Cisco Systems(US:CSCO)2025-02-18 21:34Revenue Performance - Total revenue for the second quarter of fiscal 2025 increased by 9% to $13.991 billion compared to $12.791 billion in the same period last year[185]. - Product revenue rose by 11%, while services revenue increased by 6%, with total software revenue reaching $5.5 billion, a 33% increase driven primarily by Splunk[188]. - Total revenue for the three months ended January 25, 2025, was $13,991 million, a 9% increase from $12,791 million in the same period of fiscal 2024[221]. - Product revenue increased by 11% to $10,234 million for the three months ended January 25, 2025, while services revenue increased by 6% to $3,757 million[223]. - Total revenue for the first six months of fiscal 2025 was $27,832 million, reflecting a 1% increase from $27,459 million in the same period of fiscal 2024[222]. Regional Performance - The Americas region saw a revenue increase of $692 million, while EMEA and APJC revenues rose by $371 million and $136 million, respectively[190]. - The Americas segment generated $8,202 million in revenue for the three months ended January 25, 2025, a 9% increase from $7,510 million in the same period of fiscal 2024[222]. - EMEA segment revenue increased by 11% to $3,855 million for the three months ended January 25, 2025, compared to $3,484 million in the same period of fiscal 2024[222]. Profitability and Income - Net income decreased by 8% to $2.428 billion, resulting in diluted earnings per share of $0.61, a 6% decline from the previous year[185]. - Operating income for the three months ended January 25, 2025, was $3,113 million, a slight increase of 1% from the prior year, while operating income as a percentage of revenue decreased by 1.9 percentage points to 22.3%[280][281]. - Operating income decreased by 26%, and operating income as a percentage of revenue decreased by 7.1 percentage points, primarily due to incremental expenses from Splunk and higher restructuring charges[282]. Expenses and Costs - Research and development expenses increased by 18% to $2.299 billion, contributing to a total operating expense increase of 13%[185]. - Total gross margin improved by 0.9 percentage points to 65.1%, with product gross margin increasing by 1.0 percentage points[189]. - Cash provided by operating activities for the six months ended January 25, 2025, was $5.902 billion, compared to $3.179 billion in the prior year[196]. - Total debt increased slightly to $31.038 billion from $30.962 billion[196]. Product and Service Revenue - Security product revenue surged by 117%, and Observability revenue grew by 47%, largely due to contributions from Splunk[190]. - Total services revenue for the first six months of fiscal 2025 increased by 6% to $7,484 million compared to $7,088 million for the same period in fiscal 2024[249]. - Product revenue in the Americas segment increased by 11% to $5,947 million for the three months ended January 25, 2025, compared to $5,346 million for the same period in 2024[228]. - Total product revenue for the company reached $10,234 million for the three months ended January 25, 2025, representing an increase of 11% from $9,232 million in the same period last year[236]. Cash Flow and Shareholder Returns - Free cash flow for the first six months of fiscal 2025 was $5.475 billion, up from $2.875 billion in the same period of fiscal 2024[295]. - The company returned $3.2 billion to stockholders through stock repurchases and $3.2 billion in cash dividends in the first six months of fiscal 2025[292]. - The Board of Directors declared a quarterly dividend of $0.41 per common share to be paid on April 23, 2025[298]. Inventory and Commitments - Provision for inventory was $381 million for the first six months of fiscal 2025, compared to $258 million for the same period in fiscal 2024, indicating a significant increase[207]. - As of January 25, 2025, inventories decreased by 13% to $2,927 million compared to July 27, 2024, while inventory purchase commitments increased by 13% to $5,824 million[302]. Tax and Interest - The effective tax rate for the second quarter of fiscal 2025 was 15.9%, down from 16.7% in the second quarter of fiscal 2024[216]. - The effective tax rate for the first six months of fiscal 2025 was 0.3%, a significant decrease from 17.5% in the same period of fiscal 2024, primarily due to a $720 million tax benefit[288]. - Interest income decreased by $160 million to $524 million, while interest expense increased by $591 million to $822 million, resulting in a net interest expense of $298 million[283]. Financing and Debt - The company had $10.9 billion in commercial paper notes outstanding as of January 25, 2025, consistent with the previous period[312]. - The company entered into a 5-year $5.0 billion unsecured revolving credit agreement on February 2, 2024, and was in compliance with all covenants as of January 25, 2025[313]. - The company had $20.3 billion in principal amount of senior fixed-rate notes outstanding as of January 25, 2025, with a carrying amount of $20.1 billion and a fair value of $20.2 billion[328].