Cisco Systems (CSCO) 19 Aug 212021 Q4 Earnings call transcript

Welcome to Cisco's Fourth Quarter and 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.

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

all hope Thank healthy you, Marilyn. you're staying remaining safe. And I everyone. afternoon, and good

portfolio, customer outstanding Our strength our revenue performance and year team strong geographies. and reflecting an incredibly finish. We at ended QX had an with Cisco fiscal XXXX across segments, fiscal

the the the great leader digital continuing see a in a that in and accelerated was the strong reaffirming as growth customer powers technology worldwide This we've highest order over we're to and seen to is position subscriptions. decade internet investments enterprise. software our reception momentum and product in Our

execution out incredible partners, team, As the to the the efforts our with I leadership We importantly, achieved scale deliver speed growth. these stand results most things world, the unprecedented through year, past exceptional at around me: an this and our of over think and our achievements First, extraordinary three our to people operated who about teams. of our

position and exceptionally software strategic the our innovation to that year, greater And ever speed will help by in subscriptions and we us serve our enter The more We're as for our a they are our off. with strong successful. helping agility. as investing benefits of are in our we growth well and move this futures. next for The transformation foundation today of our are than groundbreaking the factors three shift investments our fiscal paying third, are be our confident portfolio. and Second, are power both Cisco to customers These customers' and we evidenced quarter. customers results position as clear

forward, will environments look are we technologies our an successfully on laser-focused at providing the incredibly pace. we highly dynamic need As rapid to navigate customers they

adaptable and the of resilient can pace vaccine around us we've and as must of COVID inconsistent With the how organizations rise world deployment variance around globe, the seen quickly the be change.

vision matter we impact are clear, global may is for on there's to of thing tremendous what to believe sustainable, this traditional of pivotal many, for the a that While a as secure. history inclusive, at hybrid one office technology. and has and Cisco's I Company's short-term takes the we're opportunity work. in moment transform one shape, a the recovery rebuilding plans, like we office world, massive define the been digital, is future highly better have certain No demand a or return executing how our our when

are they demand their safer look create customers engaging and resiliency. is platforms as for on and and unique becoming increasingly them collaborative, Cisco. are experiences transformation which our as leadership customers deliver reliant for digital well and that technologies to we hybrid Enterprises cloud-to-edge build for need. workplaces, our to and increasingly solutions services, their with in help believe As and Cisco leading innovative position to expansive cloud-enabled to our We're infrastructure seeking a driving customers market new opportunities employees, and

our securing With shifting we Whether or QX in a performance. challenges. saw application their The world. hybrid and we industry optics fourth-quarter companies their strong to cash ESG accelerated flow. drive strong goals, robust customers meeting breadth growth, in hybrid increased software, silicon, helping thrive operating Cisco solutions, hybrid delivered modern margins, helping their is the earnings, depth through as work QX our we of and adopting momentum These architectures, biggest and dynamics hardware, our it's and are revenue solve cloud, helped enterprise, record

seeing strong implement IT to begin in subscriptions the driving future budgets plans companies recurring around of generated as also and double-digit increases. We deferred We're and performance. revenue, grow their growth future business which reflecting transformation product our increases our into success confidence critical visibility revenues

delta we monitoring do any several impact recognize not we variant months. past we're are COVID-XX, around remains However, on seeing that facing been over the additional on components impact customer we've from its the business, and spending. and aside shortage our uncertainty closely the Right now,

of Moving our customer segments. performance to the

XX% upgrades modernize in the in delivered substantial our year environment growth way to end customer growth working. of of their to of Fiscal support investment every all over highest We driven by QX up in a This strength is secure product our performance we double-digit This from the growth mentioned, new XX% one across I of decade segments. pre-COVID over As strength also levels is our with saw and in by markets. driven being help a the customer XXXX. order outstanding network stronger

product strong had our of in a very orders the quarter Specifically, of and in growth best enterprise over a in decade business, terms order saw XX%. we

In businesses, we XX% saw across with over customers of in also all orders of order differentiated our sector a on to of XX%. the Solutions, public consecutive had commercial to delivering quarter to a from We record in had very bringing and products XXX-gig growth business, huge due and also basis, third momentum showing balanced XXX% perspective, over early and in Service value accelerating these testament web-scale our trailing made our we're have our innovation customers these performance And increased adopting four-quarter we with a a performance. segments excess traction of growth. acceleration the the we investments portfolio portfolio grew Provider product

hybrid their switching, routing, Catalyst investment security wireless, saw strength and we our in high-end portfolios. for in increasing prepare customers office Security, In Unified revenue along growth our re-openings XXXX, in Trust campus solutions, and portfolio. QX, they As Communications work, and Cloud our networking, Zero are endpoint across with double-digit

show in and our over business solutions $X software to grew We subscriptions year-over-year. leading-edge driven Acacia up as and tremendous also of by X% QX, X% to X% of subscription progress, in we full technology demand address Within in and growing software QX revenue sequentially achieved their transformation revenue for strong that, a customer XX% billion fiscal year. the continues an of increasing more increase had for The very our bandwidth to optical adoption requirements.

year, of when business business over clearly the the revenue, of our in for For success highlighting perspective, QX. XX% XX% represent Software transformation. full they services combined of business, our represented with our And continued

our to accelerate. financial strong delivering engine to addition continues innovation results, In

an our we of portfolio, flexible core capabilities models, year, introduced Over down also the on impressive while as entire including networking launch number consumption service Plus. highlighted doubling the of Cisco our by capabilities across new more last a recent

hybrid help speed, partner solutions Plus a agility, technologies solve cross-portfolio Our later to Plus network-as-a-service scale technologies time-to-value cloud with with built faster needs. intelligently to business with Cisco our our delivered that our solutions catalog and and adapt new customers' deliver improved deliver offerings to broader Cisco will biggest needs of expand ecosystem. on-demand that services and customers' as-a-service

Plus around more directly still days subscription-based with via recurring in aligns launch, its transformation our While cloud. goals driving early the revenue Cisco

strengths gives at move the unique to improvement more Our pace. strategy us accelerated a confidence

us XG, our cloud-native shifts hybrid areas see extend architectures security, in leadership invest in X, hybrid Edge, and continue growth key to technology will work, to Wi-Fi our technology positions. like cloud, You

thrive improve experiences full-stack You secure These entire their will to more their deliver and enable see customers Access to digital applications strategic and stack world. us by a providing seamless across visibility to access digital include technology enable Service Edge anywhere SASE, to in our Secure insights also designed observability their even to offers work. Cloud-first or users

will in competitive continue business, Given to we're investing and our we the the our that are we have in ever extend drive momentum areas right growth. than and advantages seeing conviction more

for environment. update quarter on turn details next expectations on let me I our more over supply year, it for to and Before the give you an Scott Fiscal the the

component this the situation our While possible. technology, as doing we're supply as continuing nearly always, our experiencing also shortage Company that suppliers as team, customer to complex working through for is every global demand world-class incredible an we're challenges seeing our quickly to job meet demand navigating with chain is manage by increasing

our our strategy the ahead, and us. XXth allows at vision summary, expect our continue time. I across it new relevant I more and by as the and to to innovation fiscal very communities for recovery Scott September these And am and our This all trajectory dive I'm drivers customers, comprehensive, that, I'll building what am half. to of in strategy of and working. hope we turn have half second virtual is our encouraged Looking look deliver demand least to I our on us a the I cost deep for living in teams very you'll momentum. than board the to insights again first incredibly I additional value into and we is you detail. and at with with partners, Investor great forward and feel impacts multiyear our greater ever. join our supply on growth investments. through and achieved. proud over of and partners and your confident Day to year Thank more challenges strong potentially with adapt technology for ways portfolio, In about driving the our we're strategic our the on

Chuck. Thanks,

followed well, year, guidance. a very growth product product order on quarter, pre-COVID strength results XX% reflects to portfolio. with I'll by XX% QX environment. growth bookings, execution our We fourth very We year, strong by than our on fiscal with increase our fiscal solid detail then business. product across and customer teams. executed in the quarter our robust than fiscal and full significant the saw year greater across for versus XX dynamic strong our was close growth by more order some year QX demonstrating Our financial third our quarter driven our cover and a a provide demand, consecutive the order exceptionally momentum

decade. a was it rate product fact, In the over order strongest growth in

across share, the the results of strong had net our revenue, cash also Total per range guidance end up X% for revenue number flows. increased high income, of quarter. said operating Chuck in as and billion, earlier, geographies. We record saw year-over-year, XX.X all in We a strength areas across earnings and at to product coming

and with Our growth momentum well sequential business build X%. continues revenue to recover of

XX.X%, year-over-year of and exceeding non-GAAP points. net was Our share XX earnings non-GAAP income Both range. and per Non-GAAP the basis was high-end operating guidance margin X% was billion our $X.XX. up X.X up

revenue increase platforms growth let provide product growth our XK revenues offerings. Meraki X%. with businesses our XX%. driven detail strong X.X infrastructure of XX%. Total Campus double-digit up Switching with well exception Service revenue X.X QX turn Switching, me billion, in very was the the led billion, saw Now on double-digit by to revenue. Catalyst had Center. up more up Data performed by and a All Switching was

portfolio. XXXX had XXXX growth adoption products. Center were experienced by growth and our ramp market revenue driven we a including driven strong Applications portfolio, solid of our Data driven primarily X the expended uptake Provider a Center Enterprise had the our by as Service offerings. Routing products in and Nexus Wireless our a slight our Switching X% down saw of decline contraction. collaboration Cisco portfolio continued continued by our strong WIFI -- also markets declined robust both We grew we wireless in by the Data across as with Meraki platform. driven servers

revenue within X% suite subscription our recurring However, in WebEx grew QX.

Cloud AppDynamics, Security also our software, Calling Cloud up Center, X%. platforms. We saw in and solid growth IoT was Contact

Duo with as our offerings. XX% portfolios and Cloud had performed momentum we Our than in Zero well greater Trust continued growth and Umbrella security

year. fiscal subscription and Our QX our we grew investing Security recurring In full growth XX% strong in in. seeing XX% in strategic and revenue the revenue the areas security, applications both that customers for we're are and

driving and our subscriptions and recurring transform offerings software to delivering more continue growth We business, revenue. in

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

the QX Software for Fiscal subscription revenue grew X% year. XX% full in and

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

our Additionally, the up up XX driving RPO growth RPO the product marks next QX, more months. X%. was to was be portfolio crossed XX% it is the performance or is short-term, in billion obligations services RPO. revenue At XX X%. for meaning of total service in strength software transition as and and the at Approximately of billion XX.X XX% remaining RPO of and the the end will up recognized

As I were order exceptionally the strong we business. across momentum up as strength total mentioned, orders XX% QX had with in product

gross line basis our up was margin XXX from quarter. variability emerging BRICs geographies, was The to partially Looking it provider was the XX%, EMEA was XX was points, came and XX%. plus see price XX%. increase Americas up our in the year-over-year. XX% and up up improvements productivity up from In was points margin Product margin Non-GAAP was APJC segments, up were in up expectations freight to by with XX%, total sector up which was driven with Mexico basis by XX%. growth, modest in at lower XX.X% XX% at public was erosion. and our points the we XX.X%, as the XXX XX%, the product Total offset up down do XX%, gross enterprise gross returned was Services other gross customer markets was margins up relatively quarter basis commercial while costs, XX% service up

the to our supply will discussed the and As which we quarter, supply with first into our potentially to chain we shortages. year, at fiscal of industry-wide last least closely through manage we the partnered extended volume challenges expect purchasing leveraging due supply constraints through impacts, continue component half. commitments address half cost second suppliers, as scene and We've we key our the continue and

X.X level. Our to XXX by From on record positive cash million basis cash When at share. acquisitions at and perform continues up impact billion collections. number quarter of was a impact for our approximately world-class a a one look cash billion there year-over-year, per the driven XX.X rank material on team of a QX XX% total cash cash, equivalents, flow earnings operating results QX global supply $XXX the chain no point you sequentially. We strong up investments with non-GAAP our revenue on perspective, ended year-over-year, impact was and

dividend In the of of terms shareholders allocation, X.X capital we returned for of to billion share quarterly billion X.X during comprised million XXX cash quarter. That repurchases. our and was

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

we These further and QX, Slido, our strategy targeted allow internal position areas. innovation growth with to are Security, Socio M&A us Sedona in market Labs, to Kenna acquisitions: differentiate closed our Involvio. R&D and complementing consistent X investments strengthen our key Systems, and our During with of

with returned repurchases. fiscal X.X and perspective, a dividends to X.X value operating billion quarterly billion, of year, cash in XX.X of over was non-GAAP strong billion XX.X $X.XX. billion, represents From full pandemic comprised X.X environment From margin XX billion, free very our cap flow. X%. were flow year total a the operating 'XX. global at to up was flat points. points. net non-GAAP XX earnings was we XX.X XX% That to an execution. gross of solid Turning XX.X%, non-GAAP down margin delivered compared basis shareholders and XX.X%, cash operational was was The fiscal billion bottom-line non-GAAP per flat And income allocation a basis results our up perspective, share of overall, in were in our fiscal share challenging cash our the results, financial We Revenue which

our We growth great to also as and fuel organic our commitment return XXth maintaining dividend committed continuing well strength in remain our year shareholders, fiscal We XXXX, of driving driving the as our growth, our confidence and cap to reinforcing had shareholder strategy execution. of our consecutive driving investments allocation our our and inorganic on the balance fiscal flow returning strong sheet increased for we're stability shareholders returns and of year, a subscriptions, strong with the To cash value. a innovation, We're to software we and more flows. continued ongoing and shift to the capital a minimum annually. firmly XX% seeing recurring in to and QX to a initiatives, summarize, of more in operational revenue, cash free making solid delivering

initiate our look recurring that affording the practice the an we've fiscal around into guidance. is note revenue, us executing for successful transformation regular Now We're of our year outlook information providing additional deferred forward-looking earlier. of regarding to the is proportion pleased annual let guidance for been quarterly driving to to disclaimer our XXXX. provide outlook a subject forward-looking and Please ahead additional subscriptions, referred complement The higher our Marilyn growth. revenues to from visibility me future

financial Our QX follows. is for guidance as

expect in non-GAAP X.X% anticipate increase in reflecting range range supply continuing chain to the XX.X%, to gross we year-over-year. incurring of to to the our We as shipments X.X% protect growth margin we the in XX.X% to costs We revenue be be customers. the are of

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

fiscal for financial Our guidance 'XX is the follows. full-year as

X% XX%. in non-GAAP and be $X.XX, We to expect are to $X.XX year-over-year. full-year up share both we range QX outlook, In are expected year-on-year. X% from rate of range revenue to per a Non-GAAP of effective tax the growth to our also X% to earnings X% assuming

I and hope move Looking will we a Wednesday, on it Marilyn so you back excited which virtual Day can we ahead, now turn live, Cisco XXth, September can to us. the Q&A. join Investor will into to host webcast we're XXXX,

and Q&A let's queue up Michelle, line. Scott. go ahead the Thanks,

JP Chatterjee you Samik go may you. from Thank ahead. Morgan,

chain for getting right I my "This full-year uncertainty, out companies is Thanks definitely probably guide. time Scott, just guess, Hi. And visibility? guide here. understand, the terms full-year are a full-year and so chain the on of providing to timing guide? also you appreciate with supply feeding the would wanted that headwinds getting the of the that thoughts -- think orders chain the baking to that visibility, baking into in wanted your but guide taking a out," what not supply you're Chuck, a terms of are -- I the supply in of question. from into that what's other you. transformation, Thank how higher in full-year kind would how of Overall, terms to have what mentioned in much get full-year said, You I get of perspective. guide

great It Yeah, for of that's of the we're that. a one is question, transformation really Samik. making. Thanks benefits the

As and services and software a revenue recurring have to we we greater more move and more visibility. base,

remaining our stats just One the months. of of XX.X that is the talked of into revenue turn will that obligations billion performance we in which about XX XX% next

We are rate to our good also way going work renewals have our this. and up other renewal come feel through as we is what what a for

pretty a grow. sense good it's a have how of we So, revenue of big to chunk going and our

than the I of the in looks pipeline a We about view last several that one like for the seen -- year-over-year QX things seen that ahead, years. one pipeline we've and pipeline it's the that also we've of in would is ever better good growth of have what say and

So, we in as growth good see well. pipeline the

the what's the as what say up, confidence think your all supply gives about us that the of that the chain, to the supply assumption and low-end would add What the chain guide. that's difference to I that's the that it's guide. -- high-end a way question when on full-year and about is give to So, between you

half. of to issues, We guide. we well, the think half of to the low-end think At that as gave the high-end through in back the impact up we've begun the half us have year. second end. guide, of we with of demand earlier And supply we more supply second most supply-chain the into guide, the the through expect the some chain then why clear chain come the at That's supply first we continue impacts at to up full-year balance the and clear the

have, I think baked confidence some with supply that what's based still with into visibility the the there the -- have certainly, chain. of It's we we uncertainty. out and the on

Thank you.

We'll question, the Thanks, take Samik. next please.

Research, go Meta you from ahead. may Marshall Investment Morgan Stanley

how just or abate changes XXX kind think you much Maybe about should chain incremental Thanks. is margin either supply that would to basis supply improve chain impact, point the expect and in to sequential Thanks. through that Great. question, how of decline year? onto guidance the that throughout coupling gross just we improvement incremental price that of the and

it we you had favorable the better to, was look call good as and had Yeah. some really built Thanks, gross margin, mix came that, guided obviously driven the at a for we than product earlier. Meta, of QX a When that. in by into software heard that and what there what being you on expected for quarter

things added to taken of supply of of we've own a continue the steps doing only to adapt deliver that to ahead, with hybrid variant, midst midst and a are they customers. our to that can Looking in delta but they're transformations, all that's products -- it's the their do not the one, world world several rise the ensure to work in we to They have the have

going we those from things versus in takes from There's suppliers. to in of We're of going and "Hey, bit while process imbalances and to need a, from back have components you the obviously, we product at of We've not a go it unfavorable ensure qualifying sequential that cases, in are takes sense the what flexibility as We're from costing world's support "I time, have cost Each supply It's drives It QX. it component directly that additional and system flow supply memory the of -- our through in and QX, our some to show sources costs key trying higher some And even that as and others costs continue the and into up those, turns and greater It's, we been at demand for those to those complexity. to around point." through to ahead." where standard brokers we'll there while through some can same for second and to. normal costs to to be hear semiconductors have a costs some get a our to products that suppliers. good those sold. same what's get this also peers. we don't ship, of same buy change. That little headwind have the that's that the impacts a of able will sitting of so in as well to goods in are QX mix that be backlog, driving we supply

Xth, As quotes produced but that maybe -- component we the out beyond increase we put a costs. price always seeing honor products price only in. That August were place in on we those selective, did the went into it was increase; quotes there where very were price very because targeted, that effect before higher XX the you are goes days, put for know,

what price benefit increases in Think QX. the QX us of we QX in to on top the being So, built, and to days and for August in, customers then of line. while scroll first back versus come that out for more with orders higher we'll the those before in takes see ahead it realize and those prices, shipped orders XX of feel those and as come a benefit get something the that Xth of to from

Great. Thanks.

you. Thank

please? question, Next

Paul Cowen, Silverstein may from you ahead. go

the in looking The on gross it's slightly COVID it's insight appreciate has relatively If margin you're your appreciate I well translating the But obviously more elevated as I versus I it's us and almost guidance, but your OpEx. year of annual in the gross light is the revenue peers. as OpEx? that questions. look EPS is your meaningfully. terms you in granular of line, that for Scott's previous margin difference the at at not give the above revenue, EPS a or to strong consensus two any expecting billion cost number. upside outlook modest of you're more Can structure, terms all that pick-up

driven. on and why bottom really see those still components. there out there well. and the balance into at back that when uncertainty the that the X% to it And you gross -- Paul, Yes. of on ripples line supply to range there's is through be X%, margin That's as demand continues we many to put get

and only front, to don't I'd various least elements, that uncertainty, but at add be the to and we've other still down comment as out think given uncertainty, it's guide, you prudent we've get being I want the parsing on first prudent. this the trying that annual into given point, I guide We're that at with time the put it this to there well. there's

you pretty restrain revenue Opex some to plan revenue? to growth year. to healthy with respect your this OpEx modestly some Scott, is drive your growth below to more leverage? Would It grow OPEX. at than to You're going -- try revenue looking you're

top and are looking bottom on X% profitable we and you to laid start, want way The balanced, should on to I'll to I years. balanced the relative going is out, growth business that X% profitable may growth, Chuck, think Yeah. to growth the way us guidance line, forward, line strong this. you few we've X% X% you both see last that's X% to the expect and over pretty the performance, at add the and the to been to growth. is run bottom the a line where on X% certainly top

balanced poking get principle to elements parsing really I is down profitable what want I you're Paul, want of growth. know into I don't so And the the to don't -- into get core at. again, that, but

-- Paul

-- Can ask I

ahead, Go ahead. Go Paul.

structure structure margin what if cost reason better, COVID? gross but Just structure there to back expect your was any Is was it general not Is question -- one XXst to why should envision perspective from one as beyond not mixed going in to I would other other margin any will back go a quarter, last why got it influence proposition, on getting and where gross factors margin quarter recognize there to Century return this. your a you've the from reason gross we the or the pre-COVID? that way we

expectation, want our for of is That fiscal is there back this revenue expectation it we chain, Paul. a our as I mean, just don't I provide tailwind some our our continue stream, to year, build gets over of Over bigger given to also again, but to predict that and time, into a that longer mix bit term that software in uncertainties the supply it of margins. a should the the

I appreciate it.

Thanks, Paul. Michelle, next question.

Aaron Breakers from Fargo. Wells

go may ahead. You

and to taking on for ask good quarter. I the little Yes. a supply differently. congrats a bit chain the Thanks question question, wanted

As the that in How perishability in commentary ordering, laid Are order you or you that you demand? do laid the might just the out? see out, function that quite any assessing you've where guidance are the about double positive. think customers of how obviously, is signs pipeline seeing you you build be the momentum of

is this to Thank that. Aaron, Chuck be expected asked Look, about we for you pull-ahead.

pipeline a build, I and orderings, at directly. our say, we our calculate rates, customers times don't plans. have needs order have of several large large salesforce there's see think who channel our future what that movement, capacity looked obviously would indicators; players, to well signs telcos, are. cancellation lining that carriers, couple than ordering that we ahead analysis, can't XX, of we lead things are We've up any with opportunity Cloud other of pipeline I XX-month XX, And

pull are a times our would they we was there based significant going And but of than other lead of order to so, what lead into they dealing they the and times. not with say have, ahead on look that at amount

I the That that we're Scott in growth see strong perspective start in several a QX, that sitting out pipeline to would lead a order is after saw just that should from that to us is The we've pointed earlier, for best we with had we little believe trend the other a forecast thing real while. highlight would continue years. that this

Great, thank you.

right, All great.

please? Next question,

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

bit software seem into you yet the Thank just the lines and a strong, you. Numbers little a security angle applications Could pretty dig trail the on product side. bit? little

up broad-based, give other to follow did Thank in piece question, that Chuck, that saw was but on longer And could also, advanced, color anything can is just so cloud then, of any So, a in quarter. more you. It bit through the that? just parse us? on you peers some you lead cloud assuming to little huge second, that for that want orders, there last sounded time your number? pretty I'm else the or strong

Tim. Thanks,

so So, on to and that's positive. that there's rates keep both the to ask subscription would certainly mind you. want portions the within guys were that the order recurring expected about first in revenue a couple thing also Applications Security. The were things in Applications and of front, we The tell those rates, I higher than of might very you businesses each

some I Web in mean, collaboration revenue was subscriptions Center, Scott the handsets, collaboration. year. on-prem in the -- and is for IoT, Cloud within WebEx solid suite also if and WebEx will that's within What's As software Contact recurring recall, up within there's Calling. phones X% with Security in growth [Indiscernible] there XX% the said, applications in are suite, We Cloud QX, in associated had and there, you

impacted supply actually But areas those growth really future chain. by And the the good. some for us of were looked

XX% QX, Security, were the products the was revenue few The normalize over subscription again, would We On little created our solid Cloud Security supply recurring over some of the front, good Next-Generation that in but was revenues. there. those the to in well. legacy the next demand XX%. year a than for really chain of was headwind quarters. as Firewall stronger revenue But so again, a security the bit up expect up And XX% Zero Trust orders

Web having XXX% of call, this the are meaningful, reflected cloud infrastructure. order our the X As quarter. Cisco year the portfolio, this their now same we XX% would last meaningful. the for this a years discussion. almost X, I said made really We growth declare quarter, is start over it And customers you always was in And in a had including I silicon, XXXX side, that ago over software, landed half phenomenal enterprise new business with entire adopting but optics, and to growth multi-year and guess scale, tell the we order it over get and growth. that of I preparing when And that building talking to web-scale can was have it about I I this investments we

a also stats XXX%. really, way, because were We up In up of give that see I'll probably QX, for a our XXXG couple ask ports, it. meaningful XXXG on year, in you someone's orders orders going taking the off, XXXG to XXX%, were and port

ports deployed we've taken total. that have almost We customers orders over and XXX have XXX,XXX for

that do certification continue forward, space, are others. in franchises won those and cloud we concepts, the several the validation we -- in Web moving things of think proof really in and scale I stages it's to we're So,

this have with always said we great we in missed think transition we first done to for our the So, transition teams job good a be prepared and and a us wanted players putting architectural next that that I position. these

much Okay, for thank the you very color.

Thanks, Tim.

Next question.

Goldman Thank Sachs. Rod Hall you. from

You ahead, go may sir.

for ports. A lot question. lot Great. of Chuck. the Thanks A of ports,

costs but about I the time growth. themselves One you. order do GSD, the you as costs these orders two this Thanks. I little right and I'm flex there. And curious these seems here, once longer? would regarding these underlying is. the So, bit in back underlying to be cost, or intention to a on when again you acceleration questions how or the then wanted curious back prices Just that change. linearity them growth and what from possibility we could commentary, be plan is curious come I'm back these I'm XX% was your last pricing you component are rate? an of what down, guys curious think probable whether that prices to on for had expect pricing down exiting a those is you What will like durability your talked, handle sustain go XXXX the That it that's from accelerate would

comment start issue pricing me let well. I'll and on as the Scott Let

On hot. quarter, started day from hot a were like was then It couple not give ended to accelerated. throughout we entire month, X% Rod. to last it quarter. you the until asked it growth was It of questions linearity the one the pretty You was just and there, consistent and the end, this so

just to assets which going in now. dealing six adaptability thinking the to the expect certainly the not I'll range, just I next seeing have variant variant, may are be they're understanding teams, in gross end gross pricing and our And good we back to the -- make their feels to to because now. right talk Scott move but of think we margin months this standard, customers that we're now. a holding with what talk the have This from them I -- think with durability I be new to to the for sign this thing means pricing have accelerate. that XX% to about coming one be finished, low technology pricing to and build they're it actually this the mentioned I'd decisions margin to with growth right wouldn't comment normal hybrid element that The Delta there future as we making And have very be certainly through I about a they're is not resilient, deal now with which what going our is, are their the ability could at they're -- out, of You that like think customers of sales may quarter is, one that's they're let they work. then to one was on the our are new office. be going is order infrastructure, they're going -- -- modernizing about

that So see once then certainly we the impact these trend Scott? things favorable that start continues, through, expect. if flowing would we

that's Yeah, I think right.

about I August they're just driving they're not way increases, we we're -- really are the much Rod, motivated offsetting on other increases by the would motivated price announced those cost line by that of think think, Xth, some as I ask top as you seeing. the to

lag revenue there's are right? those in effect, we they prices take our motivated really going by show It's a but that. before actually up see Now, to time stream,

them we'll we calls Don't the have up it. actually that close for portfolios. think on that about as price motivated, warrant so, some basis we need continue on that is I price to but this do, as down. or to But thing on drivers. offsetting time, the just increase don't costs about on use continue another higher would different motivated a we always a we when we talk by one adjustment, forward. assess other those We we're just fairly it by earnings every if of a methodology though, make deploy really to the have is basis And It's make regular this our being seeing. top-line that conditions going we assessments a muscle regular We'll

you. Thank Great. Okay.

question, Next please.

Sami you. Badri Suisse. Thank from Credit

You may go ahead.

second is, your and them versus not just on then So at first with deployments, cost many these going s completely versus going just question. question new products with competing are of deployments, how Or these control controllable Cisco an vendors Thank first head-to-head and around of you. really question back My new going to incumbent much wins be And great. replacement head-to-head XXXX, that's right? you margin with or some how question is other the existing would how are cost and you. of wins that gross those the the or deployments the all? is of the Series inputs of can your Thank much for

talked Sami, I competing flux an which driven will and some new, think about significantly the costs ones versus I'll overwhelmingly with sold. you supply of demand. And various I we Sure. component on really that But with we difficult incumbent. ability the of Sami, ones imbalance to by say even goods of up are we're to they driven being in architecture question, they something which one who second costs them us. or compete your have of by tell of the -- that a it's we're that if every competing because start are are new with on with incumbents building, certainly it's incumbents on cost of -- down. assembly the the the factors would levels It's that the as have to manufacturing to inside do we've contract flex and there

and teams competitive technology. have super some our all are great built These

it's providers, the perspective, Tim to like point they asked from I -- in diversity supply their one the supplier and when other cloud They data meant about earlier And Service the and chain. time, gave so, like give call a again, we comprised want the Web perspective with I sure to an segment of on from XX% quarter. make scale for cloud our business last we orders Provider diversity share that you

Got you. Thank it.

Thanks. question? next Chuck,

from Leopold James, Raymond Simon go ahead, sir. may you

taking much the question. for very Thank you

some those idea commitment more I XX% give purchase lock in level? substantial if not and being you think And made that order you've your normalized what Can of you comment understanding commitments sustainable. you represents, a because to controlling order the could make sure when model. we or to made you about us the the way think alluded you also, I've assumed and that full-year really I'm help commitments you. guess, on headwind pricing secure I correctly. Thank growth you've as I as sustainable of see the want

supply in Chuck on some that that of at imbalance did between was we both those. work supply Sure. locked I'll and components I'll costs the particularly and looked would that and in the committed -- weigh come for as at after are we the let in both. that the in of that start part locked on order for demand, and schedule some going of that we on second We an particularly Clearly, delivery what then on growth.

There's for memory We be monitor fluctuation fluctuation going a to to to sense we'll a components. is of of that good good in in going areas, subset a example, continue be our there's have that. continue still and pricing to some

that for process ones demand, competitors, us think we for in, based You expect both kind ones an that were But adjustments I us would there. the memory price and make past, the locked seen that the that ongoing from imbalance be saw increases, the I our for highest standpoint. cost of greatest you've us to are and had and both locked we that the in in which -- the -- -- on

given this EPS. difficult guidance of both I first time a we've say on side is answer. or the on And question would that's that and order, revenue What Yes. long-range is guidance the to the annual

to going We new business begin different the metrics that key have and growth will in XXth coming you a way. to share our Investor the in up about also the we're where to of going flavor Day talk on drivers a business we're give

think I what will that future you, So, that one the think think only day, that to I bookings as we time growth to relative performance. and at, on be that's I drivers of will spend be look clear we'll metric

Thank you.

question, Next please.

Fahad MKM Najam Partners. from

sir. ahead, go may You

much for taking very you Thank my question.

terms orders In way strength, a your from forward out have And any pull-in or of customers, I the for adjusted ordering order that? parsing do have double any you and of follow-up. have you

So, at future just Fahad, and a rates, see lot -- pipeline, our looked at saying compared activity, order earlier, looked of we we've at what anything. as we've cancellation I pipeline is, ahead don't we was we've the looked our pulls

another lead we're we going we just it modestly. actually down level. certainly indication on it know growth, basically orders saw suggest customers at a us get rates, Order possible amount a the what cancellation see of now, at Fahad, in about at party. order you looking then feel come we and and you any we and that pipeline when as on based have the staying in Chuck would some Return see not pipeline imagine, -- talked think are we're it. is to looking rates the that's logical, but of material growth, see fair times, earlier from So much of QX the of of to forward, be there. because seeing advance which as would further you as out demand still and that we're can the data that cancellations double one points try top there's ordering for pipeline forecast placing Order

commercial. I think data other we other point gave is of the thing, the the growth

process I happen size. of growth talking EPS. see the customer might think up to think actually some in see kind at Commercial as orders, look or what double Commercials saw significant a XX%. don't growth, you segment in where order much ordering Enterprise you if is in of you're about and to that I is And the expect of So, overall that We the you'd expect

if picture I could big questions. appreciate that. I ask Chuck, you

new that's Before product I Cisco's in that your product total you're the versus been like taking a seeing network this growth? lines been growth For happened, How like strength mentioned think line which the the new the new time, that of COVID-XX of much I new it's refresh growth. cycle had much be To strength place [Indiscernible]? the virtually the so of Cloud, in totally seeing first phase every across deployed is repriced. architecture phase of products versus how think the you had all product in going of family of before, example, growth extent, never function a is for Edge function refresh of you're the of to

there would customer several I across occurring that say What just are are for. that is are base transitions transformations our occurring or that we're well-positioned

XG we been about If to XXX you whole and have are earlier, this portfolio. think whole Hybrid our about that WIFI things hybrid that X, these to on move infrastructure working support all spoke we what's happened Cloud, Gig with now of work, the re-architecting this transition

transitions forward these that the talking about So, just new the several is for think we're brought timely years. on because that we've been of portfolio has end I big the refreshed of front been innovation and some

the the about a at and engineering and technology I plans of really they've -- leaders good and innovation what's of think but Investor what they've looks our have new what we're built, to talking we what for really And what new like. future XXth feel all the done, lot capabilities. like, that's teams September, I about Day, The it. the pipeline looks have have going So, on driving and Analysts

appreciate you. I answer, the thank

you. Thank

question, please. Next

Citigroup you ahead, may from Markets, Suva go Global sir. Jim

buyback Jim It's But a outlook long-term some I But going EPS EPS also full-year buyback one of shows appreciated, and some and Suva. have in The much. on big don't. guide, companies and some difference greatly EPS, lot question. very noticed a normally the conviction. that's sales their I Thanks had is stock include stock you of in.

on buyback? include components about for it of this the EPS billion buyback year think EPS. that is, Does Acacia different when or growth? it include bought the are match sales some that should I wondering, does you wondering guide, I'm was about we EPS what growth stock normal So, and your know but COVID, X.X what stock I how

Great share offset Jim. It that question, buybacks our assumes only dilution.

So, the of roughly your think to doing share to think be year. you're ends that where count of own flat as it modeling, this

hear for It's you. Got clarification. much you the to all the great so Thank details.

Thanks, Jim.

Thanks, Jim.

question. Next

Kvaal Wolfe Jeff from ahead. go Research, you may

would It I like sounds Thanks to we the the into it's about growth growth close the expect very maybe if much. quarter trajectory, talk of am didn't splendid. hoping year should fourth for well as in software like, and that as overall, XXXX, be you'd a great bit Software clarification and get little can a trajectory. we

with chime some start I'll color, Scott, in. you then, can and

across we think more I continue portfolio. to add capabilities software the

Most of side the to acquisitions businesses. of lot that our the of hardware a subscription-based continue for business. to subscription We the we've We've, or software transitioned transition. in come SaaS we portfolio even do

we're will positively of transformation a have also this continue software of our we QX what from guide renewal becoming will altered the a significantly I revenue we couple So, to QX. already sheet would at we quarter next we percentage see It ago. some in think start did the and the move revenue were meaningful. expect of when guidance would but Scott, of for was we towards or X it that it's in -- volumes difference. last In on off to has just as looking perspective having years big the done balance we able the a top came X versus what greater kicking it made already years, well, portfolio.

business, this And a continue so, done invest of to are capability, part teams to have to the a we in great software. It's job, continue hugely drive we're Scott? going going important the to

somewhere mean, Yeah. the annualize XX Jeff, growth XX that we're growth last XX in even X off software biggest companies look that trailing of I makes base. software world. is We the overall subscriptions of posted billion months, in or say top X% software the in companies in what days, world. at X% the the I'd in and revenue us the one at over

back in remember I'll actually to software think what your the I us. doing hardware pieces is so subscription that about there, the just you well software software So, quite got portfolio, both collaboration to said both you that, we just for pieces, growth. recurring some underneath and earlier, question What's are Applications. what go those revenue saw elements entire includes applications, business happening headwinds. software what's nice on-prem the the the is year elements Underneath for Applications the there, on that piece of Security, we growth double-digit in We those. there both and are year-on-year not of of full legacy saw In had were there not

we're about on So, I where actually headed good feel that.

quick clarification. Great. annual And you guidance quarter the to update all every for a us? then plan Do

got course, as and update components. come with to and it more we've key some start dictate assess supply quarter of every view chain balance And happens think will for I when will see we that -- is do will of to needed. there, updating. when I in We a the big supply a demand that good little and across it variable the what -- our

you Thank much. both very

Jeff. Thanks,

for Thanks more we've Jeff, question. got and time one

Bolan Research. Cleveland Thank you. Ben from

ahead, sir. go may You

a software. bit specific to items. little Thanks end. want for the focus on in getting I at A few me also

you early consumption see you're renewals how renewals? of invoice for with piece, time? is First, base? you. sure utilization And flow licenses as and I'm the item seen think the at about from do what within average curious any DNA and last on shift trends driving implications more how average the about the customers, then happened you good early those The customer longer-term, software your you're making to duration over you Thank I'm software duration what's any seeing high-level you've second cash curious think contract and if you

want You the first? to take

okay. Yeah,

to Ben, bit get the talk three first. managed one-question about on in a there, You I'll duration limit.

remember is see a performance growth, XX% XX.X They're remaining somewhat You balanced, is RPO total us. growing, than is anything that. say beyond the the our short-term next you for see of that growth short nice many more in you'd in in first there, term, term -- XX underneath obligations, What given months, the year, that. slightly is the just the short about that's but long-term long them expect the record billion in so term the is I'd of what

a bit one, change more. in growth Chuck, maybe the And big surprising a I'll question and So, see and not go We're ahead to duration seeing you. overall. it's then little leave not long-term hit the for last DNA

if at ahead. renewal and renewals the more much look we actions obviously are our to to are customers we obviously, on renewal base have We've on the growing As And becoming adoption. and place rates important processes put you've get the where drive us the and understand adoption. specific adoption, you And don't you our in -- usage got take, dependent on is don't renewal. very to to

we're that And level. at so, it attacking

warning, we we actually need. of some job early getting on headlights done a adoption the ahead and think that some the getting ensuring team's I that, nice get

actually the really Yeah, thing that's are I Service virtual day, Specialists teller that Success, connected inside customers the Customer are we to renewal we've got working is that field the DNA Success important. Customer organization in -- because also so mean, have every with the adoption Customer piece doing

enough 'XX relates bit on this teams forward a going underlying the that that through, a working continuing and actually meaningful a measurements, more renewals engineering there's process, then this will the half of there's year it's And that. where fiscal offer on more teams of systems, year I'd and much that have a have come sort into hard next second size say then, And -- been the decent first our fiscal is metric. to it's number. and it half the when year, or get a of the opportunity the those half As -- to can the side we number. more really give we optimize 'XX the fiscal the maybe bit to you on in little a is can second working the of processes, been evolve then in on our of ensure DNA, innovation it. handful we've renewal had will early It's little

you. Thank

Great. remarks some for or up? the Thanks, with Ben, question. close And want to Chuck will can it come I closing

you. team. and web-scale I'm business, across it we've seen. now it proud are believe pleased with certainly the close off, software we're we investments work our I'll transformation, to demand the of really super head of with providers, cloud I'm the the and our happy the proud our the paying and really doing performance, the that portfolio. we're I'm with and

in Day. deal this QX not most but help a customers over last and XXth to to all, execution, Investor on and very will remind XX our during September then all on emerging time. months you. resiliency technology encourage Thank XX I just us and you complicated thank teams I'd and And for think to the our also for you like join with to our incredible want adaptability, I only of focus the agility

Thanks, Chuck.

light of an to disclosure. Again, during it will I'd quarter the next unless our quarterly be XXth, that reflect XXXX will comment audience to the Pacific Time, done is Cisco's results, XXXX first-quarter Time. call explicit FD, like public is conference November guidance on at PM not its Cisco's Eastern X:XX which Wednesday, So, Regulation financial X:XX remind PM policy fiscal on through earnings in

close the now call. will to plan We

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

Thank call. you today's for participating in conference

would If its call call you like XXXX-XXX-XXXX. entirety, to to may you the in listen

the This For please participants X-XXX-XXX-XXXX. call. dialing from concludes today's outside U.S., dial

this time. You may disconnect at