Cisco Systems (CSCO) 13 May 202020 Q3 Earnings call transcript

Welcome to Cisco's Third 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 third 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

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

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

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

Thanks Marilyn.

This also workers every express I want my truly many for we the for have and families today. ever is deepest have impact safe. want the any keep so of lost tragic those this day this pandemic to situation the we express who I and sympathies anything, fighting lives are endured all are my gratitude Before started, us of have who that the appreciation experienced. their in to to get from pains unlike frontline

been As allow communities. you transition we employee’s, stay We was a to secure as And workforce a we we global working helping that can of our connected, organizations technologies home, imagine, from and customer’s, flexible focused already for work XX% partners seamless on currently have which productive. build our have us, and the had policy.

all to are For those their X% health office who focused the of we taking precautions. clearly be must do roles, and on the in necessary are and the safety

under variety and Webex and remote. and be many the our customers free face why we they security enormous is to shifted crisis, as technologies During have entire of they introduced workforces partners dramatically cash trials for of offers a challenges. been pressure flow as This our

In with the addition, support financing $X.X to This and Resiliency Business and flexibility new financial Capital Program will a for of most we recovery XXXX. their dollars customers now, access continuity. until defer and announced Cisco help partner’s invest they payments need technology early offer through in to business

say inequities and support governments. efforts, many and global local and has proud is both non-profits, date million that so highlighting already response is these and providing I'm to problems. responders support that to pandemic This to existed including pandemic nearly technology first for $XXX exacerbating committed Cisco financial

in printed and workers, need. these to are teams N-XX relentlessly who efforts volunteers including of those shields, protective and Cisco so proud also around on the personal We to hospital have by focused how we help continuing world. be XD identify masks donating face can our been I'm innovative equipment to most

can we with chain Thank to supply been ensure organizations giving clock that are suppliers our out around working the communities. and who IT, and world our running security back we particularly you. along have and up around partners I the keep Webex, call like our to doing to to all teams, and

Despite third the we the our our greatest and financial quarter all midst are to quarter turning performance challenging of Now, crisis delivered operating environment the financial of in performance. a lifetime. in, solid we

are immune to impacts not pandemic, believe remains global position and business the we fundamentals underlying we strong. While the of financial our

to the slowdown As companies IT across we the we the look focused of world journey in business, across their very building we as of the locked performing at expectations, In environments. quarter in much it April pandemic. on as ahead were resiliency March, see reflected began a countries were down. the Then our

leadership more solid. our from parts we than a impacted been and others, our While perspective innovation portfolio product, believe operational remains of have

While role as running much secure there networking collaboration is greater, has our more of is responsibility been security been never and on so much to believe world from has to technology connected, never Cisco's and uncertainty important the to now, stay productive. our we

this focus resiliency ever invested able Organizations make must who and agility in shift on seamlessly. more more were than to and digital capabilities those had

this happen, going cannot to that the services believe products for when it's strong While emerge we thing when we one predict from situation. be demand we and our is will

of in subscription XX% own a more software year SaaS-based paying offerings and that subscription-based of through We the adoption is ago. our versus transition model and believe off. offerings business our continued our saw software We to is now have our strong shift XX%

customers gig. cloud, remain positioned to we aligned serve to over X differentiated Wi-Fi long-term our XG, create value and We also and well the believe, XXX

model, in a priorities Our stronger strong even to invest diversified build ability key relationships. gives continue business to customer us and growth to foundation portfolio

As we will digital their that and their for future, solutions through the data customers prepare the closely innovative our as infrastructure, foundation secure workforce for serve partner will their organizations. with their our we to remote modernize

of business platforms. with our segments, starting infrastructure Next, the turn I'll to performance

and overnight, has performance online and business evaluating teams their for going to quickly, greater, With how been to best to capacity productive. expand the has reliable secure, looking never keeping keep customers how users practically experiences. demand to their on world the data their secure our while This led how consistent protect their connectivity, networks with

enterprise the they've what also and deploy to or made It teams simply I've possible offices provision IT is healthcare and requiring mobile What setup, clinics. world rapidly do astonishing. is seen IT mobile around

Our clear. are strategy and proposition value

are the to capabilities. secure, ability productive these automating and We connected, powering stay of many world's while

architecture for environments this. intent-based Our was networking built like

For providers infrastructure and especially, financial having industries services security like healthcare, integrated service mission-critical. network public with tightly services, is

In teleworker, partners pop-up QX we offered new through cloud-based service cases bundles mobile and our healthcare providers. COVID-XX for use branch and

as we their scale running. strong modernize customers to to their our employees adoption network their quickly customer continued As XXXX, remote look businesses Catalyst access infrastructure, keep subscription-based capabilities and of customers safe saw

and help enterprises our SD-WAN to accelerate scale execute on cloud in multi-cloud strategies. strategy their continue to We secure innovation by investing partnerships

industry SD-WAN we our to secure solution. use with best example, integrating cloud now with Internet leading to customers an As flexibility are security breed gateway Umbrella give our our of

Our partnerships our truly multi-cloud and network across a providers fabric. announcement AWS, scale most recent Google with like offer to web Cloud us Azure allow

enabling consistent SaaS we increases, customers application connect are user and and performance demand and securely bandwidth As branches different application experience. to to our interconnect to providers enable cloud

uniquely security, company secure devices. remote safeguard always we our saw Being to solid at to of the enterprise they do. to everything security for in growth is workers increased robust rapid which on the growth, solutions are and in positioned In our customers demand the their heart world, Moving we reflecting largest wherever work. the QX, we

endpoints. in across We integrated have the the and most cloud, the applications portfolio industry comprehensive network, end-to-end and

AMP key technologies workers, end mentioned are Security protect to licenses technology. earlier, including we Zero free I industry-leading provided our Trust from Cisco As security that Cisco protection designed from Duo, for access point and network extended from Umbrella, remote secure AnyConnect

application supporting also customers are access, cloud multi-cloud by our secure We to enabling users. journey on and usage them roaming direct internet their

only seeing Internet adoption are customers. gateway into two are from we We strong and and existing our new quarters secure transition already

acquisitions, also by industry's simplified in broadest our applications, security our introduced security SecureX. investments innovation security partnerships providing network unified and Building the we automation This connecting cloud-based cloud. the we the visibility, customer’s endpoints on across portfolio infrastructure breadth and the the made platform, and and of is

their ever. productive, Turning for businesses a privacy connected have to and being collaboration security stay more become lifeline to applications. Teleworking people than critical and and tools with and

our strategy collaboration today. the for teams of at productivity, use center of portfolio as increasing portfolios Our our empowering XX% customer the XXX Fortune and

collaboration provide highly Throughout secure cloud-based quarter, end-to scaling business remote our privacy. the our We deliver and and protecting approach integrated customer’s take end-encryption, platform a secure consistent working in while invested to a ensuring to security we first customers. with solutions speed our at highly experience for unparalleled an continuity

our increase in the XX running Webex manage running We billion at now than had growth. are meeting XXX we more April, well usage We meeting generating million at dramatic capacity volume over minutes times February. February the in tripled in were in participants, the platform to three

trials that to many future. added converting also the prospects new We revenue we free Webex in anticipate through

insights to every multi-cloud tools the of provide for core in experiences optimize and that business in user particularly perform time well, the real applications With in continues AppDynamics demand at environment. business this surge monitoring and environments,

As to at and resources their around wrap to remote had want workforces and and just to the up, resiliency efforts teams, grateful the our I I world who of IT I our am I digitize and also scale. unprecedented how our this reiterate an organizations during commend support have time. to operations want operational have heroic teams speed

globally world to has of this is resilient, running highlighted the importance technologies the and crisis infrastructure build. keep we highly This having scalable what

productivity help business a that and solutions drive secure support highly environment. innovative an providing are We our customer work ensure continuity,

past from emerge innovation crisis subscriptions, this progress position before. more will shift accelerated and in a cycle, software stronger we than than better in to on our portfolio uncertainty. believe refresh are our We significant and With today of times we

by environment. our future proven and Our to strong no invest for confidence sheet execute the balance matter supported further ability is our to the

have I and so has is what proud brings. this are regardless I'm also amplified built the achieved. we been to Cisco of and believe I culture resilient last, time am of our incredible during what teams future our confident

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

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

and results Our EPS challenging overall margins environment. non-GAAP in good reflect very with a growth strong QX execution

and our COVID-XX was impact Total in business component did billion, supply results this down especially $XX chain X%. manufacturing on our revenue operations where challenges saw and quarter, have an constraints. financial we

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

the on XX%. that by more most Total me revenue revenue. is some area the billion. was was our $X.X impacted platforms Infrastructure to challenges. down supply This down QX Let XX% provide product detail chain was

in revenue the both growth Routing and XK. in We the Center. see Data both provider service of in continued Cat decline Campus ramp Switching did strong with declined and enterprise.

of and Data growth we in Center our the X Meraki. strength did offerings. servers declined HyperFlex solid see Wi-Fi continued by driven ramp in Wireless both market contraction products revenue impacting our overall, decline but and

saw we driven down We as points. the Unified a decline a X%, did uptake end in with Applications strong see environments. TP was by in growth COVID-XX and Communications conferencing,

also threat. access up saw AppDynamics double-digit IoT performance strong in Security and and in unified software. threat identity growth advanced We was strong with X% and management,

Our security and well strong Umbrella double-digit momentum growth continued performed with portfolio our with Duo offerings. cloud and

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

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

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

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

quarter, continue. the the a slowdown During April, the we impact in saw as environment there of was COVID-XX

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

of billion, public X%, down related X%. end was and or obligations segments, product provider Remaining up X%, performance down was while was our at XX%. $XX.X down The sector service QX portion RPO was to customer XX%. enterprise was the up In XX% were up commercial

X.X profitability service non-GAAP and and cost X was gross productivity a The points. XX.X%, positive gross margin was margin year-over-year. was with margin increase memory up continued driven point up savings in by perspective, partially pricing. offset points gross QX was up product XX.X%, margin gross From mix, XX.X%, total X.X Product by

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

to This ability strong access is healthy quickly environment. have free very a cash and a competitive in We challenging a capital generation balance advantage flow the markets. sheet,

and the to Our the QX quarter of commitment through comprised for allocation of and our billion returned of shareholders unchanged $X.X was of repurchases during of flow shareholders, program term minimum billion dividend. to return to annually. continue a free to deliver our $X cash billion that XX% quarterly to we we our capital In remains long intended value share our $X.X

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

our that referred ‘XX. of to type guidance fourth forward-looking the information earlier. Let fiscal for of guidance This quarter a reiterate includes me Marilyn

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

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

ahead we plan And line ask you that the up and as question. go to open let's quarterly Michelle, reminder, for to Kelly. usual questions. one stick Thanks, my

others. get to So we have Michelle? to time

Marilyn. you, Thank

first comes Our Silverstein from Cowen with Paul Company. question and

sir. You may ahead, go

infrastructure about you ask to whether torn the I'm decline.

courtesy maybe the gross you the comment margin on a focus me as Kelly could on aspects other let and of pricing performance. that. and Chuck So fine

How could your fewer any that from ask LAN? employees the That's to benefits of If side, infrastructure negative given shifted of wireless the enterprise? solutions organizations would within in from to terms the four switching connectivity, the your from so does campus and home need you arises for I in persist of but degree. the likely the the robust if also terms What's insight appreciated. walls outlook home. work impact to many could, you on thought aspect, But work that be or potential the some

deployed. you're from spot when think that security you around, working capabilities in where collaboration be we from at home for your - how should Look look Yeah. clearly Paul, that it. customers thanks about there's clearly is our I and question discussed on there needs more to

is mean return question and And their return they that the how that about to supporting infrastructure to to campus to what we're - office does and people one the then be certainly office environments the the how much going when watching. many

had are fair the realized amount a that, I equipment. aged who I’ve they a technical lot this who center will of that that customers a of crisis, pandemic have this tell you of not of have at during and debt lot they

going call is. all cover and is them leadership team is the our said out And many about this have of - so know actually robust modernized senior wakeup us is this air to we what going upgrading a building But and this to give timeframe to a talk more infrastructure.

on will be that how their see So thing? it all at to let's different they're capital again, to at how how But want different based impacted, out. situation going what customers pricing it forward do about Kelly, paces that's able about you is. and plays we talk think

Yeah.

Yes.

this memory But again So of some this have had we on prices. I Paul, yeah, will we inventory built some we continue margins know, up the did to you lower strong quarter. dynamics, still because the pricing benefit on quarter say at

from greatly benefited we which [ph] So in see that, the you'll VCP

bit did get worse. little pricing a But

margin it gross drove year-over-year so. X.X even on which pricing, was the minus the is than Paul, ahead, on certainly quarters points quarter slightly question a product So for and ones that your from before worse even pricing rate it last to year-over-year

very, again very driven by as and mix. overall as productivity, memory software cost But savings, well positive strong

And number so may and want correlation about the infrastructure to chain? the you supply talk revenue platforms between the

supply chain the revenue. majority, of the in that was the challenges so our not of drove very had components all with I Yeah. factories said we infrastructure I prepared a chunk the impacted remarks, in if like certainly platform both basically mean, that large side, on that being

years ago can and I financial years you the XX this to the to to ago Chuck, bubble? crisis appreciate compare Great. that. XX

customers bubble think one one, compare were we’re stimulus attempt as the the seen because can from or the based I difference epicenter we've around the that this - economic all on response here the that represent at certainly but a say. secondary the one, – to response it so would slow I of a to of commitment world. we presented the and the to before. In But - the never I this to from the the felt at level that different. sort Well, deceleration broad lot Fed, is damage, that we you acceleration don’t is challenges are economic And think know has has thing we the collateral Congress

what like one that see I on difference I else that one therapeutics customers think of is, themselves, some to the harden to so get like depending for believe point I everybody I my us around this prepare next the in need my and availability So of when that availability the do clearly we at I that business now vaccine, asking the do happens. came upon testing, the consistently this better and that are quickly and world infrastructure a think this something do so back stepping do to and time

Right. Thanks, Chuck.

Next question please?

from Thank you. Kidron Oppenheimer Ittai & Company.

You sir. ahead, may go

hear workers I Webex to glad just surprised, okay, a about with applications, all bit And down hard guess given had it Thanks. question I was and on as for the Thanks was a there. is the work year-over-year well. everybody I a the doing little basis. AppDynamics, push

I a the us businesses. transparent a and of guess, is bit IP understanding Webex and Chuck, that here you then AppDynamics give unified versus can relative more revenue kind overshadowing little those the clearly of of levels declining better be and

product trying I'm businesses businesses declining bottom growth category? on we how understand transparent the to be finally overall are to where close can the a in an

reasonably think, I you look you applications and well. last Ittai, the then, and at of some years Kelly But if me performed some I let couple the business over color can think Yeah, you think give I give they've collaboration, metrics.

running with tell was opportunity is have revenue really three that, get said time, future. think my one you I to and we convert to as our of that about believe so that number from customers we in categories you priority the will customers we prepared As have, up this remarks, in I and Webex what will what happened

So had them they've whom we licenses, just their productive. allowing our But again we'll them priority have up and be we'll was enterprise future. customers, the running already and that up work them go with usage and to licenses of to and exceeded who need many more getting clean back in and

the the commercial is it we we a enterprise Webex which of The new that the time there then online. And customers, third first customers, in out. took for a accounts second was advantage sign-up for category, trial would and free who had programs of free put are number deployed customers individual XX-day that customers more

would opportunity say reflected revenue I what really see the in something to that quarter two we believe represent in first going the that's announced. just we future categories of forward, and but the the be wasn't majority we'll the

any want you make comments? Kelly, So to

very size Yeah, of of I thing of the size, analytics, through mean, pieces, I'll monitoring as you the terms say for the is growing AppD business the the but you of these thing small the I think good, software. said, of helping and double-digits, percentage overall IoT in still same the then and super relative strong, terms applications is it in just the know, fairly applications,

the seeing that collab communications break the we comes which is traditional in collab, that been the So have are down, I chunk and total of and the biggest collab it we where right endpoints. seeing down pressure, is when then unified

that for us while with goes. as be to going that's So a

things big a we're there building I with that the - this transition guess. down and is to teams the for trying the portion But like talking revenue of that's continue the conferencing said, revenue strong will a there, clearly while is about. but some that would Chuck again We're are

this expect be next normal uptake here. to we and nice I the we just our the the during we using When the tailwind paid quarter, a over the when we to look quarters uptake, last convert for is free look what to at had demand from had, offers significant at few going us

mostly say about think IP, way And is the that Got right it. to to just you clarify, this? when endpoints,

the Yeah, that's driver. biggest it. It's to think the right about way

Okay. Thanks. Good luck.

Thanks, Ittai.

Next question please.

you. from Hall Goldman Rod Sachs. Thank

go may You ahead, sir.

volumes, on mostly - could I've in I could question. the Thanks the commercial down US. surprisingly and the quarter also is the of One or also last regarding you that guess juxtapose that effects. Is if the the guys. being got Hi, guys is downside, I that's Yeah. APAC acceleration then guys that regional you kind order the I'll fact two. driving the flat wondered for US was after dig weak into X% order it

plan Kelly, we that then to the quarters. in affects on it how know, I I cash then the affecting cash into that us this expect flow, you of flow some is flow like second financing And guys announced. you cash next had unwind is question the should give Thanks. it $X.X could don't idea few quarter and how billion over

little I on financials give a about the and So, and commercial - talk can Kelly, Americas you some then the why don't color the metrics give and programs.

a you the on we saw at if early. see Americas, Europe we was - pandemic, and Asia Rod So what can the timing you hit and Asia frankly, it in of than got the just had certainly stronger look

consistent So more business. the the we in saw decline

What the and customers the executed more is strengthened we we saw their in see did and security obviously in on business as Webex continuity. - US as Americas

they in as We strength out capacity. also saw service built provider

in business. saw webscale saw cable, strength in we strength we So

have the the marketplace, customers row that us seeing re-establishing second we results those is which ourselves and with relationships the space, And quarter that investing part about a frankly just both from growth We've been a the been webscale years our hard as beginnings in in the a robust work talking the as we had how had talked the that haven't we for well which while. in comment and to on marathon about of in and of was years there. in of of innovation,

really of teams the what have I'm proud done. So

a quarters. two that's bright last been the So spot in

enterprises, it, this think you disproportionately by businesses, impacted On commercial, have medium they been commercial about small mid-sized or pandemic. if

color got hit be and So here, going that the to add financial then it's and not about a bit is you program? surprise others any a hard business to talk Kelly harder on little than that that

Yeah.

to switching On America So, in the in Americas by story, add - was to followed just the also far, Americas it down least down, was APJC. similar the and the and up just biggest a U.S strong yeah geos and EMEA also it's but were down US of by to in commercial, and was chunk all add, as the it the well.

directly it's the the kind when how look related So to you of went. look orders the overall geographical at

of terms Business Program, capital In the launched - just at of the Resiliency really April. we end that

like the week So ended. quarter or before a two

nothing in So the that quarter. impacted

So in QX, there will be I'd through. say a going small we're amount - we have a pipeline that

of The haven't like at, - small is financing, healthcare early so signs lot for the a there. interest of we're pipeline customers that pipe commercial lot systems, done small a big there is there colleges, a looking that smaller really systems, healthcare who a of

start in we'll to see QX. So that convert

expect I huge months. in the some in impact QX, will to January QX in cash but payments flow a perspective, slightly There normal a on and don't they impact. more get From be then back

but impact customers that those watching helpful it's quarter leveraged that impact the will QX. a and no that be to and I small think in past, haven't be we'll this in hopefully So it

you. Thank Okay.

Yeah.

Great.

question Next please.

Sami Credit from Suisse. Thank you. Badri

ahead, go may You sir.

new you I Hi, and of enterprise, was and down customers given just have shifts products big XXXX. webscale you also mentioned consecutive of made but some to thank with home for you quarters work December given progress from and stated in also that solid know you launched the for two you SP both fact routing that the very much.

Are seeing like How accelerate performed the your things accelerate been shift? entire or the maybe slower update the product product? just and has adoption you has during general XXXX the or expectations a Series than on the adoption has bit of a products

webscale the hasn't quarters yet. even good XXXX Yeah, in the last the the of the two the we've news is seen impact I guess success thanks. seen space

it. those it's But So about in customers you, in lots before trials about they the doing very still have will evaluation I deploy. We're feel good trials. periods it's built. what they optimistic in incredibly We have tell very teams extended of - well

we're and well mid-single in up webscale buildouts of Our indicates orders service in provider as digits obviously Americas business the as that that them the which was business. some QX capacity seeing

it we announced now first coming. So We've family. and platform. couple versions more are members are where with we're how the see optimistic we'll very platform of our good of but right about goes, just And feel of that the there

very much. Thanks Great.

Chuck. Thanks,

Next question please.

you. from Samik Thank Chatterjee JPMorgan.

You may go ahead.

get initiatives vice you Joe your Cardoso of key out versus Are on thoughts change XX given your around seeing is Chatterjee. backdrop, I expectations a to look there the environment? given this days as any Wi-Fi acceleration or macro cloud, you Samik some your or for XXX demand push at wanted specifically versa Hi, gig? just Thanks. in of the X ago

sort So I think there is to put to what XG their we see little on of for generally accelerator. but mixed, a bit customers want tendency our happening with foot a is the

places they're that regional I to United States this during done the other be not sure think going they get pandemic. you heard with governments some that are and of our customers that and permits are looking able around to for

who You a they problem. saying got other are actually that having are customers not

an realize work acceleration, from there of we customers also go scenario provider But not generally service think some this will particularly away. be it's is as so our - element that going home to

to that reason hybrid And that's very think worlds be and around the their where the be we're we're want accelerate strategies where continuing have going work in in so from XG. the will these broader to they the to deployments to even I working going future distribution and a continue to users much of

cloud, on customers. mixed had big significant in say I'd from any I Wi-Fi see feedback the say don't shift. I'd I've X,

I about this why cloud, how strategy would cloud this they a understand have think that probably it's believe change and doesn't general, a it. that but - to tailwind they in there customers are some they don't go

it - relates our to strategy. So will, but as it

We to cloud those more use customers continue help are accelerate the technologies that effectively. our going to

some are in our the future offers going restraints. as are CapEx given We customers of OpEx need to customers, - our to going

on we're balance they the a So to portfolio to working of that CapEx in flexibility need. op give our both models be customers delivered

relates it development continue to around definitely accelerate to remote our as going as only going we're portfolio think cloud to accelerate connectivity the And we because well. work and to work and that's security

question Next please.

Marshall from Morgan Stanley. Thank you. Meta

You go may ahead.

thanks. Great,

the customers. end as have April from are focus sense looking You you know, uncertain like had what you're like that initial new do of of with continuity But are home or understanding to. or largely feel customers business talking relatively we of and for normal, still were beginning into March budget customers an kind outlooks work revised XXXX of this get

a very good It's question.

solely few and and prepared focused I went from and it surge of a this took a we think stepped company. think breath even worked then they work we home for for I a as how where were could I getting customers see themselves then business and back weeks through couple for they a on weeks in a continuity environment

my were making virus solely our up running, the on immediate and forward. And the we're are move business our more those and then things. we and breather response the focused traditional running, frankly, and community up in getting of focused all and things calendar sort how customers even had now we sure getting much issues We teams the took we a investments and that on

in mode. are customers our think same I the And

re-prioritize is moves right forward. to the as now and on planned took I They the going have that few be it's out had customer okay, I and think on I - to this, business phase I a continuity. do year very the deploying dealt weeks it rest of based projects they every how again who figure that to they're think different I with for industry-specific a how at

with will examples. I'll you higher in education we're the the a give whether be few campus see discussion the Obviously, students fall. very in around news on you closely working because

told that. the need the in March used could back need everything United they States As students working and of go to and they architecture now get with long-term the them actually step back heads the online me, anything in systems and we're do and to one robust they biggest real that one of of to they build

I going healthcare that is one investments. to think make they're

what months. to as change could telehealth them work and together to here forever over I support we think those put last finally will that - robust as we industry to to architecture think continue build and few the think I quickly telehealth and as with a out that I is that's opposed more going

right want you them time, You do, their that do make is is if one reasons got sure make Not help there ahead. this the during program need services the I partners we to leisure, investments they think it hospitality, wanted to were them moving which travel is the we during time see big and they to our out the financial but only are to got that. we remember afterwards going we to thing that tough struggle, candidly of the financing to

to in by going vary or it's have going the better to greatly I visibility industry. so. we're next But think So days XX

Great, thank you.

Next question please.

you. of Liani Bank from America. Thank Tal

sir. You may go ahead,

only Hi, we than sequentially why year-over-year of, contracts impact hearing one that the others are grew and for why customers areas don't all, was We're sign we the of both the year. see that the that see don't longer uncertainty of guys. COVID-XX. first willing of impact of are the and one the Services are drivers is, question on and what that to from less because

would Platforms to decline just see follow they take and does like I the trends update Infrastructure other the long and space an in it services get - this the So on to products? in how parallel it and

Hi, Tal. question. good a That's

we by software continues I support. like had say, has of So solution their a and driver That to support strong QX it their again, would be another been quarter big it. yeah, in and driven

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lag in the maintenance, terms drag, on usually for a When the a infrastructure while. there of it’s maintenance. And is lag then usually a orders

is and start point before always out quarters. feel that come through that's solid cycles the I of business your this on very but pretty But we'll and little point. maybe strong a to we a bit like a we've think So that, overall, gone in fair upcoming

you. Thank

Tal. thanks Right,

Next question.

Thank you.

Next question comes Evercore. from Amit Daryanani from

sir. may go You ahead,

guys. I fairly does I the how you past guess a lot for for a 'XX Cisco recessions my time common this guys question taking on example. 'XX, Thanks get versus up question is stack like

the So one to better do really is get how one past positioned handles and performance through correction to bottom past and versus it think would manage would of helpful. Cisco perspective Cisco versus cycle be really how and this helpful the to perhaps on different be maybe get this your to you

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offers customers So for we relevant have now. very new right our

Right.

Next question please.

Citigroup Jim you. Thank from Suva Investment.

may ahead, go sir. You

talk you running, forward as go kind with little and you. you now. the typical from a look monthly importantly working or Can keeping for the employees, Thank a potentially enterprises and little a of are delaying that things, enterprise, does cadence you commentary color different proposals how be as have their might up maybe home networks request bit the discussions trends, their orders, it's because it about the bit like seems

a is, back of does of I more incumbency the hey, it Cisco to example, hey, normal to a point, some visibility little when have. say or return three more, visibility six help give you for does do at What mean we things or than currently months in more this Chuck, buildup what we have

help you If be commentary, with could enterprise great. the some that'd just us

my do virtually I that emails gotten will of from saying many every number Jim. you industry had them, get what this, our of from I've the Thanks, we to about tell to peers you people did Yeah. their and teams it help XXX,XXX them right Webex VPN couldn't and they that helped guys if now running Webex. or and running up be wasn't for that around us over and remotely how gracious for we're business overnight

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work think you during happened a think your believe believe Jim, what And solid I think I I great these are do to strong, tendency it partners to with because whatever are that is, that's tell times point, companies times, to to what's these takes is our we and and I are want there make you that you and customers are going successful do. during you

I them as I that infrastructure, you're saying, be going need on could say like now. that I are and of said some wave right to this again think, will of right customers never going this it coming in think don't work we is have are CEOs the know if earlier, for this be. look to again at two to lot but unprepared and a looking a there at something we the may now I yet, there their fall, many

like I be plans now, where even into know being frankly in made, talked be rather we there but there is higher K-XX schools kids reasons, be in see they'll most the about not though Right those certain the it's I contingency will investments for industries what going in ed. also would back institutions classroom K-XX teaching fall. much a definite that obvious earlier

So happening. that's

pharmaceuticals are up The up obvious reasons. beef drug all cyber research, for to and the their building for infrastructure their infrastructure the working manufacturers

wouldn't expect industries things that are is really until going a that have the of crisis I to significant lot the other we side. you to again make are heart well, there this So of at investments but then get who

for much the so It's greatly you Thank details. appreciated.

Jim. Thanks,

Jim. Thanks,

Next question please.

you. Ferragu Thank Research. Street New Pierre from

sir. ahead, You go may

side are to very for last investments you, you be very said on comments back we to like hard Thank just tough come question. and I'd industries you the my getting Chuck, it's get taking made, the some crisis. now to before to hit make for other going the of you them

of risk because even months three the trying months actually from six I'm the budgets the environment into out actually But IT of as already to they're right running. to like much as the are keep to there economy their yet more situation in and of the continuity the going is a maintaining now in what how business actually figure well. six in three months start that pain, in maybe so making though recessionary say more a cutting not getting are economy months, at a macro you of And that the and of or enterprises spending how is to hurting business these feeling much stage, mode is of into getting pains, maybe

percentage be helped And the been that into is so much has economy my are and the what percentage hurt of could down how really What further question we line? already.

just this. my I'm question. good very give a to you going It's pure on Pierre. instinct Yeah,

of I aggressive we peers, going right now. be three on any liquidity risk us that six six to to at can have any planning, be solvency one anybody three is is we're I think customer that to issues, months in potentially already because anything if have right that could months is who months away, see don't working we're that have months now think my all we No is waiting. issues, we pausing.

nine or are six months you impact think months, think see of that in those I will So next impacted. I the most customers the

it know they They me impacted. Let that say way. are

we lot industries will the believe correlation we makeup. customer customer our will you, that percentage the I against that base, if there a a our will our good invest you large of tell map continue believe a of that to is perspective, invest already from are industries

others look you financial are I and that for will also these providers, mean invest. all of those pieces public So we whether think sector, at and us business continue education, to services, all higher service big

going months who So your is from been it's already answer be to already think is to anyone specific I pausing now question, months mix, three but has impacted. and six trouble to in

that. Very That's for Thanks answer. clear great.

Pierre. Thanks,

We for one question. have more time

Tim you. Barclays. Long from Thank

may ahead, sir. You go

kind me in. to a focused Number the to one, you squeezing on of competitors twofold ask are networking have been there. of business enterprise companies of think pieces competition, about Chuck, your trying for to you here. wanted where share take Thank question comes mind gaining about some share, if where some several

share, that real the a have? disrupt pandemic disruption conversely negatively? share guys cloud to be to or you some the does Thank has one major doing you of like others this where And think well. any markets are poised impacted take of to you of do opportunity are you are market about Cisco then do think there markets to maybe you where those, What the ability share But positively think sounds you. you some is high would if it either that gain

a great question. it's Yeah,

you on share. time and is we good entering this that they even some our areas difficult have it acknowledged from competitors markets to heard market I be had more their to on think where of they've earnings calls during that going where in do planned

in And campus, we robust have again in a the we've I'll probably the had decade. those most portfolio in you remind areas, like that

they the work know and people I So they - portfolio. think with to are and we're good in favor. will customers these, they very shape And think I go very with - trust like our that times in in again want

the we've been - on X.X I next the area year. is play the last your point But that think in to for take I years share, webscale certainly we the one can think running the areas X, where over

evaluations customers, will space service doing the with have portfolios share those those have routing just basis. they of daily because on both and the requirements in a think increasing the provider recapturing sets because to of that and some because continue they they deployments, new I XXXXs are and the of

the backhaul that out can space think we've other think the core of with, I the the in XG And technology the and well. networks, as there networks, carrier I networks come with XXXX with our access some share and take we

that things good where good feel position. a pretty are are the in right about we I I think control So, and we in now, of we're

sir. you, Thank Okay.

and was question that All our the right. Thanks, Tim last of call.

Yeah.

and thoughts now, through customers are thrive of other front part gratitude to are helping with with getting responders, this of for our you who front So to being you this telling let the much just tide be difficult hope right we look side we those in paycheck pandemic actually by, all, very We first all are people try the our safe to and us and Those the stem is just some this our time. prayers the of I our reiterate is camps, paycheck as our for me are of to who struggling the doing look and safe. are to first everybody colleagues just lines. in continue homeless flowing forward line live gratitude with and thanking and you who and forward close of safe to locally that kinds our during of the workers, all environments. on quickly healthcare possible especially the also those your these that helping you're who and as helping workers to family want society

with So thanks on for today being our call. us

Again, Wednesday, Chuck. will results Time. August Cisco's the X:XX like QX and X:XX which will our it I'd the close in PM is during quarterly audience financial plan We Time, Thanks, annual an is call, unless PM on to Regulation remind Pacific light XXXX public next on to not earnings FD, reflect at done guidance be XXth through policy disclosure. its now to quarter, explicit Cisco's comment the that of Eastern call.

to contact much very free feel Group questions, further any Relations today's you thank have joining Investor Cisco and for we call. you If the

participating call. for you today's conference Thank on

today's to would call you from like This entirety, please call to you U.S., dialing concludes the call. dial If in listen the its for may outside and XXX-XXX-XXXX XXX-XXX-XXXX. participants

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