CISCO REPORTS FOURTH QUARTER AND FISCAL YEAR 2023 EARNINGS

SAN JOSE, Calif., Aug. 16, 2023 /PRNewswire/ —

News Summary:
Cisco ended fiscal 2023 with Q4 revenue at $15.2 billion, up 16% year over year; GAAP EPS $0.97, up 43% year over year, and Non-GAAP EPS $1.14, up 37% year over yearQ4 FY 2023 operating cash flow of $6.0 billion, up 62% year over yearProgress on business model transformation in Q4 FY 2023:Total software revenue up 17% year over year and software subscription revenue up 20% year over yearTotal annualized recurring revenue (ARR) at $24.3 billion, up 5% year over year and product ARR up 10% year over yearRemaining performance obligations (RPO) at $34.9 billion, up 11% year over year and product RPO up 12% year over yearQ4 FY 2023 Results:Revenue: $15.2 billionIncrease of 16% year over yearEarnings per Share: GAAP: $0.97; Non-GAAP: $1.14GAAP EPS increased 43% year over yearNon-GAAP EPS increased 37% year over yearFY 2023 Results:Revenue: $57.0 billion Increase of 11% year over yearEarnings per Share: GAAP: $3.07; Non-GAAP: $3.89GAAP EPS increased 9% year over yearNon-GAAP EPS increased 16% year over yearQ1 FY 2024 Guidance: Revenue: $14.5 billion to $14.7 billionEarnings per Share: GAAP: $0.79 to $0.84; Non-GAAP: $1.02 to $1.04FY 2024 Guidance: Revenue: $57.0 billion to $58.2 billionEarnings per Share: GAAP: $3.19 to $3.32; Non-GAAP: $4.01 to $4.08Cisco today reported fourth quarter and fiscal year results for the period ended July 29, 2023. Cisco reported fourth quarter revenue of $15.2 billion, net income on a generally accepted accounting principles (GAAP) basis of $4.0 billion or $0.97 per share, and non-GAAP net income of $4.7 billion or $1.14 per share.
“This past year was a milestone year for Cisco with record performance in both the full year and Q4,” said Chuck Robbins, chair and CEO of Cisco. “We are seeing solid customer demand, gaining market share, and innovating in key areas like AI, security, and cloud. This momentum gives us confidence in our ability to capture the many opportunities ahead.”
“We delivered double-digit growth in revenue and EPS, generating strong operating leverage in Q4,” said Scott Herren, CFO of Cisco. “Our business model transformation drove double-digit growth in software revenue, product ARR and total RPO, leading to greater visibility and predictability. We are committed to expanding operating leverage and increasing shareholder returns over the long term.”
Q4 GAAP Results
Q4 FY 2023
Q4 FY 2022
Vs. Q4 FY 2022
Revenue
$             15.2   billion
$             13.1   billion
16 %
Net Income
$               4.0   billion
$               2.8   billion
41 %
Diluted Earnings per Share (EPS)
$                      0.97
$                      0.68
43 %
 
Q4 Non-GAAP Results
Q4 FY 2023
Q4 FY 2022
Vs. Q4 FY 2022
Net Income
$               4.7   billion
$               3.4   billion
36 %
EPS
$                      1.14
$                      0.83
37 %
 
Fiscal Year GAAP Results
FY 2023
FY 2022
Vs. FY 2022
Revenue
$             57.0   billion
$             51.6   billion
11 %
Net Income
$             12.6   billion
$            11.8    billion
7 %
EPS
$                      3.07
$                      2.82
9 %
 
Fiscal Year Non-GAAP Results
FY 2023
FY 2022
Vs. FY 2022
Net Income
$             16.0   billion
$             14.1   billion
13 %
EPS
$                      3.89
$                      3.36
16 %
 
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 $0.39 per common share to be paid on October 25, 2023, to all stockholders of record as of the close of business on October 4, 2023. Future dividends will be subject to Board approval.
Financial Summary
All comparative percentages are on a year-over-year basis unless otherwise noted.
Q4 FY 2023 Highlights 
Revenue — Total revenue was up 16% at $15.2 billion, with product revenue up 20% and service revenue up 4%. Revenue by geographic segment was: Americas up 21%, EMEA up 10%, and APJC up 7%. Product revenue performance was led by growth in Secure, Agile Networks up 33%, Optimized Application Experiences up 15%, and Internet for the Future up 3%. Collaboration was down 12%. End-to-End Security was flat.
Gross Margin — On a GAAP basis, total gross margin, product gross margin, and service gross margin were 64.1%, 63.6%, and 65.7%, respectively, as compared with 61.3%, 59.1%, and 67.5%, respectively, in the fourth quarter of fiscal 2022.
On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 65.9%, 65.5%, and 67.5%, respectively, as compared with 63.3%, 61.3%, and 69.0%, respectively, in the fourth quarter of fiscal 2022.
Total gross margins by geographic segment were: 65.0% for the Americas, 68.4% for EMEA and 65.3% for APJC.
Operating Expenses — On a GAAP basis, operating expenses were $5.5 billion, up 20%, and were 36.1% of revenue. Non-GAAP operating expenses were $4.6 billion, up 15%, and were 30.6% of revenue.
Operating Income — GAAP operating income was $4.3 billion, up 24%, with GAAP operating margin of 28.0%. Non-GAAP operating income was $5.4 billion, up 27%, with non-GAAP operating margin at 35.4%.
Provision for Income Taxes — The GAAP tax provision rate was 11.5%. The non-GAAP tax provision rate was 15.5%.
Net Income and EPS — On a GAAP basis, net income was $4.0 billion, an increase of 41%, and EPS was $0.97, an increase of 43%. On a non-GAAP basis, net income was $4.7 billion, an increase of 36%, and EPS was $1.14, an increase of 37%. 
Cash Flow from Operating Activities — $6.0 billion for the fourth quarter of fiscal 2023, an increase of 62% compared with $3.7 billion for the fourth quarter of fiscal 2022.
FY 2023 Highlights
Revenue — Total revenue was $57.0 billion, an increase of 11%.
Net Income and EPS — On a GAAP basis, net income was $12.6 billion, an increase of 7%, and EPS was $3.07, an increase of 9%. On a non-GAAP basis, net income was $16.0 billion, an increase of 13% compared to fiscal 2022, and EPS was $3.89, an increase of 16%.
Cash Flow from Operating Activities — $19.9 billion for fiscal 2023, an increase of 50% compared with $13.2 billion for fiscal 2022.
Balance Sheet and Other Financial Highlights
Cash and Cash Equivalents and Investments — $26.1 billion at the end of the fourth quarter of fiscal 2023, compared with $23.3 billion at the end of the third quarter of fiscal 2023, and compared with $19.3 billion at the end of fiscal 2022.
Remaining Performance Obligations (RPO) — $34.9 billion, up 11% in total, with 51% of this amount to be recognized as revenue over the next 12 months. Product RPO were up 12% and service RPO were up 9%.
Deferred Revenue — $25.6 billion, up 10% in total, with deferred product revenue up 10%. Deferred service revenue was up 9%. 
Capital Allocation — In the fourth quarter of fiscal 2023, we returned $2.8 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.39 per common share, or $1.6 billion, and repurchased approximately 25 million shares of common stock under our stock repurchase program at an average price of $50.49 per share for an aggregate purchase price of $1.3 billion. The remaining authorized amount for stock repurchases under the program is $10.9 billion with no termination date.
Acquisitions
In the fourth quarter of fiscal 2023, we closed the following acquisitions: Lightspin Technologies Ltd., a privately held cloud security software company; Smartlook, s.r.o., a privately held company that provides a digital experience and product analytics solution that monitors user engagement on websites and mobile applications in real time; and Armorblox, Inc., a privately held company focused on the use of Large Language Models and natural language understanding in cybersecurity.
Guidance
Cisco expects to achieve the following results for the first quarter of fiscal 2024:
Q1 FY 2024
Revenue
$14.5 billion – $14.7 billion
Non-GAAP gross margin rate
65% – 66%
Non-GAAP operating margin rate
34% – 35%
Non-GAAP EPS
$1.02 – $1.04
 
Cisco estimates that GAAP EPS will be $0.79 to $0.84 for the first quarter of fiscal 2024.
Cisco expects to achieve the following results for fiscal 2024:
FY 2024
Revenue
$57.0 billion – $58.2 billion
Non-GAAP EPS
$4.01 – $4.08
 
Cisco estimates that GAAP EPS will be $3.19 to $3.32 for fiscal 2024.
Our Q1 FY 2024 and FY 2024 guidance assumes an effective tax provision rate of 18% for GAAP and 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 2023 conference call to discuss Cisco’s results along with its guidance will be held on Wednesday, August 16, 2023 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 16, 2023 to 4:00 p.m. Pacific Time, August 23, 2023 at 1-866-405-7294 (United States) or 1-203-369-0606 (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 16, 2023. 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
Fiscal Year Ended
July 29,2023
July 30,2022
July 29,2023
July 30,2022
REVENUE:
Product
$      11,650
$         9,688
$      43,142
$       38,018
Service
3,553
3,414
13,856
13,539
Total revenue
15,203
13,102
56,998
51,557
COST OF SALES:
Product
4,237
3,966
16,590
14,814
Service
1,218
1,111
4,655
4,495
Total cost of sales
5,455
5,077
21,245
19,309
GROSS MARGIN
9,748
8,025
35,753
32,248
OPERATING EXPENSES:
Research and development
1,953
1,682
7,551
6,774
Sales and marketing
2,579
2,349
9,880
9,085
General and administrative
690
489
2,478
2,101
Amortization of purchased intangible assets
70
73
282
313
Restructuring and other charges
203
(2)
531
6
Total operating expenses
5,495
4,591
20,722
18,279
OPERATING INCOME
4,253
3,434
15,031
13,969
Interest income
312
129
962
476
Interest expense
(111)
(93)
(427)
(360)
Other income (loss), net
17
(54)
(248)
392
Interest and other income (loss), net
218
(18)
287
508
INCOME BEFORE PROVISION FOR INCOME TAXES
4,471
3,416
15,318
14,477
Provision for income taxes
513
601
2,705
2,665
NET INCOME
$         3,958
$         2,815
$      12,613
$       11,812
Net income per share:
Basic
$           0.97
$           0.68
$           3.08
$           2.83
Diluted
$           0.97
$           0.68
$           3.07
$           2.82
Shares used in per-share calculation:
Basic
4,071
4,128
4,093
4,170
Diluted
4,093
4,137
4,105
4,192
 
CISCO SYSTEMS, INC.
REVENUE BY SEGMENT
(In millions, except percentages)
July 29, 2023
Three Months Ended
Fiscal Year Ended
Amount
Y/Y%
Amount
Y/Y%
Revenue:
Americas
$         9,075
21 %
$       33,447
12 %
EMEA
3,926
10 %
15,135
10 %
APJC
2,203
7 %
8,417
5 %
Total
$       15,203
16 %
$       56,998
11 %
Amounts may not sum and percentages may not recalculate due to rounding.
 
CISCO SYSTEMS, INC.
GROSS MARGIN PERCENTAGE BY SEGMENT
(In percentages)
July 29, 2023
Three Months Ended
Fiscal Year Ended
Gross Margin Percentage:
Americas
65.0 %
63.8 %
EMEA
68.4 %
66.2 %
APJC
65.3 %
64.4 %
 
CISCO SYSTEMS, INC.
REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES
(In millions, except percentages)
July 29, 2023
Three Months Ended
Fiscal Year Ended
Amount
Y/Y %
Amount
Y/Y %
Revenue:
Secure, Agile Networks
$         8,125
33 %
$       29,105
22 %
Internet for the Future
1,298
3 %
5,306
1 %
Collaboration
1,023
(12) %
4,052
(9) %
End-to-End Security
987
— %
3,859
4 %
Optimized Application Experiences
214
15 %
811
11 %
Other Products
2
(33) %
9
(15) %
Total Product
11,650
20 %
43,142
13 %
Services
3,553
4 %
13,856
2 %
Total
$       15,203
16 %
$       56,998
11 %
Amounts may not sum and percentages may not recalculate due to rounding.
 
CISCO SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
July 29,2023
July 30,2022
ASSETS
Current assets:
Cash and cash equivalents
$         10,123
$           7,079
Investments
16,023
12,188
Accounts receivable, net of allowance
of $85 at July 29, 2023 and $83 at July 30, 2022
5,854
6,622
Inventories
3,644
2,568
Financing receivables, net
3,352
3,905
Other current assets
4,352
4,355
Total current assets
43,348
36,717
Property and equipment, net
2,085
1,997
Financing receivables, net
3,483
4,009
Goodwill
38,535
38,304
Purchased intangible assets, net
1,818
2,569
Deferred tax assets
6,576
4,449
Other assets
6,007
5,957
TOTAL ASSETS
$       101,852
$         94,002
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt
$           1,733
$           1,099
Accounts payable
2,313
2,281
Income taxes payable
4,235
961
Accrued compensation
3,984
3,316
Deferred revenue
13,908
12,784
Other current liabilities
5,136
5,199
Total current liabilities
31,309
25,640
Long-term debt
6,658
8,416
Income taxes payable
5,756
7,725
Deferred revenue
11,642
10,480
Other long-term liabilities
2,134
1,968
Total liabilities
57,499
54,229
Total equity
44,353
39,773
TOTAL LIABILITIES AND EQUITY
$       101,852
$         94,002
 
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Fiscal Year Ended
July 29,2023
July 30,2022
Cash flows from operating activities:
Net income
$       12,613
$       11,812
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other
1,726
1,957
Share-based compensation expense
2,353
1,886
Provision (benefit) for receivables
31
55
Deferred income taxes
(2,085)
(309)
(Gains) losses on divestitures, investments and other, net
206
(453)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable
734
(1,009)
Inventories
(1,069)
(1,030)
Financing receivables
1,102
1,241
Other assets
5
(1,615)
Accounts payable
27
(55)
Income taxes, net
1,218
(690)
Accrued compensation
651
(427)
Deferred revenue
2,326
1,328
Other liabilities
48
535
Net cash provided by operating activities
19,886
13,226
Cash flows from investing activities:
Purchases of investments
(10,871)
(6,070)
Proceeds from sales of investments
1,054
2,660
Proceeds from maturities of investments
5,978
5,686
Acquisitions, net of cash and cash equivalents acquired and divestitures
(301)
(373)
Purchases of investments in privately held companies
(185)
(186)
Return of investments in privately held companies
90
237
Acquisition of property and equipment
(849)
(477)
Proceeds from sales of property and equipment
3
91
Other
(26)
(15)
Net cash provided by (used in) investing activities
(5,107)
1,553
Cash flows from financing activities:
Issuances of common stock
700
660
Repurchases of common stock – repurchase program
(4,293)
(7,689)
Shares repurchased for tax withholdings on vesting of restricted stock units
(597)
(692)
Short-term borrowings, original maturities of 90 days or less, net
(602)
606
Issuances of debt

1,049
Repayments of debt
(500)
(3,550)
Dividends paid
(6,302)
(6,224)
Other
(32)
(122)
Net cash used in financing activities
(11,626)
(15,962)
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
(105)
(180)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
3,048
(1,363)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of fiscal year
8,579
9,942
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of fiscal year
$       11,627
$         8,579
Supplemental cash flow information:
Cash paid for interest
$            376
$            355
Cash paid for income taxes, net
$         3,571
$         3,663
 
CISCO SYSTEMS, INC.
REMAINING PERFORMANCE OBLIGATIONS
(In millions, except percentages)
July 29, 2023
April 29, 2023
July 30, 2022
Amount
Y/Y %
Amount
Y/Y %
Amount
Y/Y %
Product
$    15,802
12 %
$    14,681
9 %
$    14,090
6 %
Service
19,066
9 %
17,401
4 %
17,449
(1) %
Total
$    34,868
11 %
$    32,082
6 %
$    31,539
2 %
We expect 51% of total RPO at July 29, 2023 will be recognized as revenue over the next 12 months.
 
CISCO SYSTEMS, INC.
DEFERRED REVENUE
(In millions)
July 29,2023
April 29,2023
July 30,2022
Deferred revenue:
Product
$       11,505
$       10,895
$       10,427
Service
14,045
13,365
12,837
Total
$       25,550
$       24,260
$       23,264
Reported as:
Current
$       13,908
$       13,249
$       12,784
Noncurrent
11,642
11,011
10,480
Total
$       25,550
$       24,260
$       23,264
 
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 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
Fiscal 2022
July 30, 2022
$             0.38
$          1,567
54
$          44.02
$           2,402
$          3,969
April 30, 2022
$             0.38
$          1,555
5
$          54.20
$              252
$          1,807
January 29, 2022
$             0.37
$          1,541
82
$          58.36
$           4,824
$          6,365
October 30, 2021
$             0.37
$          1,561
5
$          56.49
$              256
$          1,817
 
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 29,2023
July 30,2022
July 29,2023
July 30,2022
GAAP net income
$        3,958
$        2,815
$      12,613
$      11,812
Adjustments to cost of sales:
Share-based compensation expense
103
78
396
311
Amortization of acquisition-related intangible assets
168
162
630
733
Acquisition-related/divestiture costs
14
24
18
27
Russia-Ukraine war costs

2

7
Supplier component remediation charge (adjustment), net
(9)

(9)

Total adjustments to GAAP cost of sales
276
266
1,035
1,078
Adjustments to operating expenses:
Share-based compensation expense
520
401
1,951
1,574
Amortization of acquisition-related intangible assets
70
73
282
328
Acquisition-related/divestiture costs
63
45
241
306
Russia-Ukraine war costs
(7)
22

84
Significant asset impairments and restructurings
203
(2)
531
6
Total adjustments to GAAP operating expenses
849
539
3,005
2,298
Adjustments to interest and other income (loss), net:
(Gains) and losses on investments
(55)

133
(478)
Total adjustments to GAAP interest and other income (loss), net
(55)

133
(478)
Total adjustments to GAAP income before provision for income taxes
1,070
805
4,173
2,898
Income tax effect of non-GAAP adjustments
(215)
(181)
(838)
(616)
Significant tax matters
(133)

31

Total adjustments to GAAP provision for income taxes
(348)
(181)
(807)
(616)
Non-GAAP net income
$        4,680
$        3,439
$      15,979
$      14,094
 
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
 
GAAP TO NON-GAAP EPS
Three Months Ended
Fiscal Year Ended
July 29,2023
July 30,2022
July 29,2023
July 30,2022
GAAP EPS
$           0.97
$           0.68
$           3.07
$           2.82
Adjustments to GAAP:
Share-based compensation expense
0.15
0.12
0.57
0.45
Amortization of acquisition-related intangible assets
0.06
0.06
0.22
0.25
Acquisition-related/divestiture costs
0.02
0.02
0.06
0.08
Russia-Ukraine war costs

0.01

0.02
Significant asset impairments and restructurings
0.05

0.13

(Gains) and losses on investments
(0.01)

0.03
(0.11)
Income tax effect of non-GAAP adjustments
(0.05)
(0.04)
(0.20)
(0.15)
Significant tax matters
(0.03)

0.01

Non-GAAP EPS
$           1.14
$           0.83
$           3.89
$           3.36
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
July 29, 2023
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
$ 7,413
$ 2,335
$ 9,748
$ 5,495
20 %
$ 4,253
24 %
$ 218
$ 3,958
41 %
% 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
15 %
$ 5,378
27 %
$ 163
$ 4,680
36 %
% of revenue
65.5 %
67.5 %
65.9 %
30.6 %
35.4 %
1.1 %
30.8 %
 
Three Months Ended
July 30, 2022
Product Gross Margin
Service GrossMargin
Total Gross Margin
Operating Expenses
Operating
Income
Interest and other income (loss), net
Net
Income
GAAP amount
$ 5,722
$ 2,303
$ 8,025
$ 4,591
$ 3,434
$ (18)
$ 2,815
% of revenue
59.1 %
67.5 %
61.3 %
35.0 %
26.2 %
(0.1) %
21.5 %
Adjustments to GAAP amounts:
Share-based compensation expense
28
50
78
401
479

479
Amortization of acquisition-related intangible assets
162

162
73
235

235
Acquisition/divestiture-related costs
24

24
45
69

69
Russia-Ukraine war costs

2
2
22
24

24
Significant asset impairments and restructurings



(2)
(2)

(2)
Income tax effect/significant tax matters






(181)
Non-GAAP amount
$ 5,936
$ 2,355
$ 8,291
$ 4,052
$ 4,239
$ (18)
$ 3,439
% of revenue
61.3 %
69.0 %
63.3 %
30.9 %
32.4 %
(0.1) %
26.2 %
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)
Fiscal Year Ended
July 29, 2023
Product Gross Margin
Service GrossMargin
Total GrossMargin
OperatingExpenses
Y/Y
OperatingIncome
Y/Y
Interest and other income(loss), net
NetIncome
Y/Y
GAAP amount
$ 26,552
$ 9,201
$ 35,753
$ 20,722
13 %
$ 15,031
8 %
$ 287
$ 12,613
7 %
% 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
11 %
$ 19,071
10 %
$ 420
$ 15,979
13 %
% of revenue
63.4 %
68.2 %
64.5 %
31.1 %
33.5 %
0.7 %
28.0 %
 
Fiscal Year Ended
July 30, 2022
Product Gross Margin
Service GrossMargin
Total Gross Margin
OperatingExpenses
Operating
Income
Interest and other income (loss), net
Net
Income
GAAP amount
$ 23,204
$ 9,044
$ 32,248
$ 18,279
$ 13,969
$ 508
$ 11,812
% of revenue
61.0 %
66.8 %
62.5 %
35.5 %
27.1 %
1.0 %
22.9 %
Adjustments to GAAP amounts:
Share-based compensation expense
112
199
311
1,574
1,885

1,885
Amortization of acquisition-related intangible assets
733

733
328
1,061

1,061
Acquisition/divestiture-related costs
27

27
306
333

333
Russia-Ukraine war costs
4
3
7
84
91

91
Significant asset impairments and restructurings



6
6

6
(Gains) and losses on investments





(478)
(478)
Income tax effect/significant tax matters






(616)
Non-GAAP amount
$ 24,080
$ 9,246
$ 33,326
$ 15,981
$ 17,345
$   30
$ 14,094
% of revenue
63.3 %
68.3 %
64.6 %
31.0 %
33.6 %
0.1 %
27.3 %
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
Fiscal Year Ended
July 29, 2023
July 30, 2022
July 29, 2023
July 30, 2022
GAAP effective tax rate
11.5 %
17.6 %
17.7 %
18.4 %
Total adjustments to GAAP provision for income taxes
4.0 %
0.9 %
0.3 %
0.5 %
Non-GAAP effective tax rate
15.5 %
18.5 %
18.0 %
18.9 %
 
GAAP TO NON-GAAP GUIDANCE
Q1 FY 2024
Gross Margin Rate
Operating Margin Rate
Earnings per Share (1)
GAAP
63% – 64%
27% – 28%
$0.79 – $0.84
Estimated adjustments for:
Share-based compensation expense
1.0 %
4.0 %
$0.12 – $0.13
Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs
1.0 %
2.0 %
$0.06 – $0.07
Significant asset impairments and restructurings

1.0 %
$0.02 – $0.03
Non-GAAP
65% – 66%
34% – 35%
$1.02 – $1.04
 
FY 2024
Earnings per Share (1)
GAAP
$3.19 – $3.32
Estimated adjustments for:
Share-based compensation expense
$0.54 – $0.56
Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs
$0.20 – $0.22
Significant asset impairments and restructurings
$0.02 – $0.04
Non-GAAP
$4.01 – $4.08
(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 continued strong customer demand, gains in market share, innovations in AI, security, and cloud, our ability to capture future opportunities, and our commitment to the expansion of operating leverage and increase of shareholder returns over the long term) and the future financial performance of Cisco (including the guidance for Q1 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: the impact of the COVID-19 pandemic and related public health measures; 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; 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 Secure, Agile Networks and services; the timing of orders and manufacturing and customer lead times; significant 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 service 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 malware; vulnerabilities and critical security defects; terrorism; natural catastrophic events (including as a result of global climate change); any other 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 24, 2023 and September 8, 2022, 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 29, 2023 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.
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 leader in technology that powers the Internet. Cisco inspires new possibilities by reimagining your applications, securing your data, transforming your infrastructure, and empowering your teams for a global and inclusive future. Discover more at newsroom.cisco.com and follow us on Twitter at @Cisco.
Copyright © 2023 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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SOURCE Cisco Systems, Inc. 

SAN JOSE, Calif., Aug. 16, 2023 /PRNewswire/ —

News Summary:

Cisco ended fiscal 2023 with Q4 revenue at $15.2 billion, up 16% year over year; GAAP EPS $0.97, up 43% year over year, and Non-GAAP EPS $1.14, up 37% year over yearQ4 FY 2023 operating cash flow of $6.0 billion, up 62% year over yearProgress on business model transformation in Q4 FY 2023:Total software revenue up 17% year over year and software subscription revenue up 20% year over yearTotal annualized recurring revenue (ARR) at $24.3 billion, up 5% year over year and product ARR up 10% year over yearRemaining performance obligations (RPO) at $34.9 billion, up 11% year over year and product RPO up 12% year over yearQ4 FY 2023 Results:Revenue: $15.2 billionIncrease of 16% year over yearEarnings per Share: GAAP: $0.97; Non-GAAP: $1.14GAAP EPS increased 43% year over yearNon-GAAP EPS increased 37% year over yearFY 2023 Results:Revenue: $57.0 billion Increase of 11% year over yearEarnings per Share: GAAP: $3.07; Non-GAAP: $3.89GAAP EPS increased 9% year over yearNon-GAAP EPS increased 16% year over yearQ1 FY 2024 Guidance: Revenue: $14.5 billion to $14.7 billionEarnings per Share: GAAP: $0.79 to $0.84; Non-GAAP: $1.02 to $1.04FY 2024 Guidance: Revenue: $57.0 billion to $58.2 billionEarnings per Share: GAAP: $3.19 to $3.32; Non-GAAP: $4.01 to $4.08

Cisco today reported fourth quarter and fiscal year results for the period ended July 29, 2023. Cisco reported fourth quarter revenue of $15.2 billion, net income on a generally accepted accounting principles (GAAP) basis of $4.0 billion or $0.97 per share, and non-GAAP net income of $4.7 billion or $1.14 per share.

“This past year was a milestone year for Cisco with record performance in both the full year and Q4,” said Chuck Robbins, chair and CEO of Cisco. “We are seeing solid customer demand, gaining market share, and innovating in key areas like AI, security, and cloud. This momentum gives us confidence in our ability to capture the many opportunities ahead.”

“We delivered double-digit growth in revenue and EPS, generating strong operating leverage in Q4,” said Scott Herren, CFO of Cisco. “Our business model transformation drove double-digit growth in software revenue, product ARR and total RPO, leading to greater visibility and predictability. We are committed to expanding operating leverage and increasing shareholder returns over the long term.”

Q4 GAAP Results

Q4 FY 2023

Q4 FY 2022

Vs. Q4 FY 2022

Revenue

$             15.2   billion

$             13.1   billion

16 %

Net Income

$               4.0   billion

$               2.8   billion

41 %

Diluted Earnings per Share (EPS)

$                      0.97

$                      0.68

43 %

 

Q4 Non-GAAP Results

Q4 FY 2023

Q4 FY 2022

Vs. Q4 FY 2022

Net Income

$               4.7   billion

$               3.4   billion

36 %

EPS

$                      1.14

$                      0.83

37 %

 

Fiscal Year GAAP Results

FY 2023

FY 2022

Vs. FY 2022

Revenue

$             57.0   billion

$             51.6   billion

11 %

Net Income

$             12.6   billion

$            11.8    billion

7 %

EPS

$                      3.07

$                      2.82

9 %

 

Fiscal Year Non-GAAP Results

FY 2023

FY 2022

Vs. FY 2022

Net Income

$             16.0   billion

$             14.1   billion

13 %

EPS

$                      3.89

$                      3.36

16 %

 

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 $0.39 per common share to be paid on October 25, 2023, to all stockholders of record as of the close of business on October 4, 2023. Future dividends will be subject to Board approval.

Financial Summary

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

Q4 FY 2023 Highlights 

Revenue — Total revenue was up 16% at $15.2 billion, with product revenue up 20% and service revenue up 4%. Revenue by geographic segment was: Americas up 21%, EMEA up 10%, and APJC up 7%. Product revenue performance was led by growth in Secure, Agile Networks up 33%, Optimized Application Experiences up 15%, and Internet for the Future up 3%. Collaboration was down 12%. End-to-End Security was flat.

Gross Margin — On a GAAP basis, total gross margin, product gross margin, and service gross margin were 64.1%, 63.6%, and 65.7%, respectively, as compared with 61.3%, 59.1%, and 67.5%, respectively, in the fourth quarter of fiscal 2022.

On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 65.9%, 65.5%, and 67.5%, respectively, as compared with 63.3%, 61.3%, and 69.0%, respectively, in the fourth quarter of fiscal 2022.

Total gross margins by geographic segment were: 65.0% for the Americas, 68.4% for EMEA and 65.3% for APJC.

Operating Expenses — On a GAAP basis, operating expenses were $5.5 billion, up 20%, and were 36.1% of revenue. Non-GAAP operating expenses were $4.6 billion, up 15%, and were 30.6% of revenue.

Operating Income — GAAP operating income was $4.3 billion, up 24%, with GAAP operating margin of 28.0%. Non-GAAP operating income was $5.4 billion, up 27%, with non-GAAP operating margin at 35.4%.

Provision for Income Taxes — The GAAP tax provision rate was 11.5%. The non-GAAP tax provision rate was 15.5%.

Net Income and EPS — On a GAAP basis, net income was $4.0 billion, an increase of 41%, and EPS was $0.97, an increase of 43%. On a non-GAAP basis, net income was $4.7 billion, an increase of 36%, and EPS was $1.14, an increase of 37%. 

Cash Flow from Operating Activities — $6.0 billion for the fourth quarter of fiscal 2023, an increase of 62% compared with $3.7 billion for the fourth quarter of fiscal 2022.

FY 2023 Highlights

Revenue — Total revenue was $57.0 billion, an increase of 11%.

Net Income and EPS — On a GAAP basis, net income was $12.6 billion, an increase of 7%, and EPS was $3.07, an increase of 9%. On a non-GAAP basis, net income was $16.0 billion, an increase of 13% compared to fiscal 2022, and EPS was $3.89, an increase of 16%.

Cash Flow from Operating Activities — $19.9 billion for fiscal 2023, an increase of 50% compared with $13.2 billion for fiscal 2022.

Balance Sheet and Other Financial Highlights

Cash and Cash Equivalents and Investments — $26.1 billion at the end of the fourth quarter of fiscal 2023, compared with $23.3 billion at the end of the third quarter of fiscal 2023, and compared with $19.3 billion at the end of fiscal 2022.

Remaining Performance Obligations (RPO) — $34.9 billion, up 11% in total, with 51% of this amount to be recognized as revenue over the next 12 months. Product RPO were up 12% and service RPO were up 9%.

Deferred Revenue — $25.6 billion, up 10% in total, with deferred product revenue up 10%. Deferred service revenue was up 9%. 

Capital Allocation — In the fourth quarter of fiscal 2023, we returned $2.8 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.39 per common share, or $1.6 billion, and repurchased approximately 25 million shares of common stock under our stock repurchase program at an average price of $50.49 per share for an aggregate purchase price of $1.3 billion. The remaining authorized amount for stock repurchases under the program is $10.9 billion with no termination date.

Acquisitions

In the fourth quarter of fiscal 2023, we closed the following acquisitions: Lightspin Technologies Ltd., a privately held cloud security software company; Smartlook, s.r.o., a privately held company that provides a digital experience and product analytics solution that monitors user engagement on websites and mobile applications in real time; and Armorblox, Inc., a privately held company focused on the use of Large Language Models and natural language understanding in cybersecurity.

Guidance

Cisco expects to achieve the following results for the first quarter of fiscal 2024:

Q1 FY 2024

Revenue

$14.5 billion – $14.7 billion

Non-GAAP gross margin rate

65% – 66%

Non-GAAP operating margin rate

34% – 35%

Non-GAAP EPS

$1.02 – $1.04

 

Cisco estimates that GAAP EPS will be $0.79 to $0.84 for the first quarter of fiscal 2024.

Cisco expects to achieve the following results for fiscal 2024:

FY 2024

Revenue

$57.0 billion – $58.2 billion

Non-GAAP EPS

$4.01 – $4.08

 

Cisco estimates that GAAP EPS will be $3.19 to $3.32 for fiscal 2024.

Our Q1 FY 2024 and FY 2024 guidance assumes an effective tax provision rate of 18% for GAAP and 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 2023 conference call to discuss Cisco’s results along with its guidance will be held on Wednesday, August 16, 2023 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 16, 2023 to 4:00 p.m. Pacific Time, August 23, 2023 at 1-866-405-7294 (United States) or 1-203-369-0606 (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 16, 2023. 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

Fiscal Year Ended

July 29,
2023

July 30,
2022

July 29,
2023

July 30,
2022

REVENUE:

Product

$      11,650

$         9,688

$      43,142

$       38,018

Service

3,553

3,414

13,856

13,539

Total revenue

15,203

13,102

56,998

51,557

COST OF SALES:

Product

4,237

3,966

16,590

14,814

Service

1,218

1,111

4,655

4,495

Total cost of sales

5,455

5,077

21,245

19,309

GROSS MARGIN

9,748

8,025

35,753

32,248

OPERATING EXPENSES:

Research and development

1,953

1,682

7,551

6,774

Sales and marketing

2,579

2,349

9,880

9,085

General and administrative

690

489

2,478

2,101

Amortization of purchased intangible assets

70

73

282

313

Restructuring and other charges

203

(2)

531

6

Total operating expenses

5,495

4,591

20,722

18,279

OPERATING INCOME

4,253

3,434

15,031

13,969

Interest income

312

129

962

476

Interest expense

(111)

(93)

(427)

(360)

Other income (loss), net

17

(54)

(248)

392

Interest and other income (loss), net

218

(18)

287

508

INCOME BEFORE PROVISION FOR INCOME TAXES

4,471

3,416

15,318

14,477

Provision for income taxes

513

601

2,705

2,665

NET INCOME

$         3,958

$         2,815

$      12,613

$       11,812

Net income per share:

Basic

$           0.97

$           0.68

$           3.08

$           2.83

Diluted

$           0.97

$           0.68

$           3.07

$           2.82

Shares used in per-share calculation:

Basic

4,071

4,128

4,093

4,170

Diluted

4,093

4,137

4,105

4,192

 

CISCO SYSTEMS, INC.

REVENUE BY SEGMENT

(In millions, except percentages)

July 29, 2023

Three Months Ended

Fiscal Year Ended

Amount

Y/Y%

Amount

Y/Y%

Revenue:

Americas

$         9,075

21 %

$       33,447

12 %

EMEA

3,926

10 %

15,135

10 %

APJC

2,203

7 %

8,417

5 %

Total

$       15,203

16 %

$       56,998

11 %

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

 

CISCO SYSTEMS, INC.

GROSS MARGIN PERCENTAGE BY SEGMENT

(In percentages)

July 29, 2023

Three Months Ended

Fiscal Year Ended

Gross Margin Percentage:

Americas

65.0 %

63.8 %

EMEA

68.4 %

66.2 %

APJC

65.3 %

64.4 %

 

CISCO SYSTEMS, INC.

REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES

(In millions, except percentages)

July 29, 2023

Three Months Ended

Fiscal Year Ended

Amount

Y/Y %

Amount

Y/Y %

Revenue:

Secure, Agile Networks

$         8,125

33 %

$       29,105

22 %

Internet for the Future

1,298

3 %

5,306

1 %

Collaboration

1,023

(12) %

4,052

(9) %

End-to-End Security

987

— %

3,859

4 %

Optimized Application Experiences

214

15 %

811

11 %

Other Products

2

(33) %

9

(15) %

Total Product

11,650

20 %

43,142

13 %

Services

3,553

4 %

13,856

2 %

Total

$       15,203

16 %

$       56,998

11 %

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

 

CISCO SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

July 29,
2023

July 30,
2022

ASSETS

Current assets:

Cash and cash equivalents

$         10,123

$           7,079

Investments

16,023

12,188

Accounts receivable, net of allowance

of $85 at July 29, 2023 and $83 at July 30, 2022

5,854

6,622

Inventories

3,644

2,568

Financing receivables, net

3,352

3,905

Other current assets

4,352

4,355

Total current assets

43,348

36,717

Property and equipment, net

2,085

1,997

Financing receivables, net

3,483

4,009

Goodwill

38,535

38,304

Purchased intangible assets, net

1,818

2,569

Deferred tax assets

6,576

4,449

Other assets

6,007

5,957

TOTAL ASSETS

$       101,852

$         94,002

LIABILITIES AND EQUITY

Current liabilities:

Short-term debt

$           1,733

$           1,099

Accounts payable

2,313

2,281

Income taxes payable

4,235

961

Accrued compensation

3,984

3,316

Deferred revenue

13,908

12,784

Other current liabilities

5,136

5,199

Total current liabilities

31,309

25,640

Long-term debt

6,658

8,416

Income taxes payable

5,756

7,725

Deferred revenue

11,642

10,480

Other long-term liabilities

2,134

1,968

Total liabilities

57,499

54,229

Total equity

44,353

39,773

TOTAL LIABILITIES AND EQUITY

$       101,852

$         94,002

 

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Fiscal Year Ended

July 29,
2023

July 30,
2022

Cash flows from operating activities:

Net income

$       12,613

$       11,812

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

Depreciation, amortization, and other

1,726

1,957

Share-based compensation expense

2,353

1,886

Provision (benefit) for receivables

31

55

Deferred income taxes

(2,085)

(309)

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

206

(453)

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

Accounts receivable

734

(1,009)

Inventories

(1,069)

(1,030)

Financing receivables

1,102

1,241

Other assets

5

(1,615)

Accounts payable

27

(55)

Income taxes, net

1,218

(690)

Accrued compensation

651

(427)

Deferred revenue

2,326

1,328

Other liabilities

48

535

Net cash provided by operating activities

19,886

13,226

Cash flows from investing activities:

Purchases of investments

(10,871)

(6,070)

Proceeds from sales of investments

1,054

2,660

Proceeds from maturities of investments

5,978

5,686

Acquisitions, net of cash and cash equivalents acquired and divestitures

(301)

(373)

Purchases of investments in privately held companies

(185)

(186)

Return of investments in privately held companies

90

237

Acquisition of property and equipment

(849)

(477)

Proceeds from sales of property and equipment

3

91

Other

(26)

(15)

Net cash provided by (used in) investing activities

(5,107)

1,553

Cash flows from financing activities:

Issuances of common stock

700

660

Repurchases of common stock – repurchase program

(4,293)

(7,689)

Shares repurchased for tax withholdings on vesting of restricted stock units

(597)

(692)

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

(602)

606

Issuances of debt

1,049

Repayments of debt

(500)

(3,550)

Dividends paid

(6,302)

(6,224)

Other

(32)

(122)

Net cash used in financing activities

(11,626)

(15,962)

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

(105)

(180)

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

3,048

(1,363)

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

8,579

9,942

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

$       11,627

$         8,579

Supplemental cash flow information:

Cash paid for interest

$            376

$            355

Cash paid for income taxes, net

$         3,571

$         3,663

 

CISCO SYSTEMS, INC.

REMAINING PERFORMANCE OBLIGATIONS

(In millions, except percentages)

July 29, 2023

April 29, 2023

July 30, 2022

Amount

Y/Y %

Amount

Y/Y %

Amount

Y/Y %

Product

$    15,802

12 %

$    14,681

9 %

$    14,090

6 %

Service

19,066

9 %

17,401

4 %

17,449

(1) %

Total

$    34,868

11 %

$    32,082

6 %

$    31,539

2 %

We expect 51% of total RPO at July 29, 2023 will be recognized as revenue over the next 12 months.

 

CISCO SYSTEMS, INC.

DEFERRED REVENUE

(In millions)

July 29,
2023

April 29,
2023

July 30,
2022

Deferred revenue:

Product

$       11,505

$       10,895

$       10,427

Service

14,045

13,365

12,837

Total

$       25,550

$       24,260

$       23,264

Reported as:

Current

$       13,908

$       13,249

$       12,784

Noncurrent

11,642

11,011

10,480

Total

$       25,550

$       24,260

$       23,264

 

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 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

Fiscal 2022

July 30, 2022

$             0.38

$          1,567

54

$          44.02

$           2,402

$          3,969

April 30, 2022

$             0.38

$          1,555

5

$          54.20

$              252

$          1,807

January 29, 2022

$             0.37

$          1,541

82

$          58.36

$           4,824

$          6,365

October 30, 2021

$             0.37

$          1,561

5

$          56.49

$              256

$          1,817

 

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 29,
2023

July 30,
2022

July 29,
2023

July 30,
2022

GAAP net income

$        3,958

$        2,815

$      12,613

$      11,812

Adjustments to cost of sales:

Share-based compensation expense

103

78

396

311

Amortization of acquisition-related intangible assets

168

162

630

733

Acquisition-related/divestiture costs

14

24

18

27

Russia-Ukraine war costs

2

7

Supplier component remediation charge (adjustment), net

(9)

(9)

Total adjustments to GAAP cost of sales

276

266

1,035

1,078

Adjustments to operating expenses:

Share-based compensation expense

520

401

1,951

1,574

Amortization of acquisition-related intangible assets

70

73

282

328

Acquisition-related/divestiture costs

63

45

241

306

Russia-Ukraine war costs

(7)

22

84

Significant asset impairments and restructurings

203

(2)

531

6

Total adjustments to GAAP operating expenses

849

539

3,005

2,298

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

(Gains) and losses on investments

(55)

133

(478)

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

(55)

133

(478)

Total adjustments to GAAP income before provision for income taxes

1,070

805

4,173

2,898

Income tax effect of non-GAAP adjustments

(215)

(181)

(838)

(616)

Significant tax matters

(133)

31

Total adjustments to GAAP provision for income taxes

(348)

(181)

(807)

(616)

Non-GAAP net income

$        4,680

$        3,439

$      15,979

$      14,094

 

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

 

GAAP TO NON-GAAP EPS

Three Months Ended

Fiscal Year Ended

July 29,
2023

July 30,
2022

July 29,
2023

July 30,
2022

GAAP EPS

$           0.97

$           0.68

$           3.07

$           2.82

Adjustments to GAAP:

Share-based compensation expense

0.15

0.12

0.57

0.45

Amortization of acquisition-related intangible assets

0.06

0.06

0.22

0.25

Acquisition-related/divestiture costs

0.02

0.02

0.06

0.08

Russia-Ukraine war costs

0.01

0.02

Significant asset impairments and restructurings

0.05

0.13

(Gains) and losses on investments

(0.01)

0.03

(0.11)

Income tax effect of non-GAAP adjustments

(0.05)

(0.04)

(0.20)

(0.15)

Significant tax matters

(0.03)

0.01

Non-GAAP EPS

$           1.14

$           0.83

$           3.89

$           3.36

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

July 29, 2023

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

$ 7,413

$ 2,335

$ 9,748

$ 5,495

20 %

$ 4,253

24 %

$ 218

$ 3,958

41 %

% 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

15 %

$ 5,378

27 %

$ 163

$ 4,680

36 %

% of revenue

65.5 %

67.5 %

65.9 %

30.6 %

35.4 %

1.1 %

30.8 %

 

Three Months Ended

July 30, 2022

Product Gross
Margin

Service Gross
Margin

Total Gross
Margin

Operating
Expenses

Operating

Income

Interest and
other income
(loss), net

Net

Income

GAAP amount

$ 5,722

$ 2,303

$ 8,025

$ 4,591

$ 3,434

$ (18)

$ 2,815

% of revenue

59.1 %

67.5 %

61.3 %

35.0 %

26.2 %

(0.1) %

21.5 %

Adjustments to GAAP amounts:

Share-based compensation expense

28

50

78

401

479

479

Amortization of acquisition-related intangible
assets

162

162

73

235

235

Acquisition/divestiture-related costs

24

24

45

69

69

Russia-Ukraine war costs

2

2

22

24

24

Significant asset impairments and restructurings

(2)

(2)

(2)

Income tax effect/significant tax matters

(181)

Non-GAAP amount

$ 5,936

$ 2,355

$ 8,291

$ 4,052

$ 4,239

$ (18)

$ 3,439

% of revenue

61.3 %

69.0 %

63.3 %

30.9 %

32.4 %

(0.1) %

26.2 %

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)

Fiscal Year Ended

July 29, 2023

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

$ 26,552

$ 9,201

$ 35,753

$ 20,722

13 %

$ 15,031

8 %

$ 287

$ 12,613

7 %

% 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

11 %

$ 19,071

10 %

$ 420

$ 15,979

13 %

% of revenue

63.4 %

68.2 %

64.5 %

31.1 %

33.5 %

0.7 %

28.0 %

 

Fiscal Year Ended

July 30, 2022

Product Gross
Margin

Service Gross
Margin

Total Gross
Margin

Operating
Expenses

Operating

Income

Interest and
other income
(loss), net

Net

Income

GAAP amount

$ 23,204

$ 9,044

$ 32,248

$ 18,279

$ 13,969

$ 508

$ 11,812

% of revenue

61.0 %

66.8 %

62.5 %

35.5 %

27.1 %

1.0 %

22.9 %

Adjustments to GAAP amounts:

Share-based compensation expense

112

199

311

1,574

1,885

1,885

Amortization of acquisition-related intangible
assets

733

733

328

1,061

1,061

Acquisition/divestiture-related costs

27

27

306

333

333

Russia-Ukraine war costs

4

3

7

84

91

91

Significant asset impairments and restructurings

6

6

6

(Gains) and losses on investments

(478)

(478)

Income tax effect/significant tax matters

(616)

Non-GAAP amount

$ 24,080

$ 9,246

$ 33,326

$ 15,981

$ 17,345

$   30

$ 14,094

% of revenue

63.3 %

68.3 %

64.6 %

31.0 %

33.6 %

0.1 %

27.3 %

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

Fiscal Year Ended

July 29, 2023

July 30, 2022

July 29, 2023

July 30, 2022

GAAP effective tax rate

11.5 %

17.6 %

17.7 %

18.4 %

Total adjustments to GAAP provision for income taxes

4.0 %

0.9 %

0.3 %

0.5 %

Non-GAAP effective tax rate

15.5 %

18.5 %

18.0 %

18.9 %

 

GAAP TO NON-GAAP GUIDANCE

Q1 FY 2024

Gross Margin Rate

Operating Margin Rate

Earnings per Share (1)

GAAP

63% – 64%

27% – 28%

$0.79 – $0.84

Estimated adjustments for:

Share-based compensation expense

1.0 %

4.0 %

$0.12 – $0.13

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

1.0 %

2.0 %

$0.06 – $0.07

Significant asset impairments and restructurings

1.0 %

$0.02 – $0.03

Non-GAAP

65% – 66%

34% – 35%

$1.02 – $1.04

 

FY 2024

Earnings per Share (1)

GAAP

$3.19 – $3.32

Estimated adjustments for:

Share-based compensation expense

$0.54 – $0.56

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

$0.20 – $0.22

Significant asset impairments and restructurings

$0.02 – $0.04

Non-GAAP

$4.01 – $4.08

(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, RussiaUkraine 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 continued strong customer demand, gains in market share, innovations in AI, security, and cloud, our ability to capture future opportunities, and our commitment to the expansion of operating leverage and increase of shareholder returns over the long term) and the future financial performance of Cisco (including the guidance for Q1 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: the impact of the COVID-19 pandemic and related public health measures; 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; 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 Secure, Agile Networks and services; the timing of orders and manufacturing and customer lead times; significant 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 service 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 malware; vulnerabilities and critical security defects; terrorism; natural catastrophic events (including as a result of global climate change); any other 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 24, 2023 and September 8, 2022, 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 29, 2023 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.

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, RussiaUkraine 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 leader in technology that powers the Internet. Cisco inspires new possibilities by reimagining your applications, securing your data, transforming your infrastructure, and empowering your teams for a global and inclusive future. Discover more at newsroom.cisco.com and follow us on Twitter at @Cisco.

Copyright © 2023 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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SOURCE Cisco Systems, Inc.

 

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