Cisco Systems (CSCO) 20 May 212021 Q3 Earnings call transcript

Welcome to Cisco's Third 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.

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

time, our Cisco during devastating of all benefits to in to I the and joining improvement experiencing Thanks, is start thoughts I surge cases. everyone want remain partners is COVID vaccine acknowledging hope in the and Marilyn. customers with challenging see India a healthy start for staying safe Good today. resources by and providing activity. this we critical are our afternoon and as deployments economic of employees, you. thanks who continuing of and

us adaptable around vigilant seeing the efforts, many must we our While recovery as pandemic the in great and world. we progress are manage of remain ongoing

great by a me which revenue forward. an macro optimism impressive strongest great we growth, improving going momentum quarter, driven and gives history across and our the in We cloud opportunities: our had to digital our the work, subscription-based strong the transformation, returned by of teams. X%, sense hybrid environment, uptake in Turning with biggest We portfolio broad-based continued QX, to by of growth execution up product business, demand offerings. saw led our

our are key which service technology that and are for we reinforces We while phase the aimed cycle recovery our more on and of growth and such drive connected, the significant focused our and next of the The momentum long-term solutions gig serve on drivers end-to-end early also for seeing customers as as XG, next-generation as of with allowing will ramping our and speed move in models cloud-enabled business, foundation XXX and for Edge. future the cycles reliant heavily Cisco's technology. be innovation, portfolio will to will of greater the long-term infrastructure models, greater innovation work as even world well our to while agility. customer's a create investment security, performance capabilities driving inclusive at as of accelerating analytics adoption network secure. simplifying improving remain automation, believe consumption a a opportunities strategy flexible offerings the our This network-wide opportunity require all us. and and with will strength tremendous that is We delivery

to rollouts economic about vaccine by only gained momentum recovery and a future. reflect QX has strong the These the Our easing that my results an spending confidence reinforces return of performance environment and a restrictions. driven

highest fiscal our across closed in improvement saw product their QX orders, from we portfolio increased XX% across investment across has robust rate improved, geographies. Acacia, our XXXX, customer and saw QX, prepare well collaboration, since we segments which by the customers have our for growth to switching, acquisition as portfolio to of QX. our wireless, including routing, office. From X% as economy campus upturn a the product perspective, return of the revenue As In during growth, reflecting of and and strength all security, led growth Webscale,

aggressively which over we up XX% sold streams we our business in a We achieved our to quarter. to revenue XX% we with more QX, shift as from our recurring to time $X.X In revenue, last continue software revenue grow software offerings. as billion expand expect subscription, of

growth saw our and also double-digit deferred of quarter remaining performance in another revenue We obligations.

progress years, software in have now six of significant $XX past have billion. well Over the over one businesses the the annual with run-rate and largest we industry made an

adoption with than which their Live, increasingly users have At across customers This with to for provides points, We is IT next-generation intelligence solutions Enterprise Platforms. delivers companies data on majority return more secure data, feeding us access connection our We're video a SaaS Catalyst it most efficient for IoT infrastructure Provider in the the switching workplace led the working to to industry's their enabling and visibility both cloud with experience endpoints, turning Let a cameras of accelerate DNA and distributed monitor solutions, Service the a experience and of across an Infrastructure workplace provide user of sensors accelerate increasingly full and portfolio insights visibility our Cisco higher help and me external modernization observability distributed portfolio, that to And integrating first teams now modern cloud Center seamless into and the also digital our networks, the faster critical Customers beyond to networks Networking spaces. cloud. to to provide and saw strong internal performance We're launched office. they actionable for the future, conditions of ever, are environment. ThousandEyes safe offering operations and infrastructure. by AppDynamics. and demand them access offering enterprise-wide remotely best vital work. users. stack trusted Wi-Fi is we our with hybrid while DNA corporate touch to as This by as create

and can business, cloud and workloads times Google, partnerships XX% connectivity of native on fabric connect basis. Amazon over our to cloud branch our with Microsoft offices our each minutes. deployment allow to these SD-WAN of strong reduce from XX-month technology, deep offerings. the consecutive increased With Our we over in a order delivered quarter trailing quarter, our XX% In growth, in and sixth which Webscale customers

of Webscale new XXX Our long-haul full Carrier gig pursuing customers realize their while the starting architectures are cycles are customers our and aggressively potential upgrade exploring build-outs XG. to

pluggable networking building breakthrough the new integrating a with are by benefits. Recently, future internet these we and week, significant cost savings. to deliver to offers our economic Last acquire platform solution, intent optical cross-work and routing, Systems routers significant launched high-performance optical the our optics, to innovation We scalable, Acacia's to on our automation capabilities. we extend technologies which automation build for announced our creating routed Sedona

data addresses offering Cisco's solution routing We our first networking, a networking one the Security, as want WAN our As ways. to will domains switching Access, also a experience unparalleled highest storage Plus, Cisco and includes offer, ranging making service, observability it performance expanded switching on which silicon new flexible networking platform, the our second, in unify and center our Webscale Plus to portfolio. technology and market, routing-focused to Live, and deliver from per programmable At Service for increasingly Cloud, to the consume a customers from chips which computer, our launched deliver our combining and X.X Cisco know Cisco terabits XX and networking Cisco more our Silicon an across new Plus market. Hybrid Cloud we portfolio, plans customers. One XX.X terabits We to

$XXX million as Turning around XX% to Security, we surpassing in quarter, we revenue, record with our the reach had expanded a world. up customers

experience. is delivering Security on simple Our and focused strategy secure a

them users, applications or to and any the data, remediate We capabilities threats. Security our proactively protect and This against customers key across trust have reason an cloud. on network devices, end-to-end to unrivaled us why is ability provide any help

analytics today's portfolio, leading Ford over portfolio, as or they continues their platform including their as of cloud With total Secure with $X was more deploy enterprise nearly platform turned ownership Lyft reducing users' With consecutive cost with highly critical access to fact, applications. secure, using Customers to billion their companies without every XXX% sensitive native both financial strong of applications Security information double-digit Zero annual that And investment protect and and authentication solutions. Cisco capabilities. users our deploying Security R&D, accessing increasingly trusted the making the controls, workforce, customers deploying remote of In Security using with team quarter, Cisco while Edge able in members. platform access momentum secure Fortune customers our are of growth nearly Service Trust their our XX%. XXX, than and Access cloud-delivered automation, in personal to our By provide and the Security distributed umbrella, their Network in lead by to their duo along Cisco of customers architectures, strong and agreements. across quarters SecureX compromising umbrella security the protection are all like X,XXX are growth, performance. cloud SASE strengthen using These must Security is this quickly XX they XXX,XXX Lyft to everywhere our industry, for

enable our our to assets loss detection authentication, efficacy. organic to SecureX. with malware passwordless observability, including new expand and enhancements security We greater with leadership complementing continue also prevention, that cloud-based innovations, data We're innovation

bring together vulnerability will their management SecureX's management capabilities overall and platform, risk-based intent threat risk. more acquire Our Kenna to manage effectively to Security with prioritize

touch me Applications. let Lastly, on

had WebEx, hybrid execute continues of strategy perform to collaboration Our business well. our in against quarter as the record we to future power work. a We

months our XXX last than six WebEx added features Over devices the portfolio. and we've more to new

people market. integrating provide Calling we into platform. hybrid capabilities with intent of our week, the comprehensive our our devices now experiences for the Labs. of signage, face WebEx wellbeing. very Labs room enabling right are and of mind is continued a and WebEx of be why launched to Last return customers environmental on calls, to monitor including good management of help In most and Socio our platform, enable so quarter. By many combined is most desk Cloud hub are the event so inclusive suite Cloud business we a Insights with People summary, teams the digital comprehensive the provide office. extending to acquire desk working. help solution proud features, way the Wellbeing Contact and manage Slido also their sensors we top new solutions I'm to work a These the able success driving. This and we will and seamless had devices, to we camera Center We Socio alerts new and safe as external and through capacity announced while touchless transformation internal our

are I mentioned we demand in experiencing nearly decade. earlier, strongest As the a

key good The are reflected peers. and our will as issues is as guidance, us supply this quickly as our arrangements We and shortage fulfilling work with actions suppliers. these as that component take is our their news, confident in optimize we revised customers place semiconductors, already similar to access seeing components, believe we will our also have we of this demand including enable to are our We in of critical by care possible. several put through

continued with commitment strategy are leading innovation choice, our profitability. well discipline, focus and us to positioning Our and trust, growth and and along for with

as United As and protect very month, the the of the nonprofit and support it's Number tremendous recently terms to in XX was Place to power recognizes planet. solutions. innovation the of partners, continue Work. of impact One in incredible have our climate $XXX culture and I'm people Best years of to are our our fund And This Cisco to million Last Place the critical that grants communities the is created. customers honor Fortune work the people, it taking and actions that investing for we States Cisco we our we our and announced named Great accelerate for Foundation we planet. lastly, us, a Work pace in by proud the to over

best customers, another in Europe, countries it's over We about forward. partners purpose, results world, power focus to the Scott. our an difference now turn a have the for confident this already or quite on ahead ability deep to making employees optimistic strong communities Cisco is Whether and to achieved remains across XXX% deliver. commitment in I'll in many and inclusive the across it future our and renewable our step our U.S. committed energy in for to what's our I'm to team's all. and delivering

for strategic plan to Chuck. creation transformation continued key and that Thanks, to identified our priorities using long-term profitable Last quarter value through four maximize operating and efficiency, growth, define financial disciplined are on I strategy: a financial driving examining focus investments, management for setting a we build financial on are in financial both approach fronts as core strong foundation progress performance organic and inorganic. providing on our all shareholders. to a We well our these pillars, and based these long-term creation made continuing as QX value enhanced

Now, for let's turn for a QX. with the summary of by followed results. our quarter our financial start to I'll guidance the results

said, We business. to quarter. QX earnings year-on-year, product in up was Chuck executed a increased high and $XX.X As quarter, well, billion income guidance orders geographies. and broad growth areas and Total revenue strength all product X% strong net range share. revenue, the with end for of our strong across in exceeding the solid saw the We per

sequential of our building momentum We also revenue and in saw was continued business recovery growth X%.

high $X.XX, the up income end $X.X our net year-on-year, billion non-GAAP and margin EPS earnings in was range. per guidance non-GAAP of coming X%, up XX.X%. Our above share X% was was operating Non-GAAP

had the contraction. Routing primarily strength we our driven products. Now $X.X continued Applications X%. servers up our X%. X%. was campus by $X.X the overall Meraki. on had up Catalyst declined, strong Total driven revenue let detail our more growth, nicely, driven revenue strong strong market. of by Switching Platforms Center Service were Wireless with has billion, that, provide growth by revenues Data experienced Provider and up billion, growth driven QX by strength revenue of in X%. market revenue. me products XK Revenue continued in double-digit Service was double-digit ramp with increased up Within in as X rebounded Wi-Fi product Infrastructure growth,

bring in entire to double-digit see growth WebEx, innovations up growth TelePresence the endpoints. remote value continue We driven in our saw by and decline Security portfolio. AppDynamics, IoT we with product a and by growth in to was Communications, the working. We Unified across XX%, software, offset

and and Cloud continued Duo performed Umbrella well, of our double-digit Security strong growth portfolio Our with momentum offerings.

and transform delivering to more our So software business, growth revenue. continued subscriptions we recurring offerings in driving and

XX% was revenue, of and billion, points were up subscriptions $X.X revenue year-on-year. Software total X software

continue of our we driving levels increase to As subscriptions, software higher we're revenues. recurring

total in of the recurring our streams. the revenue fact revenue majority came In growth from quarter

the growth transition $XX.X strength more and RPO. of were the and Additionally, is of in positive during up XX% on the both the and for portfolio QX, XX impact RPO services At end up There basis Acacia was which X%. obligations revenue up closed related remaining Service the or Product for quarter billion, points was to software a in growth acquisitions performance quarter. to our and of was driving XX%. RPOs IMImobile,

We these QX, acquisitions guide. factored QX strong not As XX%. in a were product reminder, into our total momentum revenue up with order had orders

end was range the Looking XX was improvement Enterprise Product XX%, basis and gross in up EMEA Markets margin basis and down year-over-year. down were The XX%. gross at our Customer the up Provider margin from gross significant which driven decrease XX was to includes Service BRICs was mix Emerging by the erosion XX%. was up chain with X%, challenges, XX%, last ongoing historical geographies, Public In high by margin and related segments, came up moderate software Non-GAAP positive relatively was at our largely costs benefit. at in-line a was Americas some was range. product gross the Price is service with down APJC total Commercial up XX%, points, XX.X%, XX%. product Mexico was XX our in guidance points. plus basis Sector quarter. flat, XX%, was supply margin points offset which of Total were up XX.X% XX% our up up

costs. seen we incur the continue constraints continue and additional manage industry-wide through On to front, to chain supply the

as quarter for million. extra We was X%, to purchasing approximately our and operating which the suppliers, payments impact timing as we was call. we expenses of our of benefit and by volume our growth. $XXX partnering flow the $X.X total down last the X points on driven quarter, challenges discussed supply cost was sales costs. address an expending continue. restructuring approximately commitments chain cash include with billion, leveraging the our will expect Total our of did and supply The on guidance key Operating with are we Consistent week, revenue

operating dividend and well for by ended sequentially, cash, have flow, for It We represents acquisitions, XX% billion payments of in and comprised quarterly billion debt. capacity million to full returned flow cash capital to was we billion down driven the $X.X long-term a shareholders From fiscal of as expect and quarter. shareholders, investments during X equivalents share $X perspective, cash normalize $XXX in our as authorization. current We our of program $X.X cash total $XX.X to $X.X of year. share $X.X for with billion, under remaining repurchase we billion $X.X repayments repurchases. in QX our our we billion which free the returned Year-to-date, billion billion allocation of

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

the driving well, great our in Acacia During acquisitions, we and summarize, our on Subsequent These areas. R&D we're QX market returns We're in position seeing more IMImobile, growth internal with of X. in differentiate growth acquisition making M&A software We quarter, and on investments we and end had strengthen with Slido Communications, the targeted line and strategy to value. three delivering on investments strong our growth are May our continued the and our successfully we a of closed Dashbase. us also the profitability. subscriptions, allow complementing with shareholder shift innovation QX. executed closed to and innovation top further to driving to To of consistent

earlier. to quarter to fiscal the This to Marilyn information is regarding disclaimer subject for fourth guidance our the let's 'XX. referred Now, guidance turn that of forward-looking

seeing. revenue be reflecting range range to margin protect X% to be the the our for increase of to year-on-year, again, we're gross as we XX%, we is the chain guidance we're anticipate to the of XX% in shipments growth in expect to the costs strong in as non-GAAP demand X% supply ongoing reflecting We QX financial incurring Our customers. follows:

to Our per $X.XX rate non-GAAP is tax in is margin XX%. expected be non-GAAP be Non-GAAP range expected the earnings $X.XX. XX%, expected range share the XX% operating to to and from to of to is

Looking Analyst Cisco XXXX. host Wednesday, we XX, Day excited virtual on will announce Financial ahead, to a September we're

we the forward We back event you coming can that and in sharing time. move will turn the into Marilyn with at post it now I'll look more so weeks details to Q&A. to

Thanks, Scott. begin the Michelle, let's ahead go Q&A. and

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

for sustainability Yes, increased thing I impacts look wanted sustainable that's are I and maybe the guidance. line? could off about. are to some the the guys, just heard, reasons. on question. same color of start the the asking with and costs these people talking from address I more assume, looks the inflated costs. margins I guiding you're guess margin give OpEx thanks about me cost impact as the But And how you guess like And forward. heard I are you I Scott, some most those us of too, those Thanks. of for, kinds these pressures for it also we

starting to unit Rod. chain. you're really the margin elements supply Yes. driven in a is On it. gross gross couple One guide with is of Thanks, the It margin, has on QX cost. the impact seeing by

issues announced in that a great in that actually a So years in got has two of is everyone today seeing. job from we've Gartner, world, team the number industry row. one And the it getting the the supply was ahead done chain got we've team and

So supply locked supply margin I least see you what at us of built and with with the issues got going the the with in end pricing ahead. calendar stay guide I see of will into through chain That's from we've what can component that we've providers key the some year. think this that, and both though,

that's associated On right this with we're side, fiscal we're bit reinvest you a what the track you this overall, would time restructuring When let just see into at on growth you on the and before different. track, earlier at we look of said right we announced with business me the earlier by OpEx year, the it's saying, little the -- savings that that year. happening. start the some the We ask, of

the closed So at strength when the dollar OpEx, quarter, you weakened has the it's at is a that's driving by during top bit FX through as look reset fiscal and that the see linger the headwind calendar little line. But in higher integration what's robust to get the half a the variable are of year. of and year-on-year these growth I the plans. then I of think the up a the our end it first expect from Commissions commissions acquisitions driven the to some of issues us of year, of sustainability, supply point, comp chain and your with given to

work Provider businesses, fact Rod, cybersecurity. be about on of some quarter right that business business the more were and right time to continue we Yes. think X the to And do balance that. leading Chuck. the trends most next in on want incremental that We'll are occurring months that have talked play all was the we're which you record switching, have based the is the decided but to real of and the to I had spending context drive now. office, realize segments. believe are to balanced XXX a suggesting began is that based XX across we we're business we growth Hey, and you color customer invest to we balanced growth the to temporary. as had every a decisions, the a now, return And some the seeing we to seeing major see then, this the see we to to at that that that Wi-Fi gig to in to such having just going last, across build-out, like we now It across feeling on going where I they regional over in balance add Security make they're front the campus of, costs, you in these see about we hybrid the obviously, XG out when momentum that in how are Webscale, the and long little the the of it And technology success areas. transition, the like we're Service the end was these are think

we and the feel some invest meet deal the of we'll demand to to we continue So, it. with the like pain to prudent to was and short-term side then get other of it think

Great, appreciate a okay. lot, Thanks it.

Thanks, Rod.

Rod. Thanks,

Next question, please?

Chatterjee Samik from you ahead. go Morgan, J.P. may

question. secure just what the following inflation Thanks particularly, the be And Chuck, taking help trying in Hi. that somewhat on levels going product for other seeing the demand that? up the from the you to as I guess, is you? ahead the raise my think also some that you're pulling through pulling you customers somewhat a higher expectation well. Rod's period us question will how Can as think just here, you or we aspects of supply be balance but orders macro to and are I in that navigate chain company has that ahead against through that are through might of

then you as know. been we question you to the have already work's be that so we we've cancellations it know this and extended we proxies these they then that order to. if times, really are do looking a this will of has then a they're major against would on impossible And like what customer that be at reflect great to they're Yes, But And we've of questions. if to issue the a dynamic have canceling when we situation that. underway. sense. That increases would. that see that orders orders being might any one, or that. made, We out mentioned sustained get decisions that more quantify some will inflation is be multiple also to obvious really than already that Number we these don't that where sooner channel. asked. is be, it's It's going while strategic a lead There's placing And they pretty one we what couple to if increases going cost do that pull-ahead, going a probably makes to conclusion come pretty look we for it's price just place channels as

and this of You engines wouldn't past the that pull-ahead probably and quarter. Business, would us and significant growth see were obviously see as Enterprise from pretty you Commercial more those for much Small

although see level we red certainly of flags, on. some glaring there's So probably would ordering agree we that don't early any going

Okay, thank you.

Thanks, Chuck.

Next question?

Meta Marshall Stanley, you Morgan ahead. from go may

Great, thanks. customers And the along do further the you question. from Are may planning? think year? spending work vice just from are customers or return smaller customers Where than to then Appreciate of industries larger what your last be you some versa? from the on Thanks. are seeing impacted

Great question.

think I of all, the first So, it's inverse.

Europe, and we've to analysis I done saw up lines cruise in retail. the Asia for we've front, Enterprise in making Small actually think in and Enterprise actually the in we've think healthcare, customers review year we're seen and I although we improve significantly we a on as purchases deep back team. from fiscal we they where we are prepare and would And seen in And U.S. then U.S. growth seeing were expect in the U.S. hospitality, doing double-digit Businesses to and Commercial and The next with the the today. quarter significant the moving even improved, out. a our go industry faster, little next pick

said XK of we Wi-Fi. be we've would is, campus the to we that prevalence a that double four a would as once so that our that hybrid in we've road few digits office, to talked the demand I growth believe CAT recovery. quarters of thing say would think from strength in they work the happen, about customers saw switching highlight happen I that had Wi-Fi we has And and and seen on other the the is well. definitely we And upgrade there follow the begins about continued a we're perspective, return that think to increasing that X So, last sign quarters think as about

it's think I happening as overall, even would thought perhaps at -- and that accelerated it think I So, pace. an we

thank Great, you.

Meta. Thanks,

please? Next question,

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

guys. questions, related. and have I not Hi, two related

First question increases the that? products? is shortages. the already board. prices one. That's you or price We pricing pricing environment. it your adjusted impact Does of see component have see across We for there number is any plan And

one, understand speak the know the easy hard versus your can the at COVID? X% quantify, to grow weak I'm the was year-over-year growth. say, fact so comps because about when the trying impact just trends but comments qualitatively and of impact, comps hard environment to real context you to etcetera, I second versus of of least year you but it's in really And last The deduct of we the improving Thanks. because what's acquisition in easy it's

on Yes, I'll one, and it's them Scott to add then the great. comment it. both can of on first I'll Tal, on comment

over that customers; right to now optimize of we're sustained. now improves customers we're on what I have made care these trying long rest costs term our to it we you So our we're on said because the believe have few the ago, as we deliver taking a think where increases some our position on price are be the improves erring and relationships will making we doing. products on decisions ability front, to on, that's know, pricing we and going think that certain portfolio to surgically our that But minutes of at we I and them be hard with based right so looking the

I right. the thing On point to -- that I what the I and the that is think demand is would trends, we've is real seen, substantive side you're because what of year-over-year think

over been delivering the the we strategy embracing happen it's and the last great we at marketplace is for and gets the can we've You based teams believe we're like would feel we it's that do evolving on do on math a year, thought a the positively done work see, see I year there; The sustainable. and what revenue post-pandemic. executing but our that it's we see what that demand hard, to out think based solutions we really customers the certainly, pivoted in we think ago so have QX, I some us this that

Yes.

Tal, improvements I is we've it's when quarter-on-quarter look We've four quarters you that improvement, now to and line. the improving It's to really, seen. the in each you at consecutive the five geo, and the in around think, think that seen of product across-the-board. I put need trend year-on-year, each context

improvement continued looking for obviously, and at So well bodes future. QX into we're out and the seeing that,

I is think that we demand revenue What a healthy the the built other didn't thing that backlog see in we've robust this up we've we printed also you at you point. had QX. talked the and about see that

to high very stream only got so coming we as, QX. recurring what's we that the come will I point, and percentage the QX, a have think know pipeline. we revenue And orders a at into that of this fulfill, into know of during backlog in revenue not do sizable We've exactly

sequential feel that about trend the really across the good we're So, seeing business.

Yes.

revenue guide the I supply chain, think, which headwind makes. Tal, as point really have based it's that improving to what's have we're Scott EPS through so going well. probably is that the on higher, a supply our would could good in flowed There revenue on notwithstanding been facing chain, a

the navigating it's momentum that we in now. quite But So that through business about felt notwithstanding while. complicated and right it's I've a best are our a where the thing and we're

thank you. Great,

please? question, Next

Oppenheimer, may from sir. ahead Kidron Ittai you go

of future that to for normalized Maybe can demand can us that. Oh, again sort the for is the fulfilled side. once you're away. think how a Scott being better quarter, goes of IMI, is call next for And then thanks, impact do trying about just closed What seeing now, gauge you the were COVID, plans Acacia, to without guidance what COVID on Dashbase of pattern to acceleration you of what delayed out now the you worse much for Chuck, right help want for that me. growth guidance I you on? I'm questions during couple of Slido follow a for of the now specifically trying growth that kind just now. into and year acquisitions? the and last are demand on versus right things is of up I'm think noise

Ittai. Thanks. Yes,

like. be -- a aspects on. what do you going now but they one I to believe to that's there I now customers I'll visibility definitely hold are happening. also projects return looks think think really there's try So, second I that it's into what couple I have try happening. accelerating certainly a to I'll put of that think asked, I they're think point that on better your the definitive you difficult about, is answer but what

areas of crisis, of long an really think technology wants as think all is we'll I everyone that caught their I infrastructure because that life. But other to investments flat-footed see during market frame obviously that's lot this power and transitions and no by been starting to a looking we've time so think that as to the there's they're, well these every a against increased the cybersecurity, time I the big come be customer the etcetera. realized has modernizing is thing are across next of element for that investing technology one important at

didn't years You remember, I And quarter it's grew we been quarter to XG play. this play ago. was in play didn't seeing Provider growth, this quarter again Service it's then, a of over And almost Webscale Ittai, you've that we've for our the and way, in accelerating. quarter, robustly. it mean, out growing so starting to that excess that's of five ago the XX% We we're as a out. XX% year still got waiting business was it all still play against a space now,

press upgrades revenues. and continuing see to the all cybersecurity in work return the got by that that You've attacks and this we we've record had at X is hybrid Wi-Fi you've And by got everything campus talked this the office only a where with and about. time we concern exacerbated

it, things those that's now. of feel leads right all are where to what think good are I playing we us about So, into pretty and

was And of during closed ahead we've Ittai, QX, acquisitions, for part revenue Acacia. was and of on that opening growth, your XX it of half guide. second question at QX said each that the the about the a we QX point in points basis about driven is look by the not the driven growth acquisitions. and so a impact of by commentary They our quarter let about that We mostly out there,

that Ittai, you if Two don't wanted out question other to mind. things, particular point that I on

first issue we chain a the The QX. is from see headwind supply revenue in

have is didn't we we what into guiding the would been As higher reflected quarter. Scott I have said if on revenue, which supply backlog chain the the coming earlier, challenges, mentioned about

The is first the if then that quarter during go we off CEO entering recurring sheet quarter revenue and back I or second pulling balance this at revenue to is frame. that time transformation years, look have we to thing today working into, that the visibility we're on the last of six five been the will was that we we're QX that that business for the XX% up part have we be

talking we next and a for been visibility, driving deliver but in is it just to a says to helped us lot So about we're has more to, quarter. the that have the transformation, us big why rationale we've that complex get this big business change a actually revenue which whole model allowing way in

we're any this were positive quarter. there we quarter for than So, the I probably believe benefits more the is model, where other feeling of the impact that that think business the

thanks. Appreciate great, it. That's

Thanks, Ittai.

Thanks, Ittai.

please? question, Next

James, Raymond from ahead. Leopold go you may Simon

Thank you. Appreciate it.

lost we you. like Sounds Simon?

We lost Simon. you,

Simon? Are you there,

Instructions] Daryanani go go We'll from Amit Evercore, [Operator question. the ahead. to next you may

taking question. for my question have a a I and follow-up. Thanks Perfect.

unpack the from that I in XXX where That's question about play you drop chain curious a really and acceleration helpful. as business attribute you. there I'm the would be accelerated issues traditional trends entire amount Provider at Service Service Provider is And sort second due growth you was as hoping could anything would you're points, fair else the guide well? gross think we when the talk coming then one. Thank the about your seeing just and Just basis of which margin of or drop supply Webscale versus is to the

Scott, margin? to the you take want gross

and Yes, couple I our shipment chain by unit flavors. there supply work of to to that's ensure out unit a that we've we in a it the door are certain fees, increased in cost and and increases can slight It it. done will. is the in driven Having protect the get get built again comes to back increases, price increase that components into the product done customers, There's on also expedite freight. we components

So chain. to all it really supply is tied

as sub-segments question And Webscale. then, growth, pointed it have of saw on Provider double-digit the growth should I'm Cable, We Carrier I the asked Amit, so Service out. Provider, well you because glad of Service all the across as

so three so reason why, the is and balanced optimistic. consistent across the our segments. very across the it, geographies and not all that side space it double-digit segment was consistent portfolio, it's across product we The was ESP and we're customers across but consistent another across saw in demand all of which was one it So carrying those so

please? Next question,

Raymond go from Leopold you Simon ahead. may James,

that. about hear Sorry Can you me now?

can. we Yes,

wanted they decided AirPods stop My to working.

about Sorry that.

the air paying hours extra chain to things things come shortages. when I It's know maybe we freight headwinds So, multiple the chip gross shortages, of there bridge you later overtime looking are if maybe in in add see terms that the and not of like was having but because the aspects. and could just supply help to margin then

help manifest was bridge some how the maybe there the if itself. Thanks. recovery way understand would So to us might components that

on exact Amit Simon. When the was same as asked question. Yes, you same the went AirPods your and out, wavelength

to So aspects and gear the give the product that's higher commodities answer. can as all But for that our them. that semis, and work hard smaller three we are support on has driving same working to get other memory from significant I'll their really deliver are They've dong deliver and underway certain that is of Unit slightly get the need it, across that supply It that's our within shops costs to got kind supply unit supply we're to two they us. related board. customers we team environment, or the chain to can work to sure so so chain. ensure such up based costs and that's the hybrid well can as the as it's transformation new we are all make and we

we're as expedite that fees freight margin. the And finally, getting then are gross second door. as higher, product costs go The in is, costs up, hits freight and obviously

to elements chain. supply So, of it's all tied various

Simon. Thanks,

it. Appreciate

Sorry you had to repeat yourself.

problem, okay. No all that's right. That's

question. right. with All up us queue next Michelle, the

Ferragu ahead. New Pierre may Street you you. go from Research, Thank

may. you if follow-up quick thank A I for that, have my taking guys, Hey, I two. question. after

one, look sequentially, so at your software to if I revenue The $X.X billion. $X.X first from went billion it

offering, like for your very number, were and Scott, then, we not you gross sequential it run-rate in exciting. margins, business? software growth And rounded that tiny software, revenue product kind move right? kind could is mix, of mix in expect a given which have sequential but level suggests in of have of a in disrupted, we in that the just right confirm, the mid-single-digit some growth chain should which improvement that's expected in So Is to supply situation

that. are is issues we out, Yes, as obviously our more those that's will particularly software, tech Those margins. support pointed right. you be gross Mix as chain to add around also long gross higher but The services, term to definitely, continue a recurring more tailwind revenue supply than offset margins. our

mentioned it's by a particularly X-point less ratable that upfront. that when the revenue, That amount nice the driven software of is software recurring. is a XX% of in of software revenue terms see bit in that now so and in that's tread. on of seeing are We're news longer-term subscription on with using impact In that you're your the as revenue know, improvement growth, great you're and question growth numbers recurring rounded, but fact, right the you little you recurring

also a wave, our of our the and it of growing. north in And growth bit on one thinks When you revenue. companies world, sign software set. software in of those of the quick the in product of so right, a anyone see $XX of the math, I of in we're software a terms. now don't there's right, billion do deferred think biggest just are the each So within our bow and those RPOs That's growth you the of product growth revenue Cisco

Thanks. And if for a may. Chuck, quick follow-up you, I

about your uptake offering. base talking You next have release in press you're subscription the your of

your that did are could portfolio a an the of the you turning software pandemic? feel Or are of to subscription on expecting point terms a moment? almost reaccelerate or like the inflection on it sounds mean in on of you back like point base expanding on offering us these So you uptake you front. you the Are exactly? sense of products give you What at

have things model. continued think that's Pierre, Number going in couple the so, just last business I we acquisition Every over a our on. years do, business. acceleration software the one seen few there's Yes, we

now, comes anything we consume perspective, Solutions. our And from From to we perspective then delivering organic Software is want customers So Live, how more build that a as at an we deliver should it in. we're building assets. looking virtually that we're We're actually Cisco do way. Cisco more software announced it Plus which service

part so So that, will embarking which about. what I'm on of for the we're is big just that's talking our more revenue future, another portfolio, which create recurring

sense. makes you Thank that much. very Okay,

Pierre. Thanks,

Next question?

you ahead. Cowen, from Silverstein Paul may go

a then it's Federal different of other would the can the taking think the time including on I U.S. questions. disclosed Two various size all impact been would would I And business. quick the of customer One, given big the segments expect your and what be are what's questions. or you the have your what Chuck, update since trends, be Provider, sectors long going you Federal? Service how stimulus, impact on U.S. question those Enterprise, Services us Appreciate

and is Any or forward It prominent from was It should driving one-off low that great had you what's there it up expect on growth? that was share quarter. been a a insight up can X%. extremely it? strong, going very You what a had we Is number. is single-digit -- that what in indicative

the I don't have percentage. Paul, Yes,

We on segments our out I we when if the a while. perhaps information that would Analyst we unless could September say until do of haven't percentage for that given have. you Meeting couch

those peers to only together. us combine the add many where when out you of two is Commercial our thing compare Enterprise versus No, would I some break of we them

do. of Most them

Yes.

across you're So just mind that us in trying compare the board. to as bear

for U.S. obviously, am proposed, that's impact been with the stimulus I various may, It if numbers. but Federal already great sector been impact be would folks. also you would if not will additional updated a at progress for aware, the and Scott, those of but with point that's the Enterprise, I you the us that of passed magnitude but just public it not lot only some

that Yes, get I sense. makes it.

was question, what the second Paul? And

growth. services The

services growth. the Oh,

an The new services it? growth; anomaly? the driving Is Is it it what's norm?

with obviously extra There in Overall, QX pleased was quite is services on progress our week. the there business. remember an though,

of a outsized extra And the one-off extra QX. turns that into a week so in driving of revenue there that's anomaly during a growth quarter lot that ratable. lot week is so is That it's of an services,

out, that Yes. about And been then, normal you same rates you've you seeing. once should think normalize the

you. All right, I Thank appreciate it.

Thanks.

Next question, please?

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

both Thank Actually kidding. you. Two just questions for margins. me gross too, I'm on

your breadth here. can is little pretty of driving plan what think but But book there touch like here. cost versus see just bit impact vertical. quarters? And been us kind talk had again. just what's business it you It on give could you strength strong that? the and your next the was to campus done color one the kind customers, little sounded have a some what So on of you those you starting a kind of us be Cloud the would you I then, Could with of just kind backlog that Thanks. peer others obviously great. a software First lot some has ship gone driving times, of industry, bit? Can companies X-K, to a and to given any far are there contribute the in color that's few to the of of and starting about of with little bit and out a about product talk it a for you can revenue So lead how visibility? if see Is and whole silicon little a that? you second, and for

I'll the thing will would in the for tell guide Yes, time. Cloud I'll thought I that visibility comment supply what then middle I at months one a we're they Tim. we let tell comment QX, our And take a thing, quick of make working and Scott next deliver degree I what the was say I'll confidence. one. two when team about on that can started and concerned they the we you I is Thanks. through reasonable see in could of guess, build they and could and the then that building you chain QX, little, had the

me So what better that is says they're to getting visibility.

I going think just so it's And from here. improve to

we've to couple last you the add what months that's So anything? Scott, dealing want been with

as From we've I size will well reported off which least revenue come occurring roll revenue Yes. question, got good balance that's part that your a into of amount at with, is of this QX standpoint, probably as that given Tim, backlog think now of sheet. at the visibility we point, the the our

So pipeline this look for then in what's we you too. a together and two have -- obviously good those the at the add at feel point

this at visibility good point. pretty have We

is driven it the of of being infrastructure relationship assets. strong the on going then, vertical; with, Cloud And portfolio I have Cloud say that we really Networking one a beyond customers would had all very sort by Enterprise into but that, of their

so we And into as have we infrastructure, silicon, sold but have stand-alone that sold amounts of X-Ks well. significant

software on We hardware, couple with on running some White their have and in silicon. we're on hardware. our working switching running And software to Box our pieces we a case, their them of our have one of of relative ODM

right So, December all announced good there's a news desire as variations in and the now; in involved XXXX the actively is of lot Systems we have we we're that of well.

thank Okay, you.

talked went always quarter. our XXX XX% gig, there to add-on XXX XXX by last we time, as customer a gig. be about about the gig And Just that, an seems up and to on question count during

see that and you on So that's continued a as we super know. did uptake early, technology,

you. thank Great,

question, Next please?

Investment ahead. may Citigroup Jim from Suva Research, you go

your it some one while the and so traction commentary you wins, some permanency I question. and share it be into for is for appreciated. any commentary back give traction? putting bit would hyperscale Thank wasn't as new clarification. And positive. you. quite pretty gains, Can a you details you seemed more just and bouncing Service that seems strong the of Thank Is hoped all But us Provider's commentary on on were it? like as greatly quite much you'd a now hyperscale had some appears your strong. and like product that more it efforts It

Jim. Yes,

consecutive six mid-teens ranging double-digit of quarters from had strong we've So to very growth, triple-digits.

because been in have so the Webscale share we didn't any and gains presence before. that's And has vertical, it certainly

where opportunity one two-day customer gain about we So these relationships, as hard We on expanded. with I've of and that's few the it's briefing so and positive. before, joked on it of have Enterprise worked actually a briefing our markets been calls share, and the go to all that has so portfolio. was, that two ago them particular had was weeks We've one

So we're the seeing that are infrastructure. I seeing we success Cloud vertical sides both mentioned the but question Cloud in Tim's just with around definitely

Thank you so much.

one Thanks, Jim. more And have we for time question.

you. Thank Wolfe ahead go may from sir. Kvaal Jeff you Research,

My It are question availability. you. actually as getting visibility the Thank was is side. on It margin nicely on better though said. sounds component you the

Thank what be anything has structure past And of then we wondering of that, expect I'm in year? would expecting you to these happen constraints? should time part changed the I guess So that terms get through abate the to we as you. margin the over margin headwind as

Jeff. Yes,

that, of faster billion on to now year of that grew I line. the tailwinds there's a business, comes year. at calendar higher But and the in of you also margin a margin amount earlier, software a some certainly think we the contributes the we've are run-rate good line, is of the our from no -- That of year-on-year about at the going business. us have which per which standpoint chain rate supply a now obviously XX% too. issues growth margin the When about some revenue talked than the ratability be a supply at with we've of to question think significantly gross end As we're through got seeing of software services that's $XX higher and

headwinds, So got that also in. while we've have some coming do tailwinds chain nice are we supply

the that about then drift in should And we supply fairly the scheme right is gross get the mix reflect challenges, things, once Okay. ephemeral, shift to it. then, and way margins concept of to the we these grand past think software higher. That's expect the

Yes.

chain sorry, Okay, And constraints? much on you give I'm how supply had excellent. you have us you shipped then, had number a might did not

they're really particularly point or Yes. it'd number. get so. the We talked I or say think been a they I two, think to they last think can about I'd And that were the day it's in in a right very difficult QX, I it's guide it's committed about. front, It's thing stressed, and mean, to but little, a our have build, mean reasonable guys in they tough now. what tough. to

on then corresponding the if So good with certainly guide rate increasing, saw we product that so and you our with is extrapolate capacity growth can the to the side we ship, had the backlog all have today, right, discussion wrap All let we but don't first for would spending just up by time of it. the you with just that really the thanking across relative I point to me feel and, and we about foremost portfolio. Look, dollars us predominant despite here, feel margins are I'm as pleased We reopening. gross they came proud confidence we with feel of us, customers the the what really supply about about accomplished. our which We teams, good good has our been hope around their come spend that really and back. chain, really our I'm choosing they've to

recovery statement rebound I and and be and to the I it of think to the to great that think confidence, we critical are the a office. return that's that also going proves

kick for you we And Marilyn. back to going time look thanks to with being I'm and spending with forward So, us, to it all.

PM Pacific conference results, Eastern X:XX be Wednesday, X:XX XX, will at will August call, Time, quarterly quarter XXXX PM fourth annual Chuck. which fiscal earnings Thanks, next reflect and Time. on Cisco's XXXX, our

disclosure. call. FD, in to of policy public done visit Regulation explicit and next Investor comment Cisco reminder, latest its an audience a We meetings over now Please conferences through event website As that hosting several remind will on is at few Cisco's we to access the like financial for weeks. I'd guidance Relations and during the the the it quarter be the presenting information. the schedule close light plan is not to unless Again,

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