Cisco Systems (CSCO) 13 Nov 242025 Q1 Earnings call transcript

Welcome to Cisco's First Quarter Fiscal Year 2025 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 Sami Badri, Head of Investor Relations. Sir, you may begin.

everyone. afternoon Good Badri, Chuck Sami Herren, of Relations, Investor CFO. This our Cisco's Chair by Robbins, Scott and joined is Head CEO; our and

Cisco's GAAP information, available and our earnings reconciliations on website. non-GAAP are including Relations Investor press release to supplemental

also will today's slides results. Throughout the recorded we'll non-GAAP financial be referencing we available call, webcast the on this make Following and website. call, and both GAAP

stated and of basis. discuss will product unless All We product and terms results in terms be revenue results will customer geographic of year-over-year orders made otherwise. comparisons a in on

note contained include results second materially for our quarter, comment report, which to see Please financial the our that please unless also from differ XXXX. to statements, actual public With accompany our guidance risk fiscal an in disclosure. important done and identifies uncertainties on statements. it call explicit to will discussions These and that the particularly that respect forward-looking our those for and recent will through our during are not could filings cause subject today guidance, details. release risks most Cisco this guidance XX-K year factors statements including quarter slides in detailed the its forward-looking is press further further SEC

it turn Chuck. I'll over Now to

combination revenue, the at annualized to our The our end XX subscription obligations revenue. driving streams return and demand of total exceeded than we Splunk. of leverage. have profitability. Non-GAAP Splunk growing the in recurring by 'XX, an solid value guidance growth $XX.X coming This billion fiscal commitment our free by revenue strength grew repurchases by delivering highest fuel thank performance our high at remaining helping a orders accounts Thanks, our is $X.X now for organically. in is of recurring Cisco's shareholders growth non-GAAP a which range. gross XX% fueled further we high great delivered billion returns. a team's operating we X% XX% for on first of operating our This end just order Sami, revenue, enhanced of capital ago performance more of seen product our strong and acceleration in and are all our our demand you guidance dividends, quarter, for both Cisco fiscal driven Building supported and X margin strong to QX in which joining QX The of months and sign and cash year the through The delivering innovation. to in and product the $X.XX years, were execution range, cash EPS saw share Cisco XX% saw end was to in year-over-year for us of strength of consistent of flow is 'XX, and up in start was the our normalizing on clear today. the of revenue the

customers scale. excess with provider quarter, first EMEA starting the orders of range strong broad in a driven continued product particularly across were In momentum placed in in driven XX%, million. cloud me saw orders with infrastructure by customers. up performance up $XXX some We web our in our and a Americas service AI share environment. let QX, and strong on the growth product orders triple-digit scale of XX%, demand Now details Enterprise web by

to be continues pipeline strong. AI Our

are year-over-year due QX the After year year-over-year up public very Federal QX. X% lower from remain in web-scale a design we more were earned both the this strong resolutions EMEA important It's In have last target our strong. believe year-over-year with Act exceed delayed, not wins confident sector to and of to will AI deals the APJC orders of that spending are We that note responsibility lost. we of sector public billion was order federal simply impact the in we customers. quarter, on continuing of and growth the $X orders U.S. was within diversion discussions, Federal. fiscal U.S. working and fiscal U.S. funds customers

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

order portfolio infrastructure. wireless product Internet driven and saw overall networking double-digit switching, by Our growth

our quarters Looking of particular, the by our an and of of shows center QX. market seen customers. and from acceleration brand build-out QX this power and private data double-digit at growth in have we key the order This competitive consecutive infrastructure our switching Nexus X into in strength cloud

this expect gig significant and showing on XXX One. our interest are continue XXX to based switches We in momentum gig as Silicon customers

Security of more driven than intelligence by orders the advanced doubled Splunk. threat year-over-year, capabilities

growth Splunk, our pipeline, and driven received product new and to product which well Excluding security strategy in orders by customers was security by renewed be analysts. continues

seats with teams largely Multicloud for in solutions around The XDR, solution and customers over days, cloud security fast how to competitor IT at In our with implement planning momentum customer a see far. XX,XXX and highlighting win Access scale. these moved multinational an over a can products XXX SSE with our implementation company. services thus replaced like security new from and We consultancy X,XXX our our we had Secure marquee Defense products now deploying continue QX, to

and Hypershield deal again our Webex suite. digits X-figure We by devices in for driven booked QX. also orders Collaboration our product double Cloud demand first grew

our orders observability, Splunk by Finally, high Network driven Observability. Solution, up single Assurance and ThousandEyes digits were in

We dozen including Secure across Splunk now also like and integrations and ICE. and data the to progress Cisco between security networking I'd some portfolio, a our integrating Firewall, of SD-WAN Catalyst Center, highlight updated made we've have Splunk.

Cisco and including our center. and SIM the Splunk, analytics to motions security Cisco -- alongside continue capabilities between joint network enhanced We offering selling secure secure Splunk's XDR operations

solutions full stack continue also market-leading observability observability our enterprise. build for accelerate We to to the

are global scale. show that modern for AI networks the revenue AI they fuel X majority by the to by technology customer need wave results the Overall, highlight years. anticipating the their as new next transformative for study around demand partners world Technologies of resilient our begins to and Cisco QX experience, driven to expect partner of cybersecurity demand our IT a from AI infrastructure, continued X which strong driven Findings over

are positioned their breadth portfolio, of AI on to customers to capitalize in prepare the technology our infrastructure uniquely we critical investing this With demand for as AI. are

as Cisco, X materials. our we opportunity In distinct are fact, of a which quarterly there part networking connected the outlined AI to but pillars have slide on for

for Cisco and Silicon XXXX our One are AI GXXX networks. products training Cisco's AI programmable deploy scalable, customers. demand advanced low-power with hyperscalers their AI maximum to with These efficiency for the in characteristics training First, observability. balancing in infrastructure networks load power web-scale switches back-end driving

case we proof, quarter. with super of scale further spine customers this networking one AI new a As use our web also won

Second, AI network connectivity.

operations technology quarter, leveraging and network we further sales global large-scale to AI automate prepare This booked connectivity platform their our platforms who applications. to customers, modernize for with are to enterprise

Our technology platforms enable unmatched leveraging across observability, switching, supply robotics customers innovations help and chain AI-powered routing, like and will our cutting-edge visibility. security by

today say within we Third, the AI their CIOs Cisco their to planning network are the Yet AI only AI of ready inference organizations Readiness to AI leaders and XX% Gen years. enterprise full organizations Index. clouds. next according infrastructure is talk X for the adoption Most and that say of technology

AI our our and server AI to to a cloud NVIDIA's portfolio, help data new and infrastructure deployment. center X NVIDIA-based pods, infrastructure prepare, derisk native through simplify Cisco To customers additions including software we AI Intersight and managed announced enterprise new have platform AI

month. and this AI Our next shipping pods are server is orderable month, AI new our expected to begin

and Hyperfabric, addition, be performance. fabric calendar and XXXX, our In service management to as which solution, deployment is a simplifies real-time while into providing further expected infrastructure in visibility early available network

enterprise. to we solutions, AI bringing these open are hyperscale power With of the networking the

we secure AI another AI We are we our native risk the satisfaction. is AI how to threats. products. are customer solution solutions recently customers our advanced regulations. first features and how help security Studio In demonstrate automation customers overall and Webex for solution portfolio, we into the shows Center. to introduced capabilities against to conversational for to cybersecurity into compliance our intelligence distributed insights AI fuse with the agent networking, assistant Cisco making Hypershield, Contact network easier These fabric protect understand Splunk's example providing continue it asset our evolving evolving intelligence Webex improve their and and of also built collaboration delivering of use truly maturity

interest initial strong seen continue to collaboration products, customers have and our strengthen capabilities. AI from We will increasing

productivity support cases scores. faster We're by organization. technical own resolutions, AI now customer also customer enhancing our backed our to higher AI-enabled touched Over for which center by and assistance services is automation of by our leading satisfaction XX% experience expertise are using our in

work to and solving. quality alongside In on engineers to creative internal resolution and while assistant TAC complex improve addition, our our works allowing people our AI speed time more problem for to

there what's we To are happening. X key AI, summarize, at things as look with occurring

on hyperscalers significant First, there investment focused training. with is AI in back-end networks

Second, as deployment they enterprises for to and their of prepare adopt pervasive AI deploy infrastructure need to applications. modernize to and look AI, secure

the uniquely breadth playing front-end significant trusted increased portfolio AI networks. our of and of are to X capacity our and requirements positioned models customer deployment private the lead and relationships. of win Finally, cloud on combination across already with back-end role with will is all these mature opportunities application to enterprise public both product a Cisco major

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

cash in flow. strong order well Thanks, Chuck. QX operating executed We and momentum, margins with

For revenue at our X% was total range at down year-over-year. guidance quarter, the billion, of end $XX.X high the

non-GAAP 'XX quarter of of range net income our and billion backlog As were high shipments. of earnings at was the $X.XX. the end was fiscal a above $X.X per share QX Non-GAAP last elevated reminder, significantly guidance

more QX a X% XX%, at of revenue up revenue down was elevated level Networking product driven service year the Looking by X%. ago. down we $XX.X billion, was was $X.X Total our detail. shipment primarily saw in and billion, revenue

XXX%, by devices, Response products was and primarily grew the particularly Suite Detection As and them growth in deployed by delays security the networking X%, and driven worked intelligence, inventory year. was our in X%, Security up in we and Observability contact growth have Observability Chuck and driven portfolio offerings, by declines products in includes security growth center shipped collaboration in excluding by U.S. XX%, our Splunk, by spending as which was growth we and order offset from assurance network offerings partially impacted offerings. Collaboration down strong the our security our customers networking Webex SASE, primarily said, up CPaaS last driven on-prem offerings. and Fed. suite in Splunk, threat was across down saw our network

Excluding grew for quarter. the X% observability Splunk,

billion, the with of total Cisco's Looking ARR revenue. XX% $XX was was billion, product with RPO to $XX.X at XX% year-over-year. $X.X total ARR up revenue up our up which to at XX%. up was revenue metrics. of RPO $XX.X short-term representing XX% orders software subscription subscription were up ended and Total XX%. product QX growth billion, RPO XX% XX% quarter increased recurring year-over-year. Total software increased XX% Product Total XX% billion, grew at XX% $X.X revenue billion.

product year-over-year. Splunk, were Excluding up orders X%

of and was and highest level XX%, product by favorable years. by up X%. the XXX year-over-year was APJC our XX up and XX% product provider non-GAAP up XX.X%, improvements Total Americas orders and gross was XX% margin XXX The up at drawback, service enterprise margin guidance benefit XX.X%, basis gross the than came mix, our customer productivity gross XX%. Looking our Product exceeding was of was EMEA at in XXX and XX%, points Services markets, basis public driven was more the margin is up geographic price. onetime up and Splunk, high our points. across was segments. partially points, cloud reaching offset up XX.X%, up basis end duty up range In sector in

with high We margin and at financial continued the end our of on focus profitability above guidance our XX.X%. discipline range non-GAAP operating

billion were line, and income share $X.XX. On non-GAAP net the bottom $X.X was per QX earnings

our billion allocation to the repurchases. equivalents with we cash share From quarter was ended $X.X total and during cash $X.X We sheet. quarterly a Operating cash, $XX.X QX and comprised shareholders to of billion of returned for balance perspective, billion, billion $X dividend cash capital flow of $X.X the billion. XX%. investments Shifting up

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

During secure cycle their QX, brings accelerate development we factor to in X AI intelligence, offerings life the deep which our models innovation and protection Cisco closed robust for Security and enhanced augment to from software access throughout production. acquisitions, Cloud

our with innovation and to deeper to capabilities and our expand CX in we intent teams talent, services. AI investments our accelerating complementary R&D customer technology line acquire AI Additionally, strengthen of experience targeted These to and security Cisco's our footprint our announced to internal position in momentum insights strategic with are engineering and strategy highly AI M&A.

innovation with by remain To capitalize and started business EPS. order on all and management. as the the cash accelerating non-GAAP solid as on margins strategic our return our highlighted expense growth, we significant value a investments fiscal significant making by focused combination We ahead, summarize, year best quarter, strong to to fuel to disciplined to powerful underpinned growth we continues opportunities well see It's flow that our strong this generation shareholders. ability across

financial our to Turning guidance.

fiscal follows: to billion. $XX.XX range We XX.X% to be to range of we Non-GAAP is to gross XX.X%. as For be to QX, expected of $X.XX is earnings in range guidance per range from operating revenue the margin the $XX.XX quarter XX% is our to anticipate in margins to of $X.XX. be in the to expected billion XX%. share Non-GAAP non-GAAP expect

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

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

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

from go ahead of Liani, America. Bank you Tal may

was ask so providers service is it What and both cloud cloud only I'll grew Splunk, last XX% orders, questions together. ex X%. -- my quarter,

of cloud Very focused we vendors? So cloud in on strength switching, have meaning you question elaborate my cloud in what on operating Are strong areas margins. massive participate you gross not Or follow-up the focused And have cetera, margin Talk all of routing, where cloud and certain the where and it this the about providers you other sustainability orders? on And like et specifics margin, these you others? quarter. strong you is this and optical, very more driving is margins. are extent, is providers, drivers can titans? growth

the Thank with question. for for us, Tal. you, being Thanks Okay. and thanks

first provider the which specifically is one, take I'll cloud orders. service So and

-- So service but as starting pressure, it's we business, foremost, I of provider our the if first less were we we pleased, to continues step business is at it and under it cable, back and gets think, look smaller. the also were impactful with portion smallest and be

tell And single-digit to was some both APJC, low growth some the in positive encouraging in we actually web to excess as telco we of where or And what scale the side, real telco, X is cloud saw that were saw that's largest move We occurring On we you the Europe in -- customers, of activity excess XXX%. had probably order of which would players I in see. which some in growth was well. X each all then and XXX%.

billion for participate the scale that on and as connectivity provide $X all are not to us the billion -- that customers, systems -- we for cetera, primarily orders -- in in X We end did So for it us. it's participate putting a optics end. clusters end. you switching, spine those. actually of underpinning are $XXX at areas talked $X providing connectivity networks. I growth required et million, which both with that and And above the we It out participate back concentration well the interconnecting be back-end optical, well mentioned one I'll routing, web when the in then also talk of about year. a about actually look the different track for we systems front GPUs start same from super we and AI, triple-digit win, that back the would where we systems to and it's as customer. AI all call in and was I we we was took participate, exceed When excess

about And by by So benefits our real to in silicon strategy, a our is think design way like be number big our sell this is competitive own would I customers the we're progress our proving one silicon, to in whether consume feel this it's technology, basically the us. of wins would for they advantage that that space. good We systems, having we the a say have and of making. I is to which just our the of to

So total half time, we're of scale At customers. would represented just that same the say AI the business web the the that. than pleased we took I infrastructure with from less

traditional side So strength we that we well, pleased take performance the there. saw we're to the still do with in Scott, cloud as the and call? margin showed you want

Yes. Tal, strong. the margins were very

Chuck Obviously, increase we XX a handful The margins we've course, highest basis that said year-on-year Of earlier, in of the gross points. had of that. non-GAAP had XX.X%, up as of non-GAAP product gross things includes at years. nice There's driving total XX.X%, margin XXX done of team A also favorable continues margin the enhancements. course, of call product favorable is what on other we that. line, it into had gross to the -- built addition Splunk, be by I'll which the productivity mix job the

out So cost in is chain did line. job of done benefit that We sold has project goods the have a several for That drive nice QX a team that's supply a sustainable. on around cost of line. front. cost continuing on to duty years really been the of sold drawback. goods for flight in onetime

return for were of exported. ability this on We've happens, that components When we you point are of product get been at tariff. return import. working course, incurred working of some paid to then the subsequently final you that a that these So project a on They built imported get and that. to into get that tariff been time. We've a the the

were quarter, those accepted. During the filings

this I as and look substantial quarters a QX. XX% would margins well. year, to I And a the full range you the into guide. that's margin said year. back has the that, of of see on great as X the see the benefit of XX% fairly next at onetime QX be got of we to to continue expect Having done, so that, And to our team course, will in for in settle tailwind op work gross the this

with Niknam Deutsche Bank. Matt

question is mainly macro. my So around

Just evolved follow-up. then maybe to you wondering, last over the maybe, double-click that And how backdrops to speak as Chuck, the macro X months? can quick on if a

behavior As the U.S. hesitation, verticals, terms some of wondering around in election, to intra-quarter? it any if there's different impact buying of elections given the uncertainty any relates just across

Matt. Thanks,

federal think tie the will So challenges, front, first that Scott that your I would I macro the U.S. second and and on question. say foremost, mentioned into

I'll there. bit cover little a of that So

impacted the the resolution Act, then continuing U.S. responsibility and think year. federal was at those business expires by I this end of pressure which calendar on the both federal. put pressure also fiscal of the

we've heard that earnings some think their peers announcements. in from of our I

If teens. product so Federal out and order the product to the The just organic in Splunk, high at you you actually if you U.S. world year-over-year. mid- or of our removed up the rest normalize look without orders growth was the

So strength we recovery that good We're tells very we saw world. strength that you in strong that pleased with the in Europe, the we the performance already saw enterprise. what saw strength in in States. is saw good the Geographically, Without provider we Asia. We quarter. U.S. during really Fed, strength United I balanced discussed around good had service that.

U.S. would the just federal real And I call relative at think so point. to the vertical is that elections I that seen think issue we've only don't else explained. this I anything I there's the out

delays. about, of Matt, not in It's about on fiscal funding we're that is the deals that's that there lost responsibility in to seeing the This being thing think Fed delays resolution were by through the are that. Act. continuing is And put pressure the No. U.S.

as It coming resolutions. both see get Congress we Republicans House. those the and past of White carry some looks So the houses like of continuing do back the will we

I in a expect so And get to place budget would relatively.

those just we'll teens. Chuck to do see just impact mid the product growth lost to said, point emphasize the total Fed U.S. I think high order aren't and transactions. is excluding So And -- up of that Organically

you expected. think have So in line what would with I

else. everywhere strength Was Yes.

Ng Michael Sachs. from Goldman

a maybe encouraging I think of so you it quarter. ask deal Hypershield It about that? just more little that And trends, deal recently talk about secondly, mentioned to that, available, think bit nature you was you made if wanted Could helpful. as the X-figure but like feels hear the to in I you year-over-year, was then us I talk the orders Splunk. reception the to about security. to just you could it security And Could would doubled first qualitatively the it's can about that only including give speak organic had the well? be days, early had number

Yes. Thanks, Michael.

in on was of planning is solution high-impact that and Hypershield, first a what advanced early -- in large this institution adopter seeing. question world. the financial So most, part of actually a effective the I'd was some and your is we're very that very This that's around very data say, the centers

have So we deploying large been see very customers that it.

a to adopting see, think, using these help white now that customers a in a we're And going we're get a little of uptick it. gradual So customers bit have to right up I and we program running. glove

makes a pleased we're new So large many technology when in to lead because see rest of that, deploying actually that tells the you these they real. the enterprise cases, security bank And like and will the technologies. really a commitment is that

a So . sign. that's good

issue Federal contains world on order in orders, customer with our the of -- we we and overall security our Federal customer growth. in bit U.S. the world. product largest a the largest On our that U.S. same security the largest probably had had the is

-- minutes the And ones. so without data we digits. you the -- it ago. Splunk, low product U.S. our security but to Federal, a orders few -- mid in mid-single then were without with the And up gave organic tracked

deployed responsibility fiscal if that customers rolled teens over high that So in XX last you have they out and technologies crossed to security we orders resolution XX out the federal the continuing the mid- -- as the these well. normalize to the new year-over-year up Act, We were impact federal months. organic the with X,XXX

bringing there's industry, to follow pipeline continues a belief our the come. broad-based that And the think technologies and our that highly say to more think if analyst impacted occur to that we've for I with So innovation customers, the I you are adoption we're been listen pleased there. to would there's the to bear going be or I and

So stay tuned.

Vogt David UBS. with

if First, may. I

appreciate You think, traditional Or mentioned And drove what your the front Is of margin, that of contribution you sort numbers orders were And like was kind the 'XX. half the of a I'll number some how of color from trying through balance gross second think end. you on Chuck, else licenses? enterprise Scott. we the fiscal impacts that On for Splunk the a perspective? of with think in the there Splunk mentioned, sort that growth? we're was in move some web-scale about anything the we to just campus should of then the order But term perspective, I recovery quarter. product subscription other AI of through more from half sort one in as versus give the from there

non-AI you're what your David. is, the think was spend I thanks, right, the enterprise we for question the of first that If I interpret asking portion responsible growth saw. So cloud

And try so this. to going answer to I'm

So of when scale to any don't it the the about sold we include web we segment, technology enterprise customers is. what talk regardless

enterprise whatever from buy they the simply customers buying segment is enterprise So us.

they from that web of would in the majority And say saw purely the the Internet non-AI of all was were et one? smattering enterprise on purchases infrastructure them. from it but Internet scale the second the Most technologies, space. enterprise classic There of also of sort Scott, to growth So cetera. it in was what that context infrastructure was we that the optical us. very I attributed systems, us in was a routing, of be small procure switching, would that side

Yes.

favorable is It's margin, was On that and around drove just in gross that, earlier, in a that we touched onetime benefit was of was mix touching David. I a drawback. did Splunk -- have duty there on this there margins QX I part the on what product the

actually all that built some place turned in on tariffs paid products get and refund into get back. time, had happened while getting a we exported, and then It's imported we've had approved we that that together, duty components That QX. taken project So allowed you're that that of had in and import then pulled and to to basically -- for around we and it a the refund. documented paperwork get those get paid

also benefit had years that's small catch bit little So throughout a job The of of bit thing of drive now year. more the the to -- team a QX XX% our across onetime little we of not a of a driving a of has nice in maintaining kind XX% there's that, of those out a margins QX tale from through continuing end cost board. rest the couple up gross that's and the in done another That's view the that's that and repeatable really in a to range year. QX. the

So think not of Splunk being a benefit, that's new news.

duty drawback was much onetime the the impact project. I think the more what drove the of quarter about in outperformance

with Samik JPMorgan. Chatterjee

my If questions time. data center order your mentioned had strong the both portfolio Chuck, the growth. third in prepared the you ask quarter consecutive can remarks, of at same I switching

AI autos, in terms that are that you? in -- there But to timing? to higher deployments? that's Is in of thought you're largely you're terms in sounding And still interpreting exceeding indicating that AI of Just a even realization their front billion implication for you? wondering initially ready target. second sort bit than the how of one, do believe of just what sort momentum is to enterprises Just already of in get Or on you terms in then order better $X a revenue of you've there year? necessarily the the revenue is maybe relation is realization starting

Thank you.

cloud they We their infrastructure. and is what that, workloads who about this customers that they switching for about ready are now. unsure We be now, last do clearly, been to the same on know our they enterprise XX are it forward deploy infrastructure. modern customers side, private move do shows between balanced X, move I which the prepared few -- continue quarter. they So customers they think -- modernizing But into it. to which data so, this in need even see when they're build we're infrastructure the We see center quarters invest pattern to seen generally from for applications to that public get seeing them may we've be months has they do what AI X, to talked a

think some would for last of the I of way I it, say ahead the to enterprise so is part majority but side. And question, still that preparation of build-out extent, first in your us this the on it's,

billion. comment think one we're and On revenue orders implications. speak the to orders, on second AI Scott I'd the let that I fact track the make to I'll on the The and question exceed $X the relative to

dynamic these very that changing it's have a they think of rapidly requirements. I market lot and customers, a

looking cases, that confidence into In many actually so design silicon as the a win design revenue. designed we become put system. Then they have about. design we ultimately, in, arise opportunities a the see we means get these deliver so wins bookings, We become they're And and as they for. can they talk piece that that of ultimately, we then we system, it when we a get and

what And so them. want depending the on we from timing varies

to right about you've a now. we you're going the see up And need continue but and so show job that's space, this I good on doing me the in stuff to show team our really and to continue heard why talk see in several it the the feel is execute, about to to up as you're in guidance, going calls row execute

that will revenue to you... Scott, to lead do answer So the question, the

some most we the out of said, past, Yes. there's driving consistent is more of what with we've shipments. within into that goes question, see year. Obviously, from factors and driving a that revenue, revenue in for in our revenue not we The do of the dynamic the though revenue bit the terms that that this we us a said second control, half. this get Chuck ship will the the the as get until we which Samik, don't -- are on second of of number And product in door be revenue in half majority the

Raymond with Simon Leopold James.

Great.

in the like that's to that. a partnership of is, that NVIDIA an where you catch First sort traction with sense I love I'd into how get get in on of announced terms did one to double-click or early the fits update pipeline. progressing very and maybe of

server. You AI mentioned an you've got

potential Just of talked to the alignment. Splunk follow-up my straightforward of is new earlier that's of an that opportunities being wondering customers outcome if about Splunk. And introduced you've sort pretty

If your you closing and progress to there deals. us update sight sort of could line some of of those

Yes. Thanks, Simon.

think So we're these really early still bringing I solutions to on NVIDIA the market. partnership, on

simplicity still to which AI think back that So workloads early. as deployment in quarter is to but these NVIDIA quarters Over see of the announced of a service phase platform first technologies. a still we And NVIDIA that are that that if calendar the see us is announce of we cloud GPUs. solution AI first new that in a you'll enterprise, going we'll announced is shipping and back, other But the demands, It's compute platforms. based of We is -- the GPUs, of did real be sort announced is enterprise you some on and partnership market this bring will which public to when think as our Hyperfabric, pods, fabric time, I XXXX. start portion of also fine. to GPUs AI XXXX on couple we support based

good one, say continue On Splunk the I update, second progress. the would we customers to see

are think in closed Splunk, have -- we I acquisition the really think where we about you with we We're November. March. in If

is if months. cycle X you would So that's Gary, about And their you X tell sales ask months. he average

they we and So us. initiative of until we haven't quarter even gotten part into we that haven't start probably second this were the didn't

it's out Cisco is to them business. really Splunk Splunk other have positive cases, are would them actually building acquisitions tell we was customers in and the would the thing early. use certain customer out that based of a these more on I candidate. Partners to of I list. identify bring now that added that the is on and that So some criteria we that trained is And What attributes have sign have been we've But practices, gone super X,XXX we've lead to of viable accelerate to made strategic customers you Splunk I think about a and still partners hundreds into think be Splunk that that their

super front, that we're as on well. about how that's So positive progressing

that perspective in expectations the expectations particular, add in is integration, overall it's I'd line top ahead to our only point. profitability in line and our from with on of on The just this Yes. thing progressing a on the and Splunk ARR actually at

Splunk is tracking overall So quite well us. for

James Fish with Piper Sandler.

thinking on RPO about you Chuck, Scott, at growth WiFi then, WiFi for back will refresh not just potential, that but What and I for with even enterprise products guys, announced And this availability think, are how that Go you, RPO. RPO any well. guys campus circling ahead. refresh week. just the and refresh Splunk was campus encourage X as X also opportunity switch you, you

we're we Yes, -- and This said. not break is Jim, well. to Splunk, that to across actually -- are just we've quickly out because continue Splunk. all and of without I of going integrating partly in with products or standpoint, the of RPO, and on integration From that's brought We've both going functions product don't Cisco now and products several the launched an adopting G&A are lines. joint organizational what the

getting to what's each is harder just and Splunk. That blurry it's So line say and what's harder getting blurry quarter. and not Splunk

that of would breaking sync for tell Splunk rate draw with out. So been you, it line without don't that's But to we've growth of want a positive get on really plan in where that historically. is I trying to I you. I a way still course,

the networking the during refresh, think, enterprise quarter. on Jim, look, Yes. our was very I overall business strong campus

continuing we see to refresh. are So that

had cloud big can first quarter. under we've license first a You mentioned management WiFi because the big -- This it's or step versions a system for a is announce high-end the platforms that same during us an with you one run and hardware. did that on-prem deploy same that of management it's use the the the and we system

advantage between think we've seen. dual the about as pervasive starting something deployment first think and to customers on of Number if And enterprise, in the you back that back continue to take end going to the be also the AI, if working create while. both need are these they're to front-end then been we networks hardware et It's have you that see to to to run then versions going the deployment going cetera. about and their applications side network able of continue it's pool talk a impact. AI pull we've which because to refresh in to of the we that's enterprise for going the on-prem been of edge-based because that's modernized because cloud cloud, but enterprises portability And it's see to in So you AI models. going AI, one, their be connecting about

is of real the period opportunity in be wave. time some So by large refresh driven this part, will for we and think AI

Stanley. Morgan with Marshall Meta

where of Maybe Michael's Great. was been prioritization, where security of second center? teens upside? modernization out would kind of driving of the of of of or kind the to security Is a kind just that organic strength. as most kind some question And growth back or to around mid- what the high that to driving are of if question, you wanted data just you circling answered kind that -- and on tailwind, that kind data of of federal updating modernization have are kind it within in Is seeing just of of center you get data some then products just switching. a U.S. just stripped sense what kind center

kind data around modernization . in take categories kind Just seeing commentary of place center of that any you're

Meta. Thanks,

HyperShield just we I our Access, you security early customers and those you're at to the I we've side didn't yet, to contributor them And portfolio big seen products sometimes it that so X,XXX Defense, think the now U.S. from a -- we're customers seeing XDR, when a not innovative between rest Fed if look will that's it these over of pull positive performance, see it XX again. the it's at to We impact new the portfolio side, our in with order technologies Multicloud creates think look think Secure ago. very new feedback. the of put deploy be, leads share mine you I but have months because the

We've quarter. early in of We part, completed the firewall high a recent was have in the 'XX. part latter the in most also of -- the was refreshed the had refresh refreshed In XXXX. the end low-end mid-range

are that we versus the that and today fundamentally security. I that But X energy going there's where all So security been a has the contributing just customers is to the I that in general, ago analysts is think we were market, think different. lot years mean in on I believe X, where

I've that a the Hypershield suggest about But largely the center would at momentum perspective switching On center data I customers mind massive a that security infrastructure. modernization from is with the share feeling, talking think data was opportunity around that we're side, space. least been in that

that east-west data talked and your then start at plays. in key the need we've center, you are that's the stop of roles infrastructure, the the the a one if As about, assumption traffic you to bad with Hypershield do fundamental is in actors thing

for about fundamentally area a modernization we've So that's data around as has we've the I talk that what our momentum there and happening when seen focus switching. big been think we customers center most well. But seen of

Ben Reitzes with Melius Research.

around feel for that mid-single-digit where a was chatting would greatest more they're to that comment. confusing latest is It's you're grow if a it, with that's But sense next better there question feel target I for for potentially I X%. Day, and to they Scott excess on near orders had be and going hitching you there to the AI ride specific -- to a Chuck, know move love getting would you you it they happening feel X% and year a And ready great investors. understand I these given makes year be then be are update. little you But there the Analyst said going your know engaging of you any hear. that that for? I better regarding wondering beyond. or quarter, worse and last Are for follow-up at you. Anything what need great Is long-term you customers think and asked that are where had that you the to they're one just can applications I grower? term Splunk, this to it. where you getting have happened And inferencing? investors performances making is that be feel there's Is to anything about you're thing citing? what to that a do backlog like I

Ben, thanks.

early else. So that seeing question all on That's at, applications one Cisco customer with customers on the AI first of including I the we in the virtually we're everybody is that looking focus and the relative engage big particular, enterprise to on think -- in enterprise experience. every

like contributing I So is different robotics everybody the building are that and they Then largely think, or focused are we've automation efficiency, that. second, to talked applications on chain with is supply management. about

deeper We with activity the also customer. see engagement around a of AI lot

the addition front-end leading to think their for build to calls their inferencing to lead network time. this think data AI see are to then to customer the that cases, talked actually out able that's customers this applications and data sets, the over leading So the also understanding needing leading into in to provided then upselling, both a we've my center what of those on It in customers of is about a build-out models, edge-based that belief on now happening the lot need and train overall modernizing experience of their to modernization foundational to lot also those what's infrastructure but leverage obviously. support is We end. be we on the to back they are right making customers shift in but focus by customers. doing versions the data about cross-selling value private some of And some And purchasing about side, that trends. we it's in going see is and clouds, them custom

So what generally that's we're seeing.

to exceeding the to that achieving confidence is that relative years. to continue we as make that customers then us contributes I'll would few then and out I one the there. team on more comment hand next Scott. it put in second and say the more success, quick and of delivering our we're progress and AI a to that see Scott? and and solutions the we my scale those numbers delivering more acceptance numbers, their I'll web and the

order I is digestion product the I right, No, last to of is rates about you to what said inventory that Chuck. happened it the think because hard compare right all growth go think year-on-year Ben, that year way The with needed it now, on.

is these something better we're the that quarters seeing WiFi end back platform yesterday is you demand we're that start right like overall it. -- making to one the easier with rates standpoint. that pattern could we investments is demand order sequential we're look product, platform Splunk run to at normalizing now look sense can thing that do ex combined are to be in what growth we control the And a in begin So to just the sequential see product launched fits get and as off. that either we're platform that demand same lap Those demand the doing back investments normal, a paying product in what's X marketplace. with of lap the coming some these you'll the the the AI, as more into we that more is going making into normal across from investments be discern work that say would of I a networking happening to that portfolio

we drive numbers right when 'XX, we're with a that investments to wanted making chance that out. we Obviously, I only what ensure good be off. little are now, to to We that hit as the And out. in overachieve And but bit that. we to space about feel to put got on and I'd conservative 'XX so paying say not we put a them growth those, had those

Evercore. Daryanani Amit from

this I were revenues quarter. guess time. net follow-up at same a I'll booking and Scott, ask XX% question the down

should then the for and Just help X ease. And or expectation are of hyperscale talk for one grow the the to about year. sequentially grew of your you about really we of opportunity Hypershield, more over the next And normalized, how years, that expectations? us how the against excited did up to understand XXXX rest rest the big now backlog that that is stack

start sure first the being got got it background question, there say, revenue I asking Amit, I'm XX%. networking I'll I you noise were Yes. was question, with one, but the as started not down to entire on some the

of to 'XX that's 'XX, backlog very backlog third very of comparing into was the of Of we supply quickly. shipment up built excess shipment course, where constraints had backlog we QX substantial QX with basically it. heavy the very a cleared X and remember consecutive quarters during that had that

out, gives our you has It's happening that sense I line If last we network better think a of the on some for been in what's did I'd say trending AI with you that demand. of expectations. you in math net call. yet turned just spot bright be seeing but strong that momentum that us. into as Chuck The certainly from a for to inside we're revenue, for are pointed we DC standpoint. us. bookings haven't out, has AI good switching, seeing continued

we're feeling expectations networking. second in afterwards and missed we'll to back overall if question, get So good our of relative seeing the you part I circle to us. what And to about your

relative or know question both And about are Yes. excited? you am there Hypershield more to said Hyperfabric. second think your then I I hyper I words. --

application enterprise equally our customers very optimistic AI about are mentioned. perspective, the Hypershield perspective what I a I X security from to them. excited, are am for excited about strategic those an are a you meets mean large Hyperfabric So will from deployment and customers perspective, probably them. incredibly think what But security

of about center our core And years. are applications. important West simplify things I think secondly, think to we the for is to deployment do customers most our East be X important both X few will how very These you next those if data objectives security. AI which have, the the customers So of technologies that

Jefferies. with Notter George

and detail also I Any is. can you quarter? duty on quite as some in that obviously, break what you that the gross a to gross last as the Splunk saw well. get the in to impact chance margin. And improvement just in, margin curious was obviously, quarter Obviously, be I'd out improvement. sequential wanted quarter more drawdown then,

probably servers wondering details of terms I'm product the Any of a here. if pretty mix there. factor drove a be is product So great. think UCS there day big difference mix big lines would or in was kind that other I of the

that. a And would the back. getting It's -- from the say There of between margin of will as QX, driven QX, benefit filings that a was having that place. at been I onetime the a we process duty be X of now less in benefit look QX got be It I we've during together, will substantial contributor the getting approved years working just QX. to process Sure. we've about getting it that improvement cash that duty significantly X.X in of but a this and particular, saw drawback. in probably tail those improvement gross all talked point couple just somewhere we not point of the and by through QX, and

front, a in, coming not On from we the got product Splunk mix definitely benefit surprisingly.

credit of continuing on also has to That's the other been in that margins us done product there and I you to they gross give lines inside out, team our as continue. The drive job nice and XX% had product earlier, range. cost tailwind favorable product As our supply said costs also chain know, a mix I margins overall. teams a driving -- to some product cost gross out that across really There's will infrastructure.

X So that X we headwind pre-pandemic, prepandemic. between pricing trend and normalized out point I range the into into gross settling in would guided as QX which we exactly back we the somewhere margins that of is range. XX% seen of those that I had saw see full XX% to to that point kind year, is points

from standpoint. no a So change pricing

Fargo. Wells with Rakers Aaron

keep together I'll X right here.

converting characterize customers? back-end curious opportunity with the all the Any kind positioning of into front-end as networking focus the NVIDIA the this back how to that hyperscale So kind you as I'm great. revenue, move on opportunities? competitive in that on of I'm any would on of see network of we kind the leading you at these color AI curious side. into we then front of would AI forward, seen Ethernet of sticking AI how Have theme. and you And backlog possibly end be

Aaron. Thanks,

that I way front-end infrastructure And And there's X updating back then drive So in the into I my the front-end AI end pervasive and for be they're models enterprise deployment on meaningful pretty about need what is AI lot actually is do will a their the then preparing subsequently different investment today it the actually to the will end of for and capacity has which know. that of AI been to opinion, think I because will one, is at back those capacity leveraging back-end cloud are of applications. as we -- on to apps. the own going popular think topic, prepare end lately, they're training looking Number things the the front deliver think that customers then going both all their that infrastructure that there.

stopped decisions in workloads to to investment continuing haven't run workloads make cloud. we're in to moving to the front want the the think where Customers those They I so see cloud. And continue end. they

the we've about that we're includes Spectrum talked But some building increased that, and cases, we technology, So the success featured layer. pervasive driver the I the only a networks. When look areas NVIDIA, networks. on capacity And demand software compete with the years with customers with video, I compete. are but In enterprise positioning obviously, seeing most be earlier we built it. we But look, I I out deployment think also the still in there we several where in using not are great we they're partners Ethernet see great highly to it the have products back-end we with. that competitive partnered have XX think front-end AI you There live in with of lot of look, X, a examples their that meaningfully. GPUs, got meaningful are will that our happening. world do going the at experience of We're that of think, customers, where there.

of many diversity. also customers other thing our the think largest I vendor that want is

all ability up us good and And own combined our intellectual of a with position stack bring to the own our things so our in pretty I in think entire competitively. down property those puts silicon

Karl Ackerman with BNP Paribas.

first X about implies on to which outlook, quarter have may. million. is if the Scott, want focus well, that general OpEx I I as $XX I down

the calendar I year this has think of been roughly realignment most workforce XX% completed.

hoping 'XX some passed on follow-up. savings 'XX having was I so And growth need into address accelerate excess to you your versus you a and profitability? you areas could to believe investment to drive do And which I of cost business have

to Do you ask and want ahead follow-up Karl? go a now,

Sure. Yes.

to of digits, networking amazing top triple hardware for be product these terms in which of by about today across But quite spoke silicon growing orders just and switches In driven AI cloud hyperscaler or you primarily I one are which the is guess, hyperscalers follow-up, for orders growth rack is is great. switches? and all now

triple about Yes, OpEx then digits. I'll and growing start with you the let Chuck, that talk the cloud partners are

year as middle not part in year there last of closed to compare We is remember OpEx, QX course, the did to when will QX. QX Splunk company. the our you we have got of Splunk of this the of On of growth,

is lot the There we when growth but rate did of a of out our that and driving results not those fastest it coming parts the see Splunk. talked business, reinvesting growing the turning about factor. you that. restructuring It finding across some OpEx of the savings coming that in more and security, year-on-year efficiencies some AI was and what namely around cost it, cost not out the company the So about was the addition motivating in simply of We and great driving you see necessarily savings. about was of are of

addition investing, we're by mostly as the X those about areas OpEx driven rate and the year-on-year being the think of So but Splunk. growth

I second are we was the all on growth question, balanced X I X we're largest pretty that out of then it say think pleased just would across all AI your that the not one XXX% It front. them. of on And year-over-year. And -- of customer was in Karl, infrastructure excess

pretty plugging keep in nature distributed the happy but pretty to away, the and segment. business continue of balanced that it with we'll was So we're

for going it Chuck to I'm remarks. closing hand right. some over to All

well us Yes. of strong seen are really delivering us, I for thank got the that the the just as to our and want again to a teams joining particularly thank this innovation for the as want everybody teams I their year we've quarter that to in Cisco off execution first strong start.

this talk happening. I think that as we about whole AI transformation that's

there I these the the X to networks Number of areas on. build continue one that our help in big focused think, required infrastructure models. to end back customers training again, are is we're

AI space. And support final work and this who look simplistic to refresh and customers we I to gives We is see data the for of deployment the us think the that cloud And front-end the to providers AI great then the second think going enable. ability well. private and that to for cloud the as their that centers in area AI opportunity. the with and of the this them we our with preparing transition portfolio see with customers happening is then we're are at upgrades and data opportunities breadth the we continuing a enterprise applications again, side work requirements center enterprise on see we

all next momentum what this we high a continued Thank Federal to notwithstanding gives also us to U.S. of degree quarter confidence, quarter. that talking think We look again happened you. and of you in in security, our forward

February next XXXX will fiscal Wednesday, p.m. Pacific quarter XXXX Time, at results, Cisco's p.m. today's concludes X:XX be our Eastern year which second XX, call, call. reflect X:XX quarterly This on will Time.

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