Cisco Systems (CSCO) 12 Aug 202020 Q4 Earnings call transcript

Welcome to Cisco's fourth quarter and fiscal year 2020 financial results conference call. At the request of Cisco Systems, 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. Thank you.

begin. may You

slides our full everyone, quarterly Welcome, Head webcast now made corresponding available Relations website the fourth of Chuck quarter Investor slides, CFO. on Kramer, and balance information Thanks, statements, statements, release. will guidance conference Forms documents risks that and GAAP for in to By of cash on to call. uncertainties, today XX-Q, important the be an disclosure. business. our XXXX. and our sale Throughout will XXXX explicit Video with Robbins, filed also Relations our guidance the QX information, non-GAAP a press through [Service section will the financial XXXX, press we we sheets, is call this by will discussing specifically the information, joined cause earnings other Investor and The Mora, Investor SPVSS in and that Information SEC, please statements. This Solutions] fiscal from the release most call, could section including also we that CEO, Relations, reconciliation subject materially in Kelly our details. in year-over-year including see quarter call. risk and unless will reports should financial to Sue. include are our in for differ They XX-K comment I'm Cisco's Cisco terms the COVID-XX, comparisons Chairman which found detail providing we Financial you product actual In the of completed our recent otherwise. further including is forward-looking flow of discuss fiscal to Income public following can GAAP this seen supplemental not With we'll have on factors of the forward-looking earnings A made with respect website. matters call be results during be Provider and the throughout will be terms contained in in be stated be non-GAAP accompany to discuss guidance, first Marilyn of quarter results statements, and done and fiscal financial results we its referencing geographic basis. customer this it All revenue on made the both results of Software the orders identify unless and those product and conference

will from of information is be results. historical such, I the it over to to Chuck. our financial will we now discussing SPVSS the normalized As turn business all exclude

you, staying you Thank healthy. Marilyn. and your are and We hope of all families safe

Our during with affected times. who thoughts by and challenging to we been remain those who impacted the these are on everyone has to grateful working help remain the pandemic, lines front those

As is more customers technology and offered we've both this it's offers the for at new ago. incredible into to time six in stepped with innovation, some I we organic we've focused. reflect more Through me for significant past of Cisco midst been transformation culture role this hard undergone everyone inorganic agile, years the work preparing over months. come what new, in goal the of a Financial from we have our fiscal XX% subscriptions. Cisco, We we driven Conference of XX% in that did more and year shined The since proud XXXX, revenue laid Through and while innovative, market-leading on call, transformation. achieved complex software we truly to our has most our we innovation our in today flexible resiliency, transitioned have our for in the model, And history. a so our and on am with They what brought a of customers, we determination, of commitments, consumption demonstrated XXXX, of have business to of delivered some achieve financial times five At out as software. our teams our achieved I Analyst accomplished. metrics our key XX% and compassion QX. delivered set

FY revenue We our also of from delivered software of and XX% our services exceeding XXXX, in target XX%.

architecture beating now have networks. executed to customers have drive we revenue learning our sold as simplicity and XX% to launched organizations. modernize our software help help Lastly, using of We our With their as their guide, and target machine we intent-based strategy transform our of of XX%. our them subscription, successfully management our customers and our networking automation against cost-effective

to we're the the offering innovation the in we've with to life trusted cloud, As we're the insights a new future. most observability access introduced enterprise for anywhere, customers remote SaaS software, or us our We solution. cloud, secure insights help workloads more data across for assets environments multi-cloud enterprise, driven we optics integrated in in the their Webex, company has for security our with center, capabilities The in world. secure optimize and top and security With our silicon, hosted delivering real-time with customers cloud security AppDynamics. for experience collaboration to public our portfolio highly to fast, like the applications move become SD-WAN Internet helped have also platform the user to and private the bring platform,

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what We areas: our have healthcare, that and from X; security; enhancements of best, in increased These as the for areas, time, next the and I collaboration; next-generation will this customers most our need strategy and application and right allow will accelerate us work; focus many and continue we industries; phase investments future more Wi-Fi our the define deliver also emerge than easily cloud innovation customers of the following am following company in confident stronger consumables pandemic: other silicon; in in and our that by cloud challenging relevant transformation before. the the from XG automation to help the will same we investments enterprise; key and time AI; our analytics. of education, networking; more. us, will which multi-cloud ways. optical At simpler, XXX-gig; we been accelerated the have insights once to investment; the a again, will bring

our discuss performance quarter. the me let Now in

reflect in challenges current the we environment, well. While executed our ongoing the results

on spending. expect, has As the pandemic would commercial in had the and enterprise orders, slowdown impact our most you an overall by driven

our for recovery. customer SaaS-based our to With financial continue massive to strength platforms. customers have fiscal resulting we Despite resilience innovation, greater also of broad global seeing built in a our and on key reliant compelling and demonstrated another strong the shape and certain challenging increasingly of pandemic environment, Webex, increasing this to portfolio our on are XXXX, relationships, remote operations XXXX, spend on quarter safety. a their in differentiated the the are purchasing and solutions. technologies, demand transformation of while this, strong triggered technology areas and foundation, our on of economic maximize many strategic economic until based others other security, personal delay Throughout clarity the timing We year automation has shift rapid operational decisions solid visibility customers they in Catalyst and

from adoption. an highlights we consumption June models with expanded education and In services to quarter. few introduced the resiliency offering a accelerate solutions healthcare cover and I'll business Now simpler portfolio

clinics. simplify, a employee social of distancing scale, Infrastructure our Within take many engagement them aging of to such Platforms effective we to networks. to continue portfolio to this working their connected as expand refresh will automate the their workplace, infrastructure, We secure, continued portfolio advantage to Catalyst management see employees strong cover customers our ramp and pop-up areas virtual the their at of business, home as XK enabling and from in

across acquisition intelligence best of enabling visibility our deeper AppDynamics applications, SaaS-based networks By experiences deliver and the ThousandEyes for offering possible our capabilities and analytics will with application adding these complement portfolio can in customers, insights customers. Our broader and by distributed driving improved be integrating and us to their of for digital well customer their at our top intelligence SD-WAN scale, technology, as experience reliability world. and Security cloud a priority provide to as particularly continues this unparalleled applications. we

customers and our on of is protect in from resulting security growth working adoption quarter. this device, connect portfolio, anywhere, comprehensive to double-digit accelerating ability the our any Our revenue

become good momentum in protecting our data cloud the we users had distributed, data. security and cloud more and applications, workloads, As more to solutions, goes

of two-thirds so visibility, launch automation and example to good portfolio automation, ago, two daily with experience. architecture also and many zero-trust organizations, SecureX our endpoints. have designed of Duo, deliver also X,XXX to capabilities this Since that simplification endpoint for customer We enable Applications we remote increased past products to for our over which expand over customers, secure of become security few solutions a A has combined infrastructure. is Umbrella, of weeks this active platform, our security months. consistent which AnyConnect, is six continued with delivering span AMP the enable our our only our and unify or power We're a worker more active. have the lifeline and have

As future strong had how performance organizations quarter like, define what educators, collaboration and governments, transact, have as everywhere a their will technology key Webex play growth, and embraced they role businesses, workers double-digit work, remote in connect. work. evolving this with our front-line looks

see single We to conversion AppDynamics experience achieved begun a monitoring optimize expect tools solid quarter. this insights momentum paid also subscriptions. into by free customers their providing from to in our multi-cloud of another to continue, offer environments. great of trials user value glass as These have we pane real-time the

I will let over here, achieved Cisco. in all graciously on clear on on Kramer, with future for on so want into can confidence, to the think reshaping an and improve a key have assure partnership acknowledge our advise we we I a role process. successor has we've position as agreed want Financial and our As has played helped that has the X-plus absolute to Cisco and retire to from Officer, to with us been her Kelly, has Kelly years, performance, who we world-class much Kelly take friendship. transparency, we made has the growth. you Cisco will Chief to and thank until always past that, Kelly that for finance seamless on staying Kelly with simple, her effort focused me. team, transition. have aligning a the on delivering the have partner to commitments, a focused incredible for search stay all financial and your She succession been our our you five your moment company years and you led know decision are communication, success. Cisco I I Kelly today. to CFO board investor during Over about Kelly

You will missed. truly be

before for holds. Kelly, confidence I to future turn over what to the Now, want my it I reiterate

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it Now, I'll Kelly. over turn to

certainly I'll year, summary our I'm great, what's with team, I'll my been by financial guidance to the of want I to miss of QX. has who followed all team, looking finance cover and forward for but quarter, want start really Cisco. really job. to has then the Chuck. Thanks, full and you, I Cisco, an amazing thank leadership thank for next. the also a It results

reflect Total X%. QX in execution down results margins strong was billion, a environment. challenging $XX.X Our with good overall very revenue

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

product X the market with did XX%. driven most some impacted switching, product growth see to was the in double We saw routing, of Let the is Infrastructure Wi-Fi the Data on the particularly of me our of the we pockets digits, down across more was QX DRAM was billion. Total products. provide the wireless, by of markets. down decline We strength our down data COVID area This by environment. with XX% ramp revenue. commercial and Platforms XK, the price X%. center revenue was enterprise and and Cat center, declines $X.X weakness up which Applications detail continued primarily and was declines. weak saw

On the the in remote positive growth working. side, we double-digit with of saw Webex strong importance

and XX%, in saw advanced Communication was performance declines threat in also solid offset Unified and TP This by up management. security, software. and Security strong threat access, We AppDynamics in growth with identity unified endpoints. IoT network was and

was advisory growth offerings. Umbrella as growth security performed with with had well, quarter, was momentum as maintenance Duo flat This but offset which and our the for was impacted portfolio double-digit in environment. our we cloud continued by software services. Our the business by and strong services, Service revenue our well and support COVID

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

services. software for billion, software portfolio RPO, was in over XX% RPO at X%. the Remaining growth were of up year The end our up subscriptions the strength up XX%. and points of continued QX or RPO year. of X service Software total and performance were $XX.X obligations, product demonstrates of XX% was revenue, up

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

And X%, emerging year points. service was sector down with APJC our was XX%. was XX%, plus non-GAAP geographies, XX%, down was X.X gross down BRICs over X%. QX In provider X.X Americas was service XX%. and while was markets gross public down were down total was customer enterprise X.X down down XX.X%, From down down the segments, down Commercial perspective, margin XX%, was Total XX.X%, up Mexico gross was and points. was a at down EMEA Product XX%, X%. profitability margin Looking our points X%, the margin year.

to which XX.X%, tax was rate annual the tax GAAP true-ups the reflects QX rate. Our

perspective, QX billion billion, perspective, with income $XX.X $X.X equivalents, of the X% $X.X was was investments shareholders quarterly through of EPS over cash, a We from $X.X returned our total cash and a bottom From was cash $X.XX. allocation net to year. billion. billion terms and flow GAAP QX line, Operating ended dividend. In year down we capital

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

This XX%, in cover and $XX.X ThousandEyes. margins in X.X non-GAAP X%. and strong and of billion, our acquisition repurchases cash We X%. investment fiscal X%, flow the now growth flow. quarterly To our environment. closed a bottom the non-GAAP in non-GAAP results. represents flow points. and year innovation to EPS of was line on margins fiscal $X.XX. From points, seeing summarize, cash net we week the received delivered a our investments returns legal delivering Normalized we comprised grew XXXX. up Total $XX.X down up with of rate was last related QX billion, to up EPS income we full We're down was in areas. GAAP R&D with growth Revenue $XX.X flat We fiscal making shareholder $X net innovation our very for year, share challenging environment. non-GAAP is cash operating delivered X.X was was and dividend. settlement a margin down That and in more QX margin $XX.X billion was to income and shift Just Arista, $X.XX, consistent with shareholders of XX.X%, of billion, fiscal subscriptions, increasing and cash billion for move EPS was perspective, GAAP the X%. and capital value. was $X.X we strategy year gross a operating billion I'll driving $X.X which From well returned our the the challenging allocation executed operating of are over billion fiscal XXXX for and our the perspective, strong software was long-term for the in XX% free very

referred disclaimer the regarding reiterate guidance Let earlier. subject forward-looking first fiscal information quarter the our guidance of for Marilyn to that me to is This XXXX.

to rate minus gross the to XX% non-GAAP year The XX%. the the range to year. operating XX% range to of is the We be expect non-GAAP in X% expected decline rate margin be over provision in of in XX%. expected We margin into non-GAAP minus expected anticipate to revenue $X.XX. to to turn Non-GAAP to be range XX%, of is earnings rate the Marilyn it back the move range XX% and to share I'll from can $X.XX is Q&A. we now tax so per to

Thanks, we to a as it And to queue I'll ask over up audience reminder, through Sue, get only we'll questions. we possible. the question open to as so as Kelly. now address for have many you. time one the turn Sue,

you. Thank

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You you first question LLC Credit wanted Suisse the Badri just for My is may here. Thank very - know. Sami Securities much. to go (USA) ahead. team I

should and you've new Now and some that hoping Analyst if from was guys that I'm services, new that the new Day, products a just we at measure new do you understand maybe have to know the you of range? software in coming mind guys or see you guys target some introduced achieved the get new you areas. XX% hold services investment a new target roadmap against? revenue new I you or XXXX and guidepost a to and given and

you through have, we'll we so, the and some and cycle feel last question. obviously time. successful we Sami, target. been talking been were new week we the then have this still pandemic years that about transition, communicate at this we'll set it's to relative and in just And them we making this to to to pretty new thanks a that we've and like get three for or your go, to as a need a targets ways question, We

Sami one Credit don't Suisse Securities LLC (USA) thank yet. you. it, - we Badri Got have So

Sami. Thanks,

Next question, please?

from Research. with is Stanley question Marshall next Morgan Investment The Meta

go may ahead. You

Thanks. going they kind do make in are Where conversations changes the based referred knowing of are having their just feel back, to of kind how you portfolio customers. budgets they for looking looking were Chuck, like thanks. when you the of on architectures like or Great, come you terms network year? their to remainder of are what you the were to with

Thanks, Meta.

the into is living this know multi-cloud one portfolio financial our we I think in that currently went their as delivering the our customers that that we are to as at environment, looking a this into about not that architectures, that deeply had I'd calendar paces I lot can network relative I as they and a environment. when their many in those think consume based do and on call, marketplace invested and say have technology clear we how service, get service, we'll it different a those of to need they'll who the think And technical the by customers to know we're it's portfolio they the work-from-home the last on think thing want at do do had I see in debt really to of our that so the modernizing said year. will abilities. infrastructure, of who as they entire end

We SD-WAN that, that well architectures, I as to our that some prevalent do network this shift we're be will also think integration on accelerate on cloud well. as dependent security, to because or be going those, on as are customers of the working upon we so and navigate accelerate have seen world going with their which them multi-cloud customers certainly helping

So as network ago, just talked XX because completely traffic today that we aren't the architectures years about, are flows the different. relevant I've built

manage customers, be and the And out they will continue work they at pandemic. to all how it think pace so on and based just different we'll a I come how with

Great, thanks.

question, Next please?

from next is Kidron Ittai question you. & The Thank with Company. Oppenheimer

ahead. go may You

fact you but you internally just feel technology keeps some feels is make like do I you Thanks. pace of to these of have price R&D fill can on faster But about open need you move know very aggressive getting I more you need gaps, feel necessarily bit much, it more you in? a are we're the smaller? been that over the today the been standpoint, to here you've on there just front you've so it wait on and get disciplined acquisitive that. acceleration in like from and we specifically keep talk will clearly most like not And need it like can't market sounds accelerating. you changes it the much there's conducive past, given about a help you in to aggressive in can also, And is – much and like M&A but evolution much the clearly and what longer areas, areas gaps moving when it the M&A. very more much to a and more bigger, the the of feels because faster, adjustment to this, Chuck, the not portfolio talk you

your got Ittai, the today R&D think the – five giving I next it's question, that the recognition that air aspects around that a Clearly, need of multi-cloud on years and question. accelerate we over invest, working of you'll couple technology collab, this But great help attractive we've the the just that four, transition we our think different question And see cloud of assets out they're like a the cover levels. three, the I going to this first areas feel the over to we're next M&A to of on live security, are achieved just of pandemic the expense customers is in, it's valuations there's away that that have portfolio. a basically on-prem in years. that into lot world to come clearly us from cloud more the

open continue current say that And reality to think disciplined, I I so that would but the world looking to and the we're that we at live in. we'll be

we that a ideas potential and on list all of through a targets to So we we maintain work any regular different I and pretty think and basis. options, have continue we're to open

the the real time. but And difference is be at so valuations we'll the recognition the disciplined a has right thing right I there to be changed, try have and think to do that

next the let's Sue, Ittai. Thanks, question. get

Jim Research. Suva Investment you. The is Citigroup Thank question from next with

go ahead. You may

being year-over-year United and much, maybe comparisons of you wrong, forward, the maybe Chuck And, countries out help an about coming right, and as And the year yet XXX it's many kind still coronavirus, your out missed, factor very growth. year-over-year of beyond But the seems because my factor, an well in materially if even preferred less is points pushed Cisco you aren't like as Huawei Kelly. come bridge we're more so it being States you. why outlook. me is thank of it's revenue you'll significantly incumbency to easier, out tune model And be and comps the basis things and the Thank easier, coronavirus. duration. Kelly, incumbency Thank like Huawei and for of get are revenue preferred quarter for positive to year Cisco with over maybe has coming looking

I'll and a I'll the let of Kelly then wouldn't coming I talk numbers. now. about right we're comment coronavirus the subjectively, that say out bit little

XX it much same that relative days gotten very that much as it we've clearly, days – in us I it seen we ago pretty think feels to have that me some the like not that. felt obviously to better did to XX seen areas not, feels have but the ago. US, And in and some have say I'd it general

I of wouldn't about to and some out. to but think have want where we plays around opportunities that wait talking be the before, I possibility that have would we things providers Kelly, to the... seen, getting around how talk be think the you're share world service some that the and of optimism, and we'll would we you that about those see do still are had

and Yeah, we guide. right is easier so QX QX compares. and order of the Obviously, to XXXX compare. have on goes QX know, next we from very on, compares, they we But COVID, QX and rates, some the get had XXXX you accurate so XXXX, in still as for pretty on then based what that the this comparing toughest forecast do a for assuming my guide our XXXX, we the very, that's year of of we now see, tougher as But were Jim, pandemic feel based this because tough ends. of us QX quarter and

And, much, for so thank Chuck you Kelly, the Thank and for your you details. service. much so Kelly,

Jim. I Thanks, appreciate it.

Next question, please?

next The with you. Cowen. Thank question is Paul from Silverstein

go may You ahead.

feeling it pretty in have response the clarifications. for Jim's much that there's as taking out questions. involves ago And question, US, if of as you it could it probably be of the you all you and of to cost Chuck, reduction, to I customers XX a with a and appreciate I'm reduction $X two question the timing commercial, days But, sensitivity same the were out that suspect well when count billion in I goods of enterprise all head in that will referring sold? the about as Thanks us your of Thanks. medium and nature Kelly, referenced coming just the terms to it give in to customers OpEx? small the Is for And board? reductions. out does. that sense of OpEx, respect of large and as some hoping your I you some is then costs, your the both talked or across

end so enterprises in large smaller-sized did or And see just even as very – maybe and you sort hit of in days US. enterprise then in let the around-the-world say business, straight business, little the high we go that of weakness little will medium went largest view a the as perform Paul, it's we tell got bit a felt me very we a enterprise. with worse the some little as would well particular, the in down little the strength the so, sort just small of help just But I'd saw give bit you didn't expect like of US you you add color. a In I'll as of enterprises. – in strength XX of very customer and the what that down, you in a last sort as marketplace, segment

US Asia really the drove a provider strength you and at had the because around look executed service was strong in negative Mexico negative quarter clearly, year regions, was that provider some Europe, those positive well. they in actually very saw just both really was Americas our primarily the business also We of it world, the and was they a ago, that if so the Service US. slightly here. in promising federal and It in Canada in and

now. and come and that can for positives, to that us to good Korea feels and particularly began our good did in see okay. of on United feel we ago. States. overall, and trying they see spot, of we're team I'd us through side. is Americas positives. And seeing than some to a a European us. So wild Japan was Germany better out right I'm quarter outside they're went think a going like a that build the say a days says so if The We demand some we see we for the great-great, few demand card how countries side, the the first had countries, but had about first, now, had Asia we good quarter still a bright right model XX did that think actually did say on they for quarter Not actually sort show reasonably I'd

So do more that we're you color hopefully then, to? Kelly, want down little gives a and around And seeing the you up what stack.

we XX/XX OpEx, split. in say a depending I'd you'll see the the coming of COGS and Where maybe Sure. on it little have this, side, an bleeding in the some the of of it's QX in. coming in country on of most but lot end at majority too certainly that into should And see We'll services OpEx. this, out in over the a bulk side, mostly on costs of QX say the I'd out, of terms timing, this

you. thank Kelly,

Thanks, be Chuck. missed. You'll

appreciate I Paul. you, Thank it.

will. Yes, she

Thanks, Paul.

Next question?

The next question Sachs. Rod from Thank Hall with you. Goldman is

may You ahead. go

and I recession. particularly range deteriorating wanted to Thanks that for go Chuck to this Kelly, into guess the linearity the order see we commercial back on of question. back back then volumes enterprise. in the saw I to starting I we're to we trajectory, go order guess XXXX, if

you that, recession, that recovery. that seen just whether It kind we're It's really into wonder a here. I a prolonged recession. where headed of headed feels do enterprise turning think haven't is a be we're is out and like to V-shaped this more We like real not

end you volumes just the and the beginning the I'm of of think So at look the the what curious quarter about versus of like kind what of quarter. trajectory they those

it I little more you to would give comments and – I'll that kick a a to I'll say make couple bit Kelly color.

pretty and from of of quarter, that end were where quarter think be we in the the demand I to as much looked the expected at I the line. we to beginning Kelly

too probably guide. quarter. we activity it the as enterprise line, generally would slightly the And was better lot than a than of anticipated we've it the in then end I think towards of but about get the from tell linearity was a excited had we fact, In more loaded back-end of little not slight seen, and big slight, bit quarter. had slight, But a beginning it you was better, being at I can the

So, anything add? to Kelly,

touched had in as enterprise Chuck biggest good will down, the they The and still again, I rates. the – But significantly only investing is add, it it down premier go you and commercial are of surprising. thing did enterprise, and slow on biggest, they this, not accounts, tiers does order it is kind very

saw You numbers commercial what the are.

it us the see pausing think this do their how this, and of But through I feel accounts out come think get about what pandemic big, is still why big we'll I the they're that So spends. digital their related gives think we do I it. confidence comes they're in waiting seeing of out to good to once we investing transformation is

Okay, next question?

Can I follow-up? have a Okay.

Sure.

ahead. Go

Rod. ahead, Go

hearing on? I so kind moving stuff of they from of that's you bit and of year going because budgets color aggressively and of little their robbing the toward from the year just the they budgets a wondered work-from-home talk end out in if are front Are sort they're – end what are year? all they've about these or it the just investing of changing, think back you customers. could of work-from-home, this compensate to the you're for end the Do enterprise forward demand that back pulling guys

– that about think heard forward. pulling I anything anything don't I anybody hadn't

confident it's ability clearly, just depending And the companies to position Kelly are decided But they're pursue. I continue are not their come cycles think normal have they I point. to that think made that in. just they're the that on in which there the going investment are, have investing, and invest industries to do at when enterprises continue certain themselves a out. large to larger large they think more point, they're good some I companies And some to going to out come

to going going this it's software given transformation We strategy the whether cloud, more obviously, it's come all deal with new in, this have that flows, multi-cloud as investing be out We've as we're that demand customer they be areas infrastructure that's of required strategy even employee will we that it. get think super-relevant. we And that of As and more. look have, the going more cloud, these we feel visibility the did, security think when then the world of in then like this, went portfolio the license agreements when helping it we are you to they which number at I into and side it, future. they about I and in I traffic application other those think, and the even the going experience with them to the move to be just got we've we good. I than were that to have, pretty think says have they When resonate the we it's more to to

Okay.

please? question, Next

James. next from Simon The with Raymond you. Leopold question is Thank

go may ahead. You

to we the Great, you're retire. will young thanks for question, taking miss too and you, Kelly,

Simon. Thanks,

the wanted more small strength issues, time Chuck, releasing the at understanding versus platforms guess has when is Cat my you enterprises product did trying suited follow just to up, and the I for the And been discern on are those cycle XK, mention weakest that the that customers. I the there. are to portfolio I'm because macro the sort of

of if very normal maybe could, versus where and even you the macro-related product this what's cycle-related. are you and us product in much. the cycle, help overall So contributions maybe explain you understand Thank

going about numbers this that the minute, Because thing. people for offices, campus refresh notion let is might every a are been in I'm aren't about in and their the have talk you the the Kelly months on clearly of top campus but way upgrades my share know with business that thought nine that we to one thing instinct they same I've I'll of because we the so ago. have, not customer whole mind the Simon,

for campus either those they a they've modernizing that XK think is or that, embark is and in their is they're to and However, customers to the are real who infrastructure in financial the the now their to using what have wherewithal commitment I do to are made right actually on continuing of process the what that, environments. XK they a and that decision do

that has are what those to in the about. to environments are growth haven't older our platforms, them They it of story campus who of their no committed is accelerating, one they sort customer, committed opportunity the some part the but but that's on, see is haven't still not think upgrade. this didn't I and every that Clearly, refresh, to accelerate. modernization XK it's talked continued says not we we on And to piece, using so customers which with

a story So it's us. Kelly, want do to... positive for you been

I as you your well, think, well. Simon, and point think I it said

was the just are is driving the buying the legacy But falling and new out transition. environment. faith what's the feel again that we're that segment, and still product over which launched buying, portfolio point. of XXXX, at Cat growing really amazing to customers COVID still the shows like that the when they lower When off the come commercial digits, look when the fist, to we that's it's just overall why referenced, impact end, early so hand I individually, But is in have in products is you – products the good is So that we about the your for are of lower double it. portfolio end, very it and mid the revenue and the

et to top also of it wiring it's this goes access Simon, as whole I early still into a product just process. one cetera. it enterprise, note. into, important business an closets, Number in on It is are think very goes is XXXX, that. it's we layer in but branches, in think some cases, And product, two comments I the the small

still we will that. continued So see demand some for

you much. Thank very

Sue, ahead move question. next to let's the go and

Fish you. The Sandler. is Thank next question with James Piper from

ahead. go may You

Hey, question, Kelly. there, on retirement thanks guys, the congrats for the and

James. Thanks,

the us questions the But, accelerating talked update an few you a is, it? utilizing that And revenue investments? and the think help been Can acquire transition want me, For guys asked Ittai's you then have license it where guys given of where accelerate bridge you from towards to accelerate to Chuck, about not SaaS. to term question could SaaS to you do together. that contribution, as I give the before, need

asking I'll about percent numbers the subscriptions specifically SaaS, but made the that's total gave let I we progress. you that We you SaaS. think a coming of think answer Kelly you're we've software and the lot gave from question. number I and Look,

them, ago software significantly we've was five was do earlier, SaaS, that major and continue, we we'll you to major, I space. subscription If know, help. from said will but percentage so at in at without I increased also should continue acquisitions revenue-driving that the it be that portfolio would any in certainly our to alternatives over math years last And disciplined. look years five of or coming continue as where what and certainly don't look assume we And you the on the it four

on to do numbers? Kelly, you SaaS So, the touch want

up of to continue acquisition, to of ship our Webex our and AppDynamics, appliance a the we Umbrella things just is but and an that security. going Meraki portfolio again, the adding we're our to disclose and lot it Again, and portfolio, accelerate. number. SaaS don't that's a then And has SaaS management, networking ThousandEyes like hybrid business, total We where and Duo made it's

So I going think you're to it twofold. see

are the continue type this we growth SaaS product really continue be acquiring that been to to going portfolio us. those are to seeing we You're But and internally will to the developing also good of you're accelerate to has to that. acquire, see and how been is for us in assets the try have

again, congrats and color, the appreciate I Kelly. Understood.

Thanks, James.

Next question, please?

Thank Kvaal Jeff with Wolfe next is you. from The question Research.

You may go ahead.

new a to point some at you very congratulations Kelly. seeing a much I you my role in Thank a the and have road. look and clarification. forward down question We again,

that webscale I Kelly, could then the think traction I'm if follow-through, seen you traction on a question, about little us us you that side last Is you but areas by of Thank growth bring if some update or wondering suggest i.e., is talking back in by with And OpEx for secondly of the the business? you. has $XXX million, time quarter bit net spent that things. number a Chuck, will gross take lower you'll that. $XXX down some on the it of the a come that some number; million. in

in Jeff, call thanks would talked trouble have gotten for I webscale. question. off if this the I'd been asking not and about

some what numbers positive as yet, really long-term that's had to another effort and I it years traction portfolio. rebuilding as going really speaks think had strategy belief forward. the speaks saw XK, to about I growth the that's but But traction double-digit next feel the the their to it the we meaningfully was we've the where we of quarter, so us. just have row years we these said we we're meaningful the good some with last of they'll we one for the and rest moving I excited few So we've have contributors, done. begin one relationships, I our nothing the put that and so last with of over quarter in areas quarter, silicon, positive the it think with is It about teams webscale in players. said, in the that was And And our to be that third where believe over a again, are, two

be reset and we puts go cost-out, that kind stuff, dollar will like are headwind we the a we're taking that things so puts But so a planning. is as bit is this whether the to the gross do of weaker, is and through over cost-out year, as we anything, are again, billion, it's $X forward, be so But taking and a that's real FX all of And that going gross. out out bonus, that on Jeff, takes our like takes. we there go

thank you very Okay, both much.

Yeah.

one think more time have for I Sue, Jeff. Thanks, question. we

Thank you.

Notter with George is last Jefferies. Our question from

ahead. may You go

the specifically put more I business a to go of of meat to new think how an of of Hi, Thanks wanted candidates And to just on to you of move discussion of the Kelly that model. how just in as-a-service I back direction? bit the areas And guys. Thanks. you much. in about this kind very to terms works. you could guess as bone the I'm are thinking little also? moving do mechanics to then customers what trying also. about kind areas And congrats those more incentivize

the networking we're trying time. our We're being our how are looking of in even we're looking to a as sold over from service software at midst – our are assets many of Literally, way. that compute at we're at transition, already And everything that portfolio clearly them looking hardware traditional to and we already everything. deliver

three we've of So needs launched that the that's the to it portfolio a been is be know, been I we we see while. literally already don't been transitioning two, to all the of portfolio collaboration Obviously, pilot. a collaboration some and for capabilities our across quite work working done quarters has the operational ago, even We hardware-as-a-service underway. And work as-a-service an the to last, portfolio. on in the launched acceleration do And hard systems as that.

call literally sure. the for entire give an So next the on portfolio, and update is it across you we'll

I you, right, our that Thanks, All last believe question. to George. turn Chuck. I'll was it back

done all and to just and with reiterate you've work and us and she'll the and first recap identify everything through for advise the we to all actually want help Kelly going that she's process. just us I great stay her that until right, thank successor, All of friendship that

we strategy a thank around the to really to time. I of ago. excited was challenging for come that. So out had I the nine us reiterate that customers be in, months when six, will team executing sticking than that And we're the our think I it more I her relevant to and pandemic, believe really want going do helping that about we through want

the we're all and thank continue to execute to So for And going joining future, I'm optimistic you about us through this. today.

to Time, contact Thursday, XXXX Time. further Chuck. the guidance the XXXX Again, of plan feel We not group, in done that FD, on to joining Regulation public any PM I'd to at but audience results, X:XX through quarter comment its if light Great. reflect Cisco's Thank we which like remind today's Cisco's will Pacific to X:XX explicit free policy thank the call. be you Eastern questions, conference an quarter close for is earnings financial quarterly on much next disclosure. during call, Relations you, you PM first call, have XX, will November our the now unless Cisco and Investor it's very fiscal

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