their I've the resilience I've economy think been bets back the amazed think for some just more they're these of bounce get stuff. pretty which on just I

second the number one, good where was the question have Yes, then, oh you around -- in I gig about -- XXX feel game. the it, we're tell I'll we -- around. and around And

mapped We have roadmaps our technology out.

Our scale supportive of we're headed like our we're very that good They're teams components have of customers talked supportive where acquisitions, of who doing. acquisitions. products. which control lots what allows We've to have to strategy. including of the the go They us providers made the these into these are Web

to than feel this place we time a around. And we position good last we'll in compete better transition be so, good in that much in a were

are. good So feel we I about where

Okay. Thank you.

Next please. question

James. Raymond from Leopold Simon

may ahead. You go

you to year about Thank beyond level set help guide want given think don't that but in the tough think could a you're if you sort how us October. you to the of maybe question. I quarter, the I taking facing know pretty for comparison

And January I level, July seasonality year about so apply the quarters. if year-over-year through in trending. I normal the fiscal come to should to how of seems would balance like really the a guiding just through think to should year, new just it set we X% look back X% but want rate see growth somewhat full the the

Yes. Hey, Simon.

the the of there. you about I again, of right way I'll you're again guide kind But, think way a don't say we at, unknown there's lot think the looking mean, I way. out and

you looking more way I think I half on about you're way the in get rational. normalized certainly, second the think half. at second that it very the But, you're thinking compares is the

just for And recurring. a that's metric have you a revenue do quick, of percent

the you've given past number. in over year hope it fiscal think I and with then the maybe that you have

we D&A, lot changes of the like when Simon, we adopted we a for because year CatXK to fiscal because of example know, the subscriptions have how recurring our it. on with accounting it recognize I Yes. that, started XXX this

that subscription about the so that's how of talk So is as isn't revenue why that metric software much we is our now recurring meaningful. really based,

Okay. Thanks the questions. taking for

Sure.

Simon. Thanks

question. Next

Jeff Instinet. you. from Kvaal Thank Nomura

go ahead. may You

have earlier comment had you little few if of just it's little you revenue like that lower months very margin return making the buybacks operating wonder a dividend taking plan mentioned Well forward. the than could a up hoped clarify happen shade. going on in thanks. the I rather you're of about a going sounds bit a magic to light than are trajectory your might Thank we to there then, a all here for ago. Kelly, you be you capital And much. how mostly

sure. Yes,

OM, they're are it's do on are yes, and good I hard earlier. a the as rebalancing always stuff really on of making investing the we driving teams also magic, the engineering our their hard and we on, in portfolios So is well efficiency. right the profitability side sure as margins It OpEx constantly for job we not work in like working right? we're think then, gross talked with And --

business running and So, top-line. it's well the fashioned executing despite old good the

that's allocation. happening on capital So, that's how and the

Yes.

reform we when now, XX up in XX to use the of a we did we back go We and big effectively dig the we'd QX had you XX that billion. said up if use that then a 'XX months. So, announced till we -- through buyback, tax back billion and authorization

we our our And the gotten of back brought XX debt terms from it cash balance really sheet billion want debt. since down now, now XX We've XX. balance from XX our where We've in our to so, billion. we've to reduced -- our then normal balancing we is today stocks buyback which on days at down to like opportunistic But, buying. back both free least when like being strategy, in XX% get to our between flow. of cash our to really very going and the dividend be We're reduced

Thank Okay. you.

Yes.

Thanks Kelly. Chuck.

question. last Our

Okay.

JPMorgan. Chatterjee you. Thank from Samik

You may go ahead.

for of on the then, what's provider in be relative broader weakness, in to and weakness driving you slowdown here enterprise I Hi. a seems spending. is Yes. here. mentioned there just although Thanks to follow the guys guidance wanted kind the service a squeezing me concern investors from up to

business pull levers should see the next particularly So, can your does I in slowdown of about enterprise we mix. change spending just want the drive towards if higher a software How growth even subscription given you to kind kind get thoughts to year? of think

And Live, At just a a team collaboration quick had major up. the talked refresh of Cisco follow the portfolio. about

response So what just want that you. to has see I the been. to Thank early refresh

Yes.

sort companies we think enterprise many would of a that bit cases and be enterprise close that in actually about sector spending all enterprise commercial it talk when a a strong quite as at We you we cases in was public orders think July in didn't view. would business together of spending like. that And and people that's of healthy, as our important I -- combination at is, healthy. feel talk there just include some and were -- put the just thing had some would a little one and we is, minimum I a in to when look quite about that when just

done. like a QX was the we macro of could manifesting so, may and issues felt And just even felt more it bit And finish it some didn't there feel that be themselves. we have like like normal a little

saw So, want there. really we about Kelly, software And the you then, talk what and… to that's

again, even on the think off -- talked adoption the to XXX sheet despite put -- amount -- again, the the software deferred revenue mean, because revenue sheet. and more grow I just continue about more I I write-off coming software, like balance just the balance of as on even again revenue of the more Yes. that despite on we

issues. go through buffer you do helps to when tough macro any So that

help So, I as do think of kind it's as helping soften whenever the to that that well growth is But, continue to it'll there continue kind going any of we'll add and maintain see margins. macro slowdown. we to

on feedback portfolio? Any the Sorry. collaboration

Oh, sorry. I'm sorry. Yes.

of -- with been elements there's they've refreshing interface. the end refresh units, a points doing out cognitive bringing bringing. team I really there. the end they've user They're the Webex that to they've new technology single have in, of think what -- is Amy they've got been a portfolio We've been and the new of versions capabilities consolidated new lot been,

would because perform right think I that our are they're midst all? well customers delivering really of result the that So, on that now favorably in business. decent and that Is to in sized viewing business the a it suggest continues it for

it. Thank That's Okay. you.

you. Thank

have judge thank four in we way everybody four actually what look us quarter. And are come this where of proud for our long years. based joining years really teams in I'm on I accomplished. -- So, want and a I we're don't I I today. just to mean we've

built I I portfolio that think with think customers value or innovation and guidance, is and our and that to continue to the bring our quarterly we'll the we've the do the in sustaining forward. going that we customers what

high execution. opportunities. We portfolio I growth have for think a have strong our conviction well the and positioned in record I of we're long-term

us spending thanks So, time for the you for all and thanks of with today questions.

Thanks Chuck. right. All

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

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