Cisco Systems (CSCO) 14 Aug 242024 Q4 Earnings call transcript

Welcome to Cisco's Fourth Quarter and Fiscal Year 2024 Financial Results Conference Call. At the request of Cisco, today's conference is being recorded. [Operator Instructions]

Now I would like to introduce Sami Badri, Head of Investor Relations. Sir, you may begin.

Cisco's Investor Badri, Sami is Head Relations. of This Robbins, CEO; and I'm joined Herren, and Chuck by And Scott Chair our CFO. should By you have earnings our now, press seen release. on supplemental webcast following section will slides, corresponding call. in including A be Investor with the available our Relations website the information,

will statements found Investor full statements, and non-GAAP and will product call we comparisons results, in conference in and financial Information of in our All terms we'll flow the this of website. results GAAP customer non-GAAP financial be discuss on Throughout information of call, balance orders terms geographic otherwise. sheets, throughout reconciliation product Financial unless referencing a stated Income other information, revenue can Relations this year-over-year and made to cash GAAP both and be also be section results basis.

The including those statements, uncertainties first XXXX. include risks to matters the for statements. discussing and filed the and guidance They full with XX-K will most we in report the to the today in recent detail providing fiscal the actual factors materially specifically forward-looking could we discuss SEC, Forms year subject quarter results differ from documents important be the forward-looking be are that cause which on we'll and that identify XX-Q, our risk contained in

the financial during call accompany respect details. With guidance and an slides unless Cisco on to explicit guidance, done please for through further this its disclosure. not the release that it also press public see will is comment quarter

turn Chuck. over to now will it I

growth strong and in close of and annualized the $XX.X recurring coming remaining 'XX, obligations subscription all our for the in with revenue. end joining above Thanks, revenue, in revenue year today. billion guidance fourth Sami, had for delivering us you fiscal coupled the billion range, and a quarter, We performance for $XX.X to high in revenue thank

generated by excellent Splunk. boosted also We margins

XX the Our for Cisco was gross margin highest in years. of XX.X%

product our Hypershield digestion total as We've that critical XX% with being growth year key largely as inventory closed us now and also Splunk, demand is we steady order saw HyperFabric of investing by X growth X% customers the in areas outstanding for expected. with innovation been of AI and to accelerate We indicating examples. period we behind excluding of the

With believe unmatched Splunk to Cisco, now to of network market-leading power for have security the we and an of part full deliver capability value we customers. even with solutions our observability greater unlock the

to together, ground running Splunk powerful We brought since realize early teams Cisco new and the have and solutions hit integrating the synergies. beginning we've customer

our portfolio. Jeetu with together to and Officer power differentiator that competitive security group earlier be our Patel an bringing we'll Product networking, role into collaboration stepping the as biggest is of why Chief our expanded full as this effective one today, teams know announced We immediately. This lead we is that organization

a to more we complete entire new at team. also full will of together positioning integrate into integrated for our into portfolio one the bringing organization will Splunk customers. powerful deliver organization, Splunk in line new than our come With products right before, As time, integration outcomes product as incredibly the our this Cisco, this ever together us way product the

to in we and both execution laser-focused allow key our key we as cybersecurity. invest consistent win invest remain opportunities ahead, and AI, a in focus more growth drive in announced as restructuring today, areas, business. we growth well priority to as to Looking on us these cloud efficiency on To plan

high end non-GAAP leverage solid coming resulting our the quarter. once per fourth our the some drove We QX earnings guidance across expectations, of range. Now revenue guidance above margins let also our details business me of again delivered on coming with share of in operating the our high high in performance range. share above end in our end above Strong

continue solid remaining showed quarter. made revenue, revenue and performance We growth and up all subscriptions obligations focus recurring on subscription recurring the revenue our growth, in Annualized in streams. XX% revenue to of our

commitment returned our deliver shareholders returns. We of the $X.X returned consistent In on value also or repurchases dividends, QX, 'XX to total flow. we $XX.X in to billion our billion through cash cash fiscal capital and to in free in continued value to bringing share XXX%

$XXX to operations the with strength modernize strength in breadth leveraging quarter and federal customer APJC. in double-digit applications. steady and We EMEA returned stronger saw of in our the This million-plus performance spending AI product global several APJC. earlier, transactions demand was in network In and technology signed order we are demand the who the to geographies terms quarter customer Americas their mentioned and Enterprise growth despite enterprises resulted the U.S. Public and all sector persistent and with in markets in particularly learning in next-generation in worldwide, of strength macro even driven platforms machine demand, and QX. automate by as in demand all across uncertainty. I strong results solid deploy

with we I'd our AI-powered their with the the to company and chain in automate like like and of efforts one global largest a in creating the switching, customer across routing, robotics visibility. innovations security world's observability unmatched flexible, Cisco's most will supply leading cutting-edge platforms network logistics to and logistics signed highlight intelligent technology deals operations efficient quarter enable network. advance to

We posture their major our modernize need resiliency and customers' their building They quarter. entire digital agility of first our transforming that aspect environments. every harness while includes automotive is a infrastructure, agreement AI and their with the across power and footprint. company also cybersecurity all to data IT of improve this signed cross-portfolio full in AI Splunk

to to and be very Cisco, we customers Our their their in are continue positioned era. well put partner strategic this for trust

amid their by and provider, BXB AI service we driven continued cable monetize them demand In overall strength and by industry-wide in customer while pressure, networks providers EMEA service remained offerings. to help saw autonomous our muted investment in operations telco

terms demand with encouraged and stabilization signs also are double-digit performance webscale of in growth. pipeline order in to We see of improved and

some To through data our me demand provide color, incremental of products. share let lens on some the

grew product digits. order X wireless networking also orders And and grew orders their greater orders switching Excluding wireless with data up digits. customers office than as more XX% were environments. Splunk, growth. product our to security campus switching double product double-digit strong also enterprise center look saw million, routing, year-over-year orders Collaboration In double than portfolio, enhance

on results strengthening technology top Across product the customer breadth investments. next customers demonstrate priority global their our of our as base, portfolio and demand focused our order

continue to focus technology they Cisco prioritize While product to order ruthlessly look customers investments, on our continue customers demonstrate as most important to initiatives. our their that results their

product in truly network. more We with Cisco's growth built double-digit of threats, fall. protect comprehensive, as the it We've furthers from for look Cisco to saw our extremely observability fabric Splunk, forward at solutions, end-to-end positive solution digital look easier the vision cybersecurity available making the into AI-native the first Hypershield, industry's in security with technologies. look revenue detail. customers for in which growth distributed enhance to unified to Cloud, resilience most categories Hypershield this turning and evolving against it Security our feedback our their customers to making we platform Now excluding expected deliver is customers the early and had with access year-over-year, to to

the services breach. XXX and solutions, the Cisco added Black we QX. Splunk full emergency Access, this Splunk customers gain the Early at suite new new Hat of in we And of for, month, Our to Enterprise for XDR XDR integration in proactive the quarter, availability Secure and earlier are to XDR continuing Security. Incident to cybersecurity the strong of customers, security a prepare announced and respond over with traction. conference to from access announced Response Talos recover enabling help We

infrastructure the multibillion-dollar We capitalize also continue to on AI opportunity.

$X designs webscale date customers billion the of X fabric, with orders in leveraging crossed AI AI AI to deploying with for hyperscalers Cisco-validated now have X our Ethernet top infrastructure. We

of billion $X 'XX. product AI additional an year expect fiscal orders in We

at Day As multiple in are AI. June, several momentum Investor of this fueled is use which production the in being by our in I hyperscalers, with cases shared

X/X we with have wins multiple AI. addition, these In in design roughly of

the well webscale AI beneficiary the positioned the to above be in and believe we proliferation we enterprise. AI of opportunity, are key Over application

our applications. and models generative for HyperFabric from fiscal deployment with will year. guide a users enterprise cluster build created to later Our becomes it inference solution validate assurance NVIDIA AI when to monitoring helps on-premise run to customers AI The this and design solution infrastructure available

our also enhancing customer and AI We productivity by own in services are our organization. using experience

framework requests. We our have automation robust and of XX% that a touches AI at least service

our In our so customers and AI Assistants products to efficient that partners have access are support. options addition, we incorporating into

strong on to it to I close teams our to In and hard Before growing dynamic their Scott, this we're execution know a be a drive and pleased to We while we markets all relentless the in year out fiscal believe to we take over closing, serve. environment, in I successful performance focus work with their our our as result hand want to profitability growth for have customers. the thank we in moment XXXX. strong we enter will

on over detail I'll and now more our turn to the quarter Scott provide outlook. it to

summary I'll guidance. results year cover our followed financial quarter, our Chuck. by Thanks, a start of the then the with fiscal for full

orders to normal. execution solid with strength and margins results to QX as buying Our patterns in strong reflect return begin customer

$XXX from of quarter million was offset Non-GAAP for Splunk. range impact $XX.X high fourth our guidance total ever fiscal the comparing expectations. in than the was quarter. on at strongest XX% at impact down line quarter, effect interest our was negative For $X.XX revenue above revenue billion. a acquisition in net the Splunk the of year-over-year, financing for our earnings billion, positive contributed quarter, $X.XX. with income operating share of earnings of end 'XX. net range per Non-GAAP non-GAAP The Splunk above quarter approximately impact the our was end against per of guidance the more the $X.X The the share high in

revenue our Security final Looking Networking, of down QX benefit compared XX% Total from shipments in revenue category, from we issues. the inventory down services our through when networking product up customer billion, which $X.X was was XX%, revenue up as backlog. moved detail. our of product the benefited XX% near-record more X%. was including revenues, largest at to $X.X And quarter QX Splunk. 'XX was billion, excess

in and observability X%, double-digit and in growth security. was was our declines Collaboration by Excluding in network suite, driven and Observability growth services. meetings up offerings, calling Splunk devices. growth offering network flat, cloud offset our and ThousandEyes Splunk, observability security SASE XX%, wins in in growth grew by by driven our by competitive and CPaaS driven

for the Excluding Splunk, XX% grew quarter. observability

strong XX%. growth Looking Without Without quarter our billion, Splunk, contribution ARR the product drove continued at increased which our from also ARR due to and factors performance $XX.X of Splunk. was recurring These metrics. XX% ended ARR at revenue. $XX.X was was Splunk, total product $X.X subscription now increased X%. up Cisco's and of revenue. XX% ARR Cisco's X%, which Total revenue to XX% billion, representing up total total revenue represents X%, subscription billion, up of XX%

up Without software XX% software declines subscription total our was of subscription-based software was move in revenue software due revenue at up arrangements. billion we software was more Splunk, $X.X software down to license as XX%. Total XX% X% perpetual revenue revenue to subscription-based. with

up was revenue subscription Software X%.

Total Without Splunk, billion, RPO to Total RPO up XX%. and billion, Splunk. product at grew the was grew was with performance addition short-term was due RPO $XX.X organic X% both XX%. strong $XX.X RPO up Product RPO XX% also X%. of up

QX said, orders year-over-year. XX% Chuck product were As up

were customers largely indicating the Splunk, digestion X% us. period Excluding by year-over-year, our product behind inventory of orders now is up

our APJC up was geographic and provider and up product up sector our up was was XX%, was markets, across service up at customer XX% was was enterprise year-over-year. segments and cloud up Americas Looking XX%. orders In XX%, our XX%. EMEA X%. public

the came margin Total gross range. up non-GAAP guidance gross and at basis points exceeding year-over-year mix, our by came points, offset basis of XX.X%. was driven in high XX.X%, XX.X%, basis Splunk margin the of XX.X%, our points. XXX end up XXX Services Product end XXX favorable margin margin largely guidance at price. Non-GAAP gross high and product up operating was range at by in

returned cash of and Consistent billion of Shifting for dividend our of share We repurchases. share $X.X $X.X capital to to repurchases we billion. comprised conditions the to quarter. allocation our the flow of Operating shareholders billion. quarterly balance during investments sheet. cash advantage our billion equivalents cash, with $XX.X billion market We with increase and was total ended $X.X QX $X.X cash strategy, took

was all-time fiscal of strong operating compared made including increased strongest guidance year year. March X% Turning acquisition Splunk $X.XX of Revenue full close the range, $XX $XX.X on 'XX, financing high of Splunk benefited dilutive the impact per in We leverage. approximately fiscal of $X.XX, fiscal in after of and full Non-GAAP contributed second record billion delivered which margins the at to our share billion earnings in $X.X backlog. our 'XX revenues exceeding Cisco's year as the the from shipments significant earnings, to costs. heightened this end to was of year-over-year. down revenue year. the high billion

recurring for up of terms X%. the at software year metrics, the full billion with In was $XX.X X% portion our total also revenue up product

Software Without XX%. $XX.X of revenue XX%. subscription revenue revenue subscription total XX% billion, revenue an Without Splunk, was Total was software increase up subscription-based. revenue up was total was up software total of Splunk, was subscription X%. X%.

the As total gross highest up Chuck XXX and non-GAAP in XX.X%, XX mentioned, was years. basis margin points

line, On billion. $XX.X bottom non-GAAP net was billion. was Operating the flow $XX.X income cash

fiscal was impacted compared reminder, payments a timing 'XX. large tax in to flow 'XX fiscal the As cash by of

dividends comprised shareholders share increased our in billion stability XXth cash dividends consecutive cash and was of through in the the fiscal year dividend the $X.X our $XX.X confidence for billion We share In It we year, $X.X to in value of quarterly flows. repurchases. cash reinforcing and in of ongoing 'XX, strength our repurchases. and returned billion

in product realigning shipments. ahead. order capture improving levels summarize, as fiscal we opportunities customers as of to Chuck are year. executed Cisco QX To the the We better completed Further, year and implementation mentioned, the record the exited with largely we our expenses well

plan, pretax global to impact charges total X% billion. As restructuring of $X up estimated part to our our expect we workforce of of announced approximately with

to Turning financial guidance. our

We billion to the in non-GAAP QX, our $XX.XX from revenue is rate billion. XX%. per range QX, And to margin is be be a $XX.XX tax fiscal to of Non-GAAP in the be as the approximately range $X.XX Non-GAAP expect non-GAAP range in XX% For anticipate XX%. to of margin of to share operating XX%. $X.XX. to we're follows: gross expected of effective XX% in expected guidance assuming We earnings is to range to the

$XX 'XX, billion. assuming in XX%. share the $XX.X be For tax $X.XX, and our rate range effective to as billion We follows: we're fiscal year from per range Non-GAAP earnings approximately to is of non-GAAP expected of guidance to revenue expect to is $X.XX a

Q&A. move now let's into Sami, the

Thank queue? we first analyst in you, Instructions] the [Operator the move can to Scott. Operator,

Marshall with Meta Stanley. is caller first Our Morgan

any in digestion Chuck, I of you're just wanted customers. period. But of what terms of to you prioritization maybe start budget they're seeing with a from terms out Clearly, in just sense coming full then balance or they're maybe to different for Scott, initiatives, 'XX the embedded balancing in clarification. trying Just how of risk enterprise particularly second just AI initiatives. fiscal the any is And guidance?

if I a would just XX%. and X%, show numbers All SP going plus X%. I'm about you the go if Thanks, side, world and it Meta. balanced. to say on Yes, look perspective, Americas plus across talk Europe plus enterprise was a very geographic bit up was the Asia quickly. portfolio, these demand and X%, up excluding from was are The little segments real public around I the cloud sector Splunk, and X%, was then

we the portfolio, a across pretty so saw technology incredibly was balanced. it there. But And balanced strength

wireless double-digit in we and double-digit to security, it's networking remarks transactions switching And the enterprise alone year-over-year. businesses both said, the had up So his switching and again, the single -- business important high collaboration. were XX% Scott then think I growth enterprise growth, million was space, in And of digits, in routing as in the digits. the number in enterprise I out point we up $X was the saw wireless the and that up business double think

super So across portfolio. saw demand the we balanced

this taking haven't they're customers spend preparation one to aside actually that are the enterprise I say the before AI heard AI. And in actually set on heard quarter now their order first of would for we some customers they've for infrastructure that dollars -- we infrastructure that in upgrading The cases, time in thing that that. their for it modernizing to for ready some get is

that cross-portfolio Cisco of saw cetera. we that enable visibility, these chain looking the logistics to we you AI-powered some and The solution, with bought the platform, And company platforms, in examples et large that have sales. they're whole the robotics, AI-powered supply gave platform actually

applications. deploying, actually they know not but beginning need to they full to for customers many they the we're we see of though ready. they range So be in may prepare think what know cases, be AI Even will

saw. kind of we that's what So

I your And to embedded risk Meta, question you full fiscal want Did the I guidance? say make 'XX got second sure right. in

guidance. Just the embedded, layoffs that are the fully the in X% were announced, just fiscal whether that 'XX savings is the from cut embedded

in about to of is. about. It's little place And good explain bit it detail Yes, more kind savings. not it's what a action cost that a is

efficiencies that it's the are is and into more last much yes, the the more finding fastest resources, across year, answer pivot like AI, the within it's much areas more embedded more so in the company, into pivoting did But more into guide. growth can about cloud pivoting which company we we So into pivoting cybersecurity.

cost reallocating it as of being think into more guidance. pursuit So in savings. yes, it's built versus the all But of

would hundreds AI We and into Meta, of shifting silicon of into add for just are I into that. millions on AI, cyber. actually cloud, AI infrastructure, Yes, dollars networking

a feel is to that. meaningful But like we we have shift. so the do it's So market quickly, moving

BofA with Liani Tal Securities.

on in be ahead there timing restructuring? is So the environment the year? makes environment anything learn I'm what that a to thunder, ask the a and stole The restructuring I what restructuring. you timing all correlation want with always company major of view cycles orders little here, that there wondering expected a can Is growing, drives a to it and good cautious? And from anyway. announcing you're Is one question of between hand, my a improving business last on is the there of anything bit more restructuring. your On that this fronts you still but given is we see X%

I'm ahead. Let sorry. Go me --

question second On finally improving. purchasing or what performance, It's my with of behavior there any Have any seen we've CrowdStrike? change you any Was quick a customers among together. because ask just with what security, in one. happened seen implication of dynamics I'll great CrowdStrike? different

Thanks, Tal.

a bit security on a restructuring. just about I'll me Scott, talk Then little Let back. And the make the you can question comment it. then take

So broad-based markets out It rapidly nothing across is in had resources moving to demand areas. there. consistent. ensuring able we very most shift was restructuring, there's we're serve We about that It answer was to else very the is on the into important the no, and really that it portfolio. tremendous the the that

it. really to that's add? So anything Scott,

and Tal, what take be as those continues this way we'll us at is that AI, already just we cloud spaces. on fastest-growing front and Investor networking it's a continue continuation that We talked pivoted seen important R&D to support of the of we the as them into into for having look looking those areas, space into X little cybersecurity. our than spend R&D you've and across well. But really to incredibly can in Day do. allocate efficiencies more company the resources us, every XX% about a to so Obviously,

it for highest seen discipline always we closed. financial -- on the of the it line us. from that challenging the at I we in just look revenue, the Obviously, and you've a think top history the margin yet it's you as think reported operating year company. just was the more of of year I just mean

for. I financial is think So us that you've of known the just more discipline this

year, And if I security what that to said, the then would real like the digits improvement question, back what think had start we're of I what -- the we second single you in on QX. 'XX. double felt were fiscal back an of we're in and I digits QX, high happened that. feeling in about kick Tal, We is And go in I think yes, we half seeing a -- beginning said momentum in, the that's 'XX. were see should We

security tell XXX platform, it is to CrowdStrike, for so We're that XDR customers customers decision, the it's the more added hard candidly, ramping encouraging. actually say. that a solution it's As did. edge XDR even is relates which than a product significant pretty specifically we pushing make Access on I decision will that me faster to XXX customers. cloud that Secure -- when you that's is And

have done teams job the So this a innovation. great with

in so well. our customers X,XXX that are that's using have and We Assistant very AI security, encouraging as now

been So we're what the in optimistic have this teams really doing about space.

Chatterjee JPMorgan. Samik with

expanded you're you of for mentioned visibility the well. target Maybe orders, timing I role congratulations year. the Maybe rate crossed sort relative sort hitting And off And you follow-up. $X you revenue? of of billion orders, the what's track have you some sense on as give you think the ask with I just billion for current Jeetu a translating before question, that into you Chuck, can about to if are run the starting $X and I on deployments, $X of have more AI terms already how some the to us get cumulatively the next next of in year? the billion orders as And are thinking on these

the follow-up You have now?

could Samik, follow-up you please? the ask now,

Okay.

what's expecting. quarter. embedded On the I just calculating ask core of the was to like looks about looks the think more was right, I X% sort we going the the growth sort of the guide are relative And Splunk's of growth to business. everyone about was double-digit It versus than subdued terms in it bit if a follow-up, more growth it in Splunk really

in it sort sort for on the the So math any I'm right think subdued guide how thoughts more was guide of and a -- what's if bit fiscal of embedded any 'XX? about doing why to

Yes.

And received on number to design orders, that on is these they we solid. the the the we to the as with expected. are that us, assuming date they going ahead about go have design customers Day, we about the crossed AI execute Investor deliver So billion we in which where space, the wins at webscale go wins we've had, the talk fact of are did talked we $X have from which and

to the those last flow one that year, year. I say largest space actually of will throughout But future. the hard this are of one of absolute of orders us will into say start right going so told weeks X.X the one those in that are so the releasing balance now orders only in we're how generate wins, near wins in so design it's players the they And design to week to those

candidly, So just execute us are to deliver And out asked to I expected. up think to and what deliver. it's things playing on as we they've us

Yes. it's And Samik on in line that our opening in Splunk, expectations. driving the more commentary, said focus as progressing transaction about much revenue. right we was The with of

Of of a long Chuck sales course, mentioned, it's X closed our selling number sales cycle. We've already with forces seen, double-digit together. have that as deals

momentum in grow So better to is The field company. for the Splunk in double where obviously is And public up that revenue about Splunk, the we -- the as good. them which in reported right ARR it P&L. metric the shows their time continuing was digits, the a last better ARR. metric is is because for talked they

green the script. good So of piece the of fair selling see also his to and really about I in the Chuck forces integrations. number a sales think together. beginning to several talked of those product momentum see still shoots done of continuing We've And

that we've with over And revenue. I so integrated is be built you, of going tell to impact harder Splunk sets, is much that where revenue in is to say historical company Cisco get the it's harder time going to combined we and Cisco allocated full and to is be. much the what's is think historical what these going But what what to how allocated term is will tougher of of is Splunk defining to how tougher. to product and expect I and longer happen --

and We're built So guide. into well. forces sales of seeing signs the it's together, it's what it's the I'd tell performing built you good -- is selling already

Yes.

that's X- would agreement a we cross-sell were think think, the the deals to that force our because also did I the first and my was typically Splunk Scott, transacted we that. offer over that quarter, really as last I in comments, cycle. Cisco sales closed, force the I said sales a which in these has said cross-portfolio and XX customers we worked Splunk that been Splunk have it of X-month important, largest between sales promising. And traditionally we to we one -- in included Cisco with actually of U.S., And

to beginning maybe expected this point. what and expected we what would I at have point we're have of would a this see even little So ahead at

George Notter Jefferies. with

networking, about data to what's collaboration. security, assume you integrated, through I Can a the going that integration? as driving about talk of you But talk walk wanted driving to precise bit we leverage products need together, especially the organization you're kind big to about leverage can ask putting sets. I be the AI, it? for motivations

thank George, Yes, you.

You nailed it actually.

answer could You for me.

the if I think single is need continue to candidly, what what as exactly business was Jeetu customers collaboration felt be doing X revolution security with what marketplace, I for if originally, our across from with we us networking execution, I in took and team. leader. And think growth I AI what his and cross us, biggest the like like urgency, look of done expected. obviously, I have this his here, years has what And the at you on accomplished then it's when versus quarter. now the portfolio everybody focus double-digit he intertwined, we're -- customers. you competitive on portfolio he's which we remembers the and innovation And platform become in And to and is our going And portfolio, differentiation deep welcome security there. is I more important to on a our sense networking had really pace just integration think, when do the look the as at delivering enterprise great we moving really felt in at and it's a a strategy like I think think for it was the tightly have

team's look innovation that we what deliver to the and forward so the seeing they'll future. And accomplished in the

Amit with Daryanani [ Evercore (sic) ] Daryani Amit ISI.

Chuck, There's It maybe Splunk. how of obviously frame backlog around versus help [ to commentary be inclusive just revenue you revenue into guess to follow-up, then start expecting back reduction helpful what are that That line. of your really understand. And sort all to sounds maybe you good. would for the growth will of customer do factored But none demand your kind from Maybe of Maybe flow the with, frame growth, contrast program? perhaps a cost the quantify you shares of X.X% what level sort getting think Cisco's bottom initiatives? I to normal, ]. that reduction could you be this just savings your back you patterns about to cost you Can I really in X% the this out you guidance to of sounds invest Scott. and a for up savings it just like X%, showing losing is us business. being from about revenue sort maybe positive overall expect just should this it on talk what up, realize that these headwinds want normalization growth have guide. can orders to that

Round product only QX year backlog. that once. shipment billion as those amount we've Day. talked on again first 'XX, significant can have backlog QX, the at in obviously, for past. compare the about 'XX, QX we shipments We Amit, call fiscal back and Yes. of talked the the just numbers, QX excess ended, on one, this headwind in And still of we $X our we tough in this that you know. had included Investor we that fiscal of about you have numbers. The ship from a

only it don't what this are a in QX again for get as rates growth ship of the well. that creates impacts dislocation to we but not year. That So year the entire QX, in

ex and rate. if pencil on business is growth of growth ex the and we that one Splunk, backlog looked that was it's the and the our about the So of we range in that you do rate. can the call gave core at you math see same things you said, what talked rate long-term last for And growth that

that for that's returning that, the seeing to But that the So guide. growth underneath kind then patterns. news to of normal creates around the year what's demand the we're headwind positive and revenue

company the of it and cost reductions much us taking, really actions really last we're is efficiencies finding those like a from the On across reallocating. was that the it year case

as a same years. seen savings of than of discipline the of process. us This think reallocation it more last is cost the So financial from it much for is you've process couple a

tough the discipline the as look of the we in have year, the hallmark history the is And company. have, was of of a you -- question the in answering highest we delivered kind margin said this in And company the year production. of operating earlier, at still revenue with I we the terms when in the that that

we're doing by that of it finding resources efficiencies then pivot So into costs. business, need the areas think fastest of We those it and to more reallocating and growth our way.

Leopold with Simon James. Raymond

what's to Or what are I one billion? as maybe bit Or enterprise And all what in this get you of at I'm little trickier product customer you to And and similar adoption orders my of sort same, $X that are mix first answer, maybe of nature unpacking then $X interested to I'm very a for another. of a bit looking you 'XX. fiscal one for might follow-up that the of be are trying and mix beginning way incremental AI of meaning more 'XX fiscal but inferencing? billion? the sort trying or budgeting quick talked we OpEx? about of to in we're of understand for billion incremental $X is, that probably little the think is the expecting the the

Thanks, Simon.

beginning same space. I'll the it amount So it's infrastructure about are the bit, one. enterprise would pipeline enterprise say into the in a we the that to meaningful It's we've but is it. a take thing webscale which AI doesn't have built talked predominantly that past, I of see a -- mostly build

then materially could number enterprise way, the the along higher. up picks that if be somewhere So

of over other enterprises really I said infrastructure AI. point I'd because are that time, identify going their earlier, -- as it's also out thing to it's get believe to updating The is as related difficult to be see AI are more more now a result we're and beginning I going to orders that

them going year. the that an continue to AI count on to think over we we're how that's we so But not? I stay update course pretty far you going to of these as it's out order as how play to So or the But does numbers. anyway, measure pure

And -- for and looks gross QX, And that Splunk. full op But OI&E, We've guide like. think and margin line spent we impact expect second understand revenue. on the the about Simon, for you at that there's margin. to we've I given your margin what op obviously, We the interest you below and level. And money for on what we -- we've don't talked of the year, acquire EPS. that also to the we you you question, gave guide ranges given

being in the an XX% look the I'd well full year op gross the give stays XX% additional is to range pretty that range through modeling we So and when range. what QX XX% margins margin point year, being It for guide well. as in in the as XX% you talked about you the to

Matt Deutsche Niknam with Bank.

enterprise, another, On public approach of maybe different around where the much one of more in security is the time? if your purchasing Chuck, where adjacent you sets that the And actually over decisions can speak point today? networking sector. resonating and and approach, think across how to SP platform unison platform done primarily around do within being you these to goes this how customer much buying And is

Matthew. Thanks,

primarily customers. these large happening that, in on it. we that X-figure these look, customers where sector and and think I deals. large sector are see executed the the enterprise large public in actually That's in enterprise the large we quarter, And had public

I across array to the would it's customers say at a different the cloud it networking, comes -- particularly and you're So in that security seeing edge. industries. And in of happening broad it, when

the to together. the and from drive we're one you tightly the you're to made it, more to is benefits to actually network the in where security see with the when security that and that and in deeply is connected you see the are organizational cloud innovation think I going Hypershield, change that security coming and key have that it also more embedded actually come we've know, see us of SD-WAN center going data going future. where more the of But you in we're As the And beginning network.

the growth of you. how does I'd second ex And just quick at go, your that deals data of question, kind the X%. talked a large of Matt, what much Splunk We add where point to and about order for product being part

portfolio out If large call you whole netted we agreements. these -- them

those If being of you modestly. up of growth order as same Think goes netted in out both the years, product actually, the range. it bookings

always while our growth of in it's seeing was board. not QX, good that, We're across outsized really it So growth. the driver quarter for the it a is

Ittai Oppenheimer. Kidron with

A of me. questions for couple

talk big before First, in platform Chuck, customer. of customers customers examples in deals, I platforms, -- had can you deals. and multiple slides were Maybe your prepared X renewals where is these naturally remarks, of all you about Cisco million each the $XXX single within these guess,

the unpack a second X relates bit guess cloud I can is, the deals? you product order more little value? getting was what a see the this to that points, quarter. you're the platform question right, And these areas do not question when impressive all with coming So you where footprint more. Only that I'm growth. yourself that from really incremental Maybe if In gaining

Ittai. Thanks, Yes.

And for existing You're years did Most the In these one a of first we deals cases, time renewal are X we've in the cases, of customers large some right. ago. X, some one. first it's -- are these sure. done platform it's

for the more probably real varies. I security now recognition an much customers, the it robust. portfolio us is would So the big thing And that's say I'd say is that expansion the in all

been innovation in again, AI for advantages gave are through think, also you when the them deals But the in is the customers robotics to And these platform, I of one think actually that's example into it's seeing. of that use that that AI-powered platform we these I workloads like are the important cases, really that we're earlier. get the driven some that now really understand preparation doing these seeing

the provider combination X% the service and -- cloud, order On was traditional hyperscalers. cloud that provider a growth, of service and

to say And us it the was in said second we is half significant at Scott digestion double so it period the meaningful, of see. digits. as we refreshing the the thought year was and you be QX. very we We hyperscalers, by and behind and really this just I of saw would look if said end would in had now feel as hoped QX. like And earlier, it growth

hope over quarters. And in see to the so coming normal the hyperscalers behavior buying we

Fish with Piper Sandler. James

gross your workforce. You based is guys as Scott, are though reducing on the But it X% of of number. that comments, the sounds kind

has a to employees that a his how and affected? bit by a sort is are and there a been about follow-up, many fiscal Gary And starting new for now you actually in longer, are year year-end as obviously, here. way role So number think of net guys

restructuring, a changes the are meanwhile it's of structures guys how kind of efforts with compensation So or thinking this towards you about to sales pushed ongoing kind platform sale? and more

Yes, Jim, I'll start.

reallocation moving a again, -- -- we're some that In into much think efficiencies we're will doing be a cases, that as the the of headcount more think of savings. get lower-cost going by I from that the to versus reduction as locations.

and works say So as whatever you the heads to be out were at before it's hey, expect not I like, you do X%, if math the to easy XX,XXX math to to.

going is not be that It's putting that going change. be locations. more come by to headcount to one-for-one of into just work lower-cost Some a savings

build I don't is to it's going think model. So the you as -- math you your out to help try

Yes.

real I he's sellers the at sales the are think more on looking be the to prevalent, systems from on infrastructure. more and the security portfolio on investing doubling I Splunk more we're on on focused Cisco. But simplicity. Cisco. networking with think force. for putting -- over down sell a on inside deals going the time we're the He's Splunk to going frontline capacity focused on able cross-sell being space Gary's perspective, in We're platform he's He's on the and these focused Cisco he's force quota-carrying today, call focus more incentives reps. but focused security in We're where engineering, in from -- not core sales us to incent enterprise

on down So doubling you're on networking. assets and focused to renewed core only effort real software see I really security teams but a get think some going the of to not the

Melius Reitzes Ben with Research.

really prepping a if and more wanted follow-up like they're to for see apps? Or a some you to getting they're as just is insight ask portfolio the really orders using had that getting just regard Did they're folks mean of you're where getting about -- top for. And you it bit little if you in did some a uptick with mean I your training that which of what AI, NVIDIA. for more area like the seeing then where on little the you, you're orders then I And wanted for and LLM? anticipating in of doing my to what any you really it ready Chuck, using they're anticipating sorry. wireless sense ready.

orders, there NVIDIA wondering So the But with orders. any a follow-up interest in sounds is with regard to it regard the is you're if your partnership AI enterprise to like yet. small seeing

Ben. Thanks,

ready to of models on private a really be for own lot look customers tell that actually applications like for one ones be entire the portfolio and just network they up-to-date to So infrastructure infrastructure smaller on core a you what to already infrastructure across they've we the they -- the enterprise AI, for would varies -- that data prepared you, talked we're is their some that are It center would inference. they're need In going have board. And data say applications what were I deals training I refresh But we that have I infrastructure identified I like sure earlier. exactly the thing and buying cases, other honest their the and/or their know not updating referencing are to that. to are think like. sure to be platform because is customers these about, modern their with to

make go be We center double may saw may I to those in some need see going cases, investments. to cases, switching it infrastructure. data need new some wireless. I as switching and do So I'm to well. my update digits In just where in In

it was broad-based. So think I fairly

solution. And I'd then yet with too say trials early. field partnership, the in early not that even NVIDIA We're it's on

don't to yet. there's think share So I lot a

with Rakers Fargo. Wells Aaron

billion fiscal you sight these of unpack I I terms -- AI this talked Sticking I'm curious of about on line $X just little can the orders, about $X was a bit 'XX. billion think that competing into the against as into theme, you think of in if ] Silicon it going we One, you quarter, last [ orders? And from network guys? full internal my billion second within offerings granularity can deployment, is And cloud it then Is switching? the kind there that spend of I'll Arista, are Is switch? back-end give any switching $X question.

'XX, fiscal the if your core about year of think the that kind so, me think guide? to lead to embedded contribution year. Cisco that we the guidance full going thinking quarter if we growth for Is As are for me, to in the the the in Splunk annualize contribution, is fourth kind it's networking of And fair? flattish about full how you

Yes.

both it of back and optics. Ethernet on the it say would end, a and is combination I $X primarily So billion, is

second the have have them one, sell robust those combination white would And white that to and all We sell In or of a well build from players them In we we us. cases, the -- compete it's that -- But actually is a big can things with. as perhaps with would optics. system silicon. it want can we some the help some them them We very we competing it's you box one advantages can integrated it's a of solution. it's then and systems, take... suspect business, that sell a optics cases, is boxes can we as on you

a it. happened on was QX Investor in our that in repeat the and that in had Yes. year. of range pretty about of earlier. a year also at of won't back billion is quarter, $X.X for 'XX, was $X Well, billion point current it QX to We excess that backlog to this talked compare I fiscal Day, QX clearance clearance remember, significant you it the touching in this if ago. Obviously, But what amount of Aaron,

math on the we've seeing happening that QX to the headwind significant different able the a demand compare we're being your Add outcome that have of again and in a board, of of got year. across to normalization year-on-year So what's not get in while this nice backlog you'll core. clearance

is Citi. question next Malik with Our Atif

the think business? was regards to how with Colby the bit historically, and should for seasonal sort for evolved, dynamics? in normalizing the the of 'XX, Atif. as about It Or Adrienne like about things sort scenario quarter we January how the And looks to with strong Are dynamic year quarterly It's inventory With Splunk? pretty Splunk. has of think fiscal back levels think that prior should changing? business regular are a we a the to trends we as question, about mix prior a also, we

it's it second. back for and the shock normal answer the can having were we and and chain years getting that I'll challenge -- between as we to we've We the you this X to are believe that And finally literally ready were been through and patterns. call, with end. about first, COVID been and this we going the then, supply talking then digestion Scott, take at this then with deal ordering

prior to pandemic. to it quite normal it was we we're So be like feel should happy back here. be ordering like patterns, the to Scott? are so But we

had bit on the that of do the the we but actually the Splunk, do January get normalization last get And that you was the loaded it, almost talked dynamic software with they to all the they of end companies. The that only that of into software as month. Saturday quarter that quarters last day you what quarter of to brought loaded And about, very back-end quarter. also not back-end Yes. the our on fourth right? within January They fiscal companies, their most in, on of previously don't like see very enterprise we've Splunk end one enterprise on quarter, end month

days a the would fall the so tale normal that of quarter. X be X of of doesn't our quarter And that into end the end typically or there's Splunk

our is X X -- will of a quarter impact big a days X are muted will it have or be which our QX. January So X impact that on second we'll days, It or out second our because quarter. muted lose

into will over for Some QX us. of bleed that

Paribas. Karl with Ackerman BNP

you. I in rate You inventory headwind networking the Scott, Could somewhat change product noted revenue is your you of beginning in the Though, to your the then enterprise a and behind price the of indicated hyperscale largely X in look for think of quarter. second, since has X that to to, pricing that -- in as digestion In you you the months speak general environment to fiscal stabilizing visibility from you anticipate or this order improving X words, other visibility improved outlook? And do to here year? months? from revenue improving was say, 'XX

to the the notwithstanding ability shock, visibility. side, teams on I out I look would back think are unforeseen their see some the to and demand normal say

clearly think is us, I were behind even seen of I much the issue that see you'll that been we to And couple think of we since relative the visibility forward, into greater to was. what couple And they have XX-day the it. visibility going see outer had the think long obviously, -- I'm the QX I final with period. quarters. trying so last last we this we'll -- think continue the it quarters remember where next greater But over It's think that years. it. ago -- I we've where over That's to

back to we put Yes. And and had just if go the on you price now we the it to then, work of a before place to the price a went you chain and orders, price the as because the significantly. you stability. got took ways, up our while, supply that as stability, Karl, those were get backlog lapped to into to increases gotten back where increases of then cost through go those price Chuck in you And if -- course, remember, said. go we've issues But out. We've sort turn where point shipped for orders

It's it -- always per that, anywhere X.X% in price to a see it somewhere always that so competition typically range historically, to deal, right? to in is around there's we that all expect every it's was quarter. impact expect price do be So competitive where from back X.X% but the And historically. deal been some

Thank Chuck it I you, some want back hand for Karl. to closing remarks. to now over

customers all for again I challenging helping year. joining Thanks. We to strong us. you want you our being partners I us thank thank finish to to our and today. of with our teams, appreciate want a with for the

customers encouraged think more quarter we stated, broad-based in with to is from we're a as to the and around the AI demand that see we've networking continued the and AI now it enterprise saw progress -- getting As complete, across environment. I'm making in we by the is demand normalized inventory as we're with that traction particularly our the digestion the returning some we early cybersecurity We're lift made well wins. pleased and beginning core the very space. with the actually of in with a the progress and Splunk

You growth doing you networking, and in financial always you continue to us as discipline, future have future on as infrastructure, and also AI profitability. we're invest can on us can drive in always seen. count And cyber to to silicon the count future for continued

you being we us, look you thank and to with soon. forward seeing for So all

at Eastern Cisco's over XXXX it November will X:XX hand p.m. reflect joining for Pacific Michelle. Time, XXXX X:XX first you quarter us. Thank next year all on fiscal results, be XX, will call, I'll p.m. quarterly Wednesday, which to our time.

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