Cisco Systems (CSCO) 17 Aug 222022 Q4 Earnings call transcript

Welcome to Cisco's Fourth Quarter and 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.

fourth 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 include today forward-looking for XXXX. discussing be statements, be the we year will we first matters the of guidance providing and will quarter full fiscal including The the are XX-K to risk detail filed could results our differ documents in subject forward-looking uncertainties recent cause in statements. those factors They materially on the discuss SEC, most to that identify contained we actual important in XX-Q, the which reports the risks with that and from specifically and Forms and With for also please to the release see call respect accompany that this further slides guidance, details. press its Cisco explicit is done quarter, public will through disclosure. not the on during financial an comment guidance unless it I will now turn it over to Chuck.

strong us and Thank a of our very to I'm today. joining incredibly to year to dynamic proud of you, that in for an environment. thanks had end Marilyn, you the fiscal share we all midst

our this records with several set we performance fact, In year.

on touch first me those. Let

billion. highest ever the of strongest Record product our as record delivered XXXX, recorded, $XX.X backlog $X.XX. as full company history year orders, to of year well our the For fiscal the at in EPS we of which of revenue level fueled the second non-GAAP

see we've targeted customer subscriptions, continue by making. software We and been our adoption investments driven of strong to the

inflation. supply challenges, We operating our discipline, also external and income, net record chain despite had including which reflects

to both enhanced continues annualized ARR, increasing transformation our with This, business KPIs, provides into RPO, Our show important or ongoing progress record our nature recurring remaining metrics streams. looking the recurring revenue setting These with business us backlog, revenue, record or our visibility combined with and our highs. obligations, forward. of across performance illustrate

we was certainly teams want and well. a I this customers While commitment complex and for year, our thank to executed perseverance, our partners. to our unwavering determination their

to term. XXXX Our innovation fiscal long has a us position the and team's accelerated put in unique of strength over commitment for

be Now, on our for I outlook to XXXX. want clear fiscal

driven drive innovation portfolio, our supply and line We constraints on profitability. growth of expect our performance continued focus strong easing by to across solid top and

higher we logistics year, by guide. While demand unprecedented the freight continue primarily solid. to the from We experience short moderation reflected in our costs, expect term, last of driven order product which is do growth to remain costs signals anticipated higher and in some component, QX

are seen strong see begin observability our Long-term portfolio that Long you'll our X us, as to about I'm confidence pressure our years. transitions Wi-Fi than There the ahead such opportunities currently our in customers, as and position expect what's well there quite as work, guidance, annual cloud, beyond, and tailwinds help security, towards XG move in growth. With term, we like IoT, optimistic our to XXX margin are megatrends multi-year more in gig hybrid application of as me concurrently year likely ahead. hybrid progresses. to in growth will technology XX a occurring gives provide However, many ease future. I've the this to

the the at greater of overall Before COVID-related supply we the to continuing situation in a supply and the supplies, additional quarter impact continue into the the semiconductor we fourth on of to shutdowns ease and start discuss some quarter slightly began QX. half power build how back the to due Shanghai, to challenging and constraints in I provide want After on resiliency. detail, April and color

efforts the components the decisions the have supply increases, to price and include over products years potential position future. suppliers, While remain, made component early multiple our building cost of with for These show in the with The leveraging targeted we supply help to suppliers, into inflation. alternative improve team easing. actions momentum headwinds two drive we we've taken and actions the the and made chain past and to they us capacity hundreds of to XXXX. new are fiscal offset meet will growth the signs which tremendous use have capability redesigning by all our of have along helping investments adding resiliency These similar begun to alternative

to annual quarter. XX% Moving of above and stockholders delivered With in cash exited Cisco high repurchases. We flow we end our dividends revenue with non-GAAP the order backlog. in highlights the guidance to performance range, guidance and year the solid year, margins operating product at returned billion EPS of and $X record healthy growth product generated our through share range. fiscal We and the end cash high of for came nearly achieved the

levels, In our RPO for increased XXXX. head we strong rates, this and revenue sets remain cancellation and addition, when as which more with below totaled combined billion, visibility the $XX than fiscal low into growth pre-pandemic stage

annual in growth concerning. quarter, that saw the and performance sector. XXXX that, our this the growth visibility. From is as fiscal orders second we $XX top It's the our our a is growth. which next $XX up of on to be line with stronger have we last the backlog, than term, nor on of component enterprise, demand will growth the near a product our QX before QX over the more in record and perspective, dollars an greater had XX as absolute mind we we over was XX% we was growth function we backlog than sequential in tough decline orders year-over-year is activity the our a only surprise throughout a not public keep ability that Based history pandemic. in remains organization, revenue record very was the year, effort important it over rate It than to comparisons of some the pace from in RPO where our faced company. relentless With growth. the solid business entire product commercial orders in availability of recognized beyond the our billion a to order and clearly on rate highest to perspective, saw Thanks to much delivered of the and we From the deliver great it months quarterly of XX% billion, in basis customer second reflected terms of strong quarter. of in continue revenue of almost In experience

our our While I in operations, technology trends is investment remain multiyear earlier. business not mentioned transitions benefiting disciplined to from and robust immune trends, we while macro will the

our Our and This consistently advance greater innovation virtually. of amount our largest Cisco differentiated unique to thousands more time technologies is and of recently leverage over years sense in urgency partners is business and most participating We their our a XX,XXX had increasing complexity, innovation look help pressing customers many Cisco their leading-edge is in first them helping our navigate customers leading of held to to there and objectives. the in-person Live strategic and and three for them attendance, to customer to event priorities. on including an deliver

indicate of difficult did them discussions road not supply of their coming support strategic Our in quarters in maps. commitment environments. have can technology They record proven projects, role the with to focused what Cisco the critical Regardless on may their to shift any we a investments. long-term able and bring, assurance to technology being track adjust play fundamental

orders remains four-quarter see becomes web our were them these scale customers services. to trailing ever. we opportunity significant build accelerating as proposition to the business, for as to increasingly We demand as our as meet help see up value a and networks on XX% to scalable more ahead out than basis. massively Cisco larger, business cloud turn cloud as customers momentum strong Our continue even In product

Our systems to industry-leading optics, as value innovation. software win enables and leadership performance and in silicon, us hyperscalers

footprint, fastest-growing networking. optical we XXXX a Together driven XXX-gig Cisco Acacia, are have and by center routed data One-based with the from Silicon our beyond in optics for with foundation history. our with We strong Cisco's routers, platforms Internet expanding to build-outs the rearchitect

recently we booked of one first and addition, shipped XXX-gig In systems to customers. our web scale our

we connected car. billion IoT On growth on fiscal and have front, XXXX finished also excess orders connected with We the growing $X in our by million product double than platform XXX digits. cloud things of driven now with more

had was recurring product strong continue of transformation by and up software approximately our ARR offers. with by make revenue XX%. increasing portfolio We subscription-based billion of X% quarter, our progress more this We growing on to recurring driven ARR subscription revenue. to $XX

increase a strong. our expect competitive We in productivity from While paying manage down Nexus introduced to to innovation services supply slightly, once operate innovations cloud. an data revenue and product platform drive help networks we cloud the we've made to begin and was backlog. investments software attached hardware shipments, software, that we are improve products subscription in we to improvement our in are The constraints off customers QX, our resiliency. organizations as Cloud, very position deploy, help and In new delivered launched across see their is portfolio several to our center and our

faster Calisti and Panoptica, cloud application new and introduced In for better addition, development. two tools native API-first we

We version our also native of a next-generation announced platform observability cloud AppDynamics Cloud, applications. for

entire based offerings, what dynamic market. transformation and innovations position on leadership security us end-to-end our our addition, and remains cloud-delivered detection cycle. the very threat These we for a to broader In well best-in-class a multi-cloud Cisco focusing customers just saw our secure Security security our single innovation we help close during new will they security strategy security business, architectures. our for driven In summary, well thanks Building investing Cloud, their shared to executed one the as in our several security revenue. of our our the our security to look across platform. recurring from teams, This our quarter, solid cloud strong in led time. across a we which continued this them to a of connect innovation double-digit is be year, growth on with on setting are to and platform, market-leading with fiscal game changer strategy growth part business, This execution our we records architecture their AI environments security

of took and resiliency to our to decisive We growth. growth The position power productivity. offset for driver inflation investing economic while of be help well in long-term actions continues us also critical chain, build our and supply technology in a our business to

Our leader technology that Cisco a customers outlook demonstrate and results to in the critical as bringing solutions future. into innovative today plays the role and

as investors, we be well as fiscal committed our value culture guided remain for into turn work to employees. our XXXX, partners move delivering by it purpose-led deeply to over to place we our and to for amazing continuing I now As an customers, Scott. and will

some results I'll fiscal detail by full financial then Chuck. quarter, provide the for the cover Thanks, our our first guidance. year, on followed

and QX our in gross an in in high And improvement saw overall expectations a environment above mentioned, increased our end exceeded strong were that margins. of shipment we result of the billion We're guidance revenue that quarters. as supply Chuck results of taken our numerous reflected over levels direct total Our supply actions $XX.X constraints. multiple reflect we've as the range, as pleased our with costs execution continuing very

and was Our non-GAAP the XXX share income points and our non-GAAP end our down net operating guidance. in was X% Non-GAAP margin in range. line basis at high of with guidance coming billion, $X.X earnings $X.XX, per was down XX.X%,

SD-WAN Networks revenue year-over-year. at X%. flat both our down campus Switching revenue Total detail. center declined was Within both revenue product and $X.X in was $X.X was Looking data revenue, QX service Agile product Secure, billion and driven more in growth billion, supply by wireless in strength strong Meraki Enterprise constraints. driven in routing by offerings. offerings. XXXX, driven growth, We XXXX access. our and Catalyst decline Nexus by offset by saw primarily switching primarily and Wireless Meraki had our Edge

portfolio. Collaboration optical. had driven strength future scale declines for in in up growth offset offerings. edge down calling security XX% entire and of double-digit the growth collaboration was with by XX%, in record web growth revenue, had meetings partially also strong Internet by in our was the cable, in devices, servers. X%, by We and declines driven by offset strength revenue End-to-end with across

offering, had by in in perform X%, portfolio ThousandEyes. driven well, application Trust our SaaS-based by strong Zero Our experiences dual of double-digit performance Optimized to driven offering. solid growth growth our continues

in $X.X billion, of revenue. was revenue X%, represented And $XX.X RPO total X%, based, quarter. with billion. We our highest orders of short-term strong shift metrics, subscriptions. the product continue X%. business more Bear X% Total XX% of increased backlog. during orders was up up continue closing X%. history. product Cisco's transformation X% and subscription software RPO X% on over $X growth XX% in ARR transactions software $XX.X subscription billion, billion, and our an in of RPO revenue our to software X billion subscription was revenue make RPO a our software XX% to to our X%. software we large of well $XX.X performance mind, our the Total year-over-year. billion, of We progress of revenue ARR subscription points percentage we several which up decrease the an in Total in QX product is by to of were second total decreased Total driven have revenue software saw increase was grew product $X.X increase Service as with

quarter, product growth ago, history. While a that highest enterprise, over compare against in order growth keep in important the mind product commercial X% sector. it's the which were basis, sequential year public product our growth in with double-digit to On for XX% a orders up and XX%, the was orders was down

historical gross year-on-year. was points, Sector segments geographic X% margin and down perspective, was The saw basis up as Product of basis down drivers margin related our margin, the both down basis non-GAAP we up component total benefits increase supply Public from We XX%, beyond well costs, service taken, In APJC From product gross points. significant XX.X%, In down XXX X%, as margin Enterprise points was in higher XX.X% and to a were commercial the as for freight in as at Provider gross well our software, Service down our well was hardware and and backlog mix. was higher levels our and have gross X%. increased came was and had XXX and actions levels. Americas XXX was our logistics down commodity year-over-year. normal for customer markets, EMEA we X%. a up X%, constraints, lower-than-expected Once predominant pricing margins. again, at down X%, Looking XX%,

equivalents backlog included us primarily billion year. ended was future said, cash growth. by share of shareholders $X.X a for important to is note the ending total during of Chuck billion, $X.X record that RPO combined dividend. remaining QX $X was backlog product performance allocation, not $XX.X quarterly and Operating the as reminder, fiscal XXXX just obligations. of billion. cash, backlog $XX.X visibility returned and was of for our for billion our to to a capital comprised purchases cash supply. inventory billion into And As billion flow It's in We part investments gives great payments driven with the line the the our total cash our $X.X quarter down quarter, year-over-year, and of In secure and repurchases XX% we advanced top

in a war results results. constraints, component and the Ukraine. were related the solid rising year year costs financial in faced significant Overall, supply to and where full our Turning fiscal we

highlighted growth demand, performance Our truly $XX.X constraints. share by up while order at of strong earnings clearly by including two $X.XX. billion, impacted per non-GAAP X%, were was though impressive of financial XX% Revenue up quarters supply product was the with our XX%, was X%, growth, performance

portion product total Total was software up margin up total flat, with $XX.X subscription is software X% points down revenue. operating XXX basis XX Total revenue billion, our non-GAAP non-GAAP our of gross points was of In software an was percentage total represented points. terms XX% subscription-based, the basis XX.X%, subscription which increase up margin revenue and and XX.X%, $XX.X billion, at was revenue was of XX% year-on-year. revenue of metrics, X%, X Cisco's

line, On the by for cash of was non-GAAP primarily up component to billion, XX% X%. secure We income down fiscal compared billion, delivered $XX.X operating bottom net advanced driven purchases to inventory flow $XX.X supply. payments XXXX,

representing related $XX our and and returned the billion cash a quarterly and was our actions payments approximately of flow, quarters. we $X.X via impact QX allocation comprised dividends. our negative future these repurchases From billion improve perspective, to of supply of shareholders on in $X.X flow. other and repurchases, billion situation free value stock capital these share While XXX% dividends cash had full cash year operating in This cash in helped to a

XXXX, our year flows. the We fiscal capital ongoing our commitment dividend the excess also of increased for stability in and reinforcing our consecutive and our to XXth cash returning confidence our shareholders, in to strength

advantage make while a and financial business through opportunities balance year making shift, a and capitalize driving QX and products to tough is The clearly to and strong competitive expanding continuing innovation environments. overall summarize, our and high investment environment, position strong revenue and we our services growth and To as Our fiscal innovation progress had to sheet demand drive growth we and well significant recurring complex solid the model value. on investment shareholder are a markets. executed continued in in shift for strategic our and addressable more delivering in

to we revenue We growth range guidance to gross margin in the financial of Turning to X%. our range to XX% non-GAAP XX%. to of anticipate X% for expect QX, in be be the

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

For as fiscal our follows. is guidance XXXX,

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

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

Thank Credit you. Suisse. Sami Badri with

ahead. go may You

questions. you. Thank I two had actually Hi.

segments? expectations. through which us walk bit growth in for year maybe just maybe you fiscal could revenue a driving than most your the expectations came what's stronger First of segments and Street thing and the composition the segment my And is could strength is, helpful. potentially on XXXX regarding the maybe productivity just XQ you And may lag question give other of in fiscal stronger be composition of some the some pricing of would gross color that and then XXXX, us margin

Yeah. Thanks, Sami.

about call, forecast of by that As on industry a line. growth little to X% the XXXX, X% you peel is, we most the to of start of bottom balance a what as as on demand, bit X% a care expect, the on you look don't top Retail, quarter, seen, we in services guide the we talked fiscal growth Financial end Chuck surprisingly, Pretty well. fourth bit we've at sector, much you'd strength X% at across nice growth through bit When again, to as that rest pressure. bit the a line, course, given level, pressure for again, back, that little the of different little under the the not but health little vertical. of pressure. of under of have

vertical growth we to at with year-on-year fiscal roll look that sector in enterprise, by that's QX, again, We as had difficult customer XX% So sequential because QX market you good sequentially, are that's both – growth compares saw vertical. we seeing we're a if good XXXX, what ago, the quite into commercial. by double-digit public and kind but of growth, year it

and balanced pretty roll seeing expectation across the our again, into fiscal So XXXX. that's we growth as board

getting price. On benefit the we from gross question, a margin are

gross see talked some that between from up know, put increases saw that the a revenues. in Sami, this what and benefit though, quarters, lag I in is actually we things know, we've that place price there's prior we you showing of both we reported price of XX-K coming One – And the of about, you'll in our for of up course, filings this freight margin costs driven XX-Q and by It's quarter. the from the then, and cost, X%, about and offset higher and in see component in logistics. the end QX, year-on-year our our filing

it. Thank you. Got

Next question, please.

Long with Tim Barclays.

You may go ahead.

you. Thank

quick Just have a case flattish a talked the wanted performance, been here. of few software still quarters maybe lot of business. ones. That's kind carrying Chuck, for to backlog two there. but on ask about on a you One

business of think more talk Thank there. going aggressively there So strong, bit cloud little taken orders to the moving vertical, I any but about know talk model. really still it's maybe bit running did the you I to into And bit want would you get of software a you to little growing? towards could what Can great? the get about just follow-up then this a on strength breadth shipping be is little other a portfolio that X-K you. that strong is highlights that

Thanks, Tim.

software. There's the is software out. So right, that point things let's two with would And I the start you're flattish.

Scott have it backlog, number subscription the and you to want transitioning quarter. QX that's said, We decline, have $X in perpetual the roughly which was model, was QX about it software. said, way of higher our obviously, over also, a it's from been our have our by and software decline down as think perpetual -- we, XX% during perpetual And than software I we design. And software is increase We billion, exiting actually as in in hardware. and to connected is,

why we indicator two situation because ACV are that's contributing factors, ARR had of which the quarter. of is those really exiting we the reflective it's that that's future be so -- thinking an And revenue. basically software about the should So

stuff see once planning that of of it. be the that a supply we've think to some So with what get through chain we're start comfortable more on. And reflective we'll we I been little

continue years close cloud the annually now On to X after three insertions. was That two approaching nothing. pretty is ago, just new to business it we win short billion vertical, or

dependent. And have XX%. so grown supply chain It quarters, revenue job. From fantastic the a last a the it's four perspective, teams over obviously, done is, it's very

about So wrapped get too orders up I revenue the versus right wouldn't the now.

quarters. But five with really we'll we work four the way that overall, I through where over next think are. our pleased to

you. Thank Okay.

Thanks Tim.

please. question, Next

Goldman Rod Sachs. with Hall

go You ahead, sir. may

this to order have are in expected is minus with the strong X% and I up closer numbers would to but inconsistent wanted somewhat Yeah. down you a I for thanks the quarter, wanted growth bit. to have And dig guys, calculated like but million. guys question. the Obviously, come we basis, little saying a out? them we XX% $X way -- Hey there, guess, flat, the year-over-year very I that thing that's would on just then over into inconsistent

just we're quarter was restatement July there whether any So curious the last of year.

growth us that XX% anything called help on discrepancy had that least understand might a out guys our got orders going to or numbers. You follow-up. there And I've got the of order with at dynamics in else these then

Yes, Rod, I who be we down saw thought folks some would XX%.

So it's about of just modeling. trying the demand When to to I think QX, signal. and indicate different we ways find in question, then the thinking business look obviously we were were this we're ways XX%. know that We and of XX% is at the other comparing reality to

just So characteristics. you give those few let a me of

product a it from that's all, it second QX highest in by a was as grew XX%. And sequential actually perspective, only of be with I on year historicals. range a eclipsed history, the would in which our and said, ago, First order basis,

line, in take -- out abnormal year, you which seen range then to it's it's last much was an XX%. in back sequential you the for XX we've if the last the years, very If go what of

a in You third sector and had ever. basis, and growing commercial, all product growing bookings sequentially largest quarter double-digits off again, enterprise, public solid our on sequential

We continued the pipeline. in have also growth

they the exited is going which indicator good growth good if saw would, quarter. our that strength they in stronger three, sales had I is And you we for they they would month the forward. of quarter, tell their beginning we As and forecast we very you we thought -- the thing the than at of QX, as quarter exited a way revised final the pipeline, and the forecasted finished teams

And so was linearity solid.

so customers. would from And signal significant that we demand in indicate shift haven't the just our seen a anything

clear Yes, the change that the It's no too, there in be in only quite on year-on-year. just I that made, add, so not quarter there Rod, thing Chuck the linearity comments was was The would strong. way report the question, exactly to was we your to same. other

the prior fact, linearity quarter week with was in as was In in the and year line and been year same last it year's month-to-month the last prior exactly the actually with had of expectations. size the

end strength QX. of saw So we right the through

Got you.

Okay. bit And kind inventories as I again. where or quarter, come a down I just flow of Do -- inventory? on? are supply just think guys we on the ask follow-up, to inventory you up and shortages curious a in know can and starts I next that inventory ebb quite you given so of moved

in inventory, parts is Rod, constraint, ones aren't our constrained square the set the of we free shipped that that customers. under that sitting up, the get so What's product the door rest out course, as Yes. and are of to the can the

So at sitting is billion year-on-year, $X.X up $X It's growing. about it billion.

the out well. more that the statement are are But of payments customers. everything got our towards and saw. that Both QX, Our hands we to which as of you advanced those up so those it as we've cash sure get of constrained the of we in yes, of the a much end bit square and bit can of as sets flows, parts clear up, we headwind saw a need, it's making little a door a

you. Thank Okay. Great. Appreciate it guys.

right. All

Next question, please.

Thank you. Amit Daryanani from Evercore.

ahead. go may You

about have the well. well? question guide have that when I you are just X% is for or I XXXX. my Yes. as that Thanks question. about thinking EPS maybe think for And of gross embedded margins I fiscal the to X% The in two gross then How as are backdrop? buybacks on margins taking in guide

Yes.

We've added cap no there's policy. there. allocation buyback talked in So our about

both plans buybacks shares that component. that's our opportunistic equity we the have through component systemic an offsetting Our to issued and just share it a

on through margin expectation our year. what's -- the the gross On

guide orders backlog, we'll throughout do, as ship margins of that that year. the actually we that place begin as increases through and to that what full will the don't we year. we for a course, we year, the the price to year be put tailwind we of go But I'd can Of Amit. expectation backlog more work reflect And is, that say my is, out and course, in more last the through

So year. I where and end up quarter as between guide basis going first as would our XX we margins points, the see much

customers amount firm enterprise guide could And seem then, your love are I’d you What seeing they But, fear are follow your looks the changes? any macroenvironment across I or to they to suggest hearing impact there’s a buy of is interest you that, what if that. procure get of you’re your to doesn’t how macroenvironment rates as seeing board, your the print, want in And the really been just signs that spending like from you higher shift as from perspective. any up, related changing? to

we I material enterprise in are shifting good would we've we seen what macro comments we a up. change it's just QX. demand signal that result the -- Yes, say that, into entered significant is change spending immune any as would question. haven't that, My And not a are to in

So are. we that's where

believe, how think have I years believe by a on is about our technology much I it call, that been post ago there. would last than of different I customers pandemic, I nine view lot the seven, talked eight,

crisis, three what I you would the our ask would crisis, is they with if think years. customers spending probably if to a pause last during they a be dealt not going given when we've respond, there

affects they some significantly looking times what time their look ahead from are and products times. shipments seen buying relative we're for general, to around or better of budgets the And in a what in XXXX cases, we to to little and think understand seeing question that, trying ROI, payments trying be your lead like, are some budgets not don't behavior frame. how kinds to because the than different. so, going would any But in us. shorter other customers what In hear are they these that XXXX different so fiscal anything buying to In cases, the looking buy customers a are of difference, to lot they're have about we

nice Perfect. you. Congrats Thank print. on a

Thanks, Amit.

Amit. Thanks,

Amit. Thanks,

Next question?

Marshall Meta Morgan Stanley Investment Research. you. Thank with

go ahead. You may

a couple of me. A Thanks. is Great. for just kind a feel just more the a are lagging of availability, then, for wanted of And of supply on to of of become to done just more that that questions question that how these And Maybe, given increasing just of components of some available? kind starting how get kind edge you is second that much much sense do like the I you've over redesigns Chuck. course you you, of year have maybe, optionality? just result of

your of, kind software does kind strategic of of like, activity? space, a seen, of correction on we've as change lot Just how evaluation, that view Thanks. the

Meta. Thanks,

on. be last in said to pay for of over more call, those to marketplace. were line, those towards space top some become this of We the into it's both think, we combination next on we will time, opportunity took of say, same available happy – the product of of products to earlier, then the on then, of same we we and our that saw were a had will redesigned an to of, customers, And able we which about, higher components, we ship first advantage we get well. the think have good the into and probably shipped and the the I'd one, those. our you high I XX continue increased put will purchases had margins volumes as also that which more have we saw obviously during in begin inventory redesigns think sort -- latter from the the into we've design is will our balance why candidly suppliers volume helpful which I have was At the think So that year, which begin as the the products said And the quarter, going hundreds to we to of excess QX, – network very but we that broker days. two XX

a that's gives to improve during what the it's combination things. continue that And optimism a little of things bit of So year. us of will those both

exits if might the question, few valuations, thought our they this openness changed, to strategic hasn't – second been changed. I've the and to have I've had on times, changed the strategy that the M&A that, a of asked, one the from us I've And some has the but our valuations. talk On strategy had said different because of companies

view And that now. the a changed growth. And because have with that, profitability haven't think that on IPO, our just of different not might us much they so them we creates market the We is potentially more thought believe is case opportunity companies been taking they it there willing strategy. ahead high-flying right may for obviously a not just was versus

Perfect. Thank you.

Thanks, Chuck.

Next question, please.

America Tal you. Liani with of Securities. Thank Bank

ahead. You may go

a in backlog, the the to backlog growth trying Hi, the and about distinguish asked on which of spending guys. next year, probably between supplies between touching started high better I'm function is you enterprise. very environment, when and it we

was look maybe take if few where environment various, I or slowdown theaters close us and through the deteriorates cloud not? good can can trying actually it whether or you you we you you if you use long expectations as the quarters? all, good, quarter, question cetera. et security? was second before is me your expand the how through I'm have see in go versus see Can a and the of touch environment. to environment if about coal a security. to which on deals let just through when the the takes and improvement for touch you question, it or again. you and enterprise, not there your spending And call, into on what and areas maybe next It service better, it providers Security you understand, the at When your throughout much go today, are So position

Thanks, Great. Tal.

FY to is has So our the that, availability us connected much for backlog have as we're Scott XXXX. component exiting necessarily fiscal byproduct models than we current it on I think XXXX that, a it entering tell year revenue But same with you is – XXXX touched roughly will more would the I fiscal demand. of

different that small and look the as – in at growth so we you've you segments then business had QX. And described,

sign on is digits commercial global And double it, a we was it that's then basis, think dissect to that a a which I grow. ago. when continuing good grew year XX%

double the in mid-XXs So in year. sequentially last was digits, Enterprise up

then growing a says lot we Those quarter just exited digits. signs the in us. for as there's that, growth good still high seen sequentially are pipeline double the that, we've And So, out there.

for think And team in they and our -- they just we ask as them seem optimistic the around and had me the things conversations Asia to taking go so to we right as with be now, see reasonably into continue continue week are Americas. this regions, you Europe, to the and to consideration as we're modeling we I

consistent was Scott? And a pretty story. it so

Yeah. absolutely for Probably you at the is add that look thing as constrained. is forecasted I'd now supply XXXX, that only fiscal X% growth to we've X% it

constrained. So we supply mean not and going just doesn't a there closed, more fiscal We're it quickly. demand fiscal quarter We're easing. while Easing in few our the areas over. have would case constrained we to situation throughout XXXX be constraints It's that a those, were we demand. it's XXXX. supply not just were saw late for fourth We in were not some supply growing much of

when your answer about providers the the expect cloud, to as environment? answer of as in enterprise, service for comes now change of And it a much meaning you the and same don't

of No, I've with we I times, provider service tell that you long talked before. the of doing a don't long-term is see would process planning anything. lead we that the What because them about about business started

have our to right bookings show those. shipment would that window billion, of actually And now, because they don't outside approaching they're standard $X.X so deferred we when like get anywhere up that

that because we've quarters So done. we've them all non-cancelable from are the orders that now from got contracts out of

of that we we've scale good take we And those first these talked that that about. advantage continue think continue of feel one will higher can customers We spend XXX-gig just them to web we to system trends see about players, So our that momentum. to of the shipped in speed all platforms. the given

Greta. you. Thank

about Tal, you also asked Now, security?

Yes, I did.

had backlog to Scott his -- we honest, the So good mentioned -- this on some be really growth think and in saw we I some movement, firewall side.

that a business. strengthened on strength And area continuing But we the innovation it continuing this evolve really drive, our one from we're to We a quarter number business. as also for described had So the we've our endpoint to is there in year, and -- had Trust portfolio greater that and had -- strategically. investment shipments I company perspective. Zero firewall is we solid think, we're

boost firewall space. see to did this So But clearing quarter some we'll just from I the think backlog in improvement. continue a us get

you. Thank

Thanks.

Tal. Thanks

question. Next

JPMorgan. Samik Chatterjee with

ahead. go may You

taking the on you dive trends. seem the bit it to leading of now, related for congrats into a orders the seeing the at to Thanks of you've and or into does around about But look my execution SMB like order bit guess, you're the Hi. enterprise a And being historically, volatility enterprise commercial quarter. commercial when I bit good indicator right a more a trends segment. a here. wanted numbers this talked questions, more order I

just help one I thinking collaboration us so like of seeing about can in. group anything there And in a you see collaboration there's And we're terms to a if and wanted trends there? is that results seems second turnaround very it the tough

So here think collaboration? we how should growth sustainability about the of for

Yeah, as the small on Samik, strong, just I ago. -- you. moment spoke comment a thank again I'll about business was

at against have double-digits, in very up it's we which us these to ago. commercial large year-over-year quarter sequentially, a abnormal the which comparisons both quarter, both the for other really ways is a and why to when I important they're looked think enterprise, find strength, assess sequential you growth. And

should And that for the they're so had after we're grow commercial now a at we ago quite actually that to growth right was Candidly, they all positive. comfortable be. year moving extreme as

I it in the last that that favorably ago, at that they highest So probably years. actually in growth was or we've given forever least had view the showed space strength rate XX a year the in

I see any as earlier. overall, significant demand I think sort So we don't shift, said of

business -- did clear front, the in a little the like I backlog. had minutes a the We ago. it's of On gave few we collab message bit a lot that a device security

Score side. portfolio us in Those really quarters. The past our The good X was The been for XX and million on say teams is was calling the are Scott his said and platform offset meetings the some few strong. and as we product meetings largely now hard I driven growth, the in and device the been Net But declines business So is customer responses. had will that have calling. really by for has calling that the opening comments, in shape. working meetings in Promoter strong by side

teams lot improved really hugely And to to a trying a we've this growth. it's on back work experience. of -- year, to do. focused huge a that it's But So get are the got

you. for taking questions. Yes. my Thanks Thank

Next question, please.

Ittai Oppenheimer. from Kidron

You may go ahead.

doesn’t changes make in want could down understand It take sound talk correct? I products? just supply Is the are any be like what that your me. prices the you pricing, actually from price of you’re couple pricing. I availability, components. first Maybe A component on a maybe sure in changes for to will about and Thanks. of you that the chain. there assuming odds change And if your expectations

forecast network. have From you in QX quarters. margins. a I'll just way that if jump of that when reflected been some And standpoint, saw that's that those. chasing late in in, improvement. QX. Ittai, Chuck, The parts And And of the in stability for that. actually start, broker last the during of gross do we and we did been to availability improvement up of signs some you look in you most we fluid the closed, our And see ahead, the buy I the the premium from several as was area -- network, over component obviously, want This that as a the broker let's Yes. we we constrained availability said, pay you showed see

I that think in there'll still be some of QX.

from not not in guide price better our You margin year -- assuming declines the goes see then any any that because declines QX. cost coming or gets gross as reflected on, it our And in I'm suppliers.

back comes I going There benefit back and say, charge see to logistics. news, I up come in Chuck. component We're don't airlift think parts. to Scott freight the be the hey, as you commercial see, less for -- some may lining online. good them and We'll and

are year. the that shipping get out will I did orders be more more the after from we increases our backlog were we'll much benefits that price received of think last

the are on embedded volume fiscal in what XXXX So as guidance, guidance? there? underlying assumption fiscal to regarding fiscal about is How expecting be availability XXXX? What's I exiting think better you component much your year, your it

supply that be guidance the assumes Yes. Again, constrained to continue year. our we through

XXXX. said, more would could quickly we if we I fiscal more in be supply, get As growing

be So we'll constrained. to continue supply

but obviously, not Our XXXX, same Chuck from value earlier, modeling this the we roll shows unchanged we on that that touched dollar our backlog, dollar as the value, into the dollar it's roughly the XXXX with. is value fiscal exit we orders, fiscal think

component think the availability headwinds we'll face continue year. to throughout So I

your X% order expect in guidance? line to to exceed X% XXXX you top growth fiscal Would your

Yes. We as don't know, forecast growth, order you Ittai.

at So that's to this jump not want I point. that into one

-- demand I look key the at be, think would takeaway the constrained, XXXX. probably we're you supply as not We're constrained.

Okay. Thank you.

Ittai. Thanks,

Thanks, Ittai.

Next question?

Paul Cowen. Silverstein with

ahead. go Your may

know my are on questions Chuck. one responses, picture big anyway, margins. ask I touched there want you to you. questions, Thank have previous I been on one and But comments on revenue,

from And the your The course but side, you to comments that, going aware, talked from supply 'XXs? you is the on and perspective, in by the it’s business, let networking, previous can bubble. let like you a I competitive in peers a both constraints, it sure want what strength still the to core an your but making know wireline respond the what which respond. your are And comments in about got calls, on sense, clearly that, and question competitive But that a discern campus it's I've what’s looks you've first one, Any it in your switching guys think, of enterprise networking in enterprise you is late do, competitors, thoughts share wrongly, of shape then on come I the on about been seeing of I demand up campus got And created rightly there's to the bubble particular, wireless was want since order but hard best to on or I'm I you -- landscape from all it's margins. pressures. you a LAN standpoint. in you're its

Okay.

market of QX sitting XXXX history the of share think, right backlog. I Cat is to largest First thing believe product. your second of in because now, in all, assess the that shipment do to the I quarter point, everything the difficult was very a

work come trending look we through But just exactly we'll got see we redesigning it, I'm share at mass what competitor market significantly. would And indicate you'll numbers to our been We've or be over to telling products telling because will clear work in backlog some that and that that as a point a time market right think So you strong. but I that you as to have my you ship flip continue know. that through we now. it's I pretty to as never we've backlog out. share not begin is time share it, backlog, that would some going opposed quarter And you to actually frame clear encourage our

watch So over you just something it's to time. got

clearly, I'm mean, And have not the in -- so, I we campus. competition

I strong very always We we're have. the don't that feel have volume products share. given of significant like -- we're shipping we but now, losing And right competition, the

you I into pre-pandemic it back probably pricing long-term the normalizes. increase or where freight, – which that product to seeing. get margin other were price want run that cetera, were, of right. on and they all and sure not supply margin the semis be to is, will input the from gross mix just levels to assume levels, record push and semi assume you pandemic flip near out. some technology costs, got able model were that, where When to once Okay. thoughts chain all help also off, with and increases. picture not also hotter seems everyone freight And spikes. in I weakness that seeing record construct not back first see you go I've let to Cisco, and networking networking can perspective, in particular, back networking can Any there a a the in cetera, before in on with operating And was once that et going their the that, costs the the but the IC enterprise canary general, to it, et that are to markets though going are at see get input where coal networks macro others big real upon is thing time, I actually to I side, mine. will carriers, was offset you downturn, guys question the your a make But you'll easiest the was logistics where

me Let you respond. let

Yeah.

Scott, me the take the of then, – first. networking margin let question. can the networking And the you resilience So take market

to the I've I speed. Number to said and what's the of them struggled, one, Customers made pandemic keeping get what up are – don't tech I had think dealt there again. Paul, position debt core driven with. I it a And realize technology So things. this needed think impact in is of not two revealed you're that think And they the repeatedly, they this that to infrastructure want right. that be lot your

exploding. We first are with see deal But second is that's these opening all cloud mean, workers. IoT So to customers of of comments, time the their re-architecting my entire mobile I thing. mentioned in with, I in to and mega the first that thing for the these the all hybrid trends infrastructure deal years

You industrial climate activity our to these see, is to all all tailwind to of business, control the be to to going connect a have systems, because you able be them.

over gig a XXX% year-over-year You've gig. up now mean, let give XXX bought gig XXX I me shipped have I'll got to X,XXX we just data we're shift you XXX almost – and customers We've for point, gig. that ports to XXX us. our first got

you continue, trends got WiFi-X. got you've these all – just XG, it's So

re-architecture got this observability, application of the applications. You've

mega combination So letting get never to around going you take I to do want realization and question? margin and think of then the technology are gross debt Scott, that it's brought a the trends on And them that point pandemic the these of on.

Yeah.

nailed message I that day happening. around the on I input that the from of Paul, down. office the I price margin is to the you suppliers forward expect to semis question, going to good and your look just Price come I come think, news, trends. offset see part don't it. costs, I a gross semiconductor I our think will there's saying, hey, down. particularly don't

that too. got part right, you think I

that probably I you other the thinking, would think I thing in add didn't will. your so I it, say but the – only

the tailwind longer be more in, mix line. term, we software gross that margin as a Over at the will

you've it So I your got and think that just to nailed. add thinking,

can Scott, record back to you go that level?

I the right at don't into longer want that granularity forecasting now, of term get level to Paul.

guys. Thanks, appreciate. I

Okay.

Paul. Thanks,

Next question.

Ben Bollin Research. with Cleveland

ahead. may You go

Good afternoon, question. for Thanks everyone. the taking

exiting at one, backlog sustain current first XXXX. fiscal talked levels you The about expected to

software was finish you billion the was what backlog the the quarter, backlog? Where of said in north again think I quarter? $X product but did that

up was that's And did didn't We what Ben, stat start want quarter. every say tell on one headwind giving is, The backlog, software that a actually overall is basis. not Yeah. grew I growth I'll up that about. give digits $X triple again. the north of again backlog it significant it's pretty we it we is and year-on-year well that what you talked to to software a our billion qualitatively

think outperform longer software guide shift rev line metrics to you How of those RPO. Okay. consistently for you the guess, should the not you the for is asking concept I'm broader when X% I for about think precursor a year, about And growth? as that's item. forecast RPO then one RPO term? that your the But assumption top the other to do one. on in a X% for asking more relationship to two

going on Yeah. couple There's of a dynamics in RPO.

obviously, RPO by in So say, on right, a varies but as effect line. well, you're duration bit general, an product has I'd it

growth app we high RPO announced We the just in Agile for single-digit optimized future. that RPO we say course, secure is Internet Networks, an in and growth. the RPO there, collab forgot. product So an growth security, for from the the had headwind had X% of experiences standpoint. And in double-digit quarter, I'd product almost

on we to RPO the sales So turn I as from continue. longer product term, And will of those of that go-to-market side a being headwind more the around growth. think collab, dynamics flip tailwind a expect and to you'd

Scott. Thanks

Okay.

for We more one have time question.

Simon Leopold James. Raymond from

You sir. ahead, may go

one and term. of for I've one longer question. Thanks taking short got term sort the

some a you. of into might to the if out Cisco not term, are and see about a I meeting of not factor in short-term up get by the to something happening the longer Todd particular door no And longer made And how implications org statement? that and to or chart. comment that's heard had way maybe a that we some have a to multi-product the projects the I around whether for that's constraints. some of Chuck, can And sense the numbers. the get have the supply managing wanted Nightingale work some that Thank chain elaborate split On on of been you projects because side, to bottlenecks anecdotes want that might in terms what you as

So question, understand. short-term could to Simon, I you quite is me for on clarify the if I ask didn't

customers, You're the or customers we we're saying up or orders making that or question? was what decision, exactly breaking asking are are that

Yeah.

substantive these get and So, and anecdotes, essentially components to is? understand I'm larger buying it projects I've but me not break I'm multitude I'll get. a of the trying XXX% it's apart to saying, where asking let's not some other from heard they're think I sure, how wait you stuff customers elsewhere. for components Ship Cisco as the you can't what can,

discussion really drive could is time. But about need part to what I ROI and then here's to need wouldn't here's really a I come guy need, to it surprise if have about okay sure. are need great and customer in falling it we been any good heard particular they a not mean, what everything waiting have split -- up for. they're for tell tomorrow. I that tell you, try actually that I could Yeah. and with but I we of you are if some project by telling get I'll topic, on it, was this constructive would really doing going I I we part me. had I being not I get, you I backlog the I'm that what this what tell saying, seeing, us They've are customers us desperately look, what

I what time. this need Here's

working been what that through customers may we've heard. that of and so with And a a be variation lot you've

that that's can think of. thing only So I the

about. want as-a-service the started technology talked intelligence. number team in and Secure security of of a between we AppDynamics about on managed includes together It for comment he's chart, unit to that combinations Like will is between at comment couple Connects we think that SD-WAN don't shipping Cisco a be networking from org plus huge give we but I'll talking our Live this brought is integration we Todd security actually team the ship a those flow that the On `cross-business delivering. on what org And our enterprise will There's technology two. from customers. chart. were you I examples, the cloud the offer going ThousandEyes and bidirectional

exact that with of security AppDynamics got the You've aspects Talos reason. the doing thing for other same portfolio and

on private that Jonathan do of before -- services through lot his with Todd Jonathan's got doing build You've and team XG own, was portfolio there was we Todd around all how of the took XG a private those. combination work a of and had

So that's what talking is about. Todd

I the done the what about. teams way have built. of that's customer is and a think job he's talking needs what org building the good chart the from And not really with leading

Great. Thanks clarification. that for

Okay.

Thanks, Simon.

Well, all. All you thank right. Good.

anything environment, dynamic want to have we did just proud Before and -- closing demand, come know very you shown way really great compares, really a and a we worked see together so at achieved. tough have the really a of I'm we of few But make give right I to have want what we'll we hard I the execution looking and and We change next different great you first back our teams to solid. if focus. say, to the call. obviously we'll when demand remains try teams in just comments. now, let It's wrap,

and we're what of technology model I customers purpose. achieved, and is how you around by continue our appreciate team will give ease really our encouraged rallied their teams to proud transition I do our to how also strategy. what the us, hopefully, supply seeing we're the think throughout business year. The predictability. helping I'm more supply, that value understand brings also And that have and chain visibility really has

employees a a their couple Just This number another record a of given comments. record, communities. into set we of were who high back year,

targets and by its near-term the Zero initiative were Net Net target under by approved Zero targets just Our standard. science-based XXXX

our we're building committed to but So goals. goals, meet helps own that our own only technology their also not customers

day, Lastly, competition important trying now you. for the new the difference given really with the time of today. makes I countries will positioned Great one of in us than and to but for and world. more I and thank when into all world, I named talent want super Place ever, is that, talent on a us really hire organization. the around we've be Work spending proud make to it any this we're Thank for well been around number It long-term think And you to does the XX we're resilient growth, right

Chuck. Thanks,

call. So I'll is and p.m. the concludes reflect November earnings call, on call. will quarterly year first XX, XXXX today's XXXX go Wednesday, ahead Cisco X:XX fiscal quarter which Eastern This out our X:XX be next at Time, results, close Pacific will p.m. Time. the

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

call. for today's conference you on Thank participating

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

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

disconnect time. at this may You