Cisco Systems (CSCO) 12 Feb 202020 Q2 Earnings call transcript

Welcome to Cisco's Second Quarter Fiscal Year 2020 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 second 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 call. should following will earnings A supplemental you now the with available Investor seen including on By slides made the in press our release. corresponding website be section information Relations

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

this referencing we'll non-GAAP Throughout otherwise. conference terms and GAAP call results of product in be we of and stated both product results results and unless geographic will customer financial in revenue and discuss terms orders

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

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

over now I'll With turn it Chuck. that, to

everyone. good and Marilyn afternoon Thanks

that our and feedback quarter now last services. committed to you both see told products the we strongly from is our customers remain still they As and

as macro our expect once our industry, good longer at be as recover we is uncertainty all The technology news of see many customer well this heart including are reasons to like across for customers, uncertainty seeing However, unique we the for of do. continues issues. as a to segments geographical variety cycles spending in decision-making our passes they

numbers on we this subscriptions our being more metrics You'll our progress software quarter subscription. see including to make of a continue as XX% key now that software with in sold our shift and to several

have a a believe from gig, to and opportunity us. do, The ahead While to XXX secular shift I and of X, to we firmly more benefit cloud we lot XG, work the we expect tremendous still long-term remain growth trends have Wi-Fi the them. of

and customers This are we well networks our more simpler, transformation secure, modern is The the this how broad application at staying adoption multi-cloud of center build the and managing is are cost-effective business helping on and secured largest while and of is Cisco multiyear world's networks. our transition. a focused operated, changing environments built, and

faster software, demands future, blocks than move significant strategy Internet the will innovate silicon, of and the while ever gig, support the made the the be XXX We of customers and built have future. the development for change optics; will our economics to how XG, in building before. of the investments Internet We and helping believe the this of

December, In our as Cisco as architecture; iOS single a Silicon carrier-class operating we XXXX new silicon first-ever XRX family One; well on Cisco One, system. unified introduced Silicon built and router the

options purchasing We also our announced technology consume new customers however choose. flexible they that enable to

in companies several closely demonstrates with as throughout as Their development continued collaborated commitment innovation. our launch our strategy also their strong largest SP of our the well support to participation We process. web-scale of the and

Internet offering next-generation consumption infrastructure of deployment the by white flexible in customers a of accelerate to choices our or integrated is components, box, goal Our systems model.

platforms. businesses starting our on infrastructure update brief a share me let Now, with

positioned believe we making. the given strategic portfolio been leader networking, with the in our investments we've networking we global are As well intent-based

our across tremendous the ongoing made we've and is our example shifting security while at success networking to our enterprise a XXXX strong Over quarters, the of great model. same past of subscription-based several integrating A portfolio, adoption progress time the analytics, Catalyst automation, platforms.

continue with customers more companies and the integration their better to deliver SD-WAN we to networks engaging applications. business Services along secure connectivity Recently, and To to secure do actively with this, extend a their web-scale Microsoft, Azure WAN deeper as to solutions application XXX applications announced with help and are highly the we Virtual extend with cloud. We end-to-end customers our move to Office cloud Web partnership performance. secure our Amazon wide-area

and drivers cloud-based We Security. and which to our solid our growth including are another Duo Umbrella, important had business. with solutions of quarter advanced threat Now strength across

we continue We platform. deliver as an strategy to our on security to execute see significant opportunity integrated

environment the the our and trusted benefiting multi-cloud for moves from market most to we're grows, our visibility strong customers' need position a partner. as As

differentiated is Fortune of solutions. now the of approach customers the Our across more end-to-end cloud XXX and one network, Cisco security endpoint XXX% with winning or using

an from market our to IoT Intelligence providing cloud tool collection to our business edge. visibility, Edge the across customers portfolio environment. includes entire and the detection This architecture We quarter, This make software-based data Cyber better security security solutions enhanced our we to and expanded integrated threat decisions. insights enable customers' new architecture, our to our brought Vision;

transformation that turning question with them undergoing Finally are Cisco are customers There help they a to workplace Applications. and is to transition. this no significant

cognitive believe which This critical transformation. we increasingly the company allowing work effectively enterprises we is platform secure their highly foundation by market employees empower together. their collaboration the only leader, is a workplace to how providing global becoming analytics-driven teams a to and their for As platform more are

investments. continue to our extend To we make strategic proposition, value

learning example, with experiences. our of capabilities, teams enhance further from context, a AI-powered unique combine pane several recently to insights machine which WebEx to of We glass to their providing ability complete customers and single to real-time AI enable For strong another our meeting their AppDynamics key quarter and demonstrating deliver we achieved visibility. market brought growth

cloud are automation weeks remediate to IT in simplify bringing Optimizer to AppDynamics user using increase Workload applications both with looking the productivity. comprehensive deliver optimize together infrastructure and and Intersight Two machine monitoring and our we infrastructure customers experiences. to we learning problems AI proactively are to performance visibility on-prem and of Our announced connect and application and ago,

To with new business summarize, I to the bringing transformation and market. with platforms innovative our am pleased we're

pause spending to While some the related remain experience in uncertainty to unchanged. global long-term we opportunities customer our growth continue in environment, the macro

for innovate XG Going our forward, groundbreaking generate our ever incredibly drive new on growth Internet than continue execution focus I strategy remain a that returns long-term. faster help for confident developing will profitable we and and will will era strong that to customers technologies our before. against building the the shareholder

now to over I Kelly. turn it will

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

and Our results executed EPS overall with well strong $XX at growth. with We Total down -- expectations. was revenue $XX billion, was consistent were margins billion QX down our X%.

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

Let me We and starting but XK weakness in the we Nexus Cat was strength detail by Meraki are revenue. our Switching see with $X.X revenue XK. provider. down overall, WiFi declined down to ramp revenue growth more to driven in of declined the service did Infrastructure Wireless the products. our did some provide see continued was and of declined on strong Routing of Platforms X%. Total and six see in X% our billion. Data Center. QX growth ramp Campus product both

and up by was declined identity was by decline strong by partially growth in revenue down double-digit with performance by servers support. threat unified driven and software management. offset Center in X% revenue Security growth driven Communications, was X% in in and Data X% access, solution threat by a strong Service HyperFlex. Unified Applications offset driven AppDynamics. advanced

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

of points year-over-year. total up Software were revenue, subscriptions XX% X software

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

geographies, emerging with APJC down down down Americas XX%. Looking EMEA X%, the BRICs our down X% Mexico X% was markets at plus Total were was X%. the was and down

a perspective, segments, of In RPO profitability our gross was flat performance X.X or From XX%. XX.X%, and non-GAAP was down QX public XX%. points. while X% billion, down end customer Remaining Commercial enterprise the obligations down at up was total X%. $XX.X provider up were was QX was service margin sector

flat X.X was points; Product was and XX.X% service XX.X%, gross up year-over-year. margin gross margin

of $X.X $X.X billion was We ended billion investments with GAAP cash $X.XX. EPS total equivalents the cash cash, a year-over-year. line In was from QX and income flow and terms Operating was flat net perspective QX of billion. bottom $XX.X

Today a $X.X and allocation share we capital billion dividend comprised quarter share a for From the quarterly quarterly to increase announced of was that per $X.XX we year-over-year. our returned perspective, to billion X% during $X.XX up of dividend. $X.X billion the shareholders to repurchases $X.X

strength returning shareholders and reinforces capital today's flows. X.X% This yield price. and on confidence in of our represents the commitment of closing ongoing approximately our our a our to to cash This stability dividend increase based

innovation and manufacturer and we our at pipeline. to In early performance. our designer of devices network improving network continue inorganically a latency aimed We and advanced organically invest of QX, closed reducing Exablaze in acquisition

well To and long-term summarize software the we and investments to subscriptions EPS We're growth growth. shift on making in and driving innovation margins and strong shareholder we're returns with seeing the more executed the value. delivering

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

in decline range X.X% to of minus to revenue expect the year-over-year. X.X% We minus

XX.X% be earnings from operating non-GAAP $X.XX. the in range The expected range Non-GAAP XX%. of is to XX.X% be XX.X% $X.XX per to expected in is margin tax be to to rate the is rate and share the anticipate provision expected non-GAAP non-GAAP to gross We to XX.X%. of the margin rate to range

our any disruptions the guidance result Our reflect in does from supply that not potential chain global coronavirus. could

to the continue will monitor situation We closely.

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

for and Kelly. ahead open go let's Thanks questions. line the Michelle

Thank Barclays, go Long may ahead. you. from you Tim

start maybe you going talking long longer of sense, context put could X? on the if Yes. if lot drivers your particularly a in and would that decision and I you you. last kind do process. Thank of the the In you the think just gig mentioned this industry how macro into XXX WiFi Chuck maybe about

and got you new obviously router out. silicon products And some

you you outperform a it can have bit of about different timing So businesses going across the recovery how given year? the little maybe this think that you dynamics just the all talk and maybe

a Tim It's thanks. great Yes. question.

really what lined all, -- going what's So pausing XXX-gig on. is the X that drivers up WiFi just I just just seeing And it's the transition cloud. from to think secular XG transition trying first are shift the of customers see to many growth are we're there

We obviously been U.S.. the got quarter, you to look USMCA the say some some of on late we the in Now what clearly is has like that phase deal if the had creating trade through the a signature U.S./China late closer in of uncertainty issues I'll first the and Brexit, were got that outstanding that quarter a at gone resolution. in now of

little more a customers So hopefully our viability. those will give

still a don't speak they're think I has out. hopefully, moving it that little But obviously forward. now and trying that some We it's on. cautious have up virus to deep. we'll see from to When overall, now we They're our how pick expect And the plays uncertainty virus going customers, just I planning what fully we'll the obviously what's on dissipated, again. notwithstanding see this customers that we the see of see given

Thank you.

Thanks Tim.

question Next please.

UBS. from Venkatesh Tejas

go ahead. may You

a question. had I you. Thank big-picture

With OpEx. significant and the require lower organization. That software strategy Cat a a Cisco customer the your lot routing around of before selling XK in now to incremental is announcements that, automation the seems change December to

to the along far Thank you how transformation goal? and sales channel So fit are you. in that

Thank you. question. good very a That's

the businesses of the portfolio, the on the when model in back have early first renewals a our Catalyst will this enterprise you of the some and -- of we XXXX of that. announced support a have amount subscription year And second automation. networking of software XXXX, the being we a on with We go number to have small on subscription work and if model particular done launched able lot software -- -- transformation half the to we

prepared material material has team reasonably number our to been with fiscal XXXX number, a hard working associated see those renewals. in be for So that. a we'll And then

We're things. customer think experience I we've Maria and we're got that scaled the been Martina organization, pilots organization their out run and So other building has we've now scaling pilots running that things. is And leading capabilities. sales the we've

do, right good a to about good more we've progress and position in So feel I think we're have the I made, that now. pretty we but

please. question, Next

Leopold from James. Simon Raymond

may You ahead. go

smaller been maybe a if you if see if Thank a the bit could seems beyond drive given can timing the you wondering hand-waving, you. XG given, to and to maybe maybe extent much. it's of Cisco understanding it maybe little of provider the that I'm drivers see about get a challenge could sort some very the and focus more just such service if become when? you for business. part kind of and I market eventually long-running you talk better talk this it's it's of vertical a -- less double-clicking But want of will about the how a recovering Thank what as we

Simon, wave it's to hands. a just better lot

Now a we that. you bit. are let a fact, think in December little look me at made in you -- ignoring don't the or it's update me you give I if tell we little that announcements market that let on a we

in We December. have we what about in effort five years of announced R&D

a that's the market. lot of So commitment to

we believe resurgence. So do a be will that there

the Silicon called we also or Cisco go that's XXXX a we it. XG give of update sell will if systems and just our you talk -- willing which heart December an is into to And you to I to launched at that like it in a just know that-- be they launched. gig customer to box think new white about announced on Silicon that I But to XXX well. One, would we these procure how as as directly we sell

them I there, in announcement them of cloud we're of December, the their all will we're with belief were shows what tell on those which architectures. variations the engaged you you at across of in with titans doing. us that Several

feel and orders of both taken have acceptance different We about so for launch. cloud the from players, we that good

on we world. infrastructure I to will series early XG wins XG a in and that XXXX you early. fundamental XX for tell the The IP They're rollouts around have backbone support over be product networks customers will

their those in some look then Most standalone networks, aggregation, backhaul, site, enhancing current them networks. they'll of non-standalone, Some of and cell to are core wins. means build are which they're

some will in see we up. As XXXX that pick to believe could start we we've said, begin where that of

years. XXX the the gig will couple transition the build-out think drivers the XG as over that next well be we of for So we'd as be looking

you. Thank

Thanks Chuck.

Next question, please.

Thank Company. you. and Cowen Paul Silverstein from

You ahead. may is open. Paul your Silverstein, line go

DRAM that's that Sorry, year operating and pricing assume to strong was the both guidance structure long-standing of pending the some due to and is through the you the I'm easing. the Can next your in a or near-term the represents I use and the this still two, longer-term. drivers over or back go represents what backup an so margin how gross -- you that know don't backup. I Kelly, level? expect cellphone. quarter and trend recognize particularly

But Yeah. both products Paul Yeah. happy has to. transformation This as a us see of Happy from benefiting – we're Yeah, Qs the know both when mix you things. and gross through we're software sure. And by really margins it's we margins margin gross I about so you in know overall where can in are. -- well walks as it been you our driven op as few the just the our show that. benefiting

on price, we really very, to is prices we have the room products very elasticity we shift on products want think disciplined where where I driver newer meaning for to been or older advantage of price. raising we We've effectively. that say move. example know that have very been we're second We've doing I'd to big taking

going We've that the in are with decline the pricing the fairly that been prices market managing DRAM dramatically. the balancing down well server and

I and ask know see see going Paul pricing. So you'll our you what the quarter this to in reporting you're always

our and I'd that very, quarters an points quarter's margin walk, of more level year-over-year good before say for all-time what last mentioned so X.X We're a it beneficial impact meaning it's QX. I back the of still couple at at of very in us line lowest was in right gross been. call it's the pricing most was on

So that's going well.

becoming us very benefit see well. prices sure. you pricing a benefiting manage to we quarter now as to is But less for as us know DRAM And this that's equation cost and the DRAM starting back up. that tick less of again and DRAM we're

going see I little coming But general in our can less bit of is pressure So DRAM continued pricing why being expect guided goodness year-over-year compares business you're software I driven. the guided. just which what still from increase getting the the to through from overall think more I a you

if up. I Kelly, could follow quickly just

April, the any why margins should the reason quarter, volatility? given is shift quarterly head to beyond to there beyond looking ongoing aside Looking up software continue putting

again, would mean, I on and what say I Yes. yes, we're because doing more is more software the content. portfolio

So it us. for by definition will be good

But things component plus DRAM we'll you We yes, or always, like will let minus. I as potential are always term were for swings happening. and to overall know those been back from for look like have when mean, the we large are the But driving. now shift portfolio go you there years long of the three we've it we back where where is that just if costs

it. you. Appreciate Thank

Thanks.

Next question please

from Jim Research. Citigroup Suva Investment

ahead You sir may go

And much if clarity don't It more thinking on product sector more for for got little product question just of very looks little orders, provider improved of of had kind about looking that's you year-over-year. know incrementally orders. the a so Thank I enterprise But like one to I the far. Service and marginally compared challenged. the which it's challenged. got was kind a product last you. broad. – Public quarter more orders I

color last enterprise little kind It enterprise actually difficult Or orders? you in looks maybe why year worse? can a product give just cycle Was product a us seeing decline on we like bit So it maybe you. a year-over-year Thank of little are enterprise? some big incrementally comps.

take question Jim a good me Hey, and let it. Yes. crack at

had. look enterprise, segment product focus XXXX really I of on really, QX the is cycle we if – I when it's the a it lot So strong ramps at

record campus back – for QX back as was Collaboration as in QX go the XXXX, switching for a for XXXX. well to I if So it

biggest was portfolio seeing prices again I that's kind the And was at from by was. overall through itself isolate beyond market. that we I down our the decline range that's if directly we're the by the quarter routing and as U.S. say was And of It That if second to in view, driver say No last areas. what the point of the of market flowing driver. better driven it and in biggest SP that server related two decline the was was that slightly look DRAM I'd would X%. segment. that would entire bookings the well. largely the a excuse, driven but that I regions Americas but was saw And

the So that drove Americas.

Europe basically when I biggest – was at the really U.K. at minus X% that driver was But flat. Europe the look

We always a is the because U.K. of slowdown for for sector did are and in a see driver public seeing Brexit we growth big which significantly, it the us.

public enterprise without X drove the slowed up would for Europe have So been has U.K. down U.K. both and Europe. sector points us, which

only and And be China. then Mexico APJC, the China, down, BRICS the for still it continues it have decline rapid I've Asia well, down excluding plus about X% as X about of Pac, as I again hurts our the would a total China, been points. mean, over overall XX%. points of of being couple talked China It's was still to business, up but --

So from your and XK the to for drivers. Catalyst again, And, are are Collab a against had we tough year going in a compares key ago just off quarter. ramp some enterprise record the geography, those point, both

Thank so a you greatly explanation Thank and That appreciated. you. much. great was

Thanks Jim.

Jim. Thanks

Next question, please.

Company. & Oppenheimer from Kidron Ittai

sir. ahead, You may go

in on understand assume applications, dig I Thanks. to pressure into the business AppD haven't But unified think Help doing forward? on WebEx to stuck the and growth of And been basis. going is talked the how we that I about that the platform communications growing. to you Chuck, it's year-over-year has middle should where in think transformation down is good over I the I there, X% transformation? and Am see WebEx. And still here? wanted AMI a not growing, competitiveness me are that about

Yes.

they I solutions -- I very take ends those of modern working team a to platforms, of the think to market. integrated have currently have to the was the And all, we're set all -- and first talking back yesterday. re-architected

to get the next of customers running them with for there's some customers we're that there on to to modern workshops variations XX in think, years, because I work good out stuff major the portfolio, so shape. XX in days plans, the XX been have XX we've to had

portfolio a just it was about -- it's about how there and fact, is that right and now. great effective far ago written how a industry report come was days couple analyst In of analyst, the

good about what I they're feel So doing.

XX%. business think I I if huge year flat it's ago that mean much. out a -- look and -- be back up you up to Collab a was

year team should making are. some there's So There you but they compare do -- a where pleased Kelly, I'm the just us competition comment they on against, good to job. frankly doing, is space, had good But I very a tough in keep better. competition. the want with to which Obviously, think, really is

Yes. and the I hardly say, the down, down by followed, conferencing being largest mean, was driver just give TP. -- marginally, revenue bit endpoints anything. the I'd was on business you a the the I'll majority the UC huge on the And

was for driver on the So Unified side. Communications the biggest sure

guys. Very luck, right. Good good. All

Thank you.

Next question, please.

Kvaal you. Jeff from Thank Nomura.

go may ahead. You

Thank you by line. bigger hoping a IP taking better a the question. goes? balanced I you Can than maybe accounting what love Yes. that us little downtick, are of of were in software the a understand dynamics performance help the understand for better, to that very services please. expecting on some I'd unpack, bit the that sort we much you a sort of maybe, for could where a of, and bit was

Yes. I I've this. -- say would about talked

on that. accounting no how four there's a the renewal driving been On improvement, adoption. perspective the really services over and lead the been driving quarters. for customer the Martinez, software. service up seen our tick And you've from CX we've last business really we been Service for experience, focused rates for account side Maria increase, has revenue change on

just that saw services is you say, I'd do So, that. in performance team by X% to growth continued that

of Routing -- high like were a a very, very, switching down, not we that's but very so were last it SP the back driver. is infrastructure again, the platform we segment. still just to, still mean, Campus, peak that by peak, big ramping crazy, driven tougher -- side, I very on -- say, it's compare. growing go year I'd but does that's

in year, a talk again, which you a of from saw was the applications about, all again, ago was terms then last basically, as year well. and Collab XX%, And we that piece up

So it's the feel more would server nothing just see things, you than those with, there. in center I is market, we're data to the what's say. -- starting market happening that, Combined can

imply, durable that that that we that Kelly, that number? Does X% services it Or low fluctuate single-digit between growth will rate the thinking of we've a and should sort is growth be seen?

Well, – kind range. we're we of a trying certainly certainly make that to sustainable

it's no desire again, to drive a trying doing more to everything find just They're growth they're they're they they're not – versus the team more the We else, in services working solutions so the But plays offering to to maintenance that new tied just of have is ways – area. being software incremental the can. have solutions slowdown. to everything and driving product lot along orders. And much

they Congratulations. you. Thank Obviously are.

you. Thank

Next question, please.

Rod Goldman Hall Sachs. from

You may ahead, go sir.

trying just me for guidance rates. a quick in. Thanks fitting question Yeah. the with juxtapose the had order I to

after look you total X%. down they're rate the the orders, down If product at X%;

quarter than So at little least revenue that decline just your better guidance you the yeah, deteriorated. And a midpoint printed. last the revenue for is your

down you X.X%; X.X%. guide and down So printed the

should the comment hoping stations and investment what tailing I'm product you today, not I And how wireless government. commentary, think – base XG those on whole U.S. kind like just Chuck then, Cisco the maybe the you quarter? up? press – see things services maybe commentary – this Jeff's that that on you revenue What of that deploy we on expecting is stuff potentially interested also for might out in comment question be of you actual do So you'll the develop? do guided there of helping you in how make infrastructure think Could And is some but that? how about the and coming a making

You want to go first?

Yes. first. go can I Yeah.

surprise. say, when kind good Rod, say up QX the as a – – it's up guide would know question I exactly gave for is sheet. Your we the but as the what go just where not was. when we I – we was the we off when know expectation roll minus That's process the of and QX the we would you question at really we what's balance for I kind a roll up X% same guidance coming the ended of

– We exactly for just pure coming expect backlog. and in we it's exactly know in have know what's We orders we what math.

the of the rest do back think bit expect to all add a to a through it the the was But when math next compares. the I quarter again decline you come rate the in what order you the there's of you to I and lot number it gives guided up for midpoint.

sequentials QX look If you normal to what at are. that it's with our very consistent QX

Excellent.

they're XG discussions frankly and XG lead mean, interested on companies around XG. in And Washington, Rod having obviously in the very I U.S. in the then participating question in

so entire about have technologies spent what in Washington different XG of lot a folks time we network. an And educating constitute actually

the what said the think don't we we So pretty I But you have. the is is – I think really have, much which that U.S. shape. good not rightly but radio stuff in

used Korea South be the out RAN technology. Europe backhaul. there have are security the solutions There's we – building right core. think have in got that provide software packet one can future. routing and in We've in open cell disaggregated got I that players we companies of radio a the We site are that now obviously, there's and radio core. couple that got also IP We

been just shape. that United in so fine built there's spending in here that a a and States is that's XG And recognition these is we're a working infrastructures. lot of actually, I lot technology And U.S. make to of them helping sure the that that and understand the being think time there's in leading built

both we're I think position should investments perspective, I think I these the don't U.S. combining think but on U.S. both sure are deployment everyone's these in and solutions. technology. certainly a government that in technologies again just lot we're have European then great we peers to with of in education, lots trying sure solutions the industry players I make shape, working does make companies, those with of and that from a carrier think with with comfortable good make our with the to

Chuck. That's great Thanks,

Yeah.

Thanks Chuck.

please. question, Next

Badri Sami Credit Suisse. from

ahead. go may You

Thank you. forward about down commentary forward-looking looking of kind SP the of to were like that and XX% half ask would any And the in would year orders quarter. be I the indicator this back trajectory helpful. to

telecom days; in provider scenarios; year. last at orders back the rest service two one of happens and in two mid look Should those scenario and we to maybe we If actually recent the consolidation half scenario consolidation, heard assuming the that for inflect positively no scenarios scenarios then to half we about XXXX? in back where all the of of a look at the or right both kind those of of as one we've expect

a for answer. tough segment a been question long That's to this with dealing challenges in We've time.

one the -- players all that mode fuel the and them because sure slowing. on I we probably is particular creates be triggering going working that think I think I well. that an other a are not investment as consolidation, when with will this to you XG history build-out represents it think would investment. see of tell are And I'm they investment that

network think us standalone quickly depends they for decide XG to on how I how soon do build enterprises. and a that for it just they

believing at them their upgrades, will their think minor they accommodate determine can with that of most consumer perhaps them some and think I existing I but networks it. are on backbones looking

any now. or it's to more think fast it So, that do than has they connected with no consolidation of to right on move how the consolidation I

Got it. Thank you.

please. question Next

ahead. from Chatterjee may go JPMorgan, you Samik

just I taking on portfolio. for the Cat a can if XXXX product wanted Hi, drill down to we question. bit the see more thanks

couple from and of the the portfolio. this is landscape the already a impact slowing You you that you're of of you've substantially if the of growth different the seen kind broader kind spending through rest of directionally kind still mentioned of there the seeing that rate for what can rate enterprise I product is revenue on the the on quite momentum growth talk times of just wondering call -- if there kind about strong. was momentum

Is model you're on more the that kind of and you with portfolio it you're what of of related that -- the it's portfolio? that's difference think kind subscription of rest refresh to that kind a do the going seeing or more of reflection the driving

XXXX slowing rate just and still. DCEs mean subscription say I'd say say new of growth smaller the are very is say there's very XXXX Cat I But strong. maybe issues. growth the we -- number. Yes. through there's about for a but high very, is of haven't heard I'll rates it double-digit would unbelievable XXXX some a the the managed I would that those the from the that. products the through we've isn't I question no the

off we they done. would as replaced we've ramp fast percentage the any of on is the Obviously, in what XXXX again, the products any the this Cat you are It's the ramp the transition. legacy of slow switching fastest early mentioned XXXX, point not -- of but and falling expect, that Cat this transition have have the campus but the seen at we of as total

if And beginning Wi-Fi the that's Kelly look about model. earlier a to X what at -- with subscription ramp, talked you

Our very Meraki business is still which is growing a model subscription well.

So, the look to and a then think take just back I do a subscription just anything it. are our decided just going at take some think they'll the with customers in. pause has model of to in who happening watching kick I some larger and I don't things what's cases certain think on of

you. Thank Okay.

Great.

question Next please.

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

to Yes. cycle versus call had switch. short acceleration. you with Switching growth will a a ask cyclical. new want it Hi. cycle There was I and secular I small broader question a

and also in new and a and routing declining. there's switching we probably overall old between is see substitution decline Now,

are kind of reversal routing? the drive centers a a at or Thanks. campuses? question that you a the not to when asking secular even is is in I'm could from of drive? trends in of here reversal drive to today, could trends providers least of are drive cyclical and cyclical is -- term? or growth secular? what campus going what a What the Meaning switching, to drive longer could reversal the going What routing, see in And going what's data -- What we and I growth should things center service when What's terms say data timing. see switching,

question. great it's Tal, So

years. the web-scale that been the starts simply providers, I proof a customers business think to we players. build-out of I service that with us attributed few on winning talking the in as and think large think that's our well for have it's going concepts provider today the percentage about is as routing the key these both that is service space we've I XXXX Once many routing that -- XG Cisco of backbone of insertions given

So, that one. I think that's

side, on just that's a campus I think And just timing issue. I think the

in tremendous. that the began to out we're XXXX think that seeing growth that build And their customers I Catalyst the I think refresh. is

are the replaced, road base we a that have installed of where we of ahead it's it. percentage a got long Given as

the come slowdown the I think only deployments to customers bit. up. this I is decided back reason uncertainty that when think just saw that a spending capital that But just pause the a will because little we and frees that

And routing?

SP backbone with because I in a answered portfolio. routing service the first the with big provider represents how our Routing, XG of percentage stuff,

you. Thank Okay.

Thanks.

Thanks, Tal.

question Next please.

Meta Marshall Stanley. Morgan from

ahead. You may go

of Great, still basis – thanks. kind I that's just you With In But an wondered is. if hundred to which said subscriptions Thanks. directionally, past you as of update about points. XX% the would of headwind be stated, how kind had helpful. revenue, a software of of of a transition business any if that much you kind model being right couple

XXX at up talk don't It's so. we I But or been basis But ASC so adopted XXX. entire before XXX way again, XXX the think few that. It point, mean with even a to portfolio this new impact. because I max, a to the we like quickly about that we've points. revenue it back come standards, would to Yeah. say or bps ramping basis points the XXX it ago I'd was back at be it years down bigger was

Great, thanks.

Yes.

for more one question, more. Michelle, one for have We time

Piper Fish Sandler. Jim from you. Thank

ahead, sir. go may You

talked squeezing Thanks here Hey, is side. for guys. haven't me about in. security today One on part that the we

coming We at up the have month. of end RSA the

wondering could a the they're little you of with the drivers just talk we like together on are Duo guys bit Umbrella if biggest So it business? where double-click seems Can as we and your about how the and out of the contribution versus the more specifically are these other that to of adoption there? of specifically vendors portfolio impacting some is Thanks. secure two SD-WAN Umbrella

Yes.

Kelly the solution So, I'll mean our for. looking you from their customers with data. they the the the and give But SD-WAN of secure answer I you qualitative gateways cloud sort the is, their are something on integration that want can I give think branches. the

is so, a And it us. differentiator for key

Our get it a to of working years, out. build to that of be more think, teams -- are we I hard on and continue between to it will those differentiator more integration even will two And as next continuing continue the over more portfolios. couple Kelly?

I'd are us, say of And growth us. terms in key cloud that's be are drivers for And Duo absolutely Yeah. No. security and how the so. to important continue right. will they whole absolutely for Umbrella the space

driver be we security growth just And that will be all way, which portfolio And our launched huge recently expect part our that we well. I'd to well. is starting. And in great a as of cloud say as a Security

Got it, thanks.

Yes.

just of me our recap they're joining we a our right, technology All while trying the the all And I we have The you. good. I believe, just actually conversations do seen us of. today. mean that of things well Thank saying I'll thank heart to customers, everyone really feel I is pause, by a for at bit let with have

their the rebuilding with new securing well or transforming changing data, it's, as infrastructure in applications, whether customers. their as era their their Whether interface this user they their way experience

we a that very about to position good do good we think where are. And in them I feel help we're that.

catching look forward next So you with thank you all for joining quarter. us up to today. And we'll

Chuck. Thanks,

which next Wednesday fiscal call, earnings Time. Time, at p.m. XXXX wrap May XX will X:XX quarterly p.m. our be reflect to conference X:XX XXXX call will results Just Cisco's quarter on, third Pacific Eastern the

its to during like the comment remind explicit Regulation is the an not quarter, in is audience I'd done Cisco's Again through FD, public on policy disclosure. of to that unless guidance it light financial

for there plan now contact any to thank you further Relations the Cisco's joining feel very call. call. If Investor questions, much today's We close are to group. And we free

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