Cisco Systems (CSCO) 18 Nov 212022 Q1 Earnings call transcript

Welcome to Cisco's First Quarter Fiscal Year 2022 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.

First XXXX Cisco's call. Earnings to everyone Quarter Quarterly Fiscal conference Welcome Scott is Investor our Chuck and of Mora, Chair our and CEO, This Head by Relations, Marilyn I'm joined and Herren, CFO. Robbins, have should earnings you now, seen By 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

a categories: hybrid began the the security, As other in our reporting we for experiences, reminder, QX, secure effective products, revenue in and future, Internet work, following optimized application networks, services. agile end-to-end

of the and in that discuss second for All will we guidance are uncertainties, including SEC. our unless quarterly our will As category strategic otherwise. and filed basis. subject quarter October and our detail APJC. Matters continue to press of GAAP be impacts year-over-year customer consists both including product priorities. Investor of providing stated our This product be on our which geographies, based section will be change discuss risks aligns made today fiscal discussing results product and statements, They include reportable we our done the non-GAAP in call Throughout documents years to financial and the these this Financial geographic will in year to full we and last product revenue categories XXXX. Day, of orders website. documents. forward-looking with a the terms included COVID-XX, we'll the by in amounts discussed be report revenue call, conference on on our we Click access only Information EMEA, terms throughout results, and with Fiscal release, we for the website during will XXth results the segments how as X be the on referencing and better in We this this change of reclassified Americas, revenue comparisons

press for most release done in to this the that factors which contained statements. slides quarter, Specifically, not actual unless guidance that materially call is the With those it the report recent Form important please results to identify Chuck. comment and details. forward-looking further its turn risk accompany through will disclosure. public Cisco to also from an during on see respect explicit could will now XX-K, guidance, differ the it over cause I financial on

forward Thanks, afternoon, Marilyn. with We good today. everyone. look And you to spending time

focus to we've foundation, and through visibility First, Day long-term, into and who of on joined value I built our we Investor striving in would revenue our and where This us We're us, gives to to subscription-based showcased like September, predictability profitable concentrations for for our growth. you the helping maximize software thank those of growth. generate streams. creation higher you, greater future strong

markets. well-positioned which unique in existing drive growth attractive our also We expansion of highlighted highly franchises, and are portfolio market-leading to

showcased strategy. of the of depth phase leadership next the team our we Lastly, our outline and

into were portfolio. we order robust strong continued demand start Moving fiscal of XX% growth across year also a 'XX, great and with our

past opportunities environment, double-digits, ahead. our XX is powering secure against our to the with well-positioned Even and by we is track the sits ongoing on deliver revolution, innovation. have the cloud. are and The executing of teams revolution financial Our the long-term months investing the by growth heart changing targets build while are lives. technology infrastructure well, every no all grew nearly as we delivering this digital permanently driven at and experiencing to our are is accelerated ARR XX modern constrained technology Cisco transformation we our of doubt digital accelerating, is aspect to The breakthrough solidly for capture that momentum supply

web the strategy, It's scale, based architectures, work Digital a and about that ONE customers distributed workforce front defining highly the investments than across and and hybrid the efficiency. will allow us to from their process this high-growth much to our cloud impact XG, we to Wi of security. employees cloud, including way enabling portfolios. build X, drive is of positive security, observability, key portfolio, across with experiences require new companies events. areas, our recently be A the that workspaces, on and inclusive leading solutions for enabled WebEx also in Fi accelerated anywhere. the We're across trend support expanded work, holistic already infrastructure which innovation, collaboration technology Our our networking, And Many purpose-built greater - them is hybrid We're capabilities and observability. cloud seeing hybrid speed, are and security, move new agility, meetings. full-stack work in XXX-gig, of broader to innovation with including

Now achieved quarter which say demand economic momentum by despite strong for I'd proud supply a driven products. I discuss balanced will in like shortly. exceptional QX revenue performance. with growth healthy strong margins we another quarter, to discuss with EPS Building line to the I'm and recovery, constraints, execution, our continued and last non-GAAP on We our expectations delivered from our

reflecting strong quarter and ARR ongoing a the of our double-digit generated RPO, growth of in success also transformation. We

to in conditions component successfully shortages. navigate staying related continued nimble Delta in very and global order variant, environment, the have a dynamic evolving to operate the to We

discuss quarter Every X the business. order Now me broad-based our and segments. with our of let across demand or quarter strength region, product X orders in third consecutive over grew achieved markets, order their of transformation. accelerating geographic customer market customer our commercial the increased fourth the and XX% a businesses, again momentum strongest in enterprise accelerating experienced consecutive higher. as customers performance our In the We our decade QX growth. of at of digital investments marks we

sector. a We growth also in saw public solid

in XX% momentum growth with business, years Our service customers over as order provider address X scale level these our In requirements. growing segment continues. bandwidth of delivered its their our growth highest web robust

over a once with order XXX% record again trailing was on Our a XXX%. quarter growth growth of performance basis. four That's

pleased very of XXXX XXX-gig networking in cloud our early rate outpacing Silicon portfolio, traction portfolio are platform, rapid is are Solutions, peers. our One Acacia footprint with of It's growth clear Cisco as We products. and optical our the our expanding we growth our

of innovations The the One invest customer continue routing One web quarter, XXth family. skill Launching the value. family, differentiated We to member XX.X Silicon Silicon latest terabit the device. in PXXX in this chip the with

capable by industry's on of a single terabit marked Acacia the milestone X.X unveiling wavelength. addition, capacity In major a delivering pluggable first module,

broad-based revenue billion advantages across demonstrating of reach, as product $X and was nearly We portfolio. the up as momentum. well Our product our competitive majority saw scale a year-over-year, of ongoing the demand our our

In continue see progress our addition, we to model transition. steady in business

our of increased subscription. to revenue grew $XX.X rapid Subscription predictability We Our deliver saw allows reflecting providing sold innovation faster We RPO increased $X.X XX% ARR ARR a nearly transformation product to to to visibility, strong focus billion. billion, with XX%, our business billion, delivered as business and growth of product customers, XX% more while by by $X.X software growth us to a software-led a leading long and model. to durable year-over-year the revenue term. XX% more subscriptions X% on over while

nearly which affecting are it other the supply growth our revenue and industry. solid, constraints impacted was by was every peers, our technology While

Our balanced markets. are can product and what orders customers. we ship But strong constrained were extremely we our and our build in to across

and environment. our high and We scale of an complex world-class deliver reach. They in team well fluid execute incredibly supply-chain have products volume this a that given to continue to works highly

been optimizing where significantly products to to contract they the our higher with We logistics costs closely taking to build get most working customers, possible, and components mitigate the have to paying alternative where multiple our supply shortages utilize constantly including and and designs steps our are delivery needed, our manufacturers, working on suppliers and modifying plans. suppliers key deliver

this are significantly industry. most greater our a scale We is in breadth doing than at and that

customers, increases, of seeing combined of we delivery to to Of our these necessary suppliers, gross on many our are pressure steps, production cost margins. from maximize while are course, and our When putting these cost with factors all structure. to our add

impact, While over are offset the benefits quarters. coming we've this be will immediate and thoughtfully raised recognized prices the not to

ensure remains with them focus products as quickly on possible. as customers need we provide they the Our our to

position we ESG I Now, X removal by X and world place Building X I would In pleased summary, and have am efficient September, hybrid by start progress work, our and embracing make X believe our in committed accelerating forward we're fiscal energy, We products, to do emissions XXXX. this to more the initiatives. Scope our we We areas: industry Scope net innovation, on like use our look X greenhouse to leadership do renewable including responsibility of the being net a to solutions. to deep In XXXX to to we with part. on believe a making share and year. for all innovative use for continuing focusing the emissions our better and X very the will gas carbon by investing

our navigating with results. year strong in and our set transformation, accelerated stage we this remains another reflected teams of Demand Our XXXX. are QX is in challenging strategy, executing the growth have in and while momentum on fiscal the a business our environment for operating

to of our power the and end a excellence. the Our team's of performance markets, innovation, testament our to commitment is differentiated strength our

customers their uniquely transformation the hybrid believe positioned digital accelerate and capture to hybrid we we cloud our As strategies, are ahead. of adoption work their and opportunities

strengthen And will have now I to strategically in our for We to Cisco confidence to portfolio advantage, over continue growth competitive it our across will invest I future. position and and innovation, to Scott. turn success. drive great continue our

We driven robust a portfolio for than in services. Thanks, order and XX% demonstrating strength resulting year product demand of our fiscal by products more started executed continued Chuck. the QX and strong growth, performance. with well another across quarter We our

for strong earnings revenue income, X% a up number with had also our We strength across Total saw per-share. coming results geographies. billion, of in quarter. increased line range net $XX.X year-over-year in product all across and guidance to and revenue, the areas We

in EPS $X.XX, basis continues well of in non-GAAP operating environment, the X% impacting like. up component high year-over-year, as with billion this income highly net historically our to revenue execute as earnings was above points. quickly are we'd ongoing non-GAAP high-end Non-GAAP XX.X%, convert $X.X Non-GAAP guidance was was dynamic coming up ability XX margin to demand per Our share both supply constraints range. our but business into and

data very revenue product QX in in detail. had work Total very offerings. Center and in high switching offerings. work, devices. by up was center our the $X.X our performed strong double-digit our and Cloud a The high SasS was meetings, driven to These of networks routing switching hardware Switching XXXX calling, in had our of X%. Meraki declined Meraki driven was overall, billion, collaboration Edge our offerings. well by driven perpetual partially at Contact by XX%. by single-digits revenues driven and agile switching, and was Within Looking declines down SD-WAN. by Calling Catalyst growth platform-as-a-service double-digit driven offerings. Secure continues in $X.X and also revenue Contact Hybrid with solutions, had billion, products enterprise single-digit hybrid growth by X% X up and our revenue led communication wireless Wireless by in driven by cloud-based End-to-End were XX%. Wi-Fi more offset increase perpetual revenue offset We ramp up Security revenue by and X%, show strong Center. growth campus growth our growth in revenue decreases up our compute and increase portfolio Service growth slightly. had

with growth, well offerings. momentum continued had we Zero Our performed double-digit portfolio Duo in as our Trust

growth We Management. in also saw good Unified Threat

XX%, in growth and strength customers. and in ASR strength performed again, XXXX with with the Future growth NCS well large webscale of Security Trust our the both Cloud, saw part XXXX. platforms. Edge in We Zero broad driven our subscription our by up XX%, Internet by driven Here portfolio in and portfolio in Cisco in for the Cloud XXXX, the with growth strength growing was Core,

from double-digits. of We cloud-delivered also which a for Acacia. from SaaS revenue as Optimized experiences application to proportion revenue triple-digits, shifted grew our double-digits XX%, saw Intersight acquisition by its greater strong both which grew and up driven the platform. AppDynamics grew benefits ThousandEyes its were in

Day solid, Our Investor shift to continue transformation subscriptions. at were to software we metrics business as our covered more we and

performance with portion Cisco's of increase billion, an XX% the increasing $X.X subscription and billion, increase at RPO, an revenue. with points XX% billion. of XX%. the was of recurring X%. an X%, product revenue is was with product $XX.X X%, strong X% up ARR Software represented was XX% up XX% billion, revenue grew RPO or subscription RPO revenue increase total up software subscription-based, was revenue $XX.X X billion, of which And X%. of of remaining year-over-year. Product XX%. or portion, annualized $X.X percentage Total product ARR, increased $XX.X growth revenue, was to obligations, short-term Total

you we continue significant transformation As subscriptions. to on to and can progress software increased see, make the

exceptionally XX%, earlier, orders total with up strong have QX Chuck with product to continue We the mentioned momentum order strength as across business. in

XX%, up at and geographic and up XX%. was Mexico, the was commercial Americas customer was emerging our segments. XX%, XX%, Total markets up up Looking APJC public EMEA XX%. The XX%. were In our XX%, Enterprise XX%, was up was up markets, XX%, up BRICS was up provider sector with up service was plus

the it non-GAAP basis see, Product was in was XX.X%, down XX.X%, margin And down margins points gross can was total points. came across strength service From broad gross the year-over-year. gross down XX perspective, XXX constraints. quarters, and basis business. XX.X%, basis from points. XXX a related gross component you The at margin As decrease and offset freight, by to moderate Pricing costs supply mix. prior increased relatively positive costs higher was partially impact with margin expedite, driven was primarily consistent product in by product

and through extended shortages, to by lead our these our supply constraints volume for and as supply will industry-wide us components. resulted manage many costs of and and due half cost of continue higher continue component the to which into our We which key challenges extended times seen We're supply have in commitments the impacts partnering closely fiscal address expect with we the second we XXXX. leveraging suppliers, purchasing peers

this well we're billion situation. We supply approximate the at complex and positive commitments. meet with the and manufacturers contract we despite point demand revenue was suppliers inventory and risks results, on Our impact on our XX% When our strategic timing our billion, potential we right was with chain sequentially, quarter scheduled at and collections. associated debt. by and XXX impact believe QX customer for ensure to is QX which perform to EPS, continues expectations. supplier-related driven investments cash $X.X with with our team impact very equivalents, there by driven actions purchase of material We flow cash, other of $X.X of line $XX.X total year-over-year, the repayments approximately primarily acquisitions an our and non-GAAP down Operating increasing of look higher in payments cash billion long-term ended the $X on billion, down taking in our no basis payments

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

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

in intent our internal and of strengthen These During targeted QX, us environment. further position EPSAGON executed had earnings our QX to as our investments top-line M&A in key We and consistent a we summarize, and constrained strong innovation acquisition and with profitable R&D a share to with complex, market delivered balanced, acquire growth. allow we our revenue are To strong the supply announced of complementing with our differentiate well we closed to Reflex. strategy per growth areas.

as continue to progress our significant growth We We're we growth subscription capitalize and investments to and shift continued shareholder shift seeing in on progress software great delivering the continuing model to opportunities. make make more are and driving innovation to our value. the business revenue, on drive

for let financial which Now follows. our provide is as QX me guidance

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

to is be Our expected non-GAAP in XX.X% per-share guidance. no expected $X.XX to from $X.XX. range operating XX.X%. margin the fiscal There our to is to change non-GAAP earnings full-year is range to 'XX And from

per X% the non-GAAP effective year-on-year, tax In rate non-GAAP We to to five assuming be $X.XX, X% up now are share Q&A. we move so it to guidance, growth to and X% Marilyn expect we can back QX to also full-year expected our the turn range range of a both is from earnings I'll year-over-year. of revenue into XX%. $X.XX, in

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

Suisse. Thank Credit you. from Badri Sami

You ahead. may go

very you thank the for much Hi, question.

you incorporating an mix you incorporated regarding that then question had I maybe in public that straightforward question your price contracts just honored there say the prior on or guys it about price maybe you product up looks a price second the was side? were reflected price First like key place your sector year-on-year. increases Could that on is into higher talked for some quarter orders your in increases sheets. that prior a answer idea recognized sheets Would of XXX% of that us the and give And customers? XX% you

there some past finish you're on some public line any of trends, did give or met with holdups, sector reported some or of that coming kind from there? you government Were some activity? things things update going more or very what's sector just that's think an I federal us key public on government. seeing federal of them your not the Could U.S. peers get on resistance any the deploying have strong end-market

the we've then sales the our $XX.X having out either that billion of are And quarter, and into of balance came what now revenue. current prior sitting on the about so really just increase The I'll and and let on price -- question then sector. start, Chuck Sammy, in we I'll became put Most price September. increase Xst of shipped accrued on talked on during Sure. that the public RPO, we sheet effective place of RPO.

during none would course, And built came hardware it. the had backlog So, again, quarter. of into price of those out shipments a have And lot none the increase of that have increase. price that, include the of would of

I of of it the even more into year to through by have orders turn price then Think half orders, a QX, ahead, than that way that having customers. during increases the time got towards as to increase of price backlog, looking built, QX. the the a those late work their those Sami, will think effect about QX and you delivered get think second bigger certainly

And thanks the Sami, for then question.

perhaps; think very something sector it's what federal you sector that's the a we on was We if couple it's E-Rate. XXXX a but over that so in saw situation, And been our saw our in saw U.S. education. doubled consistent. -- saw sector, business I performance We saw strength public the public business local, -- and last since we the been or of strength a On look -- we lot global basis strength on public the at years, state, we've

a civilian side, the few and That's QX teams are from a and really order doing we into still side on it's business us. for DoD very good that great pushed deals job perspective, strong an had but just a there. the

Thank you much. very

Thanks, Sami.

Next please. question,

Ittai Kidron from Oppenheimer.

You may go ahead.

I Chuck, year-over-year to for in and same accelerating Palo your that growth was the in the are seeing to thirties Alto XX%, fiscal X% twenties guys. on Fortinet, tens, rates to even Check Point basis. you you and grew that time, the in like 'XX, 'XX down XX% focus that at business All X% and and growth Hey, even was want year a and improving growth rates competitors matter now. here at to 'XX, and on security Thanks. starting the down to are large

around me but that kind the doing. nature? heading bit relative growth-wise this security bit. with into the are see portfolio for I what you. comment Scott business, it's wrong are transitions in we to of can When versus can direction you've been it Maybe within peers know is pleased in that Thank on perhaps of little seems little like you maybe can a into a So turn and that nature it the do in much portfolio. how unpack go you perpetual your depth going subscription

it's great a question. Ittai,

on. referenced that are issue And in then teams of subscription-based overall, security work grew I say you all, out that. his - businesses growth. subscription was a that and on the Scott Threat going and prem XX%. opening have better hard portfolio will get innovative is stuff There's Management in we of comments good Unified of on Trust, perpetual then room primary And the first called So the working to Zero decline in grew sort double-digits. lot the

it's hardware-based supply Ittai, in from that our network there's business. firewall impact balancing So, chain little a really and there, on

the transition better, teams So, I for it's would teams X But the we've And expect continue got to to committed we some bit that over chain. of make the next years are of, a work working the on. X a think are which get happen. combination little and do and then supply business to to with that

and broken of talked of your September, we that more said, you, hybrid And of the Ittai, focused back our are subscription Day at quarter. our the That's of where we the for haven't as security XX% during think And out lot to our all we're Chuck second in innovation. as part That's Investor grew of growth attention. we question, but the side. our at where the piece actually areas focused work in included I security subscription a markets the

So, more that's where prominent rates. our I security to see more portfolio, product more begin that a as as overall acceleration part you'll -- becomes the growth of think the and in

qualify long can subscription, where this time, is a of way a or perpetual at Maybe are drag we that think transition end the to -- to to tail answer that a be is Scott us in this for from we're you differently, there transition? will

again, and the growth. rather we're positive areas. you're a in, of high-growth I'd where are the that portfolio, as that change. in will that the And that's mix bigger to it Again, that's piece the the not into quarter it to prior trying a to change. time, continue And all positive QX, through was in becomes guidance on, double-digit It you'll faster areas why level, out way I growth. we investing the that Ittai during (ph). that part areas flip give do obviously was see get QX; focused it'll you overall think That seeing Yeah. to continue at

Thank you.

All right. Thanks for your time.

please. Next question,

ahead. Tim Long you go Barclays, may from

Maybe just see can Maybe I rate. a Chuck, software if Cat kind and related, start transition there, a side through for on accelerate software little broadly, I you. if to, could the can bit you solutions about decal the on bit growth Thank little talk of the more more we to about we XK. as a guess And little growth how you a maybe get this can granular, further. secondly, bit renewals little talk

I where think do think up opportunities a more we're as renewing? base going come Thank early there's think of the customer Any to and early starting starts to you. there, against those. like, the do period of retention look software see we any you up will are sell bulk indications and what you rates

to first second. I will take take the want You and the

Yeah, sounds good.

license the that growth, as opening bit We revenue about and effect slow commentary. in time more more an on. from we of said, we've that's selling as that focusing software put talked had again, that's it and the you same subscription, the that On a transformation perpetual lot did area during to a effort quarter really a the and selling

ARR gave that's transformation, stats you two also RPO, we and remaining mix up obligations, where see is XX%. products you'll that yet the not covers the product growing Product So, the it driving success commentary. the XX%, in but the it's recognized that opening that's that underneath of revenue in of performance

this sales future. and at actually of over are RPO they'll a point in quarter, software So, sitting in there the that the had the get we lot recognized

So headwind that's an the reported rate. revenue just overall to creating growth

perpetual Just would software, to is as you [Indiscernible], to add negative that our year-over-year. expect,

X, So ratable it over shifting where is X recognized that we're -- gets that the and years then X, too.

Cat say you expectations XK, and would numbers it's too quarters that last I'll the very renewals tell, two early the this teams line and is they're tell I but be the on in early just to our with in We're -- to small been still it's have clear. the On what that

innovative with been it the we've value like, some into Improving tell it. this ThousandEyes that you that's added I capability around now. will put

So, the on it. teams are working

have of We degree a reasonable confidence.

and we clearly the net them at off-the-charts have when we've enough to really half I see got conviction to you second to need 'XX we positive. numbers be into If look going are be. retention it's the But fiscal think rates that where into volume

you. Thank

Next question, please.

Meta Marshall from ahead. Morgan go Stanley, you may

guys tries particularly with Great. price I conversations how question a that's less suppliers. you industry just on, just and to just a your much demand. ask to wanted of Chuck, And flexibility. Thanks. impacting products pass or the of on customers, have changes, a on the Maybe with guys and you as lot service maybe efforts providers, making who then, are find question, currently, reconfigure to budget alternative just second little just

should clear of of how the to think we actions the Just up about summing of some some backlog. and of timeline those Thanks.

Let me -- on your first question.

with are varies times. it think They super I understanding. the by lead customer. Most very are customers frustrated

doing situations customer specifically our etc., that understand specific customers. think to teams many deal to issues of the general, have around in we We the with budgets, customers, and their that where I have our with we thing need handle are same that they -- but customers

across on first -- we entire -- the the quick comment of second part, to the Scott economy. availability. that about is before quarter, half then half. trend chain some we see we our -- this did on whole say talk would I I in did component inflationary that -- it the So, second deterioration stabilize a in it saw last we And supply see hand

second in and QX. don't a slight we good. in planning about some -- Scott, fiscal talk the we we remain So on know a year. what lot of expect That's it We the to improvement our of bit expected seeing slight half think And was we're today. improvement our QX, second that based stabilized some part? QX current and then want see on we'll in to belief you little

Sure. And --

-- begin When we

across that's of that's that then you question. the is Really makes so both that position it's on course, is, that are And snarled The lanes, constrained. ourselves [Indiscernible] of just think question constrained air, all trucking. overlay you not of square of The on the all logistics that one commodity in. all those ocean have that or $XX,XXX economies layering answering to answering I Yes, the across complexity what find whether and have or its to we complex.

but could As Chuck quarter. visibility stabilization the quantities. and that of during stabilization. see fewer in and the in said, that of -commits when better quarter, We then saw just into components we well. did we are actually another terms saw during suppliers balance from to bit, coming We the as more the beginning, of costs de meaning beginning signs of beginning, some saw market's they And come sign a of to some memory our decline stabilization deliver

we're as down and see the in seeing us visibility that into be means that the look half so strong of need more into both we chase provide revenue and to the position great in go RPO. accrete targeted can and we're get look we've guide, that what at a need that s we to on full-year position exactly the full guidance Obviously, the of going on a for That's year QX very So, signs year. to the stream a feel to got we backlog in, what stabilization, second the ahead given today. and lot what QX we guide in confident so what build, we we're in

Company. our had for at an is to high our never is bad good that The news customers. It's shipped things getting news is we've our been all-time is, The higher. backlog obviously challenges

Thank you. Great.

please. Next question,

Simon Leopold James. from Raymond

ahead. may You go

customers that, taking see of you for wanted any reflect If or ahead your normalize, quantify how forecast do placing you assume increases. I order or might growth point, I pull-in, to should there's maybe if you much could of could for converge question. you XX% the growth that expect adjust and of the even at to order price guess in orders basically the somewhat? what outlook order this, you growth Do trends? revenue Thank and to and some terms begin way

planning this. myself. know large reality carriers, lead the they ordering could where ordering to were pull-ahead, XXX% than our that times, the against clearly cloud will ask are what it forecasting further clearly would but I of you doing I call we would The I customers wish providers, deep like call and know I had are you that we growth. it know because do We with. out These normally. -- tell customers

that stuff the the delivery. they the know X sequence X, pipeline make that right X, out they're we and quarters for So, have ordering in sure to

So, then grew you we that visibility, like a and segment get see at XX%, lot. a look but you tend commercial to not that

not little of one, a they think answer. hard need, only of the we're which that any some feel the bit, we say, when of answer have the we're first are ordering is your I real way to actually change it historic a answer to it's second see is rates. is cancellations, looking in seen watching out. the can part them and really I many will closely watching commercial On that too, cancellation customers are so what But question You our

we quarter been In beyond even just fact, as it's and our lower. that can you I ever tell pipeline pipeline as is the it's growth, We growth probably finished. strong watch

way vast carriers, we think I think So, we the large other the those it ordering probably largest large that that customers, from that but I of know and have enterprises, perspective, is see think demand there's cloud customers, aren't. players, continued we majority an aspect visibility, below our very from about ahead we

improvement the surprise as to prior by a to were order Is Was this that well? you imagine quarter? it also you growth fair surprised the in versus

it work But if teams at we Well, to that into And these tougher, big, for now certainly been ago the X way. back big and look big we that's us actually other were success increased, right a the compare you yes. was to right -- the that's so that's our players, compare and that ago, trends going in from do cloud talked a get helpful. year happening then years have if try all look actually a franchises now. got about And -- to at momentum the the you we've these

get to -- X been have I'd that, you've enterprise caught at next modernized we years is build-out, were they're we'd ago growth told technology going going both told if we're crisis that to to crazy. be the that a you Wi-Fi customer switching you'd X, if XG realizing not Our got have be or You got got with rate me you their having doing not every that doing going

so go in would would that one not that RPO anywhere we business the over some think have and would've It so I -- look look necessarily of the in in to I we years other at in because a Because hadn't right X yes; expect have the think to it's wouldn't dire been we've a transition rate the to So, if revenue, order you if been much the would've Sheet they get situation back now and what every at period, ago. quarter, future, line? your we're revenue at close point making. point remotely that are, and you pulling the model. more in we I versus been time Balance making the quarter chain been supply of been off transition what relative

into going Yeah. amount revenue fair just of us the to obviously, billion a of XX visibility That RPO, months the $XX.X next it's current create in meaning there, gives Simon. stream

on. the the The as got pretty front. we linearity quarter throughout The the other so that was weaker is strength went strengthened. quarter, strong I'd the some and think on enter opposite, it flow It was linearity the momentum the current started relevant is I wasn't of quarter it good. off was during to also do order actually with your that quarter good It on say thing the likely point good

Yes.

Appreciate insights. Thank those much very you it. for

Thanks, Simon.

Thanks question. Simon, next

ahead. may Silverstein Paul with go you Cowen,

been can question, the revenue have did Various response. and not, heard how you Scott, much the the -- do don't previous bought If on answered number? and in I But what I if would already number Thanks. you quantifying us for this, constraints, chain second, think numbers? give supply margins have that that I those been, would apologize, you give

give at quarter's higher. pulled be look XX, number impossible the the it's calculate. largest the the growth they'll it's of had Company. off product to because at we've the backlog But quarter's if at history There -- the RPO, can't you meaningfully is this XX, product we growth you in last Well, balance sheet [Indiscernible]

But hard Scott, add? So, to it's to say. anything

revenue is supply in with we order now the QX growth component in of then and backlog constraint what quarter XX% the is that -- into to back-to-back revenue growth right closed Just, the will just over the just we're product faster that Paul, turn component XX% quarters Clearly into obviously just that we the That supply. headwind QX. seeing time. turn closed, revenue. will It

up -- to show that it's quantifying stream. So, the is revenue in going

that in RPO teams a And think feel that the would term I customers and technology the the think now, to innovation future. short what is our us across They're backlog that that's our fact I and have of indicator doesn't we're say they're I decisions What have, is I And and that's choosing matter seeing is the great, the this bode that great right well, while making have they're we choosing stuff's going ship. built. think the with is, the to for going board. that

there's short-term to it's going but some be issues, going up. So, catch to

well at as quantifying was I revenue constraints, the issues as backlog arises what to statement. of insightful that supply what as constraint two strong and us jamming the in supply and which decipher in a to mentioned But growth different demand as margins fall. thought both terms Can it. shift ask, very well backlog, the got difficult RPO it's least very that book-to-bill you've is are it -- tell you which what and really are software should I not chain guess you making Chuck, our And is revenue,

not mattered net hardware matters everything anymore. and ago That book-to-bill when a years Company, I'm we of was XX. sort sure were

the how I'm looked that want that to with you would it? ages. characterize leave you. at spreadsheet somewhere a I ago, years Scott, say backlog sure would haven't on We but it's in I'll from is --

the absolute Paul, in a at of -- QX look you built the revenue the number, in think revenue what's just in get between last rate that growth and growth can in the and -- backlog. rate Without the in I difference quarters, saying sense up two QX

bookings the door our to we're filings. we in you revenue. by us inventory, making support what and to to have taking product some is It of we're showing the and you at that's longer-term terms quickly sense taking and door to But try the get that need in we commitments visibility out, -- up trying It's see the build that the see the able building get purchase ship we adding in in looking everything and just why what's to you can out as what of a of and really doing push steps great customers delta as possible. our can between been backlog out up show

with there where up product loss share markets not about keeping are market any Chuck, you're growth? concerned

worry Yes. it and do every our so about We day, competitors.

to frustrating. the is And lining trying I so, to it's fulfill customers us, certainly is is everybody but this what guess it's and need not unique silver necessarily

Paul. right. All Thanks,

you. Thank

Next question.

from Daryanani Amit Evercore.

You may go ahead.

Thanks a taking and for questions thanks lot, my out.

the how does John street to revenue you modeling. that a a issues? you supply-chain that maybe guide get that have below gave, guide the from talk I'd think one no ratio on And John October you is you suppose extent year-over-year about obviously could to if to like the stack new was ago. for thought to sense your Would love Paul what I occurred had up XX look seeing could days decent Jan on product the we're basis.

question the -- the to that growth the no What growth out able QX on visibility we are confident full everything the top say in line, gave pushed -- buildup can have, year. door. full-year what issues giving that There's is to the quarter supply we get are guide for of hit component impacted the what backlog done we're very bottom demand quite last we X% that to the headwind and guide given good is we that by of quarter we a supply plus X% putting and being growth needs of our chain still -- I'd have X% hit on we X% pretty get on the line, to to and still that RPO strong another to those know, you

XX it different So, like days full may supply the where look because little year issues, was still ago. year the it's feels of the shape but of a the bit

Got just a wind condition you with you think it. recently. X One X you are the this what that is gravitating Silicon I customers Silicon nice One about understand, if And about for? offering, where customers? talk follow-up, reasons as to is really I'd Chuck, think Silicon this the on I resonating And had or love with to just beyond what Facebook alternated Broadcom One Could

for so would when incredible. there's pretty the I at world speed not that is but super power ports deliver the everyone, look sustainability is power at the a you And at to consumption, couple performance couple significantly meaningful -- think are I consumption, a One technology, leads Number able performance we're things. is you massive consumption in and it the the it the world number lower and X, big the when power issue it of is so reasons. to of a Silicon and say ratio, architecture performance a of comes the at where and look of only great lower those it and

you. Thank Perfect.

question, Next please.

Sachs. Goldman from Hall Rod

may You ahead. go

and good insanely an you talk that what's there. for a quarters. service question. best I XX you done you've absolute provider X X on know orders provider that And Thanks wonder years. forward the guys. little back are wanted bit number could believe the I that's the in I in about number. service if It's coming or Hi, calculate would to orders. We come to orders

fits like of to and dig view in of a is it I've of a Can and - you follow-up. how point driving this large X, of scalers inside into the of got back you for that? hyper but all Chuck, and seen point we've programs said, product so some a view, market you think from very maybe the you I on, to together that? some products these can CapEx X what And link

Okay, Rod. Thank you.

it at significant, on talked and I looked a probably XX of right don't but if think I goes think it was we not I about. -- combination years. have what back it, you're it's I know

years three For we on real. talked be these -- going to when's XG on about calls, this

see we it now. so, And real

that routers big Packet core are site backhaul. big a a sell deal. you are so, is Routers And deal.

has have we're you and increasingly You cloud and being silicon, -- systems been The standalone NCS well. is integrated very super is with providers, helpful. product the standalone doing the Acacia XK. Edge into systems integrated more obviously line, ASR getting XXXX either get successful. work Cisco The it's optical, The which software, or

just at those the cloud. up. all getting just in -- I'd major XXX-gig so, summarize look technologies I And us that think the you line build-out say into I'd it And trends, when X with the

service As the a provider network teams and strategy that had drivers. a the simplify then you routed the space XG build-out the flatten re-architecture that's provider optical service in just the our And happening question, have talked in space, to Rod. and about. whole basically second are Those

maybe give us down Yeah. back thought, rate you help progress on Obviously, probably on the within on to to to make here know I it's aging you any idea? come see give you all. Could are growth, I that. aging but the and doesn't reconcile. that idea down, us wanted some the could us RPO, I to could the if aged that try to to maybe reason at reconcile you growth so any that. us match backlog give and word because the stock's just some Scott, if well, have is we could of going people just would it out try

just So, Thanks. I'm that. help curious with if you can

on what's obviously is working at and and we're our that our We prioritization that supply that to for get quite shipped out things can what that to those to understand night and is get a day is to mechanism well. sense is the as out Rod, possible. going we can something thanks in customers how there question. backlog This are working chain make really look through resolve. What as try quickly I'd team say

that try working than we aging resolve. and there, our to -- instead to team I'd for is to you, is day So, say some are inside something what there is Rod. night Rather try quantify that it's

you. Thank Great. Okay.

Right. It's obviously RPO. RPO, it's if way, sitting the not to the RPO By in so an an it's backlog, incremental not it's yet.

Yeah, I misspoke.

Sorry about that.

Yeah.

Thank you.

All right. Thanks, Rod.

Next question.

Deutsche Matthew Bank. Niknam from

ahead You may go

for Thank guys. you the questions. Hey taking

I if two could. Just

for quarter seen the at the next First be XQ. on think I the bytes some to lift XX you've despite going gross in you're down Fiscal typically midpoint, about of guide seasonal margins, implies

So, is then And it I'm to you broadly, just consider? or there wondering, Day, using more here in can on M&A options, allocation. Analyst chain opportunities. it on a share to you're strategy continue question scale, buyback are you're I offset more other use front billion $XX transformational factors and the are Wondering stock terms is updates in to -- talked the guess what capital supply to on entirely in At terms if worsening secondly, on but constraints from larger dilution related of of you a any sitting about seeing cash. point, Thanks. there the also

Okay.

I'll gave as toward gone board QX, guide to But the got second gave gross also will XX.X well. toward tailwind in question. we've You that and the exactly The as to start increases that snuck in have is logistics it. we and we more Matthew. the margin. component of you quarter, at the about, with across of the X for talked margin XX.X into and that cost the see will on We've the QX, goes within increases, same QX there, that which to we'll guide really end half it's come are not that the got online It's gross start there competing cost it's exact and within same inside effects. just cost more be a part year a increases those We've margin. right up increases on and as There gross the combination the -- some of are the price factors

costs dealing with. It's what's the that's gross of in So we're various the constraints margin. that our supply to strictly elements tied within

allocation, is the to foremost, It's the first stated allocation your which policy growth second business. cap cap unchanged. Day, as On of exactly is, which think at we Investor was and question, the I our support

can continue in investors. the is protect plans, we term, closed, time, tax quarter efficient just offset dilution through return that, what equity dividends then you to to the most to Beyond cash during longer excess which do our obviously way the saw of our we us and

time, continually is probably it's not Company. you I pay quarter, quarter; that that a it's which closed do we about strategy done the a as deep and into. not our evaluate that. announced to once commentary. get M&A is couple opening evaluation has just will we been one we So, front. tell an continually that in a on is which question doesn't an M&A too evaluation that part during of yet we talked of EPSAGON, the quarter closed. Replex, acquisitions a Over the during The

type us continue You should to the see of some more doing acquisitions. those of build-by

it's term I part innovation. of think some accelerate that been a it space strategy time. us our helps has for Longer

Scott. That's Thanks, great.

and next the go to ahead Let's one. move

Tal Liani Bank from of America.

go may You ahead.

side. at even do your rate. there the Meaning securing hardware. strategically, network, hardware for the I But it I you software I a grew you Chuck, if question. a growth areas, SASE is, expedite And increase that side on at components, you and billion twofold. to is was hardware. even of Agile $X Hopefully the of your is the can Internet I question look these question X example, anything XX% hear Number the major routers of Networks in meaning year-over-year stuff, Hi. focus is other side in what the me. analyze revenue, future. or from high-level optical areas, to have the one, +XX, all about year-over-year. rest Secure, the optical and And can John Switches If it, the it -XX of the when growth, second on the the look higher for recurring growth that

piece legacy if seeing So, are the sustainability, how that's hardware growth year-ago? a about we high going the the what or the forward, today sustainable Thanks. is versus pieces, driver

Tal. Thanks,

indicate the all, about, hardware. not you is of that RPO of that Scott I numbers portion that we think, each look First there's when revenue that would talked recognize our that at a significant quarter

right actually RPO of If had we look as look that growth business RPO it -- up year; $XX over I it's so was through the we're think a and at successful. now in at so quarters suffered next I will at hardware XX%, I most going to go the quarter that's X think recognize sitting just the billion the close the part ago. think and and to you increase year the product the the being you

not software actually -- I think we're back we're I but think that actually just I making on great so, would the it's concerned so And coming I'm side, strong, about and but if years and -- it at it. for think progress go balance it's ago, faster, revenue we're to today what like I were the off X we it's look what meaningful. seriously sheet pulling I obviously versus

And what about sustainability?

X/XX quarter of it -- a see You in

of fraction it. A

-- fraction of a a quarter. it in given

Yeah. about Thanks. what is And the of now? sustainability seeing sustainable How that growing growth are high we're areas now? that these

the further fastest are a you you growth on that's to drive -- that's to investing today, at back Investor That's what where long-term color. X% rate you growth within if the at It's the where then $XXX us. our that growing start, touched well, And far, the Interestingly, subscription can those add to the what's I'll growth X% -- the you in projected consistent on markets and 'XX. Day, up and just fiscal We we're By billion rates. going and Tal, in that from we we're markets talked with we're products. was when already about where that, peel on playing of or We Chuck, X% say, selling touched TAM. in our to recall, see by TAM models, that, own X%, that?

XX%. RPO growing see You product

see XX%. product growing You ARR

necessarily turning You think math said amount recurring is to not But what we're do. that's ARR reported add to when revenue in in see the the building is to more you longer Those to us think you to revenues, exactly model. into the what going that, trying term. I you're drives that or immediately that growth you which do, got transformation RPO and which we that, do up are got we consider a make doing were I things and to

cloud were in to -- if I we're as software we out of another think of look Tal, as so webscale that hope having that those think progress to both revenue, before, revenue the you're just until going you the because if transition, you franchise players, about And, also is grow reason we that's next in to like -- percentage models recurring make wins there, we're like are to we growing candid. be a it continue be and total software sides at the

you. Thank it. Got

Tal. Thanks,

Next question.

from Citigroup. Suva Jim

go ahead. may You

some Thank is, is details can around question going where and comment more I and you your can really Thank outsiders with well, have on or examples give mentioned you Cisco. about just Acacia are points your is us understand prepared how milestones you. that And one in integration what some you you. Acacia as that or proof help maybe us items or fitting about

numbers It's -- they are are think ahead of perspective. what they executing from I a question, all, really we think of I good a first expected

a it's optics We're there's winning today. that's going been and foremost. silicon then continue work doing since I innovation, new to work first just think, add. onboard. anything on I great been And think between the Scott, they've just and franchises. secondly, the So to on are the just teams teams to deliver the partnership

what pace just just capable Other but that rate module from a opening a is and than delivering in them. to not executing X.X also wavelength. the and you industry, of for which pluggable is, the expect commentary milestone pretty financial single innovate on capacity No. first at this on we'd reiterating That's continuing major said terabyte the sign a the of performance,

Jim. All right. Thanks,

time have last question. X We for

Samik you. Chatterjee from Thank JPMorgan.

ahead. go may You

that and commercial Hi. Thanks just have trends to monitor, order the weaken a here. risk mention heard of variant that But I Are to earlier. Scott, revenue verticals. guide because on you the guess a follow wanted in the risk supply I but Scott. of of bit for same do you're it, as margin X at terms across the the bidding you're probably channel expected more constraints guidance then a reiterating Does high-end second the you're did some the uncertainty full-year strong for monitoring follow-up here, and look a which you. are just you and the seeing chain Chuck, customer we've point, give more Thank or into unreachable this X. you constraints squeezing bit to not half, the base uncertainty Delta you when that given anything around quick supply there impact me created partners particularly from the the space. the was all for And realize in up, is the it? there of highlighting

we now. saw answer monitoring but impact Yes, We're We in And it, -- Samik. happening clearly are some in live we right a not from in last actually you we're what's any such is see dynamic seeing but acceleration places the pretty Europe, days. in My quick. in it. world XX

out X Product points the Yeah, quarter. commercial that in about data group. XX% Samik, Chuck and commercial you talked pointed group, earlier of And the the during orders is question. commercial,

had we growth there. really So, strong

think year in what supply -- supply I talked component the said your the chain the I'll so answering if about just earlier we the to second that it's I complexity but repeat hard. question, of earlier that question,

to the end; began second half, be it's the we'll The half, later toward toward the earlier we'll high clear the up low difficult real in in if second end. be constraints half in starting up. clear do, is quarter. earlier second the did answer have we It really in see first that deteriorate seen we stabilization. to to What is question where the

revenue visibility in our we which we in half to going I quarter earlier, knowing build went the stabilization creep RPO. on, out. also so components chase the in from to and what's have the exactly stream As and second of we backlog, signs go to very It's saw what's know mentioned coming great into clearly that

the what's the So confident the more up to more end half the we're when or really question second towards all of clears in low end. is in dictate towards The high year. going full this whether

you. Thank

All Thank you. right.

Alright.

geographies, in -- continues that. what a feel our lot still environment. all team incredibly just quarter pleased Company confidence component really product have the X% our a innovation in navigating our RPO EPS, work to where the three at general. at you us delivered about will what we Large complex ARR me double-digits. teams time. with our day growth, double-digits, revenue supply ship have about look Let you complicated about these X% to headed, I issues done. chain non-GAAP very just for of good all just thanking truly in proud to the let and teams time over and me hard where wrap of bookings was have up annual do it $XX.X we on am and billion work XX%. It we It's combine with by saying, spending today night with $XX.X with continue are When billion and that I really and our I'm plan great and accomplished. We RPO good will a history, to we're feel backlog and guidance when of we growing with

So, thanks with you time. next we'll us, for and to talk spending time

Thanks. Time. next Chuck, Cisco's Eastern which be X:XX XXth, earnings will Pacific XXXX, This quarterly will at PM results, February PM Time, conference call, call. Wednesday, Fiscal XXXX our second-quarter reflect today's on X:XX concludes

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

today's participating you Instructions] for [Operator concludes conference Thank today's call. call. This on

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