Cisco Systems, Inc. (NASDAQ:CSCO) 2024 UBS Global Technology and AI Conference December 3, 2024 12:55 PM ET Company Participants Bill Gartner - SVP and GM of Optical Systems and Optics Group Conference Call Participants David Vogt - UBS David Vogt Good. I guess it's good morning still. I'm David Vogt from the UBS Hardware and Networking team. Thank you again for joining UBS Global Tech Conference, and we're excited to have with us today this morning, Cisco Systems. With us, we have Bill Gartner, SVP and GM ...

Cisco Systems, Inc. (NASDAQ:CSCO) 2024 UBS Global Technology and AI Conference December 3, 2024 12:55 PM ET Company Participants Bill Gartner - SVP and GM of Optical Systems and Optics Group Conference Call Participants David Vogt - UBS David Vogt Good. I guess it's good morning still. I'm David Vogt from the UBS Hardware and Networking team. Thank you again for joining UBS Global Tech Conference, and we're excited to have with us today this morning, Cisco Systems. With us, we have Bill Gartner, SVP and GM ...

Core Viewpoint - Cisco Systems (CSCO) has gained attention as one of the most searched stocks, prompting analysis of factors influencing its near-term performance [1] Earnings Estimates - For the current quarter, Cisco is expected to report earnings of $0.90 per share, reflecting a year-over-year increase of +3.5% [5] - The Zacks Consensus Estimate for the current fiscal year is $3.63, indicating a year-over-year decline of -2.7% [5] - For the next fiscal year, the consensus earnings estimate is $3.89, showing a year-over-year increase of +7.1% [6] - The consensus earnings estimate has seen a +4.6% increase over the last 30 days for the current quarter and a +2.6% increase for the current fiscal year [5][6] Revenue Growth - The consensus sales estimate for the current quarter is $13.86 billion, representing a year-over-year increase of +8.4% [9] - For the current and next fiscal years, sales estimates are $55.94 billion and $58.07 billion, indicating year-over-year changes of +4% and +3.8%, respectively [9] Recent Performance - Cisco reported revenues of $13.84 billion in the last quarter, a year-over-year decrease of -5.6% [10] - The EPS for the same period was $0.91, down from $1.11 a year ago, but exceeded the Zacks Consensus Estimate of $13.76 billion, resulting in a revenue surprise of +0.57% [10] - Cisco has consistently beaten consensus EPS and revenue estimates over the past four quarters [10] Valuation - Cisco holds a Zacks Rank of 3 (Hold), suggesting it may perform in line with the broader market in the near term [7][15] - The Zacks Value Style Score for Cisco is graded C, indicating it is trading at par with its peers [14]

SAN JOSE, Calif., Nov. 26, 2024 /PRNewswire/ -- Cisco (NASDAQ: CSCO) will host its 2024 Annual Meeting of Stockholders on Monday, December 9, 2024, beginning at 8:00 a.m. PST via audio webcast. Participants will include Cisco Chair and CEO Chuck Robbins.What: 2024 Cisco Virtual Annual Meeting of StockholdersWhen: Monday, December 9, 2024, 8:00 a.m. PSTListen and Watch: A live audio (including closed captioning) webcast of the meeting with synchronized slides will be available online. Cisco stockholders of r ...

Hummingbird Networks Unveils Custom IT Services for Businesses: Buy, Design, Deploy, or Fully Manage Cisco Meraki NetworksNovember 26, 2024 12:47 PM EST | Source: Brand FeaturedSimi Valley, California--(Newsfile Corp. - November 26, 2024) - Hummingbird Networks, a trusted and select certified Cisco Meraki partner, unveils its tailored IT services to help businesses with their technological challenges, enabling them to focus on their growth strategies. To solve tech complexities, the company pr ...

In partnership with Cisco, OneTen offers an inside look at how the employer's skills-first talent management approach promotes measurable business impact, organizational agility, and inclusionNEW YORK, Nov. 25, 2024 /PRNewswire/ -- OneTen, a coalition of leading companies committed to unlocking career opportunities for talent without four-year degrees, today released, "Cisco's Skills-First Success: A Powerful Playbook for the Private Sector" – an in-depth study that examines Cisco's groundbreaking efforts t ...

Cisco Systems, Inc. (NASDAQ:CSCO) RBC Capital Markets Global Technology, Internet, Media and Telecommunications Conference November 20, 2024 11:20 AM ET Company Participants Scott Herren - Executive Vice President and Chief Financial Officer Conference Call Participants Matt Hedberg - RBC Matt Hedberg Please, I'll sit over here. All right. I am, oh yes, I was looking forward to this conversation for a lot of reasons. Scott and I go way -- in the way, way back -- and that's what I love about this business as ...

Core Insights - AlgoSec has been recognized as Cisco Meraki Marketplace Tech Partner of the Month for November 2024 due to its Secure Application Connectivity platform, which enhances network security policy management through automation and orchestration [1] - The integration of AlgoSec's platform with Cisco's cloud-managed Meraki platform allows customers to achieve comprehensive visibility, expedite security policy changes, and ensure continuous compliance across their networks [2] - AlgoSec has also received accolades such as Cisco's Co-Sell Partner of the Year EMEA award, highlighting its collaborative efforts with Cisco to enhance application security management for joint customers [3] - The company was recognized by Cyber Defense Magazine as a winner in the Hot Company Application Security and Most Innovative Network Security and Management categories, emphasizing its commitment to innovative security measures [4] - AlgoSec supports over 1,800 leading organizations by providing a centralized approach to managing application connectivity and security policies across various network environments [6] Company Overview - AlgoSec is a global cybersecurity leader that empowers organizations to secure application connectivity and cloud-native applications across multi-cloud and hybrid networks [6] - The company utilizes a vendor-agnostic deep algorithm for intelligent change management automation, which accelerates digital transformation projects and reduces manual work and security risks [7] - AlgoSec's platforms provide visibility into security and compliance issues within cloud-native applications and hybrid network environments, ensuring adherence to security standards and regulations [7] Partnership and Recognition - The partnership with Cisco focuses on improving visibility and automating application connectivity changes, which helps customers manage risks effectively [3] - AlgoSec's recognition as a value-added partner by Cisco underscores its role in enhancing security measures in the current threat landscape [3] - The awards program by Cisco honors partners that introduce innovative processes and achieve substantial business outcomes for customers [3]

Revenue Performance - Revenue decreased by 6% to $13.841 billion in Q1 FY2025 compared to $14.668 billion in Q1 FY2024[125] - Total revenue for Q1 fiscal 2025 decreased by 6% to $13.841 billion, with product revenue down 9% to $10.114 billion and services revenue up 6% to $3.727 billion[145][148] - Excluding Splunk, total revenue for Q1 fiscal 2025 decreased by 14% compared to Q1 fiscal 2024[146] - Revenue from the Americas decreased by $0.8 billion, while APJC revenue increased by $19 million in Q1 FY2025[128] - Americas segment revenue decreased by 9% to $8.252 billion, with product revenue down 12% to $6.002 billion[147][150] - EMEA segment revenue decreased by 2% to $3.588 billion, with product revenue down 5% to $2.686 billion[147][150] - APJC segment revenue increased by 1% to $2.001 billion, with product revenue down 2% to $1.426 billion[147][150] Product Revenue Breakdown - Networking product revenue decreased by 23% to $6.753 billion, driven by declines in switching, routing, and wireless offerings[155][156] - Security product revenue increased by 100% to $2.017 billion, primarily driven by Splunk and growth in Network Security and SASE offerings[155][157] - Collaboration product revenue decreased by 3% to $1.085 billion, driven by declines in On-Prem Webex Suite and Collaboration Devices[155][158] - Observability product revenue increased by 36% to $258 million, driven by Observability Suite and Network Assurance offerings[155][159] Services Revenue - Services revenue increased by 6% to $3.727 billion in Q1 FY2025, driven by growth in software support, solution support, and advisory services across all geographic segments[161][162] - Americas segment contributed 60.3% of total services revenue, with a 4% YoY increase to $2.249 billion[161] - EMEA segment services revenue grew 10% YoY to $903 million, representing 24.2% of total services revenue[161] - APJC segment services revenue increased 8% YoY to $575 million, accounting for 15.5% of total services revenue[161] Gross Margin - Gross margin percentage increased by 0.7 percentage points to 65.9% in Q1 FY2025[125] - Product gross margin improved by 0.6 percentage points to 65.1%, driven by favorable product mix and productivity benefits[163][166] - Services gross margin increased by 0.7 percentage points to 68.0%, primarily due to higher sales volume[163][166] Operating Income and Expenses - Operating income as a percentage of revenue decreased by 12.2 percentage points to 17.0% in Q1 FY2025[125] - Operating income decreased 45% to $2.358 billion, with operating margin declining 12.2 percentage points to 17.0%[171][172] - Research and development expenses increased by 19% to $2.286 billion in Q1 FY2025[125] - R&D expenses increased 19% to $2.286 billion, representing 16.5% of total revenue, driven by Splunk integration and higher headcount-related costs[168][169] - Restructuring charges of $665 million were incurred in Q1 FY2025, impacting approximately 7% of global workforce[171] Net Income and Taxes - Net income decreased by 25% to $2.711 billion in Q1 FY2025[125] - The effective tax rate for the first quarter of fiscal 2025 was (19.6)%, a decrease from 18.1% in the same period of fiscal 2024, primarily due to a $720 million benefit related to a U.S. Tax Court opinion[177] Cash Flow and Investments - Cash and cash equivalents and investments increased to $18.671 billion in Q1 FY2025 from $17.854 billion in Q4 FY2024[131] - Cash provided by operating activities increased to $3.661 billion in Q1 FY2025 from $2.371 billion in Q1 FY2024[131] - Cash and cash equivalents increased by $1.557 billion to $9.065 billion as of October 26, 2024, compared to $7.508 billion on July 27, 2024[179] - Net cash provided by operating activities for the first quarter of fiscal 2025 was $3.661 billion, resulting in free cash flow of $3.444 billion[179] - Cisco returned $3.595 billion to stockholders in the first quarter of fiscal 2025, including $1.592 billion in dividends and $2.003 billion in stock repurchases[181] - Cisco's total cash and investments increased by $817 million to $18.671 billion as of October 26, 2024, compared to $17.854 billion on July 27, 2024[179] - The remaining authorized amount for stock repurchases under Cisco's program is approximately $3.2 billion, with no termination date[181] Accounts Receivable and Inventory - Accounts receivable decreased by 33% to $4.457 billion as of October 26, 2024, compared to $6.685 billion at the end of fiscal 2024[181] - Inventory decreased by 7% to $3.143 billion as of October 26, 2024, while inventory purchase commitments increased by 3% to $5.321 billion[183][184] - Cisco's inventory and inventory purchase commitments combined decreased by 1% compared to the end of fiscal 2024, reflecting efforts to optimize inventory levels[184] Financing and Debt - Financing receivables decreased by 3% to $6.534 billion as of October 26, 2024, compared to $6.714 billion at the end of fiscal 2024[184] - Channel partner financing volume was $6.0 billion in Q1 FY2025, down from $8.2 billion in Q1 FY2024[186] - Guaranteed channel partner financing balance was $1.1 billion as of October 26, 2024, down from $1.2 billion as of July 27, 2024[186] - Total senior notes outstanding amounted to $20.25 billion as of October 26, 2024[187] - Commercial paper outstanding increased to $11.9 billion as of October 26, 2024, up from $10.9 billion as of July 27, 2024[187] - Interest expense increased by $307 million YoY to $418 million, primarily due to issuances of senior notes and commercial paper[173] Performance Obligations and Deferred Revenue - Total remaining performance obligations decreased by 3% to $39.99 billion as of October 26, 2024[189] - Deferred revenue decreased by 3% to $27.5 billion as of October 26, 2024[189] Tax and Funding Commitments - U.S. transition tax payable amounted to $3.4 billion, with $1.8 billion due in Q2 FY2025 and $1.6 billion in Q2 FY2026[190] - Funding commitments increased to $0.3 billion as of October 26, 2024, up from $0.2 billion as of July 27, 2024[192] Investments and Marketable Securities - Marketable equity investments fair value decreased to $412 million as of October 26, 2024, down from $481 million as of July 27, 2024[197] - The total carrying amount of privately held investments was $1.8 billion as of October 26, 2024[197] - The fair value of marketable equity investments was $412 million as of October 26, 2024[197] Foreign Currency and Interest Rate Sensitivity - Approximately 70% of the company's operating expenses are U.S.-dollar denominated[200] - Foreign currency fluctuations increased combined R&D, sales and marketing, and G&A expenses by $8 million (0.2%) in Q1 fiscal 2025 compared to Q1 fiscal 2024[200] - A hypothetical 50 basis points change in market interest rates would alter the fair value of financing receivables by approximately $0.1 billion[196] - A hypothetical 50 basis points change in market interest rates would change the fair value of fixed-rate debt by approximately $0.7 billion[196] Forward Contracts - The notional amount of purchased forward contracts was $3,829 million as of October 26, 2024[198] - The notional amount of sold forward contracts was $3,706 million as of October 26, 2024[198]

Core Insights - The urgency to deploy AI has significantly increased among companies, with 98% reporting heightened pressure to act, yet only 13% are fully prepared to leverage AI's potential, a decline from 14% the previous year [3][5]. Urgency - Companies feel they have a limited timeframe to demonstrate AI's impact, with 85% believing they have less than 18 months, and over half (59%) stating only 12 months [5]. Strategy - A clear strategy is deemed essential for effective AI deployment, with cybersecurity being the top priority (42% advanced deployment), followed by infrastructure (40%), and data analysis and management (39%) [5]. Investment - Despite mixed results from current AI projects, companies plan to allocate approximately 30% of IT budgets to AI over the next five years, nearly double the current allocation [5]. Infrastructure - Current networking infrastructure is inadequate for AI workloads, with only 21% of organizations possessing the necessary GPUs for future demands, and 30% having capabilities for comprehensive data protection in AI models [5][6]. Data Management - Companies report decreased readiness to manage data for AI initiatives, with only 32% feeling prepared, and 80% citing inconsistencies in data pre-processing for AI projects [5][6]. Talent - A significant challenge is the lack of skilled talent, with only 31% of organizations claiming high readiness to leverage AI, and 24% indicating insufficient in-house talent for successful deployment [6]. Governance - Effective AI governance is increasingly challenging, with only 31% of organizations reporting comprehensive AI policies, and 51% citing a lack of expertise in AI governance as a barrier [6]. Culture - Cultural readiness to embrace AI has declined, with only 66% of boards being receptive to AI changes, down from 82% the previous year, and 30% of organizations reporting employee resistance to AI adoption [6]. AI Readiness Index - The Cisco AI Readiness Index surveyed 7,985 senior business leaders across 30 markets, assessing AI readiness across six pillars: strategy, infrastructure, data, talent, governance, and culture [7][8].