false 0000858877 0000858877 2024-08-14 2024-08-14

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 14, 2024

 

 

CISCO SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-39940   77-0059951

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

   (IRS Employer
Identification No.)

 

170 West Tasman Drive, San Jose, California   95134-1706
(Address of principal executive offices)   (Zip Code)

(408) 526-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading
Symbol(s)

  

Name of each exchange
on which registered

Common Stock, par value $0.001 per share   CSCO   The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02.

Results of Operations and Financial Condition.

On August 14, 2024, Cisco Systems, Inc. (“Cisco”) reported its results of operations for its fiscal fourth quarter and fiscal year 2024 ended July 27, 2024. A copy of the press release issued by Cisco concerning the foregoing results is furnished herewith as Exhibit 99.1.

The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of Cisco, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

The attached exhibit includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share data for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco’s results of operations in conjunction with the corresponding GAAP measures.

Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations.

For its internal budgeting process, Cisco’s management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related/divestiture costs, significant asset impairments and restructurings, significant litigation settlements and other contingencies (such as legal and indemnification settlements and the supplier component remediation amounts), Russia-Ukraine war costs, gains and losses on investments, the income tax effects of the foregoing, and significant tax matters. Cisco’s management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future, there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results.

As described above, Cisco excludes the following items from one or more of its non-GAAP measures when applicable:

Share-based compensation expense. These expenses consist primarily of expenses for employee restricted stock and restricted stock units, employee stock options, and employee stock purchase rights, including such expenses associated with acquisitions. Cisco excludes share-based compensation expense from its non-GAAP measures primarily because they are non-cash expenses and Cisco believes that it is useful to investors to understand the impact of share-based compensation to its results of operations.

Amortization of acquisition-related intangible assets. Cisco incurs amortization of intangible assets (which may include impairment charges from the write-downs of purchased intangible assets) in connection with acquisitions. Such intangible assets may include purchased intangible assets with finite lives, capitalized in process research and development and goodwill. Cisco excludes these items because Cisco does not believe these expenses are reflective of ongoing operating results in the period incurred. These amounts arise from Cisco’s prior acquisitions and have no direct correlation to the operation of Cisco’s business.

Acquisition-related/divestiture costs. In connection with its business combinations, Cisco incurs compensation expense, changes to the fair value of contingent consideration, as well as professional fees and other direct expenses such as restructuring activities related to the acquired company. In addition, from time to time Cisco enters into foreign currency transactions related to pending acquisitions, and may incur gains or losses on such transactions. Cisco may also from time to time incur gains or losses from divestitures of a business area as well as professional fees and other direct expenses associated with such transactions. Cisco excludes such compensation expense, changes to the fair value of contingent consideration, fees, other direct expenses, and gains and losses, as they are related to acquisitions and divestitures and have no direct correlation to the operation of Cisco’s business.

Significant asset impairments and restructurings. Cisco from time to time incurs significant asset impairments, restructuring charges, and gains or losses on asset disposals. Cisco excludes these items, when significant, because it does not believe they are reflective of ongoing business and operating results.

Significant litigation settlements and other contingencies. Cisco from time to time may incur charges or benefits related to significant litigation settlements and other contingencies. Cisco excludes these charges or benefits, when significant, because it does not believe they are reflective of ongoing business and operating results.

Russia-Ukraine war costs. In March 2022, in connection with the Russian invasion of Ukraine, Cisco announced its intention to stop business operations in Russia and Belarus for the foreseeable future. Cisco is in the process of an orderly wind-down and exit of its business in Russia and Belarus. Cisco has and may incur certain non-recurring charges related to this exit plan. These charges include non-recoverability of certain assets, special personnel-related charges in order to support impacted employees (unrelated to ordinary compensation expenses), potential future litigation and other contingencies, and other exit related costs. Cisco excludes these charges because it believes they are not normal and recurring with respect to ongoing business and operating results. These excluded amounts do not include any impacts to revenue.

Gains and losses on investments. Cisco excludes gains and losses on our marketable equity investments and our investments in privately held companies, because it does not believe they are reflective of ongoing business and operating results.

Income tax effects of the foregoing. This amount is used to present each of the amounts described above on an after-tax basis consistent with the presentation of non-GAAP net income.

Significant tax matters. Cisco may incur tax charges or benefits that are (i) related to prior periods or (ii) not reflective of its ongoing provision for income taxes. These tax charges or benefits may be the result of events such as changes in tax legislation, court decisions, and/or tax settlements. Cisco excludes these charges or benefits, when significant, because it does not believe they are reflective of ongoing business and operating results.

From time to time in the future, there may be other items that Cisco may exclude if it believes that doing so is consistent with the goal of providing useful information to investors and management.

Cisco will incur share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs, and gains and losses on investments, in future periods. Significant asset impairments, restructurings, significant litigation settlements and other contingencies, Russia-Ukraine war costs, and divestiture costs could occur in future periods. Cisco could also be impacted by significant tax matters in future periods.

Item 2.05.

Costs Associated with Exit or Disposal Activities

On August 14, 2024, Cisco announced a restructuring plan to allow it to invest in key growth opportunities and drive more efficiencies in its business. This restructuring plan is expected to impact approximately 7 percent of Cisco’s global workforce. Cisco currently estimates that it will recognize pre-tax charges to its GAAP financial results of up to $1 billion consisting of severance and other one-time termination benefits, and other costs. These charges are primarily cash-based. Cisco expects to recognize approximately $700 million to $800 million of these charges in the first quarter of fiscal 2025 with the remaining amount expected to be recognized during the rest of fiscal 2025.

The foregoing contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include the size and scope of the restructuring, and the approximate amount and expected timing of the related charges. Statements regarding future events are based on Cisco’s current expectations and are necessarily subject to associated risks related to the completion of the restructuring in the manner anticipated by Cisco. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: Cisco’s ability to achieve the benefits of the announced restructuring and possible changes in the size and timing of the related charges. For information regarding other factors that could cause Cisco’s results to vary from expectations, please see the “Risk Factors” section of Cisco’s periodic report filings with the Securities and Exchange Commission, including its most recent reports on Form 10-K and 10-Q. Cisco undertakes no obligation to revise or update publicly any forward-looking statements.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit

Number

   

Description of Document

99.1    Press Release of Cisco, dated August 14, 2024, reporting the results of operations for Cisco’s fiscal fourth quarter and fiscal year 2024 ended July 27, 2024.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

      CISCO SYSTEMS, INC.
 Dated: August 14, 2024     By:  

/s/ R. Scott Herren

    Name:   R. Scott Herren
    Title:   Executive Vice President and Chief Financial Officer

Exhibit 99.1

 

LOGO

 

Press Contact:      Investor Relations Contact:
Robyn Blum      Sami Badri
Cisco      Cisco
1 (408) 930-8548      1 (469) 420-4834
rojenkin@cisco.com      sambadri@cisco.com

CISCO REPORTS FOURTH QUARTER AND FISCAL YEAR 2024 EARNINGS

News Summary:

 

  •  

Product order growth of 14% year over year; up 6% excluding Splunk

 

  •  

Revenue of $13.6 billion in Q4 FY 2024, above the high end of our guidance range

 

  •  

Strong margins:

 

  •  

Q4 FY 2024 GAAP gross margin of 64.4% and Non-GAAP gross margin of 67.9%

 

  •  

FY 2024 GAAP gross margin of 64.7% and Non-GAAP gross margin of 67.5%, the highest in 20 years

 

  •  

Solid growth in software and recurring metrics in FY 2024, enhanced by Splunk

 

  •  

Total subscription revenue of $27.4 billion including Splunk, representing 51% of total revenue

 

  •  

Total annualized recurring revenue (ARR) at $29.6 billion, including $4.3 billion from Splunk, up 22% year over year

 

  •  

Total software revenue at $18.4 billion, up 9% year over year, with software subscription revenue of $16.4 billion, up 15% year over year, making up 89% of total software revenue

 

•  

Q4 FY 2024 Results:

 

  •  

Revenue: $13.6 billion

 

  •  

Decrease of 10% year over year

 

  •  

Earnings per Share: GAAP: $0.54; Non-GAAP: $0.87

 

  •  

GAAP EPS decreased 44% year over year

 

  •  

Non-GAAP EPS decreased 24% year over year

 

•  

FY 2024 Results:

 

  •  

Revenue: $53.8 billion

 

  •  

Decrease of 6% year over year

 

  •  

Earnings per Share: GAAP: $2.54; Non-GAAP: $3.73

 

  •  

GAAP EPS decreased 17% year over year

 

  •  

Non-GAAP EPS decreased 4% year over year

 

•  

Q1 FY 2025 Guidance:

 

  •  

Revenue: $13.65 billion to $13.85 billion

 

  •  

Earnings per Share: GAAP: $0.35 to $0.42; Non-GAAP: $0.86 to $0.88

 

•  

FY 2025 Guidance:

 

  •  

Revenue: $55.0 billion to $56.2 billion

 

  •  

Earnings per Share: GAAP: $1.93 to $2.05; Non-GAAP: $3.52 to $3.58

 

1

SAN JOSE, Calif. — August 14, 2024 — Cisco today reported fourth quarter and fiscal year results for the period ended July 27, 2024. Cisco reported fourth quarter revenue of $13.6 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.2 billion or $0.54 per share, and non-GAAP net income of $3.5 billion or $0.87 per share.

“We delivered a strong close to fiscal 2024” said Chuck Robbins, chair and CEO of Cisco. “In our fourth quarter, we saw steady customer demand with order growth across the business as customers rely on Cisco to connect and protect all aspects of their organizations in the era of AI.”

“Revenue, gross margin and EPS in Q4 were at the high end or above our guidance range, demonstrating our operating discipline” said Scott Herren, CFO of Cisco. “As we look to build on our performance, we remain laser focused on growth and consistent execution as we invest to win in AI, cloud and cybersecurity, while maintaining capital returns.”

Q4 GAAP Results

 

     Q4 FY 2024      Q4 FY 2023      Vs. Q4 FY 2023  

Revenue

    $ 13.6 billion      $ 15.2 billion        (10 )% 

Net Income

    $ 2.2 billion      $ 4.0 billion        (45 )% 

Diluted Earnings per Share (EPS)

    $ 0.54      $ 0.97        (44 )% 

The acquisition of Splunk, including financing costs, had a negative impact of $0.16 to GAAP EPS, for the fourth quarter of fiscal 2024.

Q4 Non-GAAP Results

 

     Q4 FY 2024      Q4 FY 2023      Vs. Q4 FY 2023  

Net Income

    $ 3.5 billion      $ 4.7 billion        (25 )% 

EPS

    $ 0.87      $ 1.14        (24 )% 

The acquisition of Splunk, including financing costs, had a negative impact of $0.04 to Non-GAAP EPS, for the fourth quarter of fiscal 2024.

Fiscal Year GAAP Results

 

     FY 2024      FY 2023      Vs. FY 2023  

Revenue

    $ 53.8 billion      $ 57.0 billion        (6 )% 

Net Income

    $ 10.3 billion      $ 12.6 billion        (18 )% 

EPS

    $ 2.54      $ 3.07        (17 )% 

The acquisition of Splunk, including financing costs, had a negative impact of $0.25 to GAAP EPS, for fiscal 2024.

Fiscal Year Non-GAAP Results

 

     FY 2024      FY 2023      Vs. FY 2023  

Net Income

    $ 15.2 billion      $ 16.0 billion        (5 )% 

EPS

    $ 3.73      $ 3.89        (4 )% 

The acquisition of Splunk, including financing costs, had a negative impact of $0.04 to Non-GAAP EPS, for fiscal 2024.

Reconciliations between net income, EPS, and other measures on a GAAP and non-GAAP basis are provided in the tables located in the section entitled “Reconciliations of GAAP to non-GAAP Measures.”

Cisco Declares Quarterly Dividend

Cisco has declared a quarterly dividend of $0.40 per common share to be paid on October 23, 2024, to all stockholders of record as of the close of business on October 2, 2024. Future dividends will be subject to Board approval.

 

2

Financial Summary

All comparative percentages are on a year-over-year basis unless otherwise noted.

Q4 FY 2024 Highlights

Revenue — Total revenue was $13.6 billion, down 10%, with product revenue down 15% and services revenue up 6%. Splunk contributed approximately $960 million of total revenue for the fourth quarter of fiscal 2024.

Revenue by geographic segment was: Americas down 11%, EMEA down 11%, and APJC down 6%. Product revenue performance reflected growth in Security up 81% and Observability up 41%. Networking was down 28%. Product revenue in Collaboration was flat. Security and Observability, excluding Splunk, grew 6% and 12%, respectively, in the fourth quarter of fiscal 2024.

Gross Margin — On a GAAP basis, total gross margin, product gross margin, and services gross margin were 64.4%, 63.0%, and 67.8%, respectively, as compared with 64.1%, 63.6%, and 65.7%, respectively, in the fourth quarter of fiscal 2023.

On a non-GAAP basis, total gross margin, product gross margin, and services gross margin were 67.9%, 67.0%, and 70.3%, respectively, as compared with 65.9%, 65.5%, and 67.5%, respectively, in the fourth quarter of fiscal 2023.

Total gross margins by geographic segment were: 67.7% for the Americas, 69.2% for EMEA and 66.4% for APJC.

Operating Expenses — On a GAAP basis, operating expenses were $6.2 billion, up 12%, and were 45.2% of revenue. Non-GAAP operating expenses were $4.8 billion, up 4%, and were 35.4% of revenue.

Operating Income — GAAP operating income was $2.6 billion, down 38%, with GAAP operating margin of 19.2%. Non-GAAP operating income was $4.4 billion, down 17%, with non-GAAP operating margin at 32.5%.

Provision for Income Taxes — The GAAP tax provision rate was 9.8%. The non-GAAP tax provision rate was 16.6%.

Net Income and EPS — On a GAAP basis, net income was $2.2 billion, a decrease of 45%, and EPS was $0.54, a decrease of 44%. On a non-GAAP basis, net income was $3.5 billion, a decrease of 25%, and EPS was $0.87, a decrease of 24%.

Cash Flow from Operating Activities — $3.7 billion for the fourth quarter of fiscal 2024, a decrease of 37% compared with $6.0 billion for the fourth quarter of fiscal 2023.

FY 2024 Highlights

Revenue — Total revenue was $53.8 billion, a decrease of 6%. Splunk contributed approximately $1.4 billion of total revenue for fiscal 2024.

Net Income and EPS — On a GAAP basis, net income was $10.3 billion, a decrease of 18%, and EPS was $2.54, a decrease of 17%. On a non-GAAP basis, net income was $15.2 billion, a decrease of 5% compared to fiscal 2023, and EPS was $3.73, a decrease of 4%.

Cash Flow from Operating Activities — $10.9 billion for fiscal 2024, a decrease of 45% compared with $19.9 billion for fiscal 2023.

Balance Sheet and Other Financial Highlights

Cash and Cash Equivalents and Investments — $17.9 billion at the end of the fourth quarter of fiscal 2024, compared with $18.8 billion at the end of the third quarter of fiscal 2024, and compared with $26.1 billion at the end of fiscal 2023.

Remaining Performance Obligations (RPO) — $41.0 billion, up 18% in total, with 51% of this amount to be recognized as revenue over the next 12 months. Product RPO were up 27% and services RPO were up 10%.

Deferred Revenue — $28.5 billion, up 11% in total, with deferred product revenue up 15%. Deferred service revenue was up 9%.

Capital Allocation — In the fourth quarter of fiscal 2024, we returned $3.6 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.40 per common share, or $1.6 billion, and repurchased approximately 43 million shares of common stock under our stock repurchase program at an average price of $46.80 per share for an aggregate purchase price of $2.0 billion. The remaining authorized amount for stock repurchases under the program is $5.2 billion with no termination date.

 

3

Guidance

Cisco estimates the following results for the first quarter of fiscal 2025:

 

Q1 FY 2025

       

Revenue

    $ 13.65 billion - $13.85 billion  

Non-GAAP gross margin

      67% - 68%  

Non-GAAP operating margin

      32% - 33%  

Non-GAAP EPS

      $0.86 - $0.88  

Cisco estimates that GAAP EPS will be $0.35 to $0.42 for the first quarter of fiscal 2025.

Cisco estimates the following results for fiscal 2025:

 

FY 2025

       

Revenue

    $ 55.0 billion - $56.2 billion  

Non-GAAP EPS

      $3.52 - $3.58  

Cisco estimates that GAAP EPS will be $1.93 to $2.05 for fiscal 2025.

Our Q1 FY 2025 and FY 2025 guidance assumes an effective tax provision rate of approximately 17% for GAAP and approximately 19% for non-GAAP results.

A reconciliation between the guidance on a GAAP and non-GAAP basis is provided in the tables entitled “GAAP to non-GAAP Guidance” located in the section entitled “Reconciliations of GAAP to non-GAAP Measures.”

Editor’s Notes:

 

  •  

Q4 fiscal year 2024 conference call to discuss Cisco’s results along with its guidance will be held on Wednesday, August 14, 2024 at 1:30 p.m. Pacific Time. Conference call number is 1-888-848-6507 (United States) or 1-212-519-0847 (international).

 

  •  

Conference call replay will be available from 4:00 p.m. Pacific Time, August 14, 2024 to 4:00 p.m. Pacific Time, August 20, 2024 at 1-866-510-4837 (United States) or 1-203-369-1943 (international). The replay will also be available via webcast on the Cisco Investor Relations website at https://investor.cisco.com.

 

  •  

Additional information regarding Cisco’s financials, as well as a webcast of the conference call with visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, August 14, 2024. Text of the conference call’s prepared remarks will be available within 24 hours of completion of the call. The webcast will include both the prepared remarks and the question-and-answer session. This information, along with the GAAP to non-GAAP reconciliation information, will be available on the Cisco Investor Relations website at https://investor.cisco.com.

 

4

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per-share amounts)

(Unaudited)

 

     Three Months Ended     Fiscal Year Ended  
     July 27,
2024		     July 29,
2023		     July 27,
2024		     July 29,
2023		  

REVENUE:

         

Product

    $ 9,858     $ 11,650     $ 39,253     $ 43,142  

Services

      3,784       3,553       14,550       13,856  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total revenue

      13,642       15,203       53,803       56,998  
  

 

 

    

 

 

    

 

 

    

 

 

  

COST OF SALES:

         

Product

      3,644       4,237       14,339       16,590  

Services

      1,217       1,218       4,636       4,655  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total cost of sales

      4,861       5,455       18,975       21,245  
  

 

 

    

 

 

    

 

 

    

 

 

  

GROSS MARGIN

      8,781       9,748       34,828       35,753  

OPERATING EXPENSES:

         

Research and development

      2,179       1,953       7,983       7,551  

Sales and marketing

      2,841       2,579       10,364       9,880  

General and administrative

      763       690       2,813       2,478  

Amortization of purchased intangible assets

      268       70       698       282  

Restructuring and other charges

      112       203       789       531  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

      6,163       5,495       22,647       20,722  
  

 

 

    

 

 

    

 

 

    

 

 

  

OPERATING INCOME

      2,618       4,253       12,181       15,031  

Interest income

      270       312       1,365       962  

Interest expense

      (418 )      (111 )      (1,006 )      (427 ) 

Other income (loss), net

      (74 )      17       (306 )      (248 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Interest and other income (loss), net

      (222 )      218       53       287  
  

 

 

    

 

 

    

 

 

    

 

 

  

INCOME BEFORE PROVISION FOR INCOME TAXES

      2,396       4,471       12,234       15,318  

Provision for income taxes

      234       513       1,914       2,705  
  

 

 

    

 

 

    

 

 

    

 

 

  

NET INCOME

    $ 2,162     $ 3,958     $ 10,320     $ 12,613  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income per share:

         

Basic

    $ 0.54     $ 0.97     $ 2.55     $ 3.08  
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

    $ 0.54     $ 0.97     $ 2.54     $ 3.07  
  

 

 

    

 

 

    

 

 

    

 

 

  

Shares used in per-share calculation:

         

Basic

      4,018       4,071       4,043       4,093  
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

      4,035       4,093       4,062       4,105  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

5

CISCO SYSTEMS, INC.

REVENUE BY SEGMENT

(In millions, except percentages)

 

     July 27, 2024  
     Three Months Ended     Fiscal Year Ended  
     Amount      Y/Y%     Amount      Y/Y%  

Revenue:

           

Americas

    $ 8,068        (11 )%    $ 31,971        (4 )% 

EMEA

      3,511        (11 )%      14,117        (7 )% 

APJC

      2,064        (6 )%      7,716        (8 )% 
  

 

 

       

 

 

     

Total

    $ 13,642        (10 )%    $ 53,803        (6 )% 
  

 

 

       

 

 

     

Amounts may not sum and percentages may not recalculate due to rounding.

CISCO SYSTEMS, INC.

GROSS MARGIN PERCENTAGE BY SEGMENT

(In percentages)

 

     July 27, 2024
     Three Months Ended   Fiscal Year Ended

Gross Margin Percentage:

     

Americas

    67.7%   66.8%

EMEA

    69.2%   69.1%

APJC

    66.4%   67.2%

CISCO SYSTEMS, INC.

REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES

(In millions, except percentages)

 

     July 27, 2024  
     Three Months Ended     Fiscal Year Ended  
     Amount      Y/Y%     Amount      Y/Y%  

Revenue:

           

Networking

    $ 6,804        (28 )%    $ 29,229        (15 )% 

Security

      1,787        81 %      5,075        32 % 

Collaboration

      1,019        — %      4,113        2 % 

Observability

      248        41 %      837        27 % 
  

 

 

       

 

 

     

Total Product

      9,858        (15 )%      39,253        (9 )% 

Services

      3,784        6 %      14,550        5 % 
  

 

 

       

 

 

     

Total

    $ 13,642        (10 )%    $ 53,803        (6 )% 
  

 

 

       

 

 

     

Security and Observability, excluding Splunk, grew 6% and 12%, respectively, in the fourth quarter of fiscal 2024, and 4% and 15%, respectively, for fiscal 2024.

Amounts may not sum and percentages may not recalculate due to rounding.

 

6

CISCO SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

     July 27,
2024		      July 29,
2023		  

ASSETS

      

Current assets:

      

Cash and cash equivalents

    $ 7,508      $ 10,123  

Investments

      10,346        16,023  

Accounts receivable, net of allowance of $87 at July 27, 2024 and $85 at July 29, 2023

      6,685        5,854  

Inventories

      3,373        3,644  

Financing receivables, net

      3,338        3,352  

Other current assets

      5,612        4,352  
  

 

 

     

 

 

  

Total current assets

      36,862        43,348  

Property and equipment, net

      2,090        2,085  

Financing receivables, net

      3,376        3,483  

Goodwill

      58,660        38,535  

Purchased intangible assets, net

      11,219        1,818  

Deferred tax assets

      6,262        6,576  

Other assets

      5,944        6,007  
  

 

 

     

 

 

  

TOTAL ASSETS

    $ 124,413      $ 101,852  
  

 

 

     

 

 

  

LIABILITIES AND EQUITY

      

Current liabilities:

      

Short-term debt

    $ 11,341      $ 1,733  

Accounts payable

      2,304        2,313  

Income taxes payable

      1,439        4,235  

Accrued compensation

      3,608        3,984  

Deferred revenue

      16,249        13,908  

Other current liabilities

      5,643        5,136  
  

 

 

     

 

 

  

Total current liabilities

      40,584        31,309  

Long-term debt

      19,621        6,658  

Income taxes payable

      3,985        5,756  

Deferred revenue

      12,226        11,642  

Other long-term liabilities

      2,540        2,134  
  

 

 

     

 

 

  

Total liabilities

      78,956        57,499  

Total equity

      45,457        44,353  
  

 

 

     

 

 

  

TOTAL LIABILITIES AND EQUITY

    $ 124,413      $ 101,852  
  

 

 

     

 

 

  

 

7

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

     Fiscal Year Ended  
     July 27,
2024		     July 29,
2023		  

Cash flows from operating activities:

     

Net income

    $ 10,320     $ 12,613  

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation, amortization, and other

      2,507       1,726  

Share-based compensation expense

      3,074       2,353  

Provision for receivables

      34       31  

Deferred income taxes

      (972 )      (2,085 ) 

(Gains) losses on divestitures, investments and other, net

      215       206  

Change in operating assets and liabilities, net of effects of acquisitions and divestitures:

     

Accounts receivable

      (289 )      734  

Inventories

      275       (1,069 ) 

Financing receivables

      76       1,102  

Other assets

      (671 )      5  

Accounts payable

      (90 )      27  

Income taxes, net

      (4,539 )      1,218  

Accrued compensation

      (696 )      651  

Deferred revenue

      1,220       2,326  

Other liabilities

      416       48  
  

 

 

    

 

 

  

Net cash provided by operating activities

      10,880       19,886  
  

 

 

    

 

 

  

Cash flows from investing activities:

     

Purchases of investments

      (4,230 )      (10,871 ) 

Proceeds from sales of investments

      4,136       1,054  

Proceeds from maturities of investments

      6,367       5,978  

Acquisitions, net of cash and cash equivalents acquired

      (25,994 )      (301 ) 

Purchases of investments in privately held companies

      (284 )      (185 ) 

Return of investments in privately held companies

      202       90  

Acquisition of property and equipment

      (670 )      (849 ) 

Other

      (5 )      (23 ) 
  

 

 

    

 

 

  

Net cash used in investing activities

      (20,478 )      (5,107 ) 
  

 

 

    

 

 

  

Cash flows from financing activities:

     

Issuances of common stock

      714       700  

Repurchases of common stock - repurchase program

      (5,787 )      (4,293 ) 

Shares repurchased for tax withholdings on vesting of restricted stock units

      (992 )      (597 ) 

Short-term borrowings, original maturities of 90 days or less, net

      478       (602 ) 

Issuances of debt

      31,818       —   

Repayments of debt

      (9,826 )      (500 ) 

Repayments of Splunk convertible debt, net

      (3,140 )      —   

Dividends paid

      (6,384 )      (6,302 ) 

Other

      (37 )      (32 ) 
  

 

 

    

 

 

  

Net cash provided by (used in) financing activities

      6,844       (11,626 ) 
  

 

 

    

 

 

  

Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents

      (31 )      (105 ) 
  

 

 

    

 

 

  

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents

      (2,785 )      3,048  

Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of fiscal year

      11,627       8,579  
  

 

 

    

 

 

  

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of fiscal year

    $ 8,842     $ 11,627  
  

 

 

    

 

 

  

Supplemental cash flow information:

     

Cash paid for interest

    $ 583     $ 376  

Cash paid for income taxes, net

    $ 7,426     $ 3,571  

 

8

CISCO SYSTEMS, INC.

REMAINING PERFORMANCE OBLIGATIONS

(In millions, except percentages)

 

     July 27, 2024     April 27, 2024     July 29, 2023  
     Amount      Y/Y%     Amount      Y/Y%     Amount      Y/Y%  

Product

    $ 20,055        27 %    $ 18,876        29 %    $ 15,802        12 % 

Services

      20,993        10 %      19,898        14 %      19,066        9 % 
  

 

 

       

 

 

       

 

 

     

Total

    $ 41,048        18 %    $ 38,774        21 %    $ 34,868        11 % 
  

 

 

       

 

 

       

 

 

     

We expect 51% of total RPO at July 27, 2024 will be recognized as revenue over the next 12 months.

CISCO SYSTEMS, INC.

DEFERRED REVENUE

(In millions)

 

     July 27,
2024		      April 27,
2024		      July 29,
2023		  

Deferred revenue:

         

Product

    $ 13,219      $ 12,856      $ 11,505  

Services

      15,256        14,619        14,045  
  

 

 

     

 

 

     

 

 

  

Total

    $ 28,475      $ 27,475      $ 25,550  
  

 

 

     

 

 

     

 

 

  

Reported as:

         

Current

    $ 16,249      $ 15,751      $ 13,908  

Noncurrent

      12,226        11,724        11,642  
  

 

 

     

 

 

     

 

 

  

Total

    $ 28,475      $ 27,475      $ 25,550  
  

 

 

     

 

 

     

 

 

  

CISCO SYSTEMS, INC.

DIVIDENDS PAID AND REPURCHASES OF COMMON STOCK

(In millions, except per-share amounts)

 

     DIVIDENDS      STOCK REPURCHASE PROGRAM      TOTAL  

Quarter Ended

    Per Share      Amount      Shares      Weighted-
Average Price
per Share		      Amount      Amount  

Fiscal 2024

                  

July 27, 2024

    $ 0.40      $ 1,606        43      $ 46.80      $ 2,002      $ 3,608  

April 27, 2024

    $ 0.40      $ 1,615        26      $ 49.22      $ 1,256      $ 2,871  

January 27, 2024

    $ 0.39      $ 1,583        25      $ 49.54      $ 1,254      $ 2,837  

October 28, 2023

    $ 0.39      $ 1,580        23      $ 54.53      $ 1,252      $ 2,832  

Fiscal 2023

                  

July 29, 2023

    $ 0.39      $ 1,589        25      $ 50.49      $ 1,254      $ 2,843  

April 29, 2023

    $ 0.39      $ 1,593        25      $ 49.45      $ 1,259      $ 2,852  

January 28, 2023

    $ 0.38      $ 1,560        26      $ 47.72      $ 1,256      $ 2,816  

October 29, 2022

    $ 0.38      $ 1,560        12      $ 43.76      $ 502      $ 2,062  

 

9

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP NET INCOME

(In millions)

 

     Three Months Ended      Fiscal Year Ended  
     July 27,
2024		      July 29,
2023		      July 27,
2024		      July 29,
2023		  

GAAP net income

    $ 2,162      $ 3,958      $ 10,320      $ 12,613  

Adjustments to cost of sales:

            

Share-based compensation expense

      133        103        514        396  

Amortization of acquisition-related intangible assets

      331        168        936        630  

Acquisition-related/divestiture costs

      21        14        34        18  

Supplier component remediation charge (adjustment), net

      —         (9 )       —         (9 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total adjustments to GAAP cost of sales

      485        276        1,484        1,035  
  

 

 

     

 

 

     

 

 

     

 

 

  

Adjustments to operating expenses:

            

Share-based compensation expense

      660        520        2,537        1,951  

Amortization of acquisition-related intangible assets

      268        70        698        282  

Acquisition-related/divestiture costs

      297        63        700        241  

Russia-Ukraine war costs

      —         (7 )       (12 )       —   

Significant asset impairments and restructurings

      112        203        789        531  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total adjustments to GAAP operating expenses

      1,337        849        4,712        3,005  
  

 

 

     

 

 

     

 

 

     

 

 

  

Adjustments to interest and other income (loss), net:

            

Russia-Ukraine war costs

      49        —         49        —   

(Gains) and losses on investments

      (32 )       (55 )       100        133  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total adjustments to GAAP interest and other income (loss), net

      17        (55 )       149        133  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total adjustments to GAAP income before provision for income taxes

      1,839        1,070        6,345        4,173  
  

 

 

     

 

 

     

 

 

     

 

 

  

Income tax effect of non-GAAP adjustments

      (315 )       (215 )       (1,360 )       (838 ) 

Significant tax matters

      (155 )       (133 )       (155 )       31  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total adjustments to GAAP provision for income taxes

      (470 )       (348 )       (1,515 )       (807 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Non-GAAP net income

    $ 3,531      $ 4,680      $ 15,150      $ 15,979  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

10

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP EPS

 

     Three Months Ended      Fiscal Year Ended  
     July 27,
2024		      July 29,
2023		      July 27,
2024		      July 29,
2023		  

GAAP EPS

    $ 0.54      $ 0.97      $ 2.54      $ 3.07  

Adjustments to GAAP:

            

Share-based compensation expense

      0.20        0.15        0.75        0.57  

Amortization of acquisition-related intangible assets

      0.15        0.06        0.40        0.22  

Acquisition-related/divestiture costs

      0.08        0.02        0.18        0.06  

Russia-Ukraine war costs

      0.01        —         0.01        —   

Significant asset impairments and restructurings

      0.03        0.05        0.19        0.13  

(Gains) and losses on investments

      (0.01 )       (0.01 )       0.02        0.03  

Income tax effect of non-GAAP adjustments

      (0.08 )       (0.05 )       (0.33 )       (0.20 ) 

Significant tax matters

      (0.04 )       (0.03 )       (0.04 )       0.01  
  

 

 

     

 

 

     

 

 

     

 

 

  

Non-GAAP EPS

    $ 0.87      $ 1.14      $ 3.73      $ 3.89  
  

 

 

     

 

 

     

 

 

     

 

 

  

Amounts may not sum or recalculate due to rounding.

CISCO SYSTEMS, INC.

GAAP TO NON-GAAP EPS

IMPACT OF SPLUNK ACQUISITION, INCLUDING FINANCING COSTS

 

     July 27, 2024  
     Three Months
Ended		      Fiscal Year
Ended		  

GAAP EPS Impact

    $ (0.16 )     $ (0.25 ) 

Amortization of acquisition-related intangible assets

      0.09        0.14  

Acquisition-related costs

      0.06        0.11  

Income tax effect of non-GAAP adjustments

      (0.03 )       (0.05 ) 
  

 

 

     

 

 

  

Non-GAAP EPS Impact

    $ (0.04 )     $ (0.04 ) 
  

 

 

     

 

 

  

Amounts may not sum due to rounding.

 

11

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET, AND NET INCOME

(In millions, except percentages)

 

     Three Months Ended  
     July 27, 2024  
     Product
Gross
Margin		     Services
Gross
Margin		     Total
Gross
Margin		     Operating
Expenses		     Y/Y     Operating
Income		     Y/Y     Interest
and
other
income
(loss),
net		     Net
Income		     Y/Y  

GAAP amount

    $ 6,214     $ 2,567     $ 8,781     $ 6,163       12 %    $ 2,618       (38 )%    $ (222 )    $ 2,162       (45 )% 

% of revenue

      63.0 %      67.8 %      64.4 %      45.2 %        19.2 %        (1.6 )%      15.8 %   

Adjustments to GAAP amounts:

                     

Share-based compensation expense

      57       76       133       660         793         —        793    

Amortization of acquisition-related intangible assets

      331       —        331       268         599         —        599    

Acquisition/divestiture-related costs

      5       16       21       297         318         —        318    

Russia-Ukraine war costs

      —        —        —        —          —          49       49    

Significant asset impairments and restructurings

      —        —        —        112         112         —        112    

(Gains) and losses on investments

      —        —        —        —          —          (32 )      (32 )   

Income tax effect/significant tax matters

      —        —        —        —          —          —        (470 )   
  

 

 

    

 

 

    

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

Non-GAAP amount

    $ 6,607     $ 2,659     $ 9,266     $ 4,826       4 %    $ 4,440       (17 )%    $ (205 )    $ 3,531       (25 )% 
  

 

 

    

 

 

    

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

% of revenue

      67.0 %      70.3 %      67.9 %      35.4 %        32.5 %        (1.5 )%      25.9 %   

 

     Three Months Ended  
     July 29, 2023  
     Product
Gross
Margin		     Services
Gross
Margin		     Total
Gross
Margin		     Operating
Expenses		     Operating
Income		     Interest
and
other
income
(loss),
net		     Net
Income		  

GAAP amount

    $ 7,413     $ 2,335     $ 9,748     $ 5,495     $ 4,253     $ 218     $ 3,958  

% of revenue

      63.6 %      65.7 %      64.1 %      36.1 %      28.0 %      1.4 %      26.0 % 

Adjustments to GAAP amounts:

               

Share-based compensation expense

      40       63       103       520       623       —        623  

Amortization of acquisition-related intangible assets

      168       —        168       70       238       —        238  

Acquisition/divestiture-related costs

      14       —        14       63       77       —        77  

Russia-Ukraine war costs

      —        —        —        (7 )      (7 )      —        (7 ) 

Supplier component remediation charge (adjustment), net

      (9 )      —        (9 )      —        (9 )      —        (9 ) 

Significant asset impairments and restructurings

      —        —        —        203       203       —        203  

(Gains) and losses on investments

      —        —        —        —        —        (55 )      (55 ) 

Income tax effect/significant tax matters

      —        —        —        —        —        —        (348 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP amount

    $ 7,626     $ 2,398     $ 10,024     $ 4,646     $ 5,378     $ 163     $ 4,680  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

% of revenue

      65.5 %      67.5 %      65.9 %      30.6 %      35.4 %      1.1 %      30.8 % 

Amounts may not sum and percentages may not recalculate due to rounding.

 

12

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET, AND NET INCOME

(In millions, except percentages)

 

     Fiscal Year Ended
July 27, 2024		  
     Product
Gross
Margin		     Services
Gross
Margin		     Total
Gross
Margin		     Operating
Expenses		     Y/Y     Operating
Income		     Y/Y     Interest
and
other
income
(loss),
net		     Net
Income		     Y/Y  

GAAP amount

    $ 24,914     $ 9,914     $ 34,828     $ 22,647       9 %    $ 12,181       (19 )%    $ 53     $ 10,320       (18 )% 

% of revenue

      63.5 %      68.1 %      64.7 %      42.1 %        22.6 %        0.1 %      19.2 %   

Adjustments to GAAP amounts:

                     

Share-based compensation expense

      214       300       514       2,537         3,051         —        3,051    

Amortization of acquisition-related intangible assets

      936       —        936       698         1,634         —        1,634    

Acquisition/divestiture-related costs

      10       24       34       700         734         —        734    

Russia-Ukraine war costs

      —        —        —        (12 )        (12 )        49       37    

Significant asset impairments and restructurings

      —        —        —        789         789         —        789    

(Gains) and losses on investments

      —        —        —        —          —          100       100    

Income tax effect/significant tax matters

      —        —        —        —          —          —        (1,515 )   
  

 

 

    

 

 

    

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

Non-GAAP amount

    $ 26,074     $ 10,238     $ 36,312     $ 17,935       1 %    $ 18,377       (4 )%    $ 202     $ 15,150       (5 )% 
  

 

 

    

 

 

    

 

 

    

 

 

      

 

 

      

 

 

    

 

 

    

% of revenue

      66.4 %      70.4 %      67.5 %      33.3 %        34.2 %        0.4 %      28.2 %   

 

     Fiscal Year Ended
July 29, 2023		  
     Product
Gross
Margin		     Services
Gross
Margin		     Total
Gross
Margin		     Operating
Expenses		     Operating
Income		     Interest
and
other
income
(loss),
net		     Net
Income		  

GAAP amount

    $ 26,552     $ 9,201     $ 35,753     $ 20,722     $ 15,031     $ 287     $ 12,613  

% of revenue

      61.5 %      66.4 %      62.7 %      36.4 %      26.4 %      0.5 %      22.1 % 

Adjustments to GAAP amounts:

               

Share-based compensation expense

      151       245       396       1,951       2,347       —        2,347  

Amortization of acquisition-related intangible assets

      630       —        630       282       912       —        912  

Acquisition/divestiture-related costs

      18       —        18       241       259       —        259  

Supplier component remediation charge (adjustment), net

      (9 )      —        (9 )      —        (9 )      —        (9 ) 

Significant asset impairments and restructurings

      —        —        —        531       531       —        531  

(Gains) and losses on investments

      —        —        —        —        —        133       133  

Income tax effect/significant tax matters

      —        —        —        —        —        —        (807 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP amount

    $ 27,342     $ 9,446     $ 36,788     $ 17,717     $ 19,071     $ 420     $ 15,979  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

% of revenue

      63.4 %      68.2 %      64.5 %      31.1 %      33.5 %      0.7 %      28.0 % 

Amounts may not sum and percentages may not recalculate due to rounding.

 

13

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

EFFECTIVE TAX RATE

(In percentages)

 

     Three Months Ended     Fiscal Year Ended  
     July 27,
2024		     July 29,
2023		     July 27,
2024		     July 29,
2023		  

GAAP effective tax rate

      9.8 %      11.5 %      15.6 %      17.7 % 

Total adjustments to GAAP provision for income taxes

      6.8 %      4.0 %      2.9 %      0.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Non-GAAP effective tax rate

      16.6 %      15.5 %      18.5 %      18.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

GAAP TO NON-GAAP GUIDANCE

 

Q1 FY 2025

    Gross Margin     Operating Margin     Earnings per
Share (2)		  

GAAP

      63.5% - 64.5%       14% - 15%     $ 0.35 - $0.42  

Estimated adjustments for:

       

Share-based compensation expense

      1.0%       6.0%     $ 0.16 - $0.17  

Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs

      2.5%       6.5%     $ 0.17 - $0.18  

Significant asset impairments and restructurings (1)

      —        5.5%     $ 0.13 - $0.16  
  

 

 

    

 

 

    

 

 

  

Non-GAAP

      67% - 68%       32% - 33%     $ 0.86 - $0.88  
  

 

 

    

 

 

    

 

 

  

 

FY 2025

    Earnings per
Share (2)		  

GAAP

    $ 1.93 - $2.05  

Estimated adjustments for:

   

Share-based compensation expense

    $ 0.74 - $0.76  

Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs

    $ 0.60 - $0.62  

Significant asset impairments and restructurings (1)

    $ 0.19 - $0.21  
  

 

 

  

Non-GAAP

    $ 3.52 - $3.58  
  

 

 

  

 

(1) 

On August 14, 2024, Cisco announced a restructuring plan to allow it to invest in key growth opportunities and drive more efficiencies in its business. In connection with this restructuring plan, Cisco currently estimates that it will recognize pre-tax charges of up to $1 billion consisting of severance and other one-time termination benefits, and other costs. Cisco expects to recognize approximately $700 million to $800 million of these charges in the first quarter of fiscal 2025 with the remaining amount expected to be recognized during the rest of the fiscal year.

(2) 

Estimated adjustments to GAAP earnings per share are shown after income tax effects.

Except as noted above, this guidance does not include the effects of any future acquisitions/divestitures, significant asset impairments and restructurings, significant litigation settlements and other contingencies, Russia-Ukraine war costs, gains and losses on investments, significant tax matters, or other items, which may or may not be significant.

 

14

Forward Looking Statements, Non-GAAP Information and Additional Information

This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as our customers’ reliance on Cisco to connect and protect their organizations in the era of AI and our focus on growth and consistent execution as we invest in AI, cloud and cybersecurity, while maintaining capital returns) and the future financial performance of Cisco (including the guidance for Q1 FY 2025 and full year FY 2025) that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; our development and use of artificial intelligence; overall information technology spending; the growth and evolution of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market, cloud, enterprise and other customer markets; the return on our investments in certain priorities, key growth areas, and in certain geographical locations, as well as maintaining leadership in Networking and services; the timing of orders and manufacturing and customer lead times; supply constraints; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; our ability to achieve expected benefits of our partnerships; increased competition in our product and services markets, including the data center market; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, other intellectual property, antitrust, stockholder and other matters, and governmental investigations; our ability to achieve the benefits of restructurings and possible changes in the size and timing of related charges; cyber attacks, data breaches or other incidents; vulnerabilities and critical security defects; our ability to protect personal data; evolving regulatory uncertainty; terrorism; natural catastrophic events (including as a result of global climate change); any pandemic or epidemic; our ability to achieve the benefits anticipated from our investments in sales, engineering, service, marketing and manufacturing activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during economic downturns; risks related to the global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws and regulations or adverse outcomes resulting from examinations of our income tax returns; potential volatility in operating results; and other factors listed in Cisco’s most recent reports on Forms 10-Q and 10-K filed on May 21, 2024 and September 7, 2023, respectively. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco’s most recent reports on Forms 10-Q and 10-K as each may be amended from time to time. Cisco’s results of operations for the three months and the year ended July 27, 2024 are not necessarily indicative of Cisco’s operating results for any future periods. Any projections in this release are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.

This release includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share data for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles (GAAP) and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco’s results of operations in conjunction with the corresponding GAAP measures.

 

15

Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations.

For its internal budgeting process, Cisco’s management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related/divestiture costs, significant asset impairments and restructurings, significant litigation settlements and other contingencies, Russia-Ukraine war costs, gains and losses on investments, the income tax effects of the foregoing and significant tax matters. Cisco’s management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results. For additional information on the items excluded by Cisco from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

Annualized recurring revenue represents the annualized revenue run-rate of active subscriptions, term licenses, operating leases and maintenance contracts at the end of a reporting period, net of rebates to customers and partners as well as certain other revenue adjustments. Includes both revenue recognized ratably as well as upfront on an annualized basis.

About Cisco

Cisco (Nasdaq: CSCO) is the worldwide technology leader that securely connects everything to make anything possible. Our purpose is to power an inclusive future for all by helping our customers reimagine their applications, power hybrid work, secure their enterprise, transform their infrastructure, and meet their sustainability goals. Discover more at newsroom.cisco.com and follow us on X at @Cisco.

Copyright © 2024 Cisco and/or its affiliates. All rights reserved. Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. To view a list of Cisco trademarks, go to: www.cisco.com/go/trademarks. Third-party trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.

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16

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Document and Entity Information
Aug. 14, 2024
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Document Type 8-K
Document Period End Date Aug. 14, 2024
Entity Registrant Name CISCO SYSTEMS, INC.
Entity Incorporation State Country Code DE
Entity File Number 001-39940
Entity Tax Identification Number 77-0059951
Entity Address, Address Line One 170 West Tasman Drive
Entity Address, City or Town San Jose
Entity Address, State or Province CA
Entity Address, Postal Zip Code 95134-1706
City Area Code (408)
Local Phone Number 526-4000
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Security 12b Title Common Stock, par value $0.001 per share
Trading Symbol CSCO
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