Cisco Systems (CSCO) 12 Nov 202021 Q1 Earnings call transcript

Welcome to Cisco’s First Quarter Fiscal Year 2021 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 fiscal to conference quarterly quarter call. first everyone, XXXX of earnings Welcome, Mora, Relations, Kelly of by is Head This Marilyn Investor our and CFO. Chuck Chairman and CEO; our and Kramer, Robbins, joined I'm now, should release. seen earnings our By press you have including with Investor available the information, will section following the A on slides, be website our corresponding supplemental webcast in Relations made call.

important not reconciliation product made done current disclosure. results As over an Relations release a terms call, guidance respect and to we The it is it made XXXX. we conference further call results GAAP that and we will most the uncertainties, financial information, recent the to geographic quarter referencing prior-period will All the the They the terms stated the factors the will those period's in specifically the revenue be amounts also differ and statements financial in I'll in on turn Income to on could with statements. sheets, risks details. risk and SEC, materially comment in to customary, year-over-year second forward-looking our that statements, the financial press With through see is guidance this in be results be its will be information to for balance GAAP our With non-GAAP now unless discuss Information certain and the in QX, flow report are cash can of Investor customer both product XX-K, to detail including this during please reclassifications of providing to discuss fiscal this subject section including call public comparisons guidance, cause that Throughout identify non-GAAP be on Chuck. quarter of we found which from otherwise. forward-looking include for full explicit basis. orders, and presentation. that, have of contained throughout Financial COVID-XX actual Cisco will documents discussing Form filed unless to statements, other today we will results matters website. conform in accompany slides also and

Marilyn. Thanks

First, start everyone hope XXXX. focus Cisco relentless want I is saying thank I and their innovation. for am to proud a off in and by of our want fiscal off to I these our is I solid start also results. safe employees to their dedication to customers on And healthy.

make progress Our to teams are to steady executing shift model. on a continue software our and with we subscription-driven excellence, and

by encouraged We our in are pandemic the other uncertainties. and continue signs of navigate the business macro improvement we as to

a on is focus customers. innovation a technology partner growth our and trusted differentiated Our portfolio, long-term winning with being for

necessary our Over demands them the making the hybrid we've new changes quarters, business. by our move to mission adjusted closely and they remain work few technology shifts within adopting new and to to towards stay aligned provide with need resilient critical with models. We successfully last customers

first in ahead strategy. great In industry fact, as accelerating we digital its every many is company opportunities see every

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areas years, few on. six are next we there focused key the about are think we As

products and increasingly First is The the organizations is access services. for lifeline their and how application customers. our consume all their for optimized is delivering end application experiences users

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communications focused providers significant systems. combination area capabilities, as assets, be silicon well on transitions of architectural is will third with succeed our The and and like with software done optics a helping XG. complete as XXX These integrated gig

will We work. on-prem as cloud. from technologies these deliver the Fourth accelerating future as is the of well

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private securely years. edge architecture accessing technologies data run is will key We and growth the will data. application designed that and their security believe continue intelligent success And end-to-end over keep secure. distributed final to developers while distributed these allow managing applications areas that coming deliver people We their area the our and drive developing to the around to

share more me on our let Now, QX results.

business. As earlier, I areas our saw improvement signs mentioned certain we of in encouraging of

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sold business as succeeding and deferred subscription, our saw in with double-digit revenue. revenue product are We transforming XX% in of a our growth our model software we now

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and continue At introduced to operations accelerate we Relative to platforms. pace new our the technology their strong build new scalable Partner recent as continue as well, automation to highly-secure, resilient through and of remains of their simplify accelerate platforms for as technology Summit, solutions strategies. agile our networks perform cloud-based family our help that digital number Meraki we our of our switches adapt, innovation. XK and customers Cat a Our pipeline foundation our infrastructure platforms, new customers

our We also and secure this their cloud automate recently applications insights. help platform with into running with and Our customers greater visibility and architectures increasingly new hybrid are connect, announced environments, security across multiple applications. their and SD-WAN across next-generation customers environments cloud innovations to requires automation,

consecutive customers This great making of are build us and with ongoing with double-digit to architectures. reflects forward out We strategy quarter strong fourth invest our their strides our future growth. their in our to going their commitment belief with web-scale

delivered end-to-end growth, multi-cloud been than which Google to deployed driven extended continue X,XXX customers saw organizations experience, in optimize experience. through also more and operate a our to applications. it cloud of Cisco's we distributed integrate environment their our and capabilities help In portfolio. simplified which adoption in as it better We QX, security, across since globally solutions, has available these and SecureX, a from manageability security overall solid services of offers Cloud another cloud onRamp we cloud-native In Microsoft enable our broad visibility became quarter AWS, by June. strong deeply

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from the to Umbrella to capabilities and benefit worker had our continue that in We includes shift and security Duo, robust growth remote AnyConnect. cloud-based offer secure

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can new delivered and our cloud simply enable our access response, recently and SaaS SD-WAN team deploy Internet Zero innovations, By customers solutions combining edge. to secure their detection services secure applications. with new Trust solutions, gateway security workloads and users world-class including securely capabilities, and leading to our Our extended and Umbrella access

while be area. drive Moving resiliency work productivity, to and on model focused and portfolio, this with remain environments The the customers. flexible to home, and collaboration for hybrid our leading continuity a our of mind will business employees safe. future employees ensuring in office work creating are top both remain are of we at in Organizations that

teams as empowering they and collaboration productive to organizations to is adapt business, secure models. more healthcare portfolio and be Our new learning and

hybrid customers anyone file are consistent seamless significant our and work office, solution a and privacy look security. our while anywhere, to that a solid in almost brings solutions as calling, saw XXX We environment. integrated together secure leadership and at nearly the flexible for or Cisco solution collaboration in March. Room for also return help Whether alone, providing home Webex we Navigator had need in usage new continuing customers had meetings, simple workplaces enables sensors and user increased enabling that us experience. with actionable workplace security. sharing with adoption and experiences participants, number working that collaboration launched highly a provide to office safe that with the and recently Webex messaging double Webex We million device month a Last analytics ensure

rooms, critical our accelerating innovation governments to Legislate like offerings also running, capabilities with and keep noise functions virtual of are cancellation. with Webex huddle spaces such as along We global breakout new

create technology, improve intelligent a collaboration the and experience We integrated are reimagining environment every workflow to with security productivity. AI and aspect applications work to built-in of more

Lastly AppDynamics.

applications, cloud-based networking manage applications By moving and and end-to-end full which insights our visibility, cloud-native greater action. customers require monitoring we and our are help combining to deep Our experiences delivering observability customers to their platform, better improve are highly observability through their ThousandEyes, digital AppDynamics stack distributed and insights. automated

lead incredible that on perpetual CFO Cisco. Chief to as I'm On Kelly XX. new shared Autodesk's retire served brings Scott decided Kramer, software. CFO transition. call, joining and business licenses to Now, SaaS I from subscription beginning software had for our Scott transformation and Autodesk. excited want from to background Cisco will December President as the our an Vice share last I Today, that Executive Most recently, Financial helped more CFO, model our He Herren be successful Officer in and our

our culture to also environments team of sell in progress has Cisco. service, and that also at focused she this model profitable have building prudent we us accelerate business of again business depth a for once Kelly transition. business are our operating As at a no for and and experience area of and strong partner contribute such here strong I doubt global controls. the shift thank the played our He as I transition. our solutions foster want on he help we to scale will being track continue great role financial growth, a and will of complex proud in has expertise our record Scott's more in

encouraged in how transformation will the strategies. digital of and we're to miss to year. In have I'm role to both we as her, start proud are in team. our customers Scott empowering excited we and We own the accelerate progress, their by this certainly own summary, our are our of but part very

very portfolio and a are driving. strategy, and have our and clear about we innovation I We vision feel the good

can flexibility to they who technology are on own we innovation trust, partners implement their choice Our choice trust, core individual and of customers as and and they anchors Cisco. purchase, well at needs. These consume based want as are in how

to healthcare access business, impacts technology and growing an by for of purpose are and remain we core education. on turn in and future key We needs We know Kelly. some more that it our that focus future an I'll building than guided the our power enables world's inclusive and we human to pervasive directly all. technology growth connectivity committed we like solve inclusive help As now economic to know everyone to ever thrive. can over which challenges, can biggest

Scott I am super Thanks spend the Chuck. to want to also I've with his congratulate some excited. role. had chance and on time I new him,

a I team. is over a think Also great with years. been he working a Cisco thanks It's very positive and you, addition you to news great the will time for the this Chuck. to be

provide the quarter, guidance by results for Now, let summary of QX. a for our followed me financial

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

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

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

we As the driven a product routing, the most is across enterprise reminder, by this impacted saw declines the center area commercial data primarily and markets. and weakness We in by environment. saw a switching, COVID wireless,

This to TelePresence continue see X%. center Security growth up to the and XK and strong working. importance declines products. see offset of X Applications We down continue remote with our endpoints. Cat We ramp revenue Unified Communications servers. Webex of in growth and the by did was Data was X%. of declined, Wi-Fi the by driven was

cloud Service services. as Our growth growth strong portfolio continued up double-digit business driven security support was by momentum as with offerings. with our and X%, maintenance performed and in Umbrella our revenue well well, Duo

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

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

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

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

In We a the of $X.X include allocation Operating was related million billion, $X.XX. during we $X.X quarter cash perspective, QX the billion ended we billion. $XXX billion GAAP $XX and was that perspective, in a up EPS net bottom was the of $X.X was terms GAAP line shareholders total with From capital equivalents from of and restructuring repurchases to results announced to cash, for income QX. dividend. QX plan billion XX%. cash billion our flow comprised quarterly and investments share of $X.X $X.X returned of charges

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

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

Kelly. Thanks

as only queuing we for the to quarter time is as I like question you the have adequate to While I'll to so address possible. that I'd you. one to ask we questions remind turn line many as take do operator Q&A, the over Michelle, audience it every

Oppenheimer. Thank you. Kidron Ittai from

ahead. go may You

how Hey, guys. orders look things quite enterprise on reverses? Good of the to down, business. you we bottom from when for couple see some And think you gather Where your is us look through the as you order that to guess for? the improvement duration that a clarification the changing? if duration sequential changing rest the year, quarter. of to the reconcile is is is tone stability looking that the me. you Chuck, just on quarter fiscal then, It's And I tell patterns? this Kelly, significantly duration you're in at should Can if RPO. -- from hard this

the for Hey, Ittai, comments and thanks the questions.

on in But would enterprise I'm pretty compares too improvement some call orders. have pretty significant we I about So, earlier, the had concerned is, thing which not to honestly. the a year it, We significant that did we contributed that. saw our from commercial the out side, --

this SMB a it X% you, even from [ph] in [ph] it greater And quarter. the I on, the think minus knew whole XX% last of that tell the US, we improvement that and was were we going that. was midst minus was in meltdown quarter I'll

a us fair optimism. gives amount that So, of

thing I issues some enterprise again, fine. think is There but don't that the there. resulted in anything is think we we -- concerns just just be to they had math, I -- I compare see that me going

than in Ittai, this balance the months rest half since the half the RPO, more get -- total year reporting will slightly much a ago. is we on started XX duration About longer over changed And and the hasn't term. recognized of next

been And pleasure, good. Kelly. going Very a luck forward. Good it's

it. appreciate you, Ittai, Thank

question, please. Next

Cowen from Co. Thank you. Paul Silverstein &

You may sir. go ahead,

I things you your Kelly, all good and wanted years going over for just forward. to all, of help First wish you thank the

obviously in on go offset, commercial you in update about you've challenge from enterprise, talking one benefit well seeing the And workers branch us environment? well questions, first you're assuming as that what Chuck, remote LAN back century, as headquarters, access by a question been made off, to of terms while the offices, we organizations bigger would the pricing work you as just a challenge as be there's home the Kelly, presented the going for statements offer -- improvement offices, enterprise is, the certain would in of with can In on from or remote leave smaller for can and insight longer-term and and a perspective? routing you and the fewer XXst a switching workforce percentage that be think Any that particular those to in wireless at points. dynamic terms of

then, pricing and first, that take the me question. to get let Yeah, can Kelly,

if and think a at global look a commercial, recovery collaboration basis. was by I lot Paul, on driven So, actually of security you that

feel And that. so, we about good

XK infrastructure. also in is ensure social you're continued to -- so, that go and room. customers video customers going talked with the robust to we what deal show They're in our going put going We demand they when double-digit portfolio, about and issues. that distancing to is to going growth, think with every Cat happen it conference definition need think that we high have think back, are I strength they to see cloud to

have room. we that video, monitor capacity high have this working in in how have if in sensors exceeding week, only that sensors and that built We I've but technology that have you're a seen warnings are defined actually you you we the -- the definition not where many will whatever get has in company units room people for units that the we've actually

And the will aspect think so, safety that it of helpful, too. we be

I space a we ago, days be back. what to shut this that people think to I still TBD the down headquarters in that it's balanced was days XX it's to now, on every belief going building think really going because I world. this were there going think So happens And XXX know in

modern the the the Wi-Fi continue that to moving Company So that to XK show which has X, future Cat and been strength. got is platforms we've

And we optimistic to so, we're wait have and it. while see, about

Kelly, prices? And

-- appreciate we Paul. On for say, our margin normal the pricing, and sure. On all rate it that ago Yeah, impacts, The perspective. was it. we've I'd of list down thanks And our pricing kind range there, X.X a tariffs. price QX gross kind number for as increases about, a talk know, our a words is just product walk which in from did the usually the normal year you operating annualized I the range. reminder, as points, for in we is of pricing

So now, we're it's And on to from But we I'm see quarter this are pricing. where is sequentially happy kind this of where even stated. better. QX,

stable. we're So

Thanks again. have. That's all I

Thank you.

Michelle, question. Paul. next Thanks

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

for Even the guide. the to flat, but down Thanks I rate start wanted question. mismatch, in revenue at end are with of order off I the top the orders guide, the the X%. and is guess,

said little So -- going could on a deteriorated, you're kind it's connect not then, if deteriorate Could lot. did bit. though on more quite of They even for you Chuck, know, a is just that go dots into I'm help you have Or a those orders. segment you concerned enterprise within effect? the that kind those what's that a that? by great. just why guys is. that bit would be wondering you detail of What short-term Thanks think enterprise us us, And two understand I

balance what's software. with when the We Yeah, whatnot. timing coming versus of it's our know things That's all no just backlog. the different are know go sheet We in than the and through. normally I orders what's off revenue, really

the just year-over-year really compares. it's So

about and good you're feel guide I seeing in that the So, there.

Yeah.

real pipeline, And I showing front, is funnel, enterprise which couple that of large right the I significant On there now. see see a we just a in -- point are positive. transactions out pipeline up again the our see in we is, transactions. We thing think robust would the

every are robust across a you look They're the core going to to on-prem you're they I because mean, have build have going enterprises collaborate -- so, upgrade meeting remote when And -- infrastructure. units virtually video the is if hardware to infrastructure, conference their core to into meaning at attendees on-prem out going offices it to and go every have everyone in room. going back

WAN this to moving cloud is re-architecture and Everybody positive. SD-WAN security. that's with So

short the strengthening. and answer Rod, see of couple So is, deals I think it's ago it's big a a year the funnel largely we --

it's So -- forward. looking what optimism that's gives the me

you, Okay. Thanks Kelly. Good with guys. working

Rod. Thanks,

Next question, please.

from Marshall Meta Research. you. Investment Stanley Morgan Thank

You may go ahead.

into ask quarter? Great, I wanted call, was fiscal how linearity downtrodden the You maybe QX. the thanks. Chuck. were on just initial during to pretty earnings heading

if when back customers just Thanks. they then, are start to be order and accommodated in [indiscernible] see starting make orders start office the And you Just needing uptick? to about that thinking did to in or maybe are just to orders

Yeah.

I was of good of couple did demand So actually when seen we call, a weeks. of that the we it in but earnings weeks last would say the couple the quarter, had clearly first

that was and stayed And started it stayed so, started performance and not -- -- not it trend. it the It the us was anything we saw it very would we quarter a -- linear. pretty decent beginning, give from -- But was throughout. it consistent

So, good second what a I'm the the sorry, sign that us. was was And question? for --

start In office order thinking terms were to be orders. of in to whether people about in physically needing the

I super-focused did security which think had see, And we're getting sit can't we're getting it's said, come on better. sure is I have the grips time. ultimately it's think I thing seeing employees with were basically the But do and with to their and just going some this everybody that We're of better, that think hopeful optimistic, we we're customers obviously happened is, therapeutics going think nothing. of we home set fact when the period is working peaks was has customers with balancing like help. kind What but for be and get to Obviously, I What from else, some us their of was get not around that to all I that going some current to who vaccines the productively all happen, world. of up. the customers will and I around to going

back. on, quarter what our they And then, think re-prioritized last I that. they we orders. to were come they some then, a pause, felt of I be spending that I to what going in which it's think how think to everybody environment, raced I it And money is do we think relative played but and but And everyone is, Any comments, started this I the we needed that's with we're But continues. the seeing all in took sort it macro what Kelly, of it see virus, we'll to out. and of dealing on see expected, same linearity? if sort exactly

Yeah, very linearity. good

Great, thanks. And nice Kelly. working you, with

Thanks.

Chuck. Thanks Thanks Kelly.

question? Next

Thank Long you. Tim from Barclays.

go may You ahead.

you, I'll Thank Kelly, good you. luck offer as well. to

public Just fourth talk there on bit wanted about little the what [indiscernible] breadth to customer cloud Can of being being base if one products quick strength? just that seeing better Thank that specific then sustainable or just that quarter seeing kind ask the vertical. could, the Chuck, a a what vertical follow-up, more of you're Anything you're on strong. performers? and you to you mentioned up. kind you strength across of And you. sector

been be we them believing them we're want said in in customers I've in software that vertical, cloud those facets. is of would was we talked the our there see We it I sell build. tell our that we would I that of integrated whatever to web they to stand-alone. way that space about silicon, as our that Thanks disaggregating result now we were web consume our with can technology and across is we space, we've hardware won the sell that being to you And you I that think where and sell the wanted. they to investing want optics, that our we the now architectures in both our built them had and relationships these will a aligned last what we going that launch scale would one Tim. had to software, every fact tell the systems, historically our scale buying What Yeah, rebuilding a portfolio began the December, and broader

show very progress. And been built I would starting really positioning up now, technologies that new had say are testing well and the so, in good to the and some And of we've seen we accounts.

pleased we're that. very with So

On and the pipeline -- very looks the strong.

on was one of service we that, the scale that in the saw strength on -- in scale good there space. Europe, So that in web and saw we growth of saw a and -- provider strength US, the really we comment and fact, as flat the lot And MSDC high-teens web well. in MSDC

public lot of and of put sector, in the that consistent by the On stimulus a it a -- was around the there around world. lot that of was reasonably was the world, was lots governments system

week. bullish. saw the the from spending he the and then, Our federal strong. we think was federal while and US, the -- US And spending out remains infrastructure And spent governments. building was XX some And for and not -- municipal Act there. K were in of in some teams, this But students through the we strong fairly -- stay lot sure, I a for CARES we local will E-rate time that with strong. saw We leader, particularly think in

Thank you.

Next please. question,

Research. Thank you. Jim Suva from Citigroup Investment

You ahead, sir. may go

touch. And Thank keep you truly you. missed. Please in Kelly, be will

or the the on were XX%. So or sector Why year-over-year was Kelly, back can orders much sector one public so either -- last and down Chuck year, X%. down be enterprise was stronger other? look than gap reconcile For bridge us flattish. public you and between up orders Enterprise help would comps, I X% were the

actually So it that comps either. have don't explain we

different are purchasing by COVID. there because in So everyone just can has the decisions explain, world affected you been

kind little if great. can help that'd So you just a bit, be that reconcile of us

Department the was The the going. new lot everything that but And from in sector of Defense federal lot to States right? E-rate US of a kicked Public we Jim, contributes weak, just early I world it's strength described, in what next which of that's slightly think a saw I of spending the and wave. local saw the gets sort in a stimulus. were Well, municipal good. around particular, saw spending. E-rate in. was Local lot when kicked program in, government And its good. we

had Germany. and in so -- then, was public sector -- strength there we And in just

some obviously, consistency Inside was the so, too, in healthcare. And there sector, US. in US outside more think the of it public there's I lot basically. particularly a just US, And outside healthcare the

details you. Thank so Kelly. and the bye-bye, for Thank you much Chuck, and clarifications,

Thanks, Jim.

Thanks, Jim.

Jim. Thanks

question, Next please.

from you. America. Thank Bank Tal of Liani

Analyst may ahead, sir. You go

guys. reconcile to pretty your highlighting your sounded downbeat, Last I'm Hi some trying quarter, comments numbers. to issues. you

But a initiatives. talk you the about growth sound -- on quarter, and you This better. lot

they say other details your Arista, at the platforms look getting On your routing and I is, XX.X%, competition? it's some XX%. that the more down so you are XX% all a composition, challenges? than than Can share just feel much Do of maintaining you're areas feel is is If and areas where into competitors. the context hand, you're where let's some numbers, down without are. down question shift and I And market share, and infrastructure of see basis, look Juniper you switching also worse year-over-year, global you And that share issues? about give at it growing why issues, us on there share you versus

Yeah, I'll Tal, give and can you my to quick add perspective, it. Kelly then

we you campuses this center things you have. is compute, the I you have lot would of really compute, it neither of Kelly, broader the to sort out. the mentioned would Also past just I through that talked it look be a at the pricing and that about, which anything that, to exposure what two data competitors think call quarter exposure add? drove of If was have came those we

you of center again it then call Chuck The campus year hit we and mentioned [indiscernible] the pricing only different pricing have a has well. the But down, stuff. big would companies is do and to a ago as hurts, right. or that compares it impact I data other those from some business the compute that Again, DRAM than due thing

Thank you.

Thanks Tal.

Next question, please.

you. Amit from Daryanani Evercore. Thank

sir. good, make You

the my question, go well, Jan. Yeah. revenue and And to the of Thanks I for I seen driving improved taking which are as your it these think are you XX%, top that of extent be guess, as flat on is but guys. helpful really in sales vectors are, be touch on few guide. think what question this do I the think compares you've think to my easy, of about in Chuck, skeptics we say, metrics the versus XX%, helpful. I mathematically quarter can quarters would three top down year-over-year what you durability the forward, understand last would that's two, they the line Jan. trajectory expectation being would

want Do it, Kelly? you

you Yeah, again, just shifting can earlier the to add. I'll I'd mix. have the point, this, back say we and start been consistently revenue

it as our with So, more see balance of RPO, off coming and our mix. are revenue the every getting sheet the and can in more you you quarter software see we

continued to as you see, the make on progress, have side. services can We

for growing still us. services, For it's

have services of a software portfolio. much together And bigger part and our become

that benefits us on the guide. So, revenue

the anything we that that this in the profile. strength yes, know, else. we momentum just see talked still Webex Chuck are would QX, same about. that's We growth real see, though and mean, of of And terms about add is what Chuck we're we And I driving. In real see tough orders side. QX revenue, the feel drivers see better the it'd a security. collaboration don't momentum growth again, -- We I on in what kind

also then the And Kelly feel the build-outs, put and coming going combination is the RPO, and the are web teams continue. then to we -- service what's in assess of put guide I obviously like we out and a provider, scale But off the on think factor Chuck forward XG backlog and what's we it. those forecasts the short-term that of the

is the earlier, it that to still I it's that of about the it that -- because -- things have the to So but hard is some given and math things super-optimistic talked extent, numbers some we think say us certainly have like aren't were we felt, or we to a feel relative little ago XX visibility felt now. how we uncertainty we the But where want that and them more days we to where be. we

a Thanks of And Perfect. on nice quarter, guys. luck. best Kelly.

you Thank much. very

Next question please.

JPMorgan. you. Thank Chatterjee Samik from

ahead. You go may

thanks the your come six remarks, Hi, where focus areas demand outlined in you Chuck, seeing business customer of back. question. you as the prepared for taking kind to align you're

priorities? some having it as about of peers thinking might to If prepared in to of service, in I about plans kind organically in versus need relation of you how didn't to your hardware hear remarks fill a your like kind investing are And as you where relative share trying. you're those anything just, can M&A

customer for your what are demand of like terms seeing in So models? those What are thoughts? of updated you kind

That's a great question.

our So hasn't should that or I some misconstrued I there clarify thought about misstated organic time And inorganic, were my folks probably think strategy and I some changed. strategy. on that either think versus comments thinking the were last we larger significantly acquisition

changed, at that that innovation peak we use strategy seen combination. a say are internal clear. of a be would right probably hasn't that -- for I've there now, time. But the we've -- long acquisition Our we'll just I to

the whenever and we're of our the wins are. wins customers you out XG progress Mass-Scale Group, that standalone If core some least, our there, backhaul seeing and good seeing infrastructure, provider their and look architectural service play, core platform we packet making that we doing feel Infrastructure work building provider, is where service start XG we're the, we're at about the at the

-- hasn't So it'll changed. it but be a combination and of both again,

As there you want delineate in offer as between our is and largely service, consumption-based of think a that's the around some about this marketplace around it because as this a to competitors service, today do compute. I from

so, property, you'll time. very kind about one I'm can we deliver And core a switch thinking out for a working X, is of differentiated, Ethernet things take we we're Example, see security, looking can value, at high future, and talking of of what see So capability the port our property. our our SD-WAN, as customers about more Gateway we through secure as We're at which selling -- deliver talking can service but the from X, those kinds a those about with is next are aspects come offers that of delivering And intellectual pull, similar service? us intellectual necessarily right in that I'm over and offer, cloud we're XX now. ports a Internet integrate what you'll us cloud together talking really not months. X,

you. Okay, Thank helpful. got it. Very

Chuck. Thanks

Next question?

Wells Aaron Fargo. Rakers from you. Thank

ahead. go may You

Aaron, you. can't hear we

was I also question that. good about Kelly. Sorry on mute. building I is last guess Congrats on on and question. quarter, the my the luck,

think forward? CFO those product progression move do portfolio? subscription the subscription subscriptions we about Thank think we the how about think how Robbins It's as do - of and Chuck about the now across And XX% about think A question. As software of you. we announcements revenue, deepening the the of renewal we being cycle we a good

continue solutions So us service. sold more as I think those organically and of see to both assets, you're to all as -- a going inorganically are and most add software

from you'll increases think I perspective. see that So

-- on think a renewal we I front, now. focused effort right you'll have see the that

next as across We I think first at in now we that speak. core if our etc. place you portfolio teams drove of middle motions renewal the right or look meaningful year comes have our on and now are working where across year, we cycle security, mandatory renewal a from subscriptions, currently collab about and

think what from would we'll technology a is be the as at looking being delivered I So I our and say and more more of cloud that service.

see to and going you're well. that to move continue continue to say, a forward, to of And would percentage software overall as to going going forward. So contribute you'll services business up see I tick just it we're our as and

Aaron. Thanks

question, Next please.

Associates. James you. from Thank & Raymond Simon Leopold

may ahead, sir. You go

also the thanks send much for go Kelly, and taking on help. you you congratulations the next, wherever my for Thank question.

in a of question, that subscriptions. well of about from you assume sort of as terms you're of in the subscriptions for the as see first I refresh to on Cat you the a seeing terms of little bit wanted round XK, campus on coming maturity due. In I talk could three-year front coming benefit you're of if the DNA whether up renewals opportunity

Thanks. If you could on two? elaborate those

on honestly. there. when at installed is you -- base there Thanks have X, XK large we out we're Yeah. refresh, say look the stuff, on, the Cat would And look I Simon. Wi-Fi campus you a at still early

transition so, that's going a of for time will on go we that some forward. And multi-year expect period

DNA what -- the fiscal I that it launched that 'XX. Kelly, Meta in summer first stuff, is the so in renewal think that if I remember, was beginning right? -- you of On is that of hits And [ph] earlier because announced of the a was in XXXX. that 'XX sometime we it we that's real telling really wave

Yes.

-- end the to early sort get we hit had we when adopters, next of and fiscal and till 'XX lot of year. didn't so, a the middle And you scale of of

So, start you're FY talking when see to getting come about. about that really 'XX we'll into

Thank Great, you. that's helpful.

question, Next please.

Fish James Piper Sandler. Thank from you,

may go ahead, You sir.

what second alluded the OpenRAN. desire Kelly. the Cisco also We're OpenRAN on about of up? Thanks XG the spending on first of for to materiality, it you the the through mid-band terms Thanks. infrastructure for Hoping timing XG the call And are for now question, you and see products core for starting are about more the is that congrats Chuck, guys is in you to enable core retirement, again signs spending more auction and how hearing XG? about infrastructure, coming competitively set feeling and, the spectrum and across

the We're middle it. there the -- of infrastructure around Well, Japan seen middle And and a lot in of side in would orchestration in of from are middle middle we're have one in midst of of on we in layers. world, support benefit active the deeply core in is we're the the to Jim, middle We're of and I in other of a the projects going actually of packet ORAN say others it. the the backhaul. places. We're in the couple

out for work And so time. our building to teams we're overall playing stack our over on OpenRAN how space continue that

seeing As we're stuff, XG right, winning to is opportunities. we where of a it the packet relates of lot winning today a you're core. backhaul are lot We're benefit

early delivery core upon enterprise build-outs are the to still that's -- had about year, notwithstanding the again, going But think I two dependent in and starting be say, And several to going see some -- that years. it's that we've probably either the stuff I everything pandemic world. move more can say to around going it I would a going starting I I be variables and earnest, that But next of the will there's on lot of would middle way. take in else, probably think seven quarter. think standalone historically, we talked think largely I service last to between wins and we're those that's be

Understood. Thanks Chuck.

Okay.

We [indiscernible] question? can for one more last time the have Michelle, you question.

Sami you. Credit Thank Badri Suisse. from

You may go ahead.

follow-up growing essentially guys saw at the in to is year government's quarter? to up fit public of from the CARES September therefore, a dynamics was Thank lead was through able guys you segments a kind a or than order go be me the was this the because something there quarter in. two determine just dynamics? strength Is there great funding to thanks. and been in, could you and wanted of much orders stimulus in commercial that funding upcoming strong fund some federal to of it the sector those and whether here, the a a a what be And as product least and -- some offsetting touch that quarter, closed then the in little I then on questions bit for very have fiscal that reversals guide and If consistently you quarter, fitting this strength. the can the that uptick and just your better was consensus perspective just modeling? able will Or big

of when administration. feel that's around world, big feel pretty consistent say priorities, It's the particularly tech, different they're all about dependent our good piece but upon one area is leaders about we good of in we where business and to regardless Thanks the pretty -- them good. public talk most And and US on it's that the pretty that a it there's sector, is so that Sami. of I'd actually.

aspect segments, collaboration the On what I I some the say it spending. at would looking that. say security federal think -- think But in commercial, commercial there I would assume was that would I is and and I of

this. Kelly we're much our say we to probably E-rate saw that thinks, felt as telling continue was those of putting to and themselves customers in were connected did comments but a team heard operating extent she world was sure -- just was positive, right did if CARES in earlier not -- on I've a And local I'll mid-size that muni living was enterprises the like we made anything. I federal that's some the in then think now lot have position the let the stimulus positive. it's a buying of that what really as was they that new this I comment and just significant. were Act, I'm

the a the again, heard European from again, they've [ph] I in from home of this it and home, it's school team, getting very collaborations in heard of globally -- K we the ton is that, globally, securities orders within a got benefit and working we said, like look from sector from Chuck And the at when is also [ph] XX doing lot stimulus. are through And public education -- favorable.

Thank you. it. Got

Thank you.

you over Sami. for I'll last to it comments. turn Chuck, Thanks

trying Yeah, we're and obviously, complex these I them team of times. and they're But making want are take customers I'm everything our I'll employees of our they focus the about taking times. during I to say to how for we're we But It's of sure on are been really of We've partnership. and is you. Kelly. incredible to for fun, And excited think, that done. these in care care first thanking love really and proud committed complex during our thing of a hard that working to We're thanks think I that lot had miss investor just Scott. lot community going an you. you've a Kelly, there's But how

that in I thanks But. I again, fantastic it's great It's Chuck. Company. you. Chuck. do think for is working it's a and it, great And industry going great everything, coming. appreciate I this Scott relationship. But He everybody for been with been to Scott, the be appreciate

make helped actually us that choice. Kelly And

guys us the good for was supportive So candidates on Scott's that feel helped the decision and Scott. very she very can -- with on you

joining to you So thank all forward and quarter. today you for we'll next look to us again talking

Thanks Thanks Chuck. Kelly.

X, will X:XX explicit call. But which the feel of team. light is is to Regulation questions, disclosure. guidance XXXX quarterly to Eastern the Cisco's financial during PM remind any like X:XX be its And very to you closing, for on we Pacific call. not Cisco's is you to through results, XXXX plan thank Time, free Again, second in always on Time. earnings Investor the out We will policy next the at in further audience February quarter close comment Relations an quarter, reflect to So unless the that have call, PM done now conference FD, it I'd public our fiscal joining reach if much Tuesday,

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