Cisco Systems (CSCO) 13 Nov 192020 Q1 Earnings call transcript

Welcome to Cisco's First Quarter Fiscal Year 2020 Financial Results Conference Call. At the request of Cisco, today's conference is being recorded [Operator Instructions].

Now, I would like to introduce, Marilyn Mora, Head of Investor Relations. Ma'am, you may begin.

Thanks, Michelle. First XXXX Cisco's Call. Earnings to everyone Quarter Quarterly Fiscal Conference Welcome is Investor of Mora, This Head Relations. Marilyn I'm And joined CFO. and by Chairman our and Chuck CEO Kramer, Kelly Robbins, our seen earnings have should you now, press By release. our on call. slides, with Investor information, made in webcast corresponding our following including site the A Web section will supplemental be available Relations the

in balance presentation. prior to conform information, to As information discussed we cash QX, will of non-GAAP amounts and geographic in sheets, full have made Web results be to section site. revenue financial unless in current financial and Relations period information, GAAP customer period we terms both Income results statements in early certain call, statements, non-GAAP and GAAP reclassifications found other otherwise. conference to will also can terms flow the of referencing in we reconciliation Investor results, financial stated and Throughout the product our orders, of be and this product discuss

financial public further identify the from which factors details. for slides comment call actual and the please All statements. quarter, done including that with basis. of They the that press discuss the discussing to statements, the comparisons risk it reports forward-looking first accompany XX-K, guidance, made throughout important for in be during its today detail those an include second respect documents is not we will risks contained will are this through will be matters and our providing unless materially XXXX. we The recent the filed quarter Forms on we the be to uncertainties explicit will see on year-over-year guidance on also that could most to fiscal disclosure. a differ made Cisco guidance With in cause results subject call this in specifically SEC, release forward-looking

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

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

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

will now over it Chuck. to I turn

delivered quarter challenging a We macro Marilyn. Thanks against environment. a solid

move the unrelenting While our this we're we What's performance, we're expectations. focused focus environment an pleased exceeding more a most happening our with macro driving forward. is on on innovation, discuss of customers' regardless this Cisco the in and moment. transforming We'll as inside business

X% In we have double you've of growth growth. earnings seen, QX, per and non-GAAP revenue share as digit

margins We non-GAAP operating also delivered flow. and strong non-GAAP with cash margins operating solid gross along

opportunities, shareholder our and our maximizing to We market while commitment in expand continued return. invest innovation to maintaining

the last the many of you global heard macro year, about have resilience Over of the me environment. talk

some broad-based. last However, on we was indicated see call, throughout continued our and QX we begun and weakness to that had more that weakness earnings

capitalize XG, and also these security to saw our key challenges provider weakness business change enterprise we main automation, made markets, Despite positioned relative service cloud, commercial. the to quarter we ago model, While emerging years because opportunities well continue we in in four the headwinds be and remain and this decisions tremendous across to of on collaboration.

based where our to network want continues strong. our announced At at pipeline week, This not on partner how transition networking, several new be additions including we it track progress with security our Despite said consume also our well the to year the we remains aligns software future. we Our collaboration, and only to the innovation technology, and customers uncertainty, end in XXXX. as we fiscal of to would transition believe shifts to software but exciting cloud to analytics, are we capabilities. will summit portfolio, macroeconomic of impact annual the as our lessen current last automation

customers Over innovation the business next our more their objectives. couple of months, you achieve us deliver will help see to even

to some the across recent business. highlights I'd Now, share like

portfolio our grow XXXX to Meraki as our Our switches, data enterprise cloud platforms customers continued intent-based networking portfolio, networking adopt next generation based increasingly and of family solutions. spanning Catalyst center

this and offices this, of recently automating connectivity and multiple level Our with applications partnership announced cloud Microsoft across network solution today a from our across improve their any applications of integrating connectivity their help our networks Cisco's cloud. they example security is running WAN. based fundamental with good SD-WAN achieve branch change to security requires customers architectures. customers are build we environments cloud highest are this Azure’s how the in with to To by A help shift them virtual

their solutions. optical connectivity strength are By believe building a our acquisition between as To portfolio, we our week, innovations including Last across announced innovative to our new optics, utilizing enterprise we of networking role the continue software further network also leadership, portfolio. and also LTE our cloud Meraki's will in expansion enabling critical switching, Cisco's and and Acacia extend integration our silicon, well dashboard managed based networking play security offerings. switching WAN planned our to of We our portfolio, expand Meraki networks. as continued we upon customers of routing an transform and

heart of address threat environment. multi architectures and a top the to their Now everything and help cloud Cyber be always data challenges continues concern at security, security as to secure our customers changing do. application portfolio the our of modern which of integrated let's entire ever the our address enterprise their turn for evolve is customers' an It's environments. into to fabric to we deeply they

workload. market the connect and expansive deliver access across on We've the framework to the integrated been security in building to our to designed and cyber device. running trust most comprehensive an have platform the workforce, any We application securely for any cloud zero enable customers the any workplace securing

trust, their users multi in to access and and are hybrid environments. us extend zero in leader the to simple our help cloud turning trusted increasingly them customers As to

environments, is provide people capabilities designed To protection access of are right Duo, our breach are authentication, This further we right to our our threat reduce recently the solutions. response ensuring applications. strong to leading greater the in customers' complexity to solution, access endpoint in management able These which our continuous uptake defense, Talos innovations identity provides firewall, and protection platform. announced new enhanced of incident and benefits enhance the

threat to and company no intelligence our can leverage capabilities industry customers We other Stealthwatch AI Talos, insight simplicity, also Umbrella platform through to that continue and and deliver. our with along visibility leading ML bring

applications. to Moving

of and strategy the Fortune in of is becoming use as teams the adopt unique for are as XX% growing performance solid the our We increasing rapidly productivity, our center businesses of solutions. portfolio. our XXX This collaboration customer to customers number our empowering leading

productivity the and our increasing During secure delivering platform, ever based expanded while generation highly A from of cyber our empower teamwork enabling collaboration we encryption. end-to-end secure next good to integrated our offerings better stay WebEx, helping customers quarter, data our collaboration example this team threats protecting solutions. the for workplace and cloud with modern is users

contact platform. calling, all Advantage, collaboration launched Single and meeting messaging, including Platform from single center We delivering a workloads, also

room-based as well desks we new announced and video for as hardware-as-a-service systems. Edge our addition, for options WebEx In devices, Cisco phones,

continuing collaboration ML offers bar integrated for in with We're cognitive innovation by capabilities. drive of the raising AI our industry family and the to expanding

management to cloud acquired increase our and portfolio center we customer analytics quarter, the CloudCherry, user a market and leading solution augment productivity contact experience enhance AI During with to experiences.

We of another yet also double digit growth, quarter in quarter Dynamics our a App achieved strong business with

digital Cisco to businesses made portfolio leader helping Dynamics have the turns and insights into App Our solutions actionable our investments performance through real time in outcomes. comprehensive We're analytics. application transform monitoring application business customers of linking their that in by data our

drive a shift are our we their cloud. the progress, while in I'm in challenging summarize, how both environment, own customers of in continued own remain transformation and empowering we transformation macroeconomic to To our and proud to

We vision I about solutions. the our I our and executing and and are opportunities to to commitment in ahead. our feel many have portfolio fully against believe a great well capture technology clear it customers' strategy

invest to for innovation and organic position term. Cisco in inorganic long We also to will continue the

We partners term customers, greatest our remain managing the we our long drive shareholders. for employees, ensure to also business committed and to value

it turn Kelly. me to let Now, over

start of by summary financial the our for for results quarter, Thanks, followed QX. the Chuck. a guidance with I'll

QX results Revenue Total We EPS. solid. executed $XX.X up and was revenue income net Our margins, well were overall strong with X%. growth billion, and

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

up QX our Total some revenue. was platform revenue Infrastructure to product X%. provide was more $X.X X% down billion. detail me Let on

the XK. of were had center All for CatXK of in the with growth the ramp strength continued Switching campus data Nexus routing. the both businesses except and of and up

XX% with was growth app by led growth, service grew by Access, up due growth more driven the strong had weakness to Applications including continue and declined Identity solid in businesses, Security Meraki. X% to web our performance across provider. software digit double in delivering revenue center Data unified subscriptions. driven at with threat all was Routing more Wireless HyperFlex. software dynamics. in was and And up X%, we threat, Service solution advanced offerings and transform security. support. and by business driving

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

X%. In orders terms down of orders product in QX, total were

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

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

a In GAAP billion of from and bottom was perspective, $X.XX. terms $X.X was line QX net EPS the income

the flow was we dividend. cash, for of investments X%. cash to shareholders legal received from $X.X fiscal of ended operating X%. repurchases a settlement billion up $X.X and perspective, risk From was billion. comprised quarterly equivalents in million cash 'XX, of Normalized cash quarter we our the flow capital $X.X returned for during that QX debt allocation share $X.X $XX and Operating We a the $XXX QX of was billion billion, down total billion

continue invest in We and pipeline. innovation organically inorganically to our

all seeing our shift term the to innovation, driving growth the more investments we're and strong top and shareholder value. and growth executed the delivering in returns on We're in well QX. software with closed areas. long summarize, had with During line profitability. acquisitions and subscription, making we in four for R&D We These a solid the are moves area. investment growth QX, applications strategy our To increasing and of consistent we innovation

is to Let me X% is revenues rate in reiterate non-GAAP the quarter type range the in our in guidance second $X.XX. the XX.X%; be we to range of non-GAAP decline This minus information anticipate XX.X%, forward expected rate range be fiscal guidance to tax to XX.X% non-GAAP Marilyn referred from 'XX. the margin to is to share range that operating to includes of to the gross margin of and expect be for the expected non-GAAP the per we provision year-over-year; looking expected X% of minus to earlier; XX.X% $X.XX to of XX%; rate earnings the

turn now Marilyn. I'll back it to

can we Q&A. the move into So

audience I'd and so like Michelle, Kelly. turn for others. while line we for time plenty address go to you. And one it to questions. is question that, open only, have that over the of the to Michelle I'll Michelle, Thanks, let's the doing ask ahead

go Ittai may Thank you you. Oppenheimer, ahead. from Kidron

little pattern. kind you Chuck, kind bit a quarter the evolved as demand maybe the how as of us can of far through walk

about have You're either also there, talked now softness give of is, regional commercial. of next the about stay can product with in from based the weakness broad the worse? give all, quarter, think enterprise Any framework seeing more your the assumptions you more or became, Help getting a working when started into standpoint. color will And first you and into but to right as regards guidance. into the January the the intensity that your you you're quarter, or just assumption it is mind us us

last end when read saw expected and QX. it worse obviously quarter off entire It we basically towards -- had macro the say the was did in as just numbers we quarter began from was we we see was broad based. And the mean orders regional began. than the some an Kelly then I If I some perspective. throughout the early continue of recall that call, fairly just to signs of that impact you And earnings

So negative X, negative you X, EMEA X, saw Asia. Americas, negative from and

Service stressed areas, be but The the sector. the And the them. ability public broad about impacted same. were across continue pretty this We -- and had to weaken. rest public to say that enterprise based. emerging enterprise it weakened, sector that that segments last with to were and our quarter, obviously ability was saw, in were which commercial provider commercial, I'd quarter we technology strong did strength markets, the when shown offset offset and those

all And might excuse, had in have that a happen while like where incredibly we it to seem quarter this also tough did compare.

worst the us. for really this But quarter that what So occurred we have could is that's saw.

we improvement, think what don't forward assumed will think what forward, we we've as that put material is. deterioration I I any or we've -- modeled going modeled what effectively than as far As we haven't it today. stay further

you Thank from you. JPMorgan, go Chatterjee ahead. may Samik

for get a you hearing terms can trends wanted give helpful? that of them the I what spending, of resolved. you of your be some you're that thanks And an depressing customers update the detail that as order if Do back you from last the in are the what aspects macro expect terms your to well on of just from us some to are customers? on are of sense hearing if would get come Chuck, question. in you hearing the in China of trade

things began a way couple done, conversion the customers, time stuff smaller rates says the It seen than It that and there's ratios. that We we We Kelly really large there's a to I saw saw broad our a base than when saw We we loss of which like bit it when noise like incremental some from personally loud by involved get the historically out in lower the things they were pipeline have like pause. on see were were slipping. that there. done the got feels a just customers talking So any we closed didn't deals got transactions normal, smaller. feels it. done was not we've about begun. but and didn't they

And saw and little So that. that we deals of then saw we that slipped, so bit just happened. all

is -- because another indicative not industries also approval say had teams that the customers to it's number of in hey, on add of every another now. were But want of, process eyes different changing, us we our set several telling which I'd put across requirement, expenditure we usually let's right just signature

done before. So those it are long the things we've seen seen. And I've enough unfortunately, this I've that

it, that's So was… you In quarter. China, Kelly when see we recognize it you really what the during effectively and saw

XX% down China quarter decline. was -- It continued its down XX%. versus it last we was

in momentum that decline the just So China. continuing to accelerate

Thank you. go Cowen, from Paul may Silverstein ahead. you

January the that'd than erosion, could about then correctly do on you're the it math looks million that and $XXX billion us sequentially year-over-year. your expenses to pricing, revenue down think Q. around we're less going OpEx should it? of Kelly, How like did rate that, given if how forward Do related the right? has you tell have the the the suggest would I OpEx, I to quarter, Is I could million change. be $X.X we the way price And that if see But outlook? expected you managing know in for about plan you thinking going throughout year? And a $XXX guidance if if us tell been there on

me So take those. let

is some the we of price on amount So really good in time the a erosion. price. on quarter in of least very lowest price, It had very, terms

metric on at, points. is only you're was I basis looking margin which product impact XX Paul, rate, from it gross So the know our

we've and a things our say, will that's think I lot Now of great, great I done on pricing.

prices, For we effective that selectively have raise and been we've some on -- elasticity, we've been where product price example, will benefit. been transitions we and driving we've realizing

play including guide. it. of and I From didn't that but down that ranges starting you're is in has yes, the we it the will server it see we cost accelerate OpEx making I we an we feel pressure see, very, are quarter, investments will the how OpEx we QX, it to you pricing of just fantastic. thinking down And pricing does gave But it which like been which driving off show very starting be perspective, and strong do, trade quarter, we you, impact was quarter, out. if about balancing course, but to expect the this say the plus a that's, to managing for always next are market are we're

driving correctly at and we're to. it looking you're it what that's So

Kelly, margin could being margin… with slightly the real operating drive revenue up down, higher can you operating question is, go

margins think let are that say driving key increase you're me seeing So overall, seeing margin would that because the -- break is you're down margins the I the in question. our positive there's certainly guide. I the that and

side, feeling our the are On on margins. the mix the positive software we positive impact of definitely

purely So us that's we what content on benefit that driving have just increased and software the is to selling, helping tremendously. so we're that

think to more to going pricing of that down. the server do are is tougher see we going the market course, things as get some prices now some go erosion forward specific, DRAM are we're the that of I going for like

And 'XX. of a expect you But the large started next favorable as the DRAM It's a So little seeing feel market, server we the we negative quarters this to impact quarter on benefiting related the the be bit a I that to course, decrease still of will okay. will then continue that benefit we quarter. QX next benefit are to price a recall, of that, but quarter, started that very after couple ago. of to that's from us

And to then, a become what year-over-year So less us. pricing there. the see for we'll happens that'll favor of ability

So net-net question, rate things. which this your we highest But QX, it it's delivered because been, those of is that at think will I to key in the stay don't than trends managing that's are pricing elasticity. all And favorable with benefiting product going then around mix. underlying doing management the strong real the in right the software driving and direction the we're

you. James Thank Morgan from you Faucette ahead. go Research, may Stanley Investment

of about economic across I'm wondering, said you're kind pointed and of going from little saw a Kelly of you us growth about How you as environment? that on. if board take we or relatively you expectations you. flattish forecasting here does talk to kind But in Kelly, maybe current versus scenario even Chuck, forward, of of we order think for start and a of bit Clearly, lot. Can both flat to Chuck, out the then as development? your to a book or weakness the environment and a in kind recovering order long Thanks it more get orders.

let handle you I'll Kelly, that.

uncertainty obviously, and a on to think that's we I'd improvement that with right? say, business tough do continues like the feel we term. have with the James, right right Chuck think changed the going seeing you're still, regardless. Again, we're it's whether from macro perspective, talked I portfolio making now be a question, the I I momentum the regardless don't to short portfolio metric catalyst certainly, software of us any confidence the now just macro see are headwinds mean, about. and I in in good about --

we're a to to that but know that keep the And half just as we executing don't want is. I whatever Chuck. you going comes Going that's not second macro around, easier big through it's if the add, compares I is do have victory the think forward, reality.

go you look and just what's in going at look in the you DC. the that, look at you James, trade I you China-U.S. say what's situation, world happening Kong, would now on at right Hong around if

think think -- Brexit. America. in lack been clarity those I in of what big play. clarity. just you've business got uncertainty then I it's you came lack And of there's just it's think You've could that's when into they the I of removed, uncertainty long got I there's Latin and for any suffers of get if resolved confidence some that see are that so finally -- And mean, issues

then to you're this embarking we software And probably as of said. software of think, elections we've coming exactly year been conclusion. said bigger of we is guess of we quarter. get again up that, we Kelly as work. have order growth by we obviously, that in on well we as to some rate, quarter. what our continued analyst But the I how see track some able Despite level based on end this conference hit we this have going And solid our had to So issues I XXXX, there. sort the these that the at they to next are, will would planned. on numbers coming some that We we're in put transition It results portfolio reiterate

And we feel to we're executing. that. about going on So keep good

and in teams confidence because quarter. phenomenal that I pause slowdown technologies, said I to one a think it's position at. the we are the just job have that of a our these getting have I done customers portfolio they why in see that's our full And committed

I in good good long term, are. the feel where think I we're we about and shape, for

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

ask about the I to order rate commercial deterioration. wanted

see at quarter, And could then But deterioration seeing see end last -- through over weakness is really you in this quarter. on much there if think regionally, that assuming weakness, of comment the wondering hadn't quarter seeing the it's all what particular it the you you I'm guys that just in getting at worse. the where are I do seen mainly that you place. market. you're you And been U.S.

there Just could be color you give helpful. would any further

resilient. that us on usually is across one globe going broad of of that each fairly thing was the was commercial big something was based signals regions. the there's big Rod, question. -- that definitely to, in And because a the that's one it -- That the is this the good to of business

I think all were three negative.

start first a sign. when But back, we that's that based. to that it be one bounce was think seeing it of good broad the I was come So back also

from may Venkatesh go you. UBS, Tejas ahead. Thank you

it's can been what coming forth wonder that better service year-over-year more assuming while, way. trends? business thinking refreshes that Are Obviously, a you're the you're weak down for more pipe on the I forward. product U.S. stays and there also in you. color provide so going but how could the seeing vertical environment you that service and provider broadly, if Thank that provider about the

would So what's in the focused clear just the players about I U.S., with think here, if last it's they're you currently we follow on that building out their on call trials and then across the they'll I this we'll moving. some their of going And frankly see broader that how consumer do get that based to their pretty half we'll on we more that they throughput to see the broad based XG really existing and and where major said that that enterprise talked services. run networks. play fast second And that that's an traffic area into of most suspect re-engineer We've on they maybe for have XG start in traffic. service delivery when higher build helping that's them come networks of begin backbones out XXXX, would the to

think next of that we some And to announcements up with trying over months coming accomplish. they're the have I couple what line

U.S., some the -- and had we on this had of position. -- Asia. was we much a And so strength Outside business But be of in, in get same was got basis, I'll better some would the transition it that's it the you, see I that could for was And Europe. China, we've looking weaker moves. It think. we'll a it particularly how global tell help strength that in to pockets in in It Japan. about little

it's we that's I But now, So right driven. big as story about we've always of what the deal business, said think so for see. this

America, Liani of Thank ahead, with you Bank may go Tal you. sir.

if deterioration view, the quarter this take about So quarter the guidance, rate, six organically on a your results, growth from constant in I five X.X% environment not rather to see I quarter or question view, just guidance I minus about is, to but have at we the X%, not I about have are. the now look portfolio. the And where the exactly we're getting on

with can trend can what If the order and in with, the are the we the in reaccelerate change the strong to identify Thanks. start environment Maybe longer? you growth? you as areas take as ignore versus can, that areas what versus something much and do line weak what's you your what then change the are even to may power portfolio

this continue deploy. products that made remarks comment a have I in strongly mandatory and model our what customers that's what opening good a to are we every spend products you over forward last years, new to in we refresh subscription strength the enterprise my those those a which networking about it's those doing. tell of strength, still, been the as will portfolio that the they're obviously, is, that if Tal, we transitioned saw now entire there, I day question couple about we actually think doing area, and continued and and very we've growing campus brought now in you right portfolio

of years model. towards want We continue of big a had one to transition we CapEx things the the XX software So do model. XX is to net

lot across new are go that that, we last a that -- the biggest that think of So if do. strategic we expected. think still I We're new stuff. I of That's it's, have we're up. the in the perspective, portfolio, have the customers we've on From think made you a can announcements of progress thing making coming a buying we lot a announcements portfolio week, lot timeline clearly, And transition. we midst got you of I

those there's value to the are to our and we'll with customers resonate So most I still try think to that meaningful areas right slowdown, while continue do technology, our seeing that there's can a now. find everything we

to the given other you with security it And haven't that working them. that on I some think see you saw yet. importance of announced technology we things we're

going you things all the to described. to So continue we're do that

Markets, may Global Thank ahead, Suva you. go you from Jim Citigroup sir.

quarter there of people Is Obviously, what like was about of XXXX. wouldn't starting anything details saw before a you. And pause were negative Is laid this it four like a historically white of to macro? the of we it saw fourth it time be, well, the about different challenges. boxes about quarters, we look it lot. say, hurt such white their you Or lot kind back why in out Cisco, kind boxes? some trends, When you year a Is Thank XXXX? over we will kind time? generally July the last There recovery. last history,

based And all, obviously, the rapid in second like we like year. But believe saw, I Tal. the of across second in think the given comps. box talked and the we're, or the Kelly of geographies. portfolio. just like that. all about as that have the don't talk it's don't the that things I It's math white It's half we broad with that anything I First also half. broad about change across to anything broad different said, We is But the

also have Wi-Fi this X We transition.

some We we backbone transitions. XG will At point, some have got coming XXX the going spinning gig next on year. around

And worry to that So also there But believe their just core that seen they investments, lot are strategies things. shorter is they going so time of worry they're about able than fundamental be I falling customers, technology to going to have that I the competitors' behind. would to what past. the to pause a a that seems our is it for mean, while. about will in they me be you absolutely pause their

So button of because the I uncertainty. pause hit think all the they'll

traffic build their doing this all architecture. as turns deal is it cloud the see everything them incredibly new that. on so long And we'll world, value with today's the and just a how to And out. going how only strategic and think long to world I we they're there's their see pause to they But technology. important in it building that flows of re-architecting security lasts have we're given frankly,

go Rakers you may Aaron you. ahead. from Wells Thank Fargo,

of of I software want to the software. product around to kind it If go of days. at made earlier to recall, being out laid revenue you about would kind revenue that back out map of past to from contributed kind of have -- comments analyst you I total what and the XX% your being progressing seemed kind of expansion, kind

trajectory even right the trying of And nature of more I'm you think we this to build around company. is for higher left of and is look recurring to just to out we of subscription, see beyond the could kind business? think the subscription that, push the portfolio about product understand to mix of about? what the your As product kind just portfolio kind as motion that even

I'd we say software, of out end revenue be XX% be we our XX%. should we is what and services the and have laid said software of by 'XX,

are we metric the And passed. are that's already XX% number, your towards. So we pacing

at XX% by end So to we this of year. that are that driving be the

pacing well are that driving like selling mentioned, amount we that. This So software with greatly increased we're are we transition our the has of Jeff system. with

that So is going all well.

the third metric less. or was the of I think you software subscription by from which software. is shared in of years that our XXXX, SaaS, if at target And I XX% if think number a which from coming correlate coming revenue we probably was our today, and QX of our Kelly XX% you said, just end to Yes, -- was be also four ago

So of that's transition been the the of so the nature far. that success driving we've

that the metric for the point. end target 'XX be we've XX%, of a passed it’s for to was Yes, that so good Actually, already.

you. ahead, Piper may Thank sir. you Jaffray, go from Fish James

And talking anyways you're of and trying correct? talking monthly, color then on think than to seems understand that and are, kind business hoping within cycles about of it as more we're switching of get the recurring with of kind enterprises where of just you're like this correct. When large with the more campus just drives, the make business CatXK, just that license subscription of term more thinking sure really the it just growth we to sort you that. a I line, especially

one, Yes. subscription meaning. that on Yes,

that sell switch I now, a if a it's with subscription sold renewed XK Catalyst since or five gets putting now. from on the term So three years

about. we're talking what that's So

So of based a gets we're renewed. based is it that all selling term on the software value

have in very on a about those this we Jim, it's said inning that to transitions we would I the new, we're would seeing second going happening answer I and we're expected. early were little still we because are we of the -- platforms, like of talking to to second we bottom were transition question in inning, actually give we where the think maybe And now. from and very in time the well. old growth year-over-year are. we're just still the you sense strong just yesterday And last mean, in relative this, we the we're joked the But where I very how

we the things have Wi-Fi last the to new announced we'll we products. enterprise to week And the XXXX. of entire with XK, customers the And the the portfolio across one now Cat manage of in the the access Catalyst platform, under X ability networking Meraki one was so refresh that take of portfolio the in advantage then with mode and points, could it continue Cat other extend XK of products

well So and very still early. it's it's going

color, that Chuck. for Thanks

Thank Jim. you,

let with that So quarter. at our today certainly world I the a end that incredibly up portfolio. going wrap said, feel being we confidence and now. short think that, future. talked about good we the say great of We really right about the felt continuing challenges, And the well. just complicated know, impact the metrics obviously, And me software That in we are is on last where we I term it's shared notwithstanding, some transition have the you

us with I'll you for thank all it so today. And Marilyn. to And kick back being

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

close to call. now We plan the

Department. for If the And Relations you contact free feel questions, Cisco joining much you have we call any Investor thank further to the very today. please

on for call. today's you Thank conference participating

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