Financial Performance - Cisco's Q3 FY25 revenue reached $14.149 billion, an increase of 11% year-over-year[7, 23, 36, 37] - Non-GAAP EPS stood at $0.96[7, 37] - Total software revenue increased by 25% year-over-year to $5.622 billion[7, 38] - Total ARR grew by 5% year-over-year to $30.6 billion[7, 26] - Total RPO increased by 7% year-over-year to $41.7 billion[7, 31] - The company returned $3.131 billion to shareholders through share repurchases and dividends in Q3 FY25[7, 39] AI Initiatives and Growth - Cisco secured over $600 million in AI infrastructure orders from webscale customers in Q3 FY25, exceeding the full-year FY25 target of $1 billion[7, 14] - Product orders increased by 20% year-over-year, or 9% excluding Splunk[7, 34] Q4 FY25 Guidance - Cisco projects Q4 FY25 revenue between $14.5 billion and $14.7 billion[47] - The company anticipates non-GAAP EPS between $0.96 and $0.98[47]

Financial Data and Key Metrics Changes - In Q3, total revenue was $14.1 billion, up 11% year over year [25] - Non-GAAP net income was $3.8 billion, with non-GAAP earnings per share at $0.96 [25] - Total product revenue increased to $10.4 billion, up 15%, while services revenue rose to $3.8 billion, up 3% [25] - Total annual recurring revenue (ARR) ended at $30.6 billion, a 5% increase, with subscription revenue up 15% to $7.9 billion, representing 56% of total revenue [26] Business Line Data and Key Metrics Changes - Networking revenue grew 8%, driven by double-digit growth in switching and enterprise routing, but offset by a decline in servers [26] - Security revenue surged 54%, primarily due to growth in Splunk and SASE offerings [26] - Collaboration revenue increased by 4%, while observability revenue rose by 24% [26] - Product orders were up 20% year over year, with a 9% increase when excluding Splunk [27] Market Data and Key Metrics Changes - In geographic segments, The Americas saw a 27% increase, EMEA was up 4%, and APJC grew by 21% [27] - In customer markets, Service Provider and Cloud orders increased by 32%, Enterprise orders were up 22%, and Public Sector orders rose by 8% [27] Company Strategy and Development Direction - Cisco is focusing on AI infrastructure, with over $600 million in AI infrastructure orders from web scale customers in Q3, surpassing the fiscal year target a quarter early [6][11] - The company is expanding partnerships, including a significant collaboration with NVIDIA to enhance AI deployment capabilities [12][14] - Cisco is investing in the Kingdom of Saudi Arabia as a strategic technology partner for AI infrastructure, aligning with the country's Vision 2030 [13] Management's Comments on Operating Environment and Future Outlook - Management noted that customer purchasing behavior remains strong despite macroeconomic uncertainties, particularly in AI transitions [36] - The company anticipates continued growth in AI orders, with a focus on executing and increasing capacity to meet demand [84] - Management expressed confidence in the long-term growth opportunities in AI and cloud infrastructure, expecting sustained investment from customers [50][51] Other Important Information - Cisco returned $3.1 billion to shareholders in Q3 through dividends and share repurchases [7] - The company announced the retirement of CFO Scott Herren at the end of fiscal year 2025, with Mark Patterson set to take over [20][23] Q&A Session Summary Question: What are you seeing in terms of customer buying behavior given the uncertainty with tariffs? - Management indicated no significant changes in purchasing behavior, with customers still committed to technology transitions [36][37] Question: Can you elaborate on the public sector performance? - Public sector orders were up 8%, with double-digit growth in U.S. Federal orders, despite challenges in the civilian sector [45][46] Question: Is 2025 expected to be a peak year for cloud CapEx? - Management believes that global cloud CapEx will continue to grow, with significant opportunities in enterprise AI [49][51] Question: Can you provide insights on the $600 million AI orders? - The $600 million in AI orders was not from the new Saudi AI company, but management expects substantial future opportunities in that region [56][58] Question: What is the impact of tariffs on guidance for Q4? - Management has built in expectations for tariffs in the Q4 guidance, reflecting potential impacts on gross margins [96]

Financial Data and Key Metrics Changes - In Q3, total revenue was $14.1 billion, up 11% year over year, with non-GAAP net income at $3.8 billion and non-GAAP earnings per share at $0.96 [25][28] - Total product revenue increased to $10.4 billion, up 15%, while services revenue rose to $3.8 billion, up 3% [25][28] - Total annual recurring revenue (ARR) ended at $30.6 billion, a 5% increase, with subscription revenue up 15% to $7.9 billion, representing 56% of total revenue [26][28] Business Line Data and Key Metrics Changes - Networking revenue grew 8%, driven by double-digit growth in switching and enterprise routing, partially offset by a decline in servers [26][28] - Security revenue surged 54%, primarily due to growth in offerings from Splunk and SASE [26][28] - Collaboration revenue increased by 4%, while observability revenue rose by 24% [26][28] Market Data and Key Metrics Changes - Product orders grew 20% year over year, with a 9% increase when excluding Splunk [27] - In geographic segments, The Americas saw a 27% increase, EMEA was up 4%, and APJC grew by 21% [27] - In customer markets, Service Provider and Cloud orders increased by 32%, Enterprise orders were up 22%, and Public Sector orders rose by 8% [27] Company Strategy and Development Direction - Cisco is focusing on AI infrastructure, with over $600 million in AI infrastructure orders from web scale customers in Q3, surpassing the original target for the fiscal year [6][11] - The company is expanding partnerships, including a significant collaboration with NVIDIA to enhance AI capabilities [12][14] - Cisco is investing in the Kingdom of Saudi Arabia as a strategic technology partner for AI infrastructure, aligning with the country's Vision 2030 [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that customer purchasing behavior remains strong despite macroeconomic uncertainties, particularly in AI transitions [36][40] - The company expects continued growth in AI orders and infrastructure, with a focus on executing and increasing capacity [86] - Management anticipates that the sovereign AI cloud opportunity will ramp up in the near term, positioning Cisco as a core system provider [14][15] Other Important Information - Cisco returned $3.1 billion to shareholders in Q3 through dividends and share repurchases, with a total of $9.6 billion returned year to date [7][29] - The company announced the retirement of CFO Scott Herren at the end of fiscal year 2025, with Mark Patterson set to take over [19][20] Q&A Session Summary Question: What are you seeing in terms of customer buying behavior given the uncertainty with tariffs? - Management indicated no significant change in purchasing behavior, with customers committed to technology transitions, particularly in AI [36][37] Question: Is 2025 expected to be a peak year for cloud CapEx? - Management believes that global cloud CapEx will continue to grow, driven by sovereign cloud strategies and enterprise AI opportunities [48][50] Question: Can you elaborate on the $600 million in AI orders? - Management clarified that the $600 million in AI orders does not include any from the new Saudi AI company, which is just starting [55][57] Question: What is the impact of tariffs on guidance for Q4? - Management has built in expectations for tariffs in the Q4 guidance, reflecting the full cost without mitigation [88][97] Question: How is Cisco participating in the Middle East AI opportunities? - Management expects significant spending in the Middle East, with discussions focused on networking, compute, security, and observability [64][66]

Financial Data and Key Metrics Changes - Total revenue for Q3 was $14.1 billion, an increase of 11% year over year [24] - Non-GAAP net income was $3.8 billion, with non-GAAP earnings per share at $0.96 [24] - Total product revenue was $10.4 billion, up 15%, while services revenue was $3.8 billion, up 3% [24] - Total annualized recurring revenue (ARR) ended at $30.6 billion, a 5% increase [25] - Total subscription revenue increased by 15% to $7.9 billion, representing 56% of total revenue [25] - Non-GAAP gross margin was 68.6%, up 30 basis points year over year [27] - Non-GAAP operating margin was 34.5%, above the high end of guidance [28] Business Line Data and Key Metrics Changes - Networking product orders grew by 8%, with double-digit growth in switching and enterprise routing [25] - Security orders surged by 54%, driven by offerings from Splunk and SASE [25] - Collaboration revenue increased by 4%, while observability revenue rose by 24% [25] - Product orders were up 20% year over year, with a 9% increase when excluding Splunk [26] Market Data and Key Metrics Changes - In the Americas, product orders increased by 27%, while EMEA saw a 4% increase and APJC grew by 21% [26] - Service Provider and Cloud orders were up 32%, Enterprise orders increased by 22%, and Public Sector orders rose by 8% [26] Company Strategy and Development Direction - Cisco is focusing on AI infrastructure, with over $1 billion in AI orders received year to date, surpassing the original target [5][11] - The company is enhancing its partnerships, particularly with NVIDIA, to deliver integrated AI solutions [12] - Cisco is investing in strategic partnerships in Saudi Arabia to support AI infrastructure development [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that customer purchasing behavior remains stable despite tariff uncertainties, with continued commitment to technology transitions [35] - The company anticipates sustained demand for AI infrastructure and does not expect a significant slowdown in cloud CapEx [47] - Management expressed confidence in the ongoing growth opportunities in AI and enterprise markets [49] Other Important Information - Scott Herron, CFO, announced retirement at the end of fiscal year 2025, with Mark Patterson set to take over [21][22] - Cisco closed the acquisition of Snap Attack to enhance its security operations capabilities [29] Q&A Session Summary Question: Customer buying behavior amid tariff uncertainties - Management indicated no significant changes in purchasing behavior, with customers still committed to technology transitions [35][36] Question: Impact of cloud CapEx slowing down - Management does not anticipate a slowdown in global cloud CapEx, citing ongoing investments in sovereign cloud strategies [47][48] Question: AI orders and future growth rates - AI orders are expected to continue growing, with management emphasizing the need for execution and capacity increases [81][84] Question: Networking orders strength and product cycle contributions - Networking orders showed broad strength across various segments, with expectations for continued growth driven by product refresh cycles [70][71] Question: Tariff impact on guidance for Q4 - Management confirmed that the guidance for Q4 includes assumptions about tariffs, reflecting potential impacts on gross margins [106][107]

Core Insights - Cisco announced transformative innovations and partnerships aimed at enhancing security professionals' ability to secure and leverage AI in response to a complex threat landscape and talent shortages [2][3] - The upcoming 2025 Cybersecurity Readiness Index indicates that 86% of organizations have faced AI-related security incidents in the past year, highlighting the urgency for improved security measures [2] Group 1: Innovations and Partnerships - Cisco XDR integrates agentic AI to improve threat detection and response, correlating data across various platforms to prioritize alerts and automate responses [4][5] - The collaboration with Splunk enhances network visibility and detection capabilities, allowing organizations to build a more efficient Security Operations Center (SOC) [5][6] - Cisco's Foundation AI initiative aims to democratize AI security through open-source tools and models, fostering collaboration among security experts [9][10] Group 2: AI Security and Risk Management - Cisco's AI Defense integrates with ServiceNow to provide comprehensive AI risk management and governance, facilitating secure AI adoption [8] - New AI Supply Chain Risk Management controls are introduced to protect against vulnerabilities in AI model files and datasets, ensuring secure deployment of AI applications [10] Group 3: Industrial IoT Security - Enhancements to Cisco's Industrial Threat Defense solution aim to secure critical infrastructure and industrial networks against cyber threats, integrating IT security measures into operational technology [11]