Cisco Systems (CSCO) 19 May 222022 Q3 Earnings call transcript

Welcome to Cisco's Third 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.

third 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 this and results referencing geographic financial of Throughout terms we GAAP both otherwise. be and stated in conference will we'll call, of and non-GAAP unless product and revenue in results customer results product orders discuss terms made comparisons this be throughout done basis. All will call on year-over-year a accompany that this from in materials the call the a QX which the in included war fiscal note, the extra slide impacts Ukraine summarizes in and week is XXXX. Please The fourth of matters guidance discussing be the be will providing include and including statements, quarter today forward-looking we XXXX. will for full the we fiscal year They including cause important differ in in COVID-XX, XX-Q, specifically from Forms identify are and most filed that documents factors forward-looking recent the that and to the the with XX-K uncertainties, risks in our statements. discuss reports detail which we actual on contained to results risk could the subject materially SEC, those call accompany respect details. With and slides to guidance, please for further this the release that also press see is unless will through financial not quarter during explicit it done Cisco public comment its on an the disclosure. guidance over I to will Chuck. now turn it

of Many and many impacting and year optimism factors and Marilyn, today. optimism headwinds of you second entered remain spoke fueled that in back those fiscal with and unchanged us our in with When half we good supply QX other component that peers. we the Thanks, February, of the despite challenges everyone. afternoon, our

technology the well customers to our portfolio and is adopt helping strong backlog, innovation our is business happening. in embrace demand across transitions differentiated record resulting We multiple progressing our and continue see our transformation

two our However, earnings our which were events unanticipated since last call, impacted there performance. revenue QX

war in resulted in Scott the revenue Belarus The operations impact, Ukraine. first and us ceasing in discuss. and This will is had a which corresponding Russia

to in These more to of we The into prevented This products even related originally in China, levels severe late resulted certain lockdowns relates COVID us which lockdowns from March. heading an critical in the shortage began customers second components. in anticipated QX. turn at shipping

COVID Our the QX Ukraine impact usual wider a guidance incorporates in lockdowns. revenue China related taking than the continuing into and the war range, uncertainty the account to of

the We quarters upcoming on revenue supply it the we're this at that caution this current about is erring on environment. quarter on a practical and dependent our less of more environment believe the of dependent Given demand and uncertainty, in in increasingly performance our taking being side terms complex time. availability in one outlook, the

of aspects been believe of begin of mitigation teams control, that first of actions next certain that issues see half fiscal have situation we've the many component been several benefits the alleviate in our While of our to these on to help facing. current are actions will largely the we We working year. out the

Now me our more third let quarter performance. specifically talk about

record solid in role year-over-year sequentially customers' leading discussed the over and XXX% billion, mentioned, X% few $XX yet grew backlog we year-over-year. our momentum our up the the remain, we've play critical This of well orders As demand product over in resulting I of XX% Total many just reaffirms quarters past solutions. futures. continued to positives another up for

$XX billion, growth and progressed ending XX%. Our In at business transformation growth also ARR of QX, we the quarter saw XX%, nicely. ARR of product over

performance billion $XX over with obligations quarter the or exited also in We remaining RPO.

profitability of all effective the non-GAAP at pricing was guidance our by to drivers which above on across high are the deliver of range. driven strong. and our and target business of We us our range want what fundamental the margins This guidance deliver our lower end volumes spending operating high end delivered quarter. EPS actions allowed for said The reiterate gross I both and I discipline, also bottom-line earlier. offset and to

do. we While we change tremendous of in short-term does shared XXX or their some that agility, are even they close our customers. allowing Global Advisory outlook, hosted challenges, our consistently us. transformation. met is at not deliver them adopting Customer in more alignment our for but challenges the with technology our This them driving we customers' just speed heart most to The their customers. of belief and technology to not is business also they're move meeting front business week, it empowering become to our Board Last to they facing And and the long-term critical where to from important with strategies, greater opportunities has everything their their experiences differentiated driving Cisco strategy their overall

the touch from like highlights quarter. to I'd some Now on

to in continue of business. demand We areas see several strong our

our made on Our strong growth. continue to to incredibly our in orders, as as web help we've and grew share franchises, center wins consecutive the This is momentum strength four-quarter edge. and have their their trailing we at customers This to progress build of I serve the connect web-scale which end capabilities basis, continued in of to leading data business XXX% design in demand space. proud expanding customers XX% users a ninth in taking this the quarter and we we remains we the over these new scale are had scale. winning over and solid marks remain from

We solutions, is our platform history. Cisco's which growing fastest gig in including the the are XXX of SP X,XXX, pleased Cisco routing traction also the with extremely

routing, portfolio, SP wireless, was switching, ZR ZR of solid revenue also and perspective, From majority portfolio our well. In a SD and and optics across networking Silicon security a by perform WAN. portfolio, performance our One Acacia to continue addition, our plus our led products demand optical of including product

making reflecting to organizations digitize their customers experiences. areas deliver that these rapidly to in differentiated performance Our ongoing are our investments

the for connectivity, need customers proud very solutions. driving with next Looking work gig, positioned of cloud, and well pace hybrid networking, observability forward, also platforms to shift explosion applications deliver end-to-end our our XG, the Cisco I'm of solutions. to our of and hybrid for generation the increased IoT, XXX and is are security, innovation.

During Cisco and along networking the quarter, announced enhance across work to innovations and portfolios experiences cloud environments. our new technologies with hybrid

networks organizations introduced also our avoid predict new learn, help We disruptions. predictive network and to

innovation, more announce which in RSA and Cisco our Live We at have even June. event own we'll

to of a believe In purpose and passion Work build Day. one as while by deep our In believe for an our future in year to inclusive through a are is at the the Place Cisco out unique of play the fundamentals quarter Best business expected, solid at against named have Company us technology to purpose focused the we place the for summary, the our rally we to executing and we remain addition demand strong. and the to laid we second a around clearly both help the Work Fortune strategy this opportunity Great U.S. out remains Investor innovation, technology of For for in we row. why and on the world were I intersection better all power all. number make not did We

for confident us. continue robust an innovation, excellence executing a bringing more the with thank in determination. remain we front dedication, over they unparalleled that that And to around predictability incredibly long-term now dynamic focus the our the to want and customers continue in resiliency to also in do, agility world our be focus our with our market innovation. will have with on and to I'll teams growth turn and We of focus for that, opportunities environment. resolute to They in We while all pipeline call of to business and transform I Scott. our

challenges earnings billion, management Chuck. saw despite across orders, chain Thanks, portfolio supply was Chuck spend net drove Total while share of and growth $XX.X strength income order our in just profitability. driven revenue year-over-year. growth Product disciplined by product We was per our and flat most outlined. the solid

end our which On was of of QX historical total growth. points a earnings revenue. bit points in negative and up revenue rate to approximately Russia receivables revenue in both and points. in extra coming at XXX range. as which our Belarus was to billion, had a of benefit three, we a this of two share uncollectible Belarus, above operating impact Ukraine the Russia, The higher in and included rate $X.XX, points high of we for to for run year the the per income quarter QX margin impact growth or recorded and our percentage And Our up reminder, week four growth. than week, March, charges In revenue X%, impact net was combined $X.X five a was Ukraine operations non-GAAP percentage in the of range. X% basis, up approximately additional million extra the last war Historically, of percentage of guidance an end the stopped approximately other collectively X% XX.X%, high non-GAAP 'XX coming was items. business year-over-year total revenue our of guidance represented was a of and due of basis approximately Non-GAAP $XXX have total

revenues year by our X data Agile X%, products, was our QX total had the was by by wireless solid Service and X%, week approximately Meraki by across growth offerings. $X.X down revenue, switching XXXX billion, Looking the Networks driven with driven percentage product was portfolio, product Within $X.X increase in our switching growth prior in up up double-digit strength strength Wireless Nexus detail, offerings. revenue combined, switching which our switching and XXXX including Catalyst products points. the in Ukraine, impacted with WiFi-X Meraki war revenue broad-based at our more by a driven was X%. grew and in campus center extra led revenue billion, our Secure,

Collaboration Cisco by X% growth across contact Security Future was in routing our driven Servers. the platform-as-a-service. by down networking We the by partially SD-WAN. of X%, including and our communication and optical, primarily by X%, driven declined also Access strength solid End-to-End up in Enterprise broad Acacia, most strength slightly the Internet had in growth optics the offset by grew double-digit XXXX. offerings, with offset for strength in products declines continued core portfolio. was driven of meetings, and calling center Edge in was ramp

Our Zero double-digit of up both strong X%, performed by Application our growth based growth SaaS Trust was driven offerings well and performance Duo with Intersight. offering. in our Experiences Optimized driven portfolio by in double-digit ThousandEyes

prior as continue on been X%. across of down extra and ARR portion XX%, increase was or shift the Total decrease $XX.X RPO We make business impact the Total the We the more transformation to of in would Total negative have X% obligations revenue. product Annualized X% decrease combined Ukraine. subscription short had subscriptions which and service total was growth up of billion, strong solid strength represented in our billion, of is $X.X week revenue recurring total the software revenue order extra increased billion, subscription-based, grew in revenue X%. software RPO subscription Total and Cisco's with QX the our product the points of year war billion. the prior to performance X one excluding have software. billion, remaining and of impact RPO software subscription revenue a RPO of with Total we was X%, an metrics X%. was higher, XX%. with progress XX% negative Ukraine. the percentage combined to up increased the week was the higher XX% or XX% a term X% $XX.X X been business. ARR excluding revenue of growth growth of would year Product And product in most war year-on-year. point of points in $XX.X revenue revenue $X.X

in segments, our markets, XX.X%, end at was XX%, non-GAAP X%, range was From above APJC X%, Americas XX%. enterprise total service X%, margin up sector X%, high gross a In EMEA the up up was up guidance Looking commercial the customer provider our impact. basis was to geographic up The points perspective, our came flat. of and margin service higher up public and gross constraints gross at partially and points by component strong costs XX gross basis in pricing driven XX down as points. year-over-year. freight was product XX.X%, ongoing margin costs, higher margin Product related was offset was down XX.X%, supply as logistics decrease basis XX by and well primarily positive up was

XXX see and we We XX,XXX numbers. on the a critical currently continue of constraints manage components, seen constraints total to give by shortages, the component To a through supply scale out industrywide of of our QX us roughly in sense unique part peers. of

to team close aggressively pursuing supply options multiple those shortages. is Our chain

increase backlog we normal levels our and once historical saw product hardware for in significant again levels. a our both well Given solid orders, beyond software our

investments said, just obligations. a not cash future payments grew than included $XX Chuck with and grew QX We As operating for and $X $XX.X total billion. to and down had cash to X our year-on-year Operating percentage of quarter up X% advanced equivalents both backlog by software billion, These ending supply. sequentially. was over ended And $XX.X backlog well negative of to billion reminder, performance flow. part product year-over-year, as XX% a payments driven impact primarily cash cash, point the advanced remaining is our $X.X on flow secure billion, backlog QX more billion

$X.X and available model complex shareholders highly markets. during $XXX million quarter, the shift Year-to-date, a under of for shareholders make to we environment Board and cash quarterly our and to repurchases. approximately returned of while opportunities have dividends stock that of cash and significant addressable we're share progress expanding In $XX allocation, dividend repurchase our billion our to to value comprised $XX authorization. investments we summarize, the terms repurchases of making was on To and stock billion $X.X in innovation approximately strategic navigating billion on business capitalize billion our returned our total capital in than continuing growth more via

guidance for me let provide Now our financial QX.

QX. into in supply, we of QX continue terms the we to challenges experienced In expect

revenue anticipate For expect We be range next be growth to of to we to in XX%. in of X% minus the minus non-GAAP to the gross X.X%. margin range XX% quarter, the

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

is guidance full For 'XX, year fiscal follows. the as

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

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

from Marshall Morgan Research. Investment Thank you. Meta Stanley

You go may ahead.

that from enterprise Great, sense could Maybe in just kind I customers? thanks. what of were if us orders seeing your Chuck, give macro year-over-year. and know you you're the flat

behavior macro you Thanks. conditions seeing are -- Just their currency and given just just what's any inflation overall happening change be in or in either would helpful?

Yes, Meta. Thank you.

few So relative orders one, on X-percentage of the demand issue, I'd XX% point growth Number out Belarus, things. we de-booked ago a year XX%. to and of a without grew against that point Russia a we

we that. good So about feel

couple point thing projects advisory about XXX the of all I from accomplish. at biggest last ago they last that to would Our a customers The the shift enterprise nature XX%. side, any were our real quarter customers point. not just trying board grew them. they're signaling is this out we talking we everything Again, our are not and hearing global in strategic on customer We're had we of had where weeks of

finite of customers. Just keep define in the way to enterprise a mind we list named is

it at to more defines lumpy. the look commercial I So our enterprise, enterprise how would tends and our reflect business. If a be combination that of industry

marketplace, number. So you we're for give hearing thought we I in would to that the combined what comparisons

commercial grew the but we basis trailing XX% together, and without enterprise If months XX%. combine a impact, it XX we Russia grew actually you grew on X%, and

us now. customers still aren't anything are the differently signals we're our seeing that we with demand and right So comfortable telling

thanks. it pass I'll Great, on.

Next question please.

from Chatterjee Samik you. Thank JPMorgan.

ahead. may go You

Chuck, fiscal similar quarter question. see historically, fourth any or past when now of of which here other bit, I that. supply of be you're just And cycle sort of the impacting Hi, are don't see quarter if I thanks instances what third sort sort Thank you. guiding you environment for situation many question do that? -- aspects sort that? demand almost guess is we the down demand there geopolitical back really on start stemming is, the the or that's to of to again, the of is reflection of never that some of has my really I to to mean from I taking sort even of a go a

Samik, question. Yes. it's great a

answer reflection me just QX no is nothing start So the let of to with the issue there is guide. in do our basic that with has demand guide, QX

me Let describe try that. to we how got to

we in operations understand. QX to from if revenue everybody were from for Those Most into important at our a then it's ceasing ends corresponding April. what others, results, occurred. of us from end that of at -- look had, one-time. perspective, revenue quarters million Russia had think of recall, end you've I they we quarter we $XXX and We had heard impact March. you the the write-downs our are When

an about China it experienced from a was the situation. March XX today. Shenzhen the opened so Shanghai really lockdowns. talking up we later, So week we're again but until entire it down, quarter shut of In Shanghai,

and from to So to problem. $XXX That's million we get power our had caused Russia that the million attributed completely of simplicity what supplies out the we was of had inability then $XXX China.

power get in and PCB there what Shanghai, because an fact supplies what lots of power the that our of a you for simple As we we've assemblies QX. into components had lockdown. and think happened in supplies. we we are at the When QX built, go That's about heard XX,XXX because Shanghai of example, couldn't look lockdown

ports that And be high to they're out. start to degree believe that us is up, when in supply up catch of that congestion. do we into allow we to to we it's those And inbound the in up back up just efforts, believe and what correspondingly is components. cetera, win going what guidance that don't to and for just that lots that believe they any We June So they going open led there means we're Shanghai a we capacity, going QX. airport logistics that able to there the getting believe know be this that et not which to be start trying competition for X. get materials impossible to means would exactly saying capacity. get what when to We implies country, transportation we raw open is is the on now to of issue believe QX, with combined going

these very simple look So line explanation don't what good, top to as numbers it's even occurred. though

the then your do open question when we we begin power if make flow gets to that of the So follow-on the assumption Well, is, do and up part better. think begin China natural does get more this we supplies. of to

have last actions, of that us of six a redesigning and QX working lot our to also benefit been on diversity, in the first start over a had our of in will of starting XXX believe those have over teams see products, our products that. the combination months nine to year mitigating XXX We give we the component to half

see improvement the need through about We we think extent. we that XX next to when as So, I can being will transparent what occur. get and expect of when I'm it that's as some see some improve to to we days, just but

taking for my Thank you. Thanks question.

Samik. Thanks,

Next question please.

from Thank Oppenheimer. Ittai you. Kidron

ahead, sir. may You go

guys. Hi, dig bit, I a the I want Chuck, supply into chain. on Thanks. that guess to little

the peers than impacted industry. of more in your much be to seem You some

others mid gauge there Is you on exposure So I'm in a have April none you them percentage had China some others? did come to stand any just can you unusually couple whether that that of of in had out and signaled do And that color components you but understand an from to give have I April China us late quarter, March, they not. anything. and to is what why report it them your trying high of relative

given of what's guess disconnects to part they've term, April second and just and And just longer so said seen happening clearly, challenges thinking any are associated Russia China they policy, COVID the a source And geopolitically for a geopolitical also Ukraine, then term? of that from risks China I their the but standpoint, is of haven't a in kind this, a anything. as you a there long-term longer some as with components in planning sort that on clearly

questions. good Both you. thank Ittai, Yes,

one, the the April we are it I was are that think have of biggest month issue think full I the wasn't first feeling to that April. on who thing and spoken the reporting I for impact peers we same differentiation us. are

components a design normalized in. basis So the portfolio, of products us all question for now different on that across with

So problems. certain we problems an unique we have component have areas to there with the into may have or is a we're into have issue unique just a product. for advantage a about component others one talked those where problems because we us or may redesigning designed I opportunity product general, have And we may a are that though unique the where in designed same

revenue of that a we quarter. quarter general we So you're many that more week our in you general, put our in we competitors do Also massive April. in in just think perspective, was think huge because last advantage, it of their than of shipped entire the would exposure but month shipped in of referencing the And the that's volumes. to

be impact. the us, million shows So it it up If impact for an $XXX than million they us have million it's for a problem, issue be it a it might just $XX in -- a same number $XXX bigger would. that might

one. So that's the first

The one constantly chain. I our what global would say that we supply are evaluating is second

chains the And triaging all that last the so that we're think industry, years way all it's at supply not the an we time about realize designed evolving of the one current that over And now about as we we've country, same issues have. resilience. XX-XX it's I we're

resilience. The we a geographic COVID -- give I built dual shut that our country constantly we So example for have did before not plan teams regional a had is But are we have redundancy to a we challenge. would driving down. in,

working out to on time. now, will it and to go all do our of that that so so teams continue right any of kinds time geographic And takes they create are things resilience, those but

thanks. Okay,

Ittai. Thanks,

question please. Next

Leopold with James. you. Thank Raymond Simon

sir. ahead, go may You

to this Thanks taking want I'll here, Hopefully, give I question. make but shot. the a sense for

in the that something gross guess, seen secondary do is allowed brokers of some Your you -- Is better I you markets, revenue wondering relative you revenue, paying or quarter looked in if didn't tertiary from usage to of margin and was will that fees for your I'm your prevented relatively peers. understand but the peers of resilient high issue practices of part just that opposite your is and the parts and very a reaching margin? some outlook gross from the gross the the that have we've And in margin, the make sales. to I'm your it to trying allowed you but have a sense? good lighter like

Simon. does, Yes. absolutely It

Let I'll me to to little it start and bit about talk a Scott then kick it.

active with are And our call broker us and buying purchasers we first. you in first foremost, the can So, power, imagine, they market. incredibly

And to so -- no, that do has nothing it. with

given fact, bought of they've in the supply who us team examples where market had a recently. spent our lot of In chain with product time broker we've

Scott it. that's think what did can don't explain I So But there. happen

Yes, Simon. price it's add question, year. great I'd this is, you we recall, What two increases did if a

of we to ask are that the of in first time what see toward we when going line? -- beginning year would continue right quarter. in calendar of the said increases, benefit the at enrolled third the they we quarter, our the what we to The like quarter the second second And the top the is to one just and one about those at those price end the you end thought closed said And of which up are happened. we begin and exactly that's show we the thought

chain off shipments talked quarter -- that of issues were the unit with pricing. that we've were supply, the the component with offset the strong about we able supply the in to while the So because with pretty

QX. there, In in in was published fact, you'll Q, up XXX so this pricing the it our see about but basis our list -- we points

we beginning do So we're component while impact the doing are front. price that was a some things in have to from it of realize we on -- offset by the the supply, unit the

We pursuing same working are the to and different we're be avenue. at a actively vendor got qualified sources It's every time. qualify to so

a of pursuing but headwind creating We a distributor, to those channels all it's the a broker, through a from through whether that is and broker, us. directly are vendor, actively we're bit obviously that pursuing

you. Thank

Michelle, next question please.

Thank you. Suisse. Sami Credit Badri from

You ahead. go may

thank you. Hi,

you much order one clarification growth is how question First was is, to us price that an a Could at number to trying just product give growth order increases product And just the question. contributed on That's second a X%. number? then idea reported the on we're the first about together explain maybe contribution, some versus peers far more a piece even X% would little Could Russia, are we specifically enterprise for grow there? accounting reports just why the your in that Ukraine and enterprise? trends after reporting to bit going of greater what's and on triangulate try

Okay.

the growth. honest, have We price price on And cost be the I'll moment, but not significant cost. was did increase our increase we've pricing more incremental at passthrough all, the of only to really Scott on first our that offsetting a add let First, then. in since incurred time impact

all all at not passed where getting price costs the incurred. through place So we right time We're increases were we have now the even we have that a now.

first So that's the answer.

without commercial business XX% or would enterprise last but our would would thing the have and and have Russia. and have -- without for second be to X% been would grown view you X%, grew said way reports combination me the enterprise earlier it which XX% easiest I the industry and tell and that the On report is one, our quarter what of the peers grown views

business, that I'm think is of if quarter. shift the you size commercial So a you growing grew that they the leading demand look at still our momentum, the pretty there. of about those usually X%, demand XX% is in the And comfortable of two combined businesses indicator if which

So I'm not concerned.

question, Sami get XXX and part go Yes. flow through backlog has in QX point a revenue revenue, to And basis realized. then to to Obviously saw statement. that from it we the first pricing is your the of the first impact to from bookings

little bit a we basis higher impact points. on haven't quantified, be So bookings than would the that XXX while it

it. Got you. Thank

Next question please.

Rod Hall Sachs. Goldman Thank you. with

You may ahead, go sir.

thanks I things of the I for question coming there. that the think come hi, said I that back I because a out Chuck. combined saying to -- these question. product all that guess, will investor know And be this orders, want heard you I Yes, the main you're

Even if we you're But a a at basis you normal digits quite the over growth XX% bit highs product look we're sequential still seasonality. give year mid-single think orders, year coming seasonality. way movement I you these below below on off down know it's on the product the those, on on historic that's that orders. normal sequentially that if and

guess if I see can scenario still on but declined what which Because you you'd where to orders any be in makes of wondering in is into trajectory double as a If quarter? July you'd head sense. good kind could product we order XXXX I territory. product on that product us idea levels orders next be So digits, give case I'm down any

how So long follow-up. I'm I are trajectory you normalizing hoping mean and on I that's then looks over maybe us Thanks. orders have a what And that kind question. more you of like maybe could little those color a bit just think time? a give

the and actually I got way. right you about Rod thinking you're

thinking way You the think about I'm about it. exactly

were out with with So I the quarter worth this they fewer planning be is I'll customers the pause and think doing is with they're demand. now right now may we've XX-month with We seasonality three say if with and the orders XX and doing situation it order seen quarter. last first thing going any window placed that current And certain of we months' to what customers.

just around. thing -- get So very head it's difficult I to your it's mean a

quarterly look the have at then think you momentum what you growth one from way momentum. the So is about rate I Because see one, at. XX% sort look to grew quarter math, the X% that That's that declining there's right. our year about would to you next vis-a-vis XX% of grow if because delta, and demand on think to I XX%, on demand two ago be I then of Number a -- things that right.

the those to get know we I've think to ahead go how right. in. think much but we've years point when comparing think team don't back we quarters, about, But as So that's talked second pull I and numbers have talking assessment XX% watch one to we a know these thing real it, we had two about you're We start against is for. I thing the your I been because

quarters We it's analysis what going from have sort of us really that's we because a to just to to view. now. and years to stuff, we've do once at metrics -- I get back two maybe doing think really we seeing a apply feel -- another a four historical thing the now looked year, cycle for right difficult normalized the way through these to normalized of navigate like we be And won't right

order through growth to our get hopefully we'll will and where a of will a going there. our those phase As then and to revenue we're said, get into I've more to model predictive go just demand where two lagging be got growth a get point we back

believe people of from pretty curious demand know still so good, bad to what I the you're is it's curious how hard of hearing tone CIOs, like Chuck, CEOs, to I -- are money, is on are I'm I'm feeling of news guess, seems talked what you a there it like just people they a you everywhere people, yet I And lot conversations spend and the subject, lot now? Okay, to that seems want mean going? look thinking but that's great.

think COVID changed about about our think I everything technology. how customers

really supporting or to they those they day thought important hybrid that or work the projects technology. to impact them and spending behind -- not think capabilities of years key sector slow a ago, not they public I COVID differentiation making customers is relative are mean, sure modernization it. I had or what importance three competitors. to of And falling it, they're of giving they different. prudent about be leaders, CEOs, different day very customer think about feel to just much stop them would though a they're spending, their on the think it was of understanding when Even their the of decisions. they're going stopping that pre-COVID today technology how infrastructure And lot it's went their I

decisions. just for higher make them I'm is they a I not there those saying think bar those so And decisions. make to won't

thank you very much. Great,

question Next please.

America. of Bank from Liani Tal you. Thank

ahead, go sir. You may

the I year. difficulties even because rates last comparing growth to high -- of have model is XX% orders. still to XX% comparing didn't have I we still start next of we're This year still

I we get you getting at Should of the also actions, supply a Next of growth And starts -- materially, at the being we XX%. growth somewhere levels to think trying order accelerate quarter, you're quarters, are of revenue to about revenue quarters. At few that chain look decelerating to seeing your or just both growth point even we supposed should how combination same negative. down maybe order but next negative have multiple better of to Thanks. there accelerating. going instead mean, next I'm understand XX%. could quarters to when of few growth because be -- the time time,

take to it, want Scott? You

one is Yes, again the then way the in sitting within more last of back quarter think And of and this you quarter. software Tal, think first we than backlog. I greater billion than now gave product. it to to billion that backlog $XX about $X We've time in that, got statistics

sitting on the $XX You got yet revenue plus billion and transacted $XX line. about we've accreted not add have of to RPO to we've sales of that billion the that we're

in rate you So revenue pace about the need And out I I think about being bookings think you for certainly to versus you it growth. dependent supply on next dependent want it. growth think quarter way being and to the as the way model of on think about year, that's

all that trends, big side, than are product the order in is contribution same I there products the have the like et I the enterprise, cetera. but trends about the very provider that of mean of terms There dollars, in are not think trends. has you cetera. better trends are et the service when some order And guess the to

provide, just little for order number in bit and actually order a areas So the below you growth where numbers and order a does where dig single growth it better the orders is mean can worse? that deeper you is tell us the areas

the decision grew would That's following stop a where operations the and the it take Yes, in grew Enterprise and orders then may the that flat XX%. in some that Belarus, impact also you in in were about it is to quarter enterprise but release. available XX% It Russia up the we'll normalize of the that press the talked that before quarter, I enterprise. have and for up in Belarus, Russia think to online. growth orders. to be of put quarter We slides X%

But So trailing about, the define biggest these enterprise, talked our lumpy. it's is months, by quite strong. definition way XX with business -- we a going customers. Chuck actually bit as it's a on be that And to

gave And doing in continues see of a to We has sector order continue call then saw sector in be the you stats well. first the tip tip And It up as quarter. last commercial, us. the rest we this late pandemic to nice you into be growth hold to XX% web growth growth scale. we during we commercial things for to saw down. We the indicator that talked up. those up. Those to for demand as 'XX, of particularly some sales Public SP, fine was And when we tip Public product, before down in well. leading begin us. commercial recover went continued about are fiscal tends remember commercial

it us, that's the at this not has any seeing leading and seeing -- not we're certainly we're in if point. So weakness been for demand indicator

you. Thank it. Got

Thanks, Tal.

question. Next

Silverstein Paul you. with Cowen. Thank

may go sir. You ahead,

I clarifications. could two ask for if Guys,

think the First didn't QX. that list? showing of expected impact you revenue I share is revenue you you impact million heard the what's kind say high say $XXX I in hear what's QX. Can I in of

in is I of to difficult. the peg but it being But out that. that for was we very area We expecting get, and they're China going really caused it again, just getting we we getting issues to we we're we power right stuff did. going were what realistic to most to Hi, ability articulate door, really everything need to the Paul. Thanks. range we about get QX else. Yes, to we had open up to is pretty up because open see we'll getting actually be what have and us exactly now, to the shipping able -- much us believe which that and supplies, mean know -- create particular, right when in cetera, the the concerning to simple just in how QX, -- don't now opened And we're understand et see the it

add want So Scott, to something? you

that recover into towards was I in came into Yes, of the different sense right of right. said within lockdown, concerns I what of the hit have not we that a of supplies. leading didn't unique scale a is was Shanghai of quarter, from that to what of come every to supply in which, to just a issues we then late issue is we I'd and give not hope got immediately no oversimplify day because peers. number that. XX,XXX part the areas. that, some up potential get working We've a quarter it's the wasn't but I give I power more those don't went list. half and tried we April of know constraint in It It's We're every just add many And want there you of couple power every I'm on very second to and QX because that resolved day constraint day within time XXX them It will components to about now. you see hit. our more quarter. of supplies our course, that is example QX When was that the in had and

very be convenient say, could it's say into So level and and better trying or assuming unfortunately, scroll here's was dynamic a and QX to it we're we're zoom it a would situation. And you two not -- through we things just those if what is one we It guide. exactly not it as are. up the gets do built what's if that's worse or what

in you visibility orders all and is lack the be Going in been Chuck shortfall supply have the is concern billion is expectations, shortfall to obvious that on statement have, guidance supply? the order concern question and your the the the questions a to equation? the book all your demand, or about Street the understandable plus billion, concern that the that quality all asked to portion slowdown Scott of is respect that any equation? guidance many supply the of we $X of Is to to rolled But back about the demand with that -- to of in have in of all $X side

impact QX no is guide. our There demand Zero.

It's a XXX% supply.

XXX% supply.

But One post at your book. the at the talk linearity of of the we revenue. on other see? the look what you your about we to I look linearity of linearity this during quick quarter, quarter, this know, order orders if clarification normally If we topic. up call, do

normal, was very It normal.

at degradation no seen all? you've So

No.

XXXs we're and in remember QX pattern. If half line we to Paul, is, we a little on XX% when just a of skewed yes, a product it's because year planned there top was it ago, and about lot went XX% with quarters We're of with right I it. been XX%. built into. thing grow orders we're back have think from was had quarter said a to the normal because a worried a we of purchase I would And happy quite three year going fallen

but update, will an right feel it there's So have tell you. we like significant any Obviously shift. quarter we'll next doesn't now,

straight say quarter didn't last percent cynic growth. of you're I see relative you Chuck quarters talking. And understand quarter would three plus about a the to last anything XX

-- any You or just but don't is and at any about now slowdown changed. I'm advertise, here expected playing devil's obviously, advocate tune looking slowdown advise the

Paul, about expectations. have commentary bookings that's fine. But never future we any

I it on. appreciate pass I'll Thank you. it. Okay.

Paul. Thanks,

Next question.

David UBS. you. Vogt Thank from

sir. ahead, You may go

sort of supply $X $XX.X time And If on flat your follow-up sort for the I a seasonality mentioned some think are year RPO. Great. triangulate I what my you there the rate term the next sort revenue guess year. your saying, run near where maybe to mean And on billion. year, tack quick how this realistic flows constraints a as of I kind through? of trying have articulated your in mean, question. at are I I near I we not today roughly could of looks is is on window, out the billion, mistaken, mean on go backlog taking of year? of that as half is trajectory I then had exit of we that a taking probability a Chuck billion I'm first follow-up. I'm to the increase RPO and peers $XX.X start possibility if revenue and just everyone you've that we backlog, and what chain but sequentially given realm the I Thanks we within at term on the into quarter-over-quarter like clarification a given next that

Sure.

On the RPO which about, RPO, that billion we talked is got up right, X%. of $XX.X short-term you the number

end our a that QX on stream the a means that the fiscal piece is X% months. business into revenue give get term short looks you That update go piece growth then of end what of at in the of as least QX leading -- next into by how that of of indicator good how at growing looks sense accretes definition XX we'll so the of can pretty And and 'XX. short-term we in and an it you RPO by

quarter we we metrics quarter you little in a or X% peak order order we obviously kind talking of your sort reach closer on where would and appropriate When look calculation bit sure the year of where our commitments in think backlog two make about see to that book how of your sort maybe for to longer then a than you demand maybe could sort the to customers, peaks, you parts as handicap on chains we and at what decelerate perspective And where ago? ultimately from meet think a and We're Great. that you of term? as follow-up. -- are you those of perspective both thought your a but from the have just peaks a window, the a from purchase peak little order of further, growth as and this bit demand from Right? components commitment decelerates of lot maybe end supply about

angles is I'll forecast One not to on. that while the, try in to surprise touch it there two the Yes, me don't to David and of that peak is would again it does we QX. that, kind itself see grow backlog when

piece set saw so guess, at who and the components, not our pursuing question that we chain those sits purchase as up terms a pretty a earlier finished the now of hands aggressive parts, they it pretty in you On enough pretty second and at want supply get on as convert being in level. constraints actually the customers I clear a critical commitments high QX, And back team again substantially goods were purchase to in commitments few into high level inventory we that product supply products. of our that's can the in quickly of

the really peak So these down? components critical is is in the we're chasing now, a of QX, peak QX, lot the of on that depends fluidity availability

Scott. Thanks,

you. remainder to both the holding the that on one we've which onto square record hope and inventory, sense the sets I a not, makes those the just we with record seems get right. and and to that have parts in got backlog it's door. We're out to were sitting get contrast it's We But another. like built

of trying conversion, that's flow sense. sort makes cash Thanks. helpful. that No, understand your Yes. We're to so

All right.

question, Next please.

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

is Ben We Hi, standing thanks couple for for taking a of questions. in question. This Harwood the Pierre. had

your most in about arising So firstly, you April. of issues talked

to full you quarter? And expectations? what over the should you. the demand confidence mean productivity that? demand Do this X% on and And XX%, around below and to below was Thank expect was kind economy think happens then give what in that spills your it So Does secondly, we be lost around fourth then timeframe of expectations. would XX% cost X%, XXXX then you met? this into what third

to want Scott? take You it,

million to Most that. math, April, obviously didn't we quarter. -- the stop on your there of we revenue within about, made talked -- part we first of talked we the Ben of of the that but $XXX off two had a follow had Yes. Belarus, decision months in exactly had Russia, in your write it that relative was month forego were about operations expectations was the to I receivables question, some and impact the to yes, of we to

we have question. On would that. I'm the made the supply I at followed I with of what that you side, quite expectations were sure to that for hope remainder delta up chain your not answers get our the to trying quarter.

it that was was April a at linearity the amount saying it. that percentage I expected we certain you missed just we of from said we by, if what would a look in have perspective,

So check. correct, didn't probably a we mathematical just but it's issue,

don't it about I think Yes. in terms. those actually

I don't either.

if answer afterwards. we your Ben, But follow-up didn't yes, again question, can that

Okay.

right, All Ben. thanks,

He backlog rolling a the asked into second over 'XX. Okay. one, too, about

with mean I Yes, backlog. the

of couple things. a So

on say is was is -- below we've cancellations I'd continue rate out to of trying to I think been a that obviously backlog. what the backlog may the you order it that get there very is be on durability pre-pandemic. where What question And they is tracking run actually closely. that this something is at

seeing not we're So any there. cancellations

expect see strong is to that would build, something else softening see there weaken demand. if We was continue pipeline very think I to which you pipeline and

orders at date. the are in days of beginning the kind look That change those out in a within that just we policy XX what's place in ship orders with As also further the of non-cancelable we've into place committed with sitting of all says backlog, non-cancelable February. went are put

non-cancelable. but we've in with those guarantee on working or biggest of we them rescheduled basis customers, for agreements received canceled. then our within And days that will that where put a be bespoke XX orders place So since orders not are shipment they supply, will we've guarantee been to

we've durability So backlog the of feel good got. the about

Okay.

Thank you.

Next question.

with Long Barclays. Tim

You may go sir. ahead,

if Two as Thank you. could I well.

you of First, Chuck, A position in about was the gross are seems margins guys a It strong pricing. pricing now. lot we talked that like good. was

back you think customers. to to out pressure the the or pricing normalize, and that's few or that you give quarters look if industry something when do a remains think things will If be do a you

could a unique factors was more? not hoping growth look start into standpoint? So And of of reaccelerate is margin the just one-time that great you a in opportunities in Cisco. Could over that you software kind could lot from ahead at quarters growth I software watch us give even things line? there, that second, that still probably sustainable of to I you software when the heard to few those, the next ex but dig

Yes.

one the Tim, first the So, questions, the on by for -- way. thanks

whether we see we the over those I software that that at as asked begins customers think at we it's passed haven't because you onto we time, if will look that I increases that reductions the the so as where The costs through many input will to growth one, first On something we've you. consideration glad then stuff the take want our would to we explain. on tell we think that holistically it occur to costs customers. in pass is input reality what time I I'm see taken into is on

week chain interesting the extra difficult and understand we So a the ago the and completely situation a to because in have really situation. little Russia a supply it's quarter year

on in take you software. going me let So what's through to try

If fact piece the revenue until begin hardware in $X have with we is will to that that of over backlog the the hardware recognizing software a well you that start connected not billion ships. we of

up So that's billion -- and year-over-year. $X

not in of that we a that software is right large we're now times. would normal component there So recognizing

So down daily it's we basis, extra you wrote had a a where into Russia. as that we down operations then wrote result if ratable the extra of the in first software do -- we take week piece. ceasing consideration week. revenue And the an year take ago from And that revenue on we you of recognition then software a

put a on, number growth. the is headwind X-point the quarter our So to a -- it's to one assume Russia those was software reasonable. but three and first The extra hard

wanted So I that. little a complicated, to make sure I understood know you it's but

to expect, chain to the normalized wasn't this see week clear, So And Russia complicated. extra rates that when would so particularly those starts and stuff impact. we'll without that then back growth I would normalize supply too expect to then the start hopefully we

Yes.

software XXXX What any curious things of the upgrades? help? the that of or other could Just are macro outside related really standalone kinds

helpful. be renewal The Yes. could stuff it 'XX, in

we've center some enterprise group. wireless. continuing enterprise switching running are the progress We even across routing, in infrastructure routing, on scale We've portfolio. our on networking on subscriptions got to that group. into I make We've on got data our mean, now mass subscriptions built subscriptions

next the over years. in layering few sort they'll So

thank Okay, you.

one have for Okay. It looks time question. we like more

Daryanani Thank from you. Evercore. Amit

You may go ahead.

here your share conviction able the of China, it's Because were the be month peers And product get that others they answer your the power, Perfect. demand. one I from were I not not lot might loss not have that happening? after able that A no conviction I supply to the issues. be better that sounded there is and get analog out. the you much for you chain, to know were shortfall, of snuck horse in to guess would if what's the A, July. China the maybe in in perspective chain billion-dollar just supply dead

about had in loss? few share And Shanghai cases talk just are COVID you China could B, now. A, So having for has days not conviction, no then a you

up So in a QX from that of you be assuming what guide June, Or guidance? at and get just in the higher end does your your Shanghai recovery they are imply that could better you open things embedding QX? in perhaps fiscal

Okay.

now and thing think chain So we supply is have complex situation, because share incredibly of difficult to all I backlog first assess portfolio. the a right of market situations

or whether So and areas. are in is share. core that our somewhere? we're in the good routing space suspect really there we somewhere markets, web SP demand how performing in other and we that we've I feel about losing it's WiFi But seen the or losing and share actually I in in scale particularly switching are

widespread So I is think our don't improving. working of -- are but there share, problem on sure a we pockets teams are there I'm that

don't have logistics it We the capacity it going open to our recognize logistics right what the of day that of about logistics that's every that salons to first grocery now. that do many whole means. have is side the their be and working and they the one? resources of of nature it approved concern piece. China the workers In mean -- Because in working keep lot they're is out? me have does up or company been slowly there just and open So into let a they don't open Amit, up, do know is of we when What that ship Does all the trying thing, mean first But we cases, they to to the that the factories what that uncertainty going for dormitories. we've up and side? some means. what know of all, open stores built on guide things been

to it's the ports. So now to airports. ship the on us ready we all and components floor have traffic for sitting or going raise product know leverage. It's And the to capacity right going is to there's for for they all compete that lower air

how in that which about is concerned to takes the long guide. reflected clear up, we're So it

think risk the also their ports we we coming and months seeing have saw starts into it what in that in once LA ago. the gets U.S., of several it We

what's just opening put for there. does So to remind we about guide up just led like cautious And that you the those unknowns Shanghai. that out timeframe would us just not the look recovery are it's that and the what all I

like over last lockdown was were article were quarter of in a as think and read, I cities that of of XX I population China. the there it the

have it's it So that's how But it unwinds. to about see just broader. how we're and wait thinking we and

Fair you. enough. Thank

Thank you.

going closing Chuck, it to over you Amit. you, Thank remarks. turn some to I'm for

Thanks, Marilyn.

really clearly believe a out Ukraine. a that to through, record these And the point think we good. we challenging QX I point diving So is our on that this is on and It's top to though for in with begin dynamic us time price in we deliver the the events also we of and thank working for QX, even which quarter during was We been want hard for COVID challenges lockdowns and in QX, I faced unanticipated with year. benefit year, which complex first full for guidance the it the first we us the next to We situation actions environment. the war that low us spending good. miss EPS our the of increases, all, of our into short-term will face. at want clearly will that And have teams will manage mitigation successfully realizing half a EPS We're line, a had just fiscal as company. everybody record

fundamentals actually is have a lot, year complex when the disappointing, are done. topline our strong favor. transformation in technology number Demand, while So business the deliver in. will transitions that and still and we're The working, this EPS is solid participating we're we the navigated

have great me around and despite high degree that a challenges we that We teams leads short-term face. of world the have the confidence to

So and we us thank all to for look time you with with spending quarter. you forward connecting next

August conference at XXXX Thanks, will earnings X:XX on fiscal up and And PM XX, Time. just fourth our Eastern results PM quarterly I'll fiscal Time, it Pacific which saying wrap next Wednesday, XXXX, call, reflect by Chuck. Cisco's quarter will X:XX be

joining So Investor We this us concludes today's the thank you today. for feel team. much out to questions, to any call. very Relations But if further you have reach free

today's Thank call. conference you for participating on

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

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