SAN JOSE,
Calif., May 15, 2024 /PRNewswire/ --
News Summary:
- $12.7 billion in revenue, down
13% year over year, in line with expectations and reflects our
customers' continued implementation of products on-hand
- Strong profitability with GAAP gross margin of 65.1% and
non-GAAP gross margin of 68.3%
- Transformed business model, further enhanced by the Splunk
acquisition:
- Total subscription revenue of $6.9
billion including Splunk, representing 54% of total
revenue
- Total annualized recurring revenue (ARR) at $29.2 billion including $4.2 billion from Splunk, up 22% year over year,
and product ARR at $15.5 billion, up
44% year over year
- Gary Steele, former Splunk CEO,
named president of Go-to-Market, effective immediately
- Q3 FY 2024 Results:
- Revenue: $12.7 billion
- Decrease of 13% year over year
- Splunk contributed $413 million
in revenue
- Earnings per Share: GAAP: $0.46; Non-GAAP: $0.88
- GAAP EPS decreased 41% year over year, which includes a
negative $0.09 impact from the Splunk
acquisition
- Non-GAAP EPS decreased 12% year over year, which includes a
negative $0.01 impact from the Splunk
acquisition
- Q4 FY 2024 Guidance:
- Revenue: $13.4 billion to
$13.6 billion
- Earnings per Share: GAAP: $0.46 to $0.51;
Non-GAAP: $0.84 to $0.86
- FY 2024 Guidance:
- Revenue: $53.6 billion to
$53.8 billion
- Earnings per Share: GAAP: $2.46 to $2.51;
Non-GAAP: $3.69 to $3.71
Cisco today reported third quarter results for the period ended
April 27, 2024. Cisco reported third quarter revenue of
$12.7 billion, net income on a
generally accepted accounting principles (GAAP) basis of
$1.9 billion or $0.46 per share, and non-GAAP net income of
$3.6 billion or $0.88 per share.
"We delivered a solid Q3 performance in what remains a dynamic
environment" said Chuck Robbins,
chair and CEO of Cisco. "Our unique ability to bring together
networking, security, observability, and data enables Cisco to
offer our customers unrivaled digital resilience for the AI
era."
"Revenue, gross margin and non-GAAP EPS in Q3 were at the high
end or above our guidance range, both including and excluding
Splunk, resulting in continued operating leverage," said
Scott Herren, CFO of Cisco.
"Customers are consuming the equipment shipped over the last few
quarters in line with our expectations and we are seeing
stabilization of demand as a result. The addition of Splunk to our
product line will be a catalyst for further growth."
Gary Steele Named President of Go-to-Market
Cisco has named Gary Steele as
President of Go-to-Market, effective immediately. Steele is well
known for his operational excellence, and in this new role, he will
work closely with Robbins to set and execute against Cisco's
strategic plans and goals. He will continue to lead the Splunk
team through the integration process to ensure a seamless
integration into Cisco.
Cisco also announced that Jeff
Sharritts, Cisco's Chief Customer and Partner Officer, will
depart Cisco after a successful 24-year career at the company.
Sharritts will remain with Cisco until mid-July to ensure a
seamless transition.
GAAP
Results
|
|
|
|
Q3 FY 2024
|
|
Q3 FY 2023
|
|
Vs. Q3 FY 2023
|
Revenue
|
|
$
12.7 billion
|
|
$
14.6 billion
|
|
(13) %
|
Net Income
|
|
$
1.9 billion
|
|
$
3.2 billion
|
|
(41) %
|
Diluted Earnings per
Share (EPS)
|
|
$
0.46
|
|
$
0.78
|
|
(41) %
|
The acquisition of Splunk, including financing costs, had a
negative impact of $0.09 to GAAP EPS,
for the third quarter of fiscal 2024.
Non-GAAP
Results
|
|
|
|
Q3 FY 2024
|
|
Q3 FY 2023
|
|
Vs. Q3 FY 2023
|
Net Income
|
|
$
3.6 billion
|
|
$
4.1 billion
|
|
(14) %
|
EPS
|
|
$
0.88
|
|
$
1.00
|
|
(12) %
|
The acquisition of Splunk, including financing costs, had a
negative impact of $0.01 to Non-GAAP
EPS, for the third quarter of 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 July 24, 2024, to all stockholders of record as
of the close of business on July 5,
2024. Future dividends will be subject to Board
approval.
Financial Summary
All comparative percentages are on a year-over-year basis
unless otherwise noted.
Q3 FY 2024 Highlights
Revenue -- Total revenue was $12.7 billion, down 13%, with product revenue
down 19% and service revenue up 6%. Cisco completed the acquisition
of Splunk Inc. ("Splunk") in the third quarter of fiscal 2024.
Splunk contributed $413 million of
total revenue for the third quarter of fiscal 2024.
Revenue by geographic segment was: Americas down 15%, EMEA down
9%, and APJC down 12%. Product revenue performance reflected growth
in Security up 36% and Observability up 27%. Networking was down
27%. Product revenue in Collaboration was flat. Security and
Observability, excluding Splunk, grew 3% and 14%, respectively, in
the third quarter of fiscal 2024.
Gross Margin -- On a GAAP basis, total gross
margin, product gross margin, and service gross margin were 65.1%,
63.5%, and 69.2%, respectively, as compared with 63.4%, 62.7%, and
65.4%, respectively, in the third quarter of fiscal 2023.
On a non-GAAP basis, total gross margin, product gross margin,
and service gross margin were 68.3%, 66.9%, and 71.6%,
respectively, as compared with 65.2%, 64.5%, and 67.3%,
respectively, in the third quarter of fiscal 2023.
Total gross margins by geographic segment were: 67.9% for the
Americas, 69.6% for EMEA and 67.4% for APJC.
Operating Expenses -- On a GAAP basis,
operating expenses were $6.1 billion,
up 15%, and were 47.9% of revenue. Non-GAAP operating expenses were
$4.3 billion, down 5%, and were 34.0%
of revenue.
Operating Income -- GAAP operating income was
$2.2 billion, down 44%, with GAAP
operating margin of 17.2%. Non-GAAP operating income was
$4.3 billion, down 12%, with non-GAAP
operating margin at 34.2%.
Provision for Income Taxes -- The GAAP tax
provision rate was 15.6%. The non-GAAP tax provision rate was
19.0%.
Net Income and EPS -- On a GAAP basis, net income
was $1.9 billion and EPS was
$0.46, each a decrease of 41%. On a
non-GAAP basis, net income was $3.6
billion, a decrease of 14%, and EPS was $0.88, a decrease of 12%.
Cash Flow from Operating Activities --
$4.0 billion for the third quarter of
fiscal 2024, a decrease of 24%, compared with $5.2 billion for the third quarter of fiscal
2023.
Balance Sheet and Other Financial Highlights
Cash and Cash Equivalents and Investments --
$18.8 billion at the end of the third
quarter of fiscal 2024, compared with $26.1
billion at the end of fiscal 2023.
Remaining Performance Obligations (RPO)
-- $38.8 billion, up
21% in total, with 52% of this amount to be recognized as revenue
over the next 12 months. Product RPO were up 29% and service RPO
were up 14%.
Deferred Revenue -- $27.5
billion, up 13% in total, with deferred product revenue up
18%. Deferred service revenue was up 9%.
Capital Allocation -- In the third quarter of
fiscal 2024, we returned $2.9 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 26 million shares of common stock under
our stock repurchase program at an average price of $49.22 per share for an aggregate purchase price
of $1.3 billion. The remaining
authorized amount for stock repurchases under the program is
$7.2 billion with no termination
date.
Acquisitions
In the third quarter of fiscal 2024, we closed the following
acquisitions:
- Splunk Inc., a public cybersecurity and observability
company
- Isovalent, Inc., a privately held cloud native solutions
company
Guidance
Cisco estimates the following results for the fourth quarter of
fiscal 2024:
Q4 FY 2024
|
|
|
Revenue
|
|
$13.4 billion - $13.6
billion
|
Non-GAAP gross margin
rate
|
|
66.5% –
67.5%
|
Non-GAAP operating
margin rate
|
|
31.5% –
32.5%
|
Non-GAAP EPS
|
|
$0.84 –
$0.86
|
Our Q4 FY 2024 guidance includes $950
million to $1 billion in
revenue from Splunk and a negative impact to non-GAAP EPS of
approximately ($0.03) as the interest
impact from financing the acquisition more than offsets the
operating benefit.
Cisco estimates that GAAP EPS will be $0.46 to $0.51 for
the fourth quarter of fiscal 2024.
Cisco estimates the following results for fiscal 2024:
FY 2024
|
|
|
Revenue
|
|
$53.6 billion - $53.8
billion
|
Non-GAAP EPS
|
|
$3.69 –
$3.71
|
Cisco estimates that GAAP EPS will be $2.46 to $2.51 for
fiscal 2024.
Our Q4 FY 2024 guidance assumes an effective tax provision rate
of approximately 18% for GAAP and non-GAAP results. Our FY 2024
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:
- Q3 fiscal year 2024 conference call to discuss Cisco's results
along with its guidance will be held on Wednesday, May 15,
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, May 15, 2024 to
4:00 p.m. Pacific Time, May 21,
2024 at 1-800-391-9851 (United
States) or 1-203-369-3268 (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, May 15, 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.
CISCO SYSTEMS,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions,
except per-share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
April 27,
2024
|
|
April 29,
2023
|
|
April 27,
2024
|
|
April 29,
2023
|
REVENUE:
|
|
|
|
|
|
|
|
Product
|
$
9,024
|
|
$
11,092
|
|
$
29,395
|
|
$
31,492
|
Service
|
3,678
|
|
3,479
|
|
10,766
|
|
10,303
|
Total
revenue
|
12,702
|
|
14,571
|
|
40,161
|
|
41,795
|
COST OF SALES:
|
|
|
|
|
|
|
|
Product
|
3,295
|
|
4,136
|
|
10,695
|
|
12,353
|
Service
|
1,134
|
|
1,203
|
|
3,419
|
|
3,437
|
Total cost of
sales
|
4,429
|
|
5,339
|
|
14,114
|
|
15,790
|
GROSS MARGIN
|
8,273
|
|
9,232
|
|
26,047
|
|
26,005
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
Research and
development
|
1,948
|
|
1,962
|
|
5,804
|
|
5,598
|
Sales and
marketing
|
2,559
|
|
2,526
|
|
7,523
|
|
7,301
|
General and
administrative
|
736
|
|
641
|
|
2,050
|
|
1,788
|
Amortization of
purchased intangible assets
|
297
|
|
70
|
|
430
|
|
212
|
Restructuring and
other charges
|
542
|
|
87
|
|
677
|
|
328
|
Total operating
expenses
|
6,082
|
|
5,286
|
|
16,484
|
|
15,227
|
OPERATING INCOME
|
2,191
|
|
3,946
|
|
9,563
|
|
10,778
|
Interest
income
|
411
|
|
262
|
|
1,095
|
|
650
|
Interest
expense
|
(357)
|
|
(109)
|
|
(588)
|
|
(316)
|
Other income (loss),
net
|
(10)
|
|
(142)
|
|
(232)
|
|
(265)
|
Interest and other
income (loss), net
|
44
|
|
11
|
|
275
|
|
69
|
INCOME BEFORE PROVISION FOR INCOME
TAXES
|
2,235
|
|
3,957
|
|
9,838
|
|
10,847
|
Provision for income
taxes
|
349
|
|
745
|
|
1,680
|
|
2,192
|
NET INCOME
|
$
1,886
|
|
$
3,212
|
|
$
8,158
|
|
$
8,655
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.47
|
|
$
0.79
|
|
$
2.01
|
|
$
2.11
|
Diluted
|
$
0.46
|
|
$
0.78
|
|
$
2.00
|
|
$
2.11
|
Shares used in
per-share calculation:
|
|
|
|
|
|
|
|
Basic
|
4,042
|
|
4,089
|
|
4,051
|
|
4,100
|
Diluted
|
4,060
|
|
4,110
|
|
4,071
|
|
4,111
|
CISCO SYSTEMS,
INC.
REVENUE BY
SEGMENT
(In millions,
except percentages)
|
|
|
|
April 27,
2024
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
Amount
|
|
Y/Y %
|
|
Amount
|
|
Y/Y %
|
Revenue:
|
|
|
|
|
|
|
|
|
Americas
|
|
$
7,372
|
|
(15) %
|
|
$
23,904
|
|
(2) %
|
EMEA
|
|
3,458
|
|
(9) %
|
|
10,606
|
|
(5) %
|
APJC
|
|
1,873
|
|
(12) %
|
|
5,652
|
|
(9) %
|
Total
|
|
$
12,702
|
|
(13) %
|
|
$
40,161
|
|
(4) %
|
|
Amounts may not sum and
percentages may not recalculate due to rounding.
|
CISCO SYSTEMS,
INC.
GROSS MARGIN
PERCENTAGE BY SEGMENT
(In
percentages)
|
|
|
|
April 27,
2024
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
Gross Margin Percentage:
|
|
|
|
|
Americas
|
|
67.9 %
|
|
66.5 %
|
EMEA
|
|
69.6 %
|
|
69.1 %
|
APJC
|
|
67.4 %
|
|
67.5 %
|
CISCO SYSTEMS,
INC.
REVENUE FOR GROUPS
OF SIMILAR PRODUCTS AND SERVICES
(In millions,
except percentages)
|
|
|
|
April 27,
2024
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
Amount
|
|
Y/Y %
|
|
Amount
|
|
Y/Y %
|
Revenue:
|
|
|
|
|
|
|
|
|
Networking
|
|
$
6,522
|
|
(27) %
|
|
$
22,425
|
|
(11) %
|
Security
|
|
1,304
|
|
36 %
|
|
3,288
|
|
14 %
|
Collaboration
|
|
987
|
|
— %
|
|
3,093
|
|
2 %
|
Observability
|
|
211
|
|
27 %
|
|
589
|
|
21 %
|
Total
Product
|
|
9,024
|
|
(19) %
|
|
29,395
|
|
(7) %
|
Services
|
|
3,678
|
|
6 %
|
|
10,766
|
|
5 %
|
Total
|
|
$
12,702
|
|
(13) %
|
|
$
40,161
|
|
(4) %
|
|
Security and
Observability, excluding Splunk, grew 3% and 14%, respectively, in
the third quarter of fiscal 2024, and 3% and 17%, respectively, for
the first nine months of fiscal 2024.
|
|
Amounts may not sum and
percentages may not recalculate due to rounding.
|
|
CISCO SYSTEMS,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
millions)
(Unaudited)
|
|
|
April 27,
2024
|
|
July 29,
2023
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
8,913
|
|
$
10,123
|
Investments
|
9,857
|
|
16,023
|
Accounts receivable,
net of allowance of $81 at April 27, 2024 and $85 at
July 29, 2023
|
5,127
|
|
5,854
|
Inventories
|
3,118
|
|
3,644
|
Financing receivables,
net
|
3,443
|
|
3,352
|
Other current
assets
|
5,428
|
|
4,352
|
Total current
assets
|
35,886
|
|
43,348
|
Property and equipment,
net
|
2,000
|
|
2,085
|
Financing receivables,
net
|
3,251
|
|
3,483
|
Goodwill
|
58,633
|
|
38,535
|
Purchased intangible
assets, net
|
11,819
|
|
1,818
|
Deferred tax
assets
|
5,527
|
|
6,576
|
Other assets
|
5,882
|
|
6,007
|
TOTAL ASSETS
|
$
122,998
|
|
$
101,852
|
LIABILITIES AND EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
debt
|
$
11,891
|
|
$
1,733
|
Accounts
payable
|
2,054
|
|
2,313
|
Income taxes
payable
|
1,867
|
|
4,235
|
Accrued
compensation
|
3,211
|
|
3,984
|
Deferred
revenue
|
15,751
|
|
13,908
|
Other current
liabilities
|
5,334
|
|
5,136
|
Total current
liabilities
|
40,108
|
|
31,309
|
Long-term
debt
|
20,102
|
|
6,658
|
Income taxes
payable
|
2,869
|
|
5,756
|
Deferred
revenue
|
11,724
|
|
11,642
|
Other long-term
liabilities
|
2,427
|
|
2,134
|
Total
liabilities
|
77,230
|
|
57,499
|
Total equity
|
45,768
|
|
44,353
|
TOTAL LIABILITIES AND EQUITY
|
$
122,998
|
|
$
101,852
|
CISCO SYSTEMS,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
millions)
(Unaudited)
|
|
|
Nine Months
Ended
|
|
April 27,
2024
|
|
April 29,
2023
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
8,158
|
|
$
8,655
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation,
amortization, and other
|
1,684
|
|
1,304
|
Share-based
compensation expense
|
2,274
|
|
1,720
|
Provision for
receivables
|
19
|
|
11
|
Deferred income
taxes
|
(245)
|
|
(1,343)
|
(Gains) losses on
divestitures, investments and other, net
|
224
|
|
243
|
Change in operating
assets and liabilities, net of effects of acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
1,286
|
|
1,494
|
Inventories
|
530
|
|
(894)
|
Financing
receivables
|
92
|
|
1,126
|
Other
assets
|
(382)
|
|
(428)
|
Accounts
payable
|
(300)
|
|
156
|
Income taxes,
net
|
(5,223)
|
|
1,120
|
Accrued
compensation
|
(1,092)
|
|
25
|
Deferred
revenue
|
211
|
|
1,055
|
Other
liabilities
|
(86)
|
|
(324)
|
Net cash provided by
operating activities
|
7,150
|
|
13,920
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
investments
|
(3,044)
|
|
(7,652)
|
Proceeds from sales of
investments
|
3,874
|
|
802
|
Proceeds from
maturities of investments
|
5,804
|
|
3,789
|
Acquisitions, net of
cash and cash equivalents acquired
|
(25,874)
|
|
(96)
|
Purchases of
investments in privately held companies
|
(82)
|
|
(162)
|
Return of investments
in privately held companies
|
146
|
|
72
|
Acquisition of
property and equipment
|
(472)
|
|
(616)
|
Other
|
(2)
|
|
(24)
|
Net cash used in
investing activities
|
(19,650)
|
|
(3,887)
|
Cash flows from
financing activities:
|
|
|
|
Issuances of common
stock
|
347
|
|
316
|
Repurchases of common
stock - repurchase program
|
(3,772)
|
|
(3,029)
|
Shares repurchased for
tax withholdings on vesting of restricted stock units
|
(765)
|
|
(444)
|
Short-term borrowings,
original maturities of 90 days or less, net
|
1,547
|
|
(602)
|
Issuances of
debt
|
24,159
|
|
—
|
Repayments of
debt
|
(2,195)
|
|
(500)
|
Repayments of Splunk
convertible debt, net
|
(3,140)
|
|
—
|
Dividends
paid
|
(4,778)
|
|
(4,713)
|
Other
|
(52)
|
|
(4)
|
Net cash provided by
(used in) financing activities
|
11,351
|
|
(8,976)
|
Effect of foreign
currency exchange rate changes on cash, cash equivalents,
restricted cash and
restricted cash equivalents
|
(39)
|
|
(90)
|
Net (decrease) increase
in cash, cash equivalents, restricted cash and restricted cash
equivalents
|
(1,188)
|
|
967
|
Cash, cash equivalents,
restricted cash and restricted cash equivalents, beginning of
period
|
11,627
|
|
8,579
|
Cash, cash equivalents,
restricted cash and restricted cash equivalents, end of
period
|
$
10,439
|
|
$
9,546
|
Supplemental cash flow
information:
|
|
|
|
Cash paid for
interest
|
$
350
|
|
$
306
|
Cash paid for income
taxes, net
|
$
7,150
|
|
$
2,414
|
CISCO SYSTEMS,
INC.
REMAINING
PERFORMANCE OBLIGATIONS
(In millions,
except percentages)
|
|
|
April 27,
2024
|
|
January 27,
2024
|
|
April 29,
2023
|
|
Amount
|
|
Y/Y%
|
|
Amount
|
|
Y/Y%
|
|
Amount
|
|
Y/Y%
|
Product
|
$
18,876
|
|
29 %
|
|
$
16,249
|
|
12 %
|
|
$
14,681
|
|
9 %
|
Service
|
19,898
|
|
14 %
|
|
19,407
|
|
12 %
|
|
17,401
|
|
4 %
|
Total
|
$
38,774
|
|
21 %
|
|
$
35,656
|
|
12 %
|
|
$
32,082
|
|
6 %
|
|
We expect 52% of total
RPO at April 27, 2024 will be recognized as revenue over the
next 12 months.
|
CISCO SYSTEMS,
INC.
DEFERRED
REVENUE
(In
millions)
|
|
|
April 27,
2024
|
|
January 27,
2024
|
|
April 29,
2023
|
Deferred
revenue:
|
|
|
|
|
|
Product
|
$
12,856
|
|
$
11,640
|
|
$
10,895
|
Service
|
14,619
|
|
14,131
|
|
13,365
|
Total
|
$
27,475
|
|
$
25,771
|
|
$
24,260
|
Reported as:
|
|
|
|
|
|
Current
|
$
15,751
|
|
$
14,011
|
|
$
13,249
|
Noncurrent
|
11,724
|
|
11,760
|
|
11,011
|
Total
|
$
27,475
|
|
$
25,771
|
|
$
24,260
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
CISCO SYSTEMS,
INC.
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
GAAP TO NON-GAAP
NET INCOME
(In
millions)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
April 27,
2024
|
|
April 29,
2023
|
|
April 27,
2024
|
|
April 29,
2023
|
GAAP net
income
|
$
1,886
|
|
$
3,212
|
|
$
8,158
|
|
$
8,655
|
Adjustments to cost of
sales:
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
139
|
|
106
|
|
381
|
|
293
|
Amortization of
acquisition-related intangible assets
|
249
|
|
156
|
|
605
|
|
462
|
Acquisition-related/divestiture costs
|
12
|
|
1
|
|
13
|
|
4
|
Total adjustments to
GAAP cost of sales
|
400
|
|
263
|
|
999
|
|
759
|
Adjustments to
operating expenses:
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
665
|
|
518
|
|
1,877
|
|
1,431
|
Amortization of
acquisition-related intangible assets
|
297
|
|
70
|
|
430
|
|
212
|
Acquisition-related/divestiture costs
|
264
|
|
55
|
|
403
|
|
178
|
Russia-Ukraine war
costs
|
(10)
|
|
2
|
|
(12)
|
|
7
|
Significant asset
impairments and restructurings
|
542
|
|
87
|
|
677
|
|
328
|
Total adjustments to
GAAP operating expenses
|
1,758
|
|
732
|
|
3,375
|
|
2,156
|
Adjustments to
interest and other income (loss), net:
|
|
|
|
|
|
|
|
(Gains) and losses on
investments
|
(7)
|
|
123
|
|
132
|
|
188
|
Total adjustments to
GAAP interest and other income (loss), net
|
(7)
|
|
123
|
|
132
|
|
188
|
Total adjustments to
GAAP income before provision for income taxes
|
2,151
|
|
1,118
|
|
4,506
|
|
3,103
|
Income tax effect of
non-GAAP adjustments
|
(484)
|
|
(219)
|
|
(1,045)
|
|
(623)
|
Significant tax
matters
|
—
|
|
—
|
|
—
|
|
164
|
Total adjustments to
GAAP provision for income taxes
|
(484)
|
|
(219)
|
|
(1,045)
|
|
(459)
|
Non-GAAP net
income
|
$
3,553
|
|
$
4,111
|
|
$
11,619
|
|
$
11,299
|
CISCO SYSTEMS,
INC.
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
GAAP TO NON-GAAP
EPS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
April 27,
2024
|
|
April 29,
2023
|
|
April 27,
2024
|
|
April 29,
2023
|
GAAP EPS
|
$
0.46
|
|
$
0.78
|
|
$
2.00
|
|
$
2.11
|
Adjustments to
GAAP:
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
0.20
|
|
0.15
|
|
0.55
|
|
0.42
|
Amortization of
acquisition-related intangible assets
|
0.13
|
|
0.06
|
|
0.25
|
|
0.16
|
Acquisition-related/divestiture costs
|
0.07
|
|
0.01
|
|
0.10
|
|
0.04
|
Significant asset
impairments and restructurings
|
0.13
|
|
0.02
|
|
0.17
|
|
0.08
|
(Gains) and losses on
investments
|
—
|
|
0.03
|
|
0.03
|
|
0.05
|
Income tax effect of
non-GAAP adjustments
|
(0.12)
|
|
(0.05)
|
|
(0.26)
|
|
(0.15)
|
Significant tax
matters
|
—
|
|
—
|
|
—
|
|
0.04
|
Non-GAAP EPS
|
$
0.88
|
|
$
1.00
|
|
$
2.85
|
|
$
2.75
|
|
Amounts may not sum due
to rounding.
|
CISCO SYSTEMS,
INC.
GAAP TO NON-GAAP EPS
IMPACT OF SPLUNK
ACQUISITION, INCLUDING FINANCING COSTS
|
|
|
Three Months
Ended
|
|
April 27,
2024
|
GAAP EPS
Impact
|
$
(0.09)
|
Amortization of
intangible assets
|
0.05
|
Acquisition-related
costs
|
0.05
|
Income tax effect of
non-GAAP adjustments
|
(0.02)
|
Non-GAAP EPS
Impact
|
$
(0.01)
|
|
Amounts may not sum due
to rounding.
|
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
|
|
April 27,
2024
|
|
Product
Gross Margin
|
|
Service
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
|
$ 5,729
|
|
$ 2,544
|
|
$ 8,273
|
|
$ 6,082
|
|
15 %
|
|
$ 2,191
|
|
(44) %
|
|
$
44
|
|
$ 1,886
|
|
(41) %
|
% of revenue
|
63.5 %
|
|
69.2 %
|
|
65.1 %
|
|
47.9 %
|
|
|
|
17.2 %
|
|
|
|
0.3 %
|
|
14.8 %
|
|
|
Adjustments to GAAP
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
57
|
|
82
|
|
139
|
|
665
|
|
|
|
804
|
|
|
|
—
|
|
804
|
|
|
Amortization of
acquisition-related intangible assets
|
249
|
|
—
|
|
249
|
|
297
|
|
|
|
546
|
|
|
|
—
|
|
546
|
|
|
Acquisition/divestiture-related costs
|
4
|
|
8
|
|
12
|
|
264
|
|
|
|
276
|
|
|
|
—
|
|
276
|
|
|
Significant asset
impairments and restructurings
|
—
|
|
—
|
|
—
|
|
542
|
|
|
|
542
|
|
|
|
—
|
|
542
|
|
|
Russia-Ukraine war
costs
|
—
|
|
—
|
|
—
|
|
(10)
|
|
|
|
(10)
|
|
|
|
—
|
|
(10)
|
|
|
(Gains) and losses on
investments
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
(7)
|
|
(7)
|
|
|
Income tax
effect/significant tax matters
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(484)
|
|
|
Non-GAAP
amount
|
$ 6,039
|
|
$ 2,634
|
|
$ 8,673
|
|
$ 4,324
|
|
(5) %
|
|
$ 4,349
|
|
(12) %
|
|
$
37
|
|
$ 3,553
|
|
(14) %
|
% of revenue
|
66.9 %
|
|
71.6 %
|
|
68.3 %
|
|
34.0 %
|
|
|
|
34.2 %
|
|
|
|
0.3 %
|
|
28.0 %
|
|
|
|
Three Months
Ended
|
|
April 29,
2023
|
|
Product
Gross Margin
|
|
Service
Gross Margin
|
|
Total
Gross Margin
|
|
Operating
Expenses
|
|
Operating
Income
|
|
Interest and
other income
(loss), net
|
|
Net
Income
|
GAAP amount
|
$
6,956
|
|
$
2,276
|
|
$
9,232
|
|
$
5,286
|
|
$
3,946
|
|
$
11
|
|
$
3,212
|
% of revenue
|
62.7 %
|
|
65.4 %
|
|
63.4 %
|
|
36.3 %
|
|
27.1 %
|
|
0.1 %
|
|
22.0 %
|
Adjustments to GAAP
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
40
|
|
66
|
|
106
|
|
518
|
|
624
|
|
—
|
|
624
|
Amortization of
acquisition-related intangible assets
|
156
|
|
—
|
|
156
|
|
70
|
|
226
|
|
—
|
|
226
|
Acquisition/divestiture-related costs
|
1
|
|
—
|
|
1
|
|
55
|
|
56
|
|
—
|
|
56
|
Significant asset
impairments and restructurings
|
—
|
|
—
|
|
—
|
|
87
|
|
87
|
|
—
|
|
87
|
Russia-Ukraine war
costs
|
—
|
|
—
|
|
—
|
|
2
|
|
2
|
|
—
|
|
2
|
(Gains) and losses on
investments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
123
|
|
123
|
Income tax
effect/significant tax matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(219)
|
Non-GAAP
amount
|
$
7,153
|
|
$
2,342
|
|
$
9,495
|
|
$
4,554
|
|
$
4,941
|
|
$ 134
|
|
$
4,111
|
% of revenue
|
64.5 %
|
|
67.3 %
|
|
65.2 %
|
|
31.3 %
|
|
33.9 %
|
|
0.9 %
|
|
28.2 %
|
|
Amounts may not sum and
percentages may not recalculate due to rounding.
|
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)
|
|
|
Nine Months
Ended
|
|
April 27,
2024
|
|
Product
Gross Margin
|
|
Service
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
|
$ 18,700
|
|
$ 7,347
|
|
$ 26,047
|
|
$ 16,484
|
|
8 %
|
|
$ 9,563
|
|
(11) %
|
|
$ 275
|
|
$ 8,158
|
|
(6) %
|
% of revenue
|
63.6 %
|
|
68.2 %
|
|
64.9 %
|
|
41.0 %
|
|
|
|
23.8 %
|
|
|
|
0.7 %
|
|
20.3 %
|
|
|
Adjustments to GAAP
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
157
|
|
224
|
|
381
|
|
1,877
|
|
|
|
2,258
|
|
|
|
—
|
|
2,258
|
|
|
Amortization of
acquisition-related intangible assets
|
605
|
|
—
|
|
605
|
|
430
|
|
|
|
1,035
|
|
|
|
—
|
|
1,035
|
|
|
Acquisition/divestiture-related costs
|
5
|
|
8
|
|
13
|
|
403
|
|
|
|
416
|
|
|
|
—
|
|
416
|
|
|
Significant asset
impairments and restructurings
|
—
|
|
—
|
|
—
|
|
677
|
|
|
|
677
|
|
|
|
—
|
|
677
|
|
|
Russia-Ukraine war
costs
|
—
|
|
—
|
|
—
|
|
(12)
|
|
|
|
(12)
|
|
|
|
—
|
|
(12)
|
|
|
(Gains) and losses on
investments
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
132
|
|
132
|
|
|
Income tax
effect/significant tax matters
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(1,045)
|
|
|
Non-GAAP
amount
|
$ 19,467
|
|
$ 7,579
|
|
$ 27,046
|
|
$ 13,109
|
|
— %
|
|
$ 13,937
|
|
2 %
|
|
$ 407
|
|
$ 11,619
|
|
3 %
|
% of revenue
|
66.2 %
|
|
70.4 %
|
|
67.3 %
|
|
32.6 %
|
|
|
|
34.7 %
|
|
|
|
1.0 %
|
|
28.9 %
|
|
|
|
Nine Months
Ended
|
|
April 29,
2023
|
|
Product
Gross Margin
|
|
Service
Gross Margin
|
|
Total
Gross Margin
|
|
Operating
Expenses
|
|
Operating
Income
|
|
Interest and
other income
(loss), net
|
|
Net
Income
|
GAAP amount
|
$ 19,139
|
|
$
6,866
|
|
$ 26,005
|
|
$ 15,227
|
|
$ 10,778
|
|
$
69
|
|
$
8,655
|
% of revenue
|
60.8 %
|
|
66.6 %
|
|
62.2 %
|
|
36.4 %
|
|
25.8 %
|
|
0.2 %
|
|
20.7 %
|
Adjustments to GAAP
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
111
|
|
182
|
|
293
|
|
1,431
|
|
1,724
|
|
—
|
|
1,724
|
Amortization of
acquisition-related intangible assets
|
462
|
|
—
|
|
462
|
|
212
|
|
674
|
|
—
|
|
674
|
Acquisition/divestiture-related costs
|
4
|
|
—
|
|
4
|
|
178
|
|
182
|
|
—
|
|
182
|
Significant asset
impairments and restructurings
|
—
|
|
—
|
|
—
|
|
328
|
|
328
|
|
—
|
|
328
|
Russia-Ukraine war
costs
|
—
|
|
—
|
|
—
|
|
7
|
|
7
|
|
—
|
|
7
|
(Gains) and losses on
investments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
188
|
|
188
|
Income tax
effect/significant tax matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(459)
|
Non-GAAP
amount
|
$ 19,716
|
|
$
7,048
|
|
$ 26,764
|
|
$ 13,071
|
|
$ 13,693
|
|
$ 257
|
|
$ 11,299
|
% of revenue
|
62.6 %
|
|
68.4 %
|
|
64.0 %
|
|
31.3 %
|
|
32.8 %
|
|
0.6 %
|
|
27.0 %
|
|
Amounts may not sum and
percentages may not recalculate due to rounding.
|
CISCO SYSTEMS,
INC.
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
EFFECTIVE TAX
RATE
(In
percentages)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
April 27,
2024
|
|
April 29,
2023
|
|
April 27,
2024
|
|
April 29,
2023
|
GAAP effective tax
rate
|
15.6 %
|
|
18.8 %
|
|
17.1 %
|
|
20.2 %
|
Total adjustments to
GAAP provision for income taxes
|
3.4 %
|
|
0.2 %
|
|
1.9 %
|
|
(1.2) %
|
Non-GAAP effective tax
rate
|
19.0 %
|
|
19.0 %
|
|
19.0 %
|
|
19.0 %
|
GAAP TO NON-GAAP
GUIDANCE
|
|
Q4 FY 2024
|
|
Gross Margin
Rate
|
|
Operating Margin
Rate
|
|
Earnings per
Share (1)
|
GAAP
|
|
63% – 64%
|
|
18.5% –
19.5%
|
|
$0.46 –
$0.51
|
Estimated adjustments
for:
|
|
|
|
|
|
|
Share-based
compensation expense
|
|
1.0 %
|
|
6.0 %
|
|
$0.15 –
$0.16
|
Amortization of
acquisition-related intangible assets and
acquisition/divestiture-related costs
|
|
2.5 %
|
|
6.5 %
|
|
$0.19 –
$0.20
|
Significant asset
impairments and restructurings
|
|
—
|
|
0.5 %
|
|
$0.01 –
$0.02
|
Non-GAAP
|
|
66.5%
– 67.5%
|
|
31.5% –
32.5%
|
|
$0.84 –
$0.86
|
FY 2024
|
|
Earnings per
Share (1)
|
GAAP
|
|
$2.46 –
$2.51
|
Estimated adjustments
for:
|
|
|
Share-based
compensation expense
|
|
$0.58 –
$0.59
|
Amortization of
acquisition-related intangible assets and
acquisition/divestiture-related costs
|
|
$0.46 –
$0.47
|
Significant asset
impairments and restructurings
|
|
$0.13 –
$0.14
|
(Gains) and losses on
investments
|
|
$0.03
|
Non-GAAP
|
|
$3.69 –
$3.71
|
(1) 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, asset impairments,
Russia-Ukraine war costs, restructurings, (gains) and
losses on investments and significant tax matters or other events,
which may or may not be significant unless specifically stated.
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 ability to bring together
networking, security, observability, and data to enable us to offer
digital resilience to our customers, the stabilization of demand
for our products, and the addition of Splunk to our product line as
a catalyst for future growth) and the future financial performance
of Cisco (including the guidance for Q4 FY 2024 and full year FY
2024) 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 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
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partnerships; increased competition in our product and service
markets, including the data center market; dependence on the
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standards; rapid technological and market change; manufacturing and
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other matters, and governmental investigations; our ability to
achieve the benefits of restructurings and possible changes in the
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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
February 20, 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 and nine months ended April 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 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, 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.
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