SAN JOSE, Calif., Nov. 17, 2021 /PRNewswire/ --
News Summary:
- Overall performance: $12.9
billion in revenue, up 8% year over year, with broad-based
strength across the business; GAAP EPS $0.70, up 37% year over year, and Non-GAAP EPS
$0.82, up 8% year over year
- Strong demand across the business with 33% year-over-year total
product order growth
- Solid progress on business model transformation: Total
Annualized Recurring Revenue was $21.6
billion for the first quarter of fiscal 2022, up 10% year
over year
- Q1 Results:
-
- Revenue: $12.9
billion
-
- Increase of 8% year over year
- Earnings per Share: GAAP: $0.70; Non-GAAP: $0.82
-
- GAAP EPS increased 37% year over year
- Non-GAAP EPS increased 8% year over year
- Q2 Guidance:
-
- Revenue: 4.5% to 6.5% growth year over year
- Earnings per Share: GAAP: $0.64 to $0.68;
Non-GAAP: $0.80 to $0.82
- FY 2022 Guidance:
-
- Revenue: 5% to 7% growth year over year
- Earnings per Share: GAAP: $2.77 to $2.89;
Non-GAAP: $3.38 to $3.45
Cisco today reported first quarter results for the period ended
October 30, 2021. Cisco reported first quarter revenue of
$12.9 billion, net income on a
generally accepted accounting principles (GAAP) basis of
$3.0 billion or $0.70 per share, and non-GAAP net income of
$3.5 billion or $0.82 per share.
"In Q1, we had robust growth and continued strong demand despite
the very dynamic supply environment," said Chuck Robbins, Chair and CEO of Cisco. "Cisco's
technology sits at the heart of the accelerated digital
transformation happening today. Our breakthrough innovation, strong
demand, and the success of our business transformation position us
well for another year of growth in fiscal 2022."
"Our teams executed well in a challenging environment,
delivering balanced profitable growth with revenue and non-GAAP EPS
both growing 8% year over year," said Scott
Herren, CFO of Cisco. "We also continued to make significant
progress in our business model transformation. Remaining
performance obligations and annualized recurring revenue both grew
10% year over year with product ARR growth of 21% providing more
predictability and visibility to our long-term growth."
GAAP
Results
|
|
|
|
Q1 FY
2022
|
|
Q1 FY
2021
|
|
Vs. Q1 FY
2021
|
Revenue
|
|
$
|
12.9
|
billion
|
|
$
|
11.9
|
billion
|
|
8%
|
Net Income
|
|
$
|
3.0
|
billion
|
|
$
|
2.2
|
billion
|
|
37%
|
Diluted Earnings per
Share (EPS)
|
|
$
|
0.70
|
|
|
$
|
0.51
|
|
|
37%
|
|
|
Non-GAAP
Results
|
|
|
|
Q1 FY
2022
|
|
Q1 FY
2021
|
|
Vs. Q1 FY
2021
|
Net Income
|
|
$
|
3.5
|
billion
|
|
$
|
3.2
|
billion
|
|
8%
|
EPS
|
|
$
|
0.82
|
|
|
$
|
0.76
|
|
|
8%
|
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."
Financial Summary
All comparative percentages are on a year-over-year basis
unless otherwise noted.
Q1 FY 2022 Highlights
Revenue -- Total revenue was up 8% at $12.9 billion, with product revenue up 11% and
service revenue up 1%. Revenue by geographic segment was: Americas
up 5%, EMEA up 11%, and APJC up 15%. Product revenue performance
was led by growth in Secure, Agile Networks up 10%, Internet for
the Future up 46%, End-to-End Security up 4%, and Optimized
Application Experiences up 18%. Hybrid Work was down 7%.
Gross Margin -- On a GAAP basis, total gross
margin, product gross margin, and service gross margin were 62.4%,
61.5%, and 65.2%, respectively, as compared with 63.6%, 62.7%, and
65.8%, respectively, in the first quarter of fiscal 2021.
On a non-GAAP basis, total gross margin, product gross margin,
and service gross margin were 64.5%, 63.8%, and 66.5%,
respectively, as compared with 65.8%, 65.3%, and 67.1%,
respectively, in the first quarter of fiscal 2021.
Total gross margins by geographic segment were: 64.5% for the
Americas, 64.4% for EMEA and 64.7% for APJC.
Operating Expenses -- On a GAAP basis,
operating expenses were $4.6 billion,
down 8%, and were 35.8% of revenue. Non-GAAP operating expenses
were $4.0 billion, up 2%, and were
31.2% of revenue.
Operating Income -- GAAP operating income was
$3.4 billion, up 34%, with GAAP
operating margin of 26.7%. Non-GAAP operating income was
$4.3 billion, up 10%, with non-GAAP
operating margin at 33.3%.
Provision for Income Taxes -- The GAAP tax
provision rate was 18.5%. The non-GAAP tax provision rate was
19.0%.
Net Income and EPS -- On a GAAP basis, net income
was $3.0 billion, an increase of 37%,
and EPS was $0.70, an increase of
37%. On a non-GAAP basis, net income was $3.5 billion, an increase of 8%, and EPS was
$0.82, an increase of 8%.
Cash Flow from Operating Activities --
$3.4 billion for the first quarter of
fiscal 2022, a decrease of 16% compared with $4.1 billion for the first quarter of fiscal
2021.
Balance Sheet and Other Financial Highlights
Cash and Cash Equivalents and Investments --
$23.3 billion at the end of the first
quarter of fiscal 2022, compared with $24.5
billion at the end of fiscal 2021.
Remaining Performance Obligations (RPO)
-- $30.1 billion, up
10% in total, with 53% of this amount to be recognized as revenue
over the next 12 months. Product RPO were up 18% and service RPO
were up 4%.
Deferred Revenue -- $22.1
billion, up 8% in total, with deferred product revenue up
19%. Deferred service revenue was flat.
Capital Allocation -- In the first quarter of
fiscal 2022, we returned $1.8 billion
to stockholders through share buybacks and dividends. We declared
and paid a cash dividend of $0.37 per
common share, or $1.6 billion, and
repurchased approximately 5 million shares of common stock under
our stock repurchase program at an average price of $56.49 per share for an aggregate purchase price
of $256 million. The remaining
authorized amount for stock repurchases under the program is
$7.7 billion with no termination
date.
Acquisitions
In the first quarter of fiscal 2022, we closed the acquisition
of Epsagon Ltd., a privately held modern observability company with
expertise in distributed tracing solutions for modern applications
and technologies, including containers and serverless
environments.
In addition, we announced our intent to acquire replex GmbH, a
privately held enterprise software company based in Germany.
Guidance
Cisco expects to achieve the following results for the second
quarter of fiscal 2022:
Q2 FY
2022
|
|
|
Revenue
|
|
4.5% - 6.5% growth
Y/Y
|
Non-GAAP gross margin
rate
|
|
63.5% -
64.5%
|
Non-GAAP operating
margin rate
|
|
32.5% -
33.5%
|
Non-GAAP
EPS
|
|
$0.80 -
$0.82
|
Cisco estimates that GAAP EPS will be $0.64 to $0.68 for
the second quarter of fiscal 2022.
Cisco expects to achieve the following results for fiscal 2022
(no change from our previous guidance):
FY
2022
|
|
|
Revenue
|
|
5% - 7% growth
Y/Y
|
Non-GAAP
EPS
|
|
$3.38 -
$3.45
|
Cisco estimates that GAAP EPS will be $2.77 to $2.89 for
fiscal 2022.
Our Q2 FY 2022 and FY 2022 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:
- Q1 fiscal year 2022 conference call to discuss Cisco's results
along with its guidance will be held on Wednesday, November 17, 2021 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, November 17, 2021 to 4:00
p.m. Pacific Time, November 24,
2021 at 1-866-360-3304 (United
States) or 1-203-369-0159 (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, November 17, 2021. 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
|
|
October
30,
2021
|
|
October
24,
2020
|
REVENUE:
|
|
|
|
Product
|
$
|
9,529
|
|
|
$
|
8,587
|
|
Service
|
3,371
|
|
|
3,342
|
|
Total
revenue
|
12,900
|
|
|
11,929
|
|
COST OF
SALES:
|
|
|
|
Product
|
3,673
|
|
|
3,206
|
|
Service
|
1,174
|
|
|
1,142
|
|
Total cost of
sales
|
4,847
|
|
|
4,348
|
|
GROSS
MARGIN
|
8,053
|
|
|
7,581
|
|
OPERATING
EXPENSES:
|
|
|
|
Research and
development
|
1,714
|
|
|
1,612
|
|
Sales and
marketing
|
2,261
|
|
|
2,217
|
|
General and
administrative
|
551
|
|
|
544
|
|
Amortization of
purchased intangible assets
|
84
|
|
|
36
|
|
Restructuring and
other charges
|
5
|
|
|
602
|
|
Total operating
expenses
|
4,615
|
|
|
5,011
|
|
OPERATING
INCOME
|
3,438
|
|
|
2,570
|
|
Interest
income
|
121
|
|
|
174
|
|
Interest
expense
|
(89)
|
|
|
(112)
|
|
Other income (loss),
net
|
187
|
|
|
49
|
|
Interest and other
income (loss), net
|
219
|
|
|
111
|
|
INCOME BEFORE
PROVISION FOR INCOME TAXES
|
3,657
|
|
|
2,681
|
|
Provision for income
taxes
|
677
|
|
|
507
|
|
NET
INCOME
|
$
|
2,980
|
|
|
$
|
2,174
|
|
|
|
|
|
Net income per
share:
|
|
|
|
Basic
|
$
|
0.71
|
|
|
$
|
0.51
|
|
Diluted
|
$
|
0.70
|
|
|
$
|
0.51
|
|
Shares used in
per-share calculation:
|
|
|
|
Basic
|
4,218
|
|
|
4,230
|
|
Diluted
|
4,243
|
|
|
4,244
|
|
CISCO SYSTEMS,
INC.
|
REVENUE BY
SEGMENT
|
(In millions,
except percentages)
|
|
|
|
Three Months
Ended
|
|
|
October 30,
2021
|
|
|
Amount
|
|
Y/Y %
|
Revenue:
|
|
|
|
|
Americas
|
|
$
|
7,561
|
|
|
5%
|
EMEA
|
|
3,303
|
|
|
11%
|
APJC
|
|
2,036
|
|
|
15%
|
Total
|
|
$
|
12,900
|
|
|
8%
|
|
Amounts may not sum
and percentages may not recalculate due to rounding.
|
CISCO SYSTEMS,
INC.
|
GROSS MARGIN
PERCENTAGE BY SEGMENT
|
(In
percentages)
|
|
|
|
Three Months
Ended
|
|
|
October 30,
2021
|
Gross Margin
Percentage:
|
|
|
Americas
|
|
64.5%
|
EMEA
|
|
64.4%
|
APJC
|
|
64.7%
|
CISCO SYSTEMS,
INC.
|
REVENUE FOR GROUPS
OF SIMILAR PRODUCTS AND SERVICES
|
(In millions,
except percentages)
|
|
|
|
Three Months
Ended
|
|
|
October 30,
2021
|
|
|
Amount
|
|
Y/Y %
|
Revenue:
|
|
|
|
|
Secure, Agile
Networks
|
|
$
|
5,967
|
|
|
10%
|
Hybrid Work
|
|
1,109
|
|
|
(7)%
|
End-to-End
Security
|
|
895
|
|
|
4%
|
Internet for the
Future
|
|
1,374
|
|
|
46%
|
Optimized Application
Experiences
|
|
181
|
|
|
18%
|
Other
Products
|
|
3
|
|
|
9%
|
Total
Product
|
|
9,529
|
|
|
11%
|
Services
|
|
3,371
|
|
|
1%
|
Total
|
|
$
|
12,900
|
|
|
8%
|
|
Amounts may not sum
and percentages may not recalculate due to rounding.
|
Effective for the first quarter of fiscal 2022, we began
reporting our revenue in the following categories: Secure, Agile
Networks; Hybrid Work; End-to-End Security; Internet for the
Future; Optimized Application Experiences; Other Products and
Services. This change better aligns our product categories with our
strategic priorities. The reclassified product category revenue by
quarter for fiscal 2019 through fiscal 2021 as well as other
information is available on Cisco's Investor Relations website at
https://investor.cisco.com/investor-relations/financial-information/Financial-Results/default.aspx.
CISCO SYSTEMS,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
(Unaudited)
|
|
|
October 30,
2021
|
|
July 31,
2021
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
7,619
|
|
|
$
|
9,175
|
|
Investments
|
15,727
|
|
|
15,343
|
|
Accounts receivable,
net of allowance of $114 at October 30, 2021 and $109 at
July 31, 2021
|
5,306
|
|
|
5,766
|
|
Inventories
|
1,832
|
|
|
1,559
|
|
Financing receivables,
net
|
4,070
|
|
|
4,380
|
|
Other current
assets
|
3,034
|
|
|
2,889
|
|
Total current
assets
|
37,588
|
|
|
39,112
|
|
Property and
equipment, net
|
2,238
|
|
|
2,338
|
|
Financing
receivables, net
|
4,546
|
|
|
4,884
|
|
Goodwill
|
38,802
|
|
|
38,168
|
|
Purchased intangible
assets, net
|
3,350
|
|
|
3,619
|
|
Deferred tax
assets
|
4,198
|
|
|
4,360
|
|
Other
assets
|
5,259
|
|
|
5,016
|
|
TOTAL
ASSETS
|
$
|
95,981
|
|
|
$
|
97,497
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
debt
|
$
|
506
|
|
|
$
|
2,508
|
|
Accounts
payable
|
2,261
|
|
|
2,362
|
|
Income taxes
payable
|
816
|
|
|
801
|
|
Accrued
compensation
|
3,231
|
|
|
3,818
|
|
Deferred
revenue
|
12,017
|
|
|
12,148
|
|
Other current
liabilities
|
4,407
|
|
|
4,620
|
|
Total current
liabilities
|
23,238
|
|
|
26,257
|
|
Long-term
debt
|
8,996
|
|
|
9,018
|
|
Income taxes
payable
|
8,553
|
|
|
8,538
|
|
Deferred
revenue
|
10,055
|
|
|
10,016
|
|
Other long-term
liabilities
|
2,438
|
|
|
2,393
|
|
Total
liabilities
|
53,280
|
|
|
56,222
|
|
Total
equity
|
42,701
|
|
|
41,275
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
95,981
|
|
|
$
|
97,497
|
|
CISCO SYSTEMS,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
October
30,
2021
|
|
October
24,
2020
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
2,980
|
|
|
$
|
2,174
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation,
amortization, and other
|
533
|
|
|
451
|
|
Share-based
compensation expense
|
453
|
|
|
438
|
|
Provision (benefit)
for receivables
|
1
|
|
|
13
|
|
Deferred income
taxes
|
(98)
|
|
|
(120)
|
|
(Gains) losses on
divestitures, investments and other, net
|
(211)
|
|
|
(59)
|
|
Change in operating
assets and liabilities, net of effects of acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
427
|
|
|
1,526
|
|
Inventories
|
(275)
|
|
|
(21)
|
|
Financing
receivables
|
672
|
|
|
167
|
|
Other
assets
|
(170)
|
|
|
(259)
|
|
Accounts
payable
|
(93)
|
|
|
73
|
|
Income taxes,
net
|
17
|
|
|
(84)
|
|
Accrued
compensation
|
(585)
|
|
|
(165)
|
|
Deferred
revenue
|
(95)
|
|
|
(45)
|
|
Other
liabilities
|
(129)
|
|
|
7
|
|
Net cash provided by
operating activities
|
3,427
|
|
|
4,096
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
investments
|
(2,951)
|
|
|
(3,756)
|
|
Proceeds from sales of
investments
|
580
|
|
|
657
|
|
Proceeds from
maturities of investments
|
1,856
|
|
|
1,425
|
|
Acquisitions, net of
cash and cash equivalents acquired and divestitures
|
(336)
|
|
|
(830)
|
|
Purchases of
investments in privately held companies
|
(101)
|
|
|
(68)
|
|
Return of investments
in privately held companies
|
53
|
|
|
29
|
|
Acquisition of
property and equipment
|
(122)
|
|
|
(171)
|
|
Proceeds from sales of
property and equipment
|
1
|
|
|
4
|
|
Net cash used in
investing activities
|
(1,020)
|
|
|
(2,710)
|
|
Cash flows from
financing activities:
|
|
|
|
Issuances of common
stock
|
—
|
|
|
1
|
|
Repurchases of common
stock - repurchase program
|
(273)
|
|
|
(800)
|
|
Shares repurchased for
tax withholdings on vesting of restricted stock units
|
(133)
|
|
|
(89)
|
|
Repayments of
debt
|
(2,000)
|
|
|
—
|
|
Dividends
paid
|
(1,561)
|
|
|
(1,520)
|
|
Other
|
(3)
|
|
|
35
|
|
Net cash used in
financing activities
|
(3,970)
|
|
|
(2,373)
|
|
Net decrease in cash,
cash equivalents, and restricted cash
|
(1,563)
|
|
|
(987)
|
|
Cash, cash
equivalents, and restricted cash, beginning of period
|
9,942
|
|
|
11,812
|
|
Cash, cash
equivalents, and restricted cash, end of period
|
$
|
8,379
|
|
|
$
|
10,825
|
|
Supplemental cash
flow information:
|
|
|
|
Cash paid for
interest
|
$
|
124
|
|
|
$
|
160
|
|
Cash paid for income
taxes, net
|
$
|
758
|
|
|
$
|
710
|
|
CISCO SYSTEMS,
INC.
|
REMAINING
PERFORMANCE OBLIGATIONS
|
(In millions,
except percentages)
|
|
|
October 30,
2021
|
|
July 31,
2021
|
|
October 24,
2020
|
|
Amount
|
|
Y/Y%
|
|
Amount
|
|
Y/Y%
|
|
Amount
|
|
Y/Y%
|
Product
|
$
|
13,384
|
|
|
18
|
%
|
|
$
|
13,270
|
|
|
18
|
%
|
|
$
|
11,340
|
|
|
15
|
%
|
Service
|
16,751
|
|
|
4
|
%
|
|
17,623
|
|
|
3
|
%
|
|
16,129
|
|
|
8
|
%
|
Total
|
$
|
30,135
|
|
|
10
|
%
|
|
$
|
30,893
|
|
|
9
|
%
|
|
$
|
27,469
|
|
|
10
|
%
|
We expect 53% of total RPO at October 30, 2021 will be
recognized as revenue over the next 12 months.
CISCO SYSTEMS,
INC.
|
DEFERRED
REVENUE
|
(In
millions)
|
|
|
October
30,
2021
|
|
July 31,
2021
|
|
October
24,
2020
|
Deferred
revenue:
|
|
|
|
|
|
Product
|
$
|
9,681
|
|
|
$
|
9,416
|
|
|
$
|
8,139
|
|
Service
|
12,391
|
|
|
12,748
|
|
|
12,334
|
|
Total
|
$
|
22,072
|
|
|
$
|
22,164
|
|
|
$
|
20,473
|
|
Reported
as:
|
|
|
|
|
|
Current
|
$
|
12,017
|
|
|
$
|
12,148
|
|
|
$
|
11,271
|
|
Noncurrent
|
10,055
|
|
|
10,016
|
|
|
9,202
|
|
Total
|
$
|
22,072
|
|
|
$
|
22,164
|
|
|
$
|
20,473
|
|
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
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
October 30,
2021
|
|
$
|
0.37
|
|
|
$
|
1,561
|
|
|
5
|
|
|
$
|
56.49
|
|
|
$
|
256
|
|
|
$
|
1,817
|
|
Fiscal
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31,
2021
|
|
$
|
0.37
|
|
|
$
|
1,562
|
|
|
15
|
|
|
$
|
53.30
|
|
|
$
|
791
|
|
|
$
|
2,353
|
|
May 1, 2021
|
|
$
|
0.37
|
|
|
$
|
1,560
|
|
|
10
|
|
|
$
|
48.71
|
|
|
$
|
510
|
|
|
$
|
2,070
|
|
January 23,
2021
|
|
$
|
0.36
|
|
|
$
|
1,521
|
|
|
19
|
|
|
$
|
42.82
|
|
|
$
|
801
|
|
|
$
|
2,322
|
|
October 24,
2020
|
|
$
|
0.36
|
|
|
$
|
1,520
|
|
|
20
|
|
|
$
|
40.44
|
|
|
$
|
800
|
|
|
$
|
2,320
|
|
CISCO SYSTEMS,
INC.
|
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
|
GAAP TO NON-GAAP
NET INCOME
|
(In
millions)
|
|
|
Three Months
Ended
|
|
October
30,
2021
|
|
October
24,
2020
|
GAAP net
income
|
$
|
2,980
|
|
|
$
|
2,174
|
|
Adjustments to cost of
sales:
|
|
|
|
Share-based
compensation expense
|
69
|
|
|
65
|
|
Amortization of
acquisition-related intangible assets
|
198
|
|
|
163
|
|
Acquisition-related/divestiture costs
|
1
|
|
|
1
|
|
Legal and
indemnification settlements/charges
|
—
|
|
|
43
|
|
Total adjustments to
GAAP cost of sales
|
268
|
|
|
272
|
|
Adjustments to
operating expenses:
|
|
|
|
Share-based
compensation expense
|
383
|
|
|
362
|
|
Amortization of
acquisition-related intangible assets
|
84
|
|
|
36
|
|
Acquisition-related/divestiture costs
|
112
|
|
|
59
|
|
Significant asset
impairments and restructurings
|
5
|
|
|
602
|
|
Total adjustments to
GAAP operating expenses
|
584
|
|
|
1,059
|
|
Adjustments to
interest and other income (loss), net:
|
|
|
|
(Gains) and losses on
equity investments
|
(219)
|
|
|
(48)
|
|
Total adjustments to
GAAP interest and other income (loss), net
|
(219)
|
|
|
(48)
|
|
Total adjustments to
GAAP income before provision for income taxes
|
633
|
|
|
1,283
|
|
Income tax effect of
non-GAAP adjustments
|
(138)
|
|
|
(246)
|
|
Total adjustments to
GAAP provision for income taxes
|
(138)
|
|
|
(246)
|
|
Non-GAAP net
income
|
$
|
3,475
|
|
|
$
|
3,211
|
|
CISCO SYSTEMS,
INC.
|
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
|
GAAP TO NON-GAAP
EPS
|
|
|
Three Months
Ended
|
|
October
30,
2021
|
|
October
24,
2020
|
GAAP EPS
|
$
|
0.70
|
|
|
$
|
0.51
|
|
Adjustments to
GAAP:
|
|
|
|
Share-based
compensation expense
|
0.11
|
|
|
0.10
|
|
Amortization of
acquisition-related intangible assets
|
0.07
|
|
|
0.05
|
|
Acquisition-related/divestiture costs
|
0.03
|
|
|
0.01
|
|
Legal and
indemnification settlements/charges
|
—
|
|
|
0.01
|
|
Significant asset
impairments and restructurings
|
—
|
|
|
0.14
|
|
(Gains) and losses on
equity investments
|
(0.05)
|
|
|
(0.01)
|
|
Income tax effect of
non-GAAP adjustments
|
(0.03)
|
|
|
(0.06)
|
|
Non-GAAP
EPS
|
$
|
0.82
|
|
|
$
|
0.76
|
|
|
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
|
|
October 30,
2021
|
|
Product
Gross
Margin
|
|
Service
Gross
Margin
|
|
Total
Gross
Margin
|
|
Operating
Expenses
|
|
Y/Y
|
|
Operating
Income
|
|
Y/Y
|
|
Interest
and other
income
(loss),
net
|
|
Net
Income
|
|
Y/Y
|
GAAP
amount
|
$
|
5,856
|
|
|
$
|
2,197
|
|
|
$
|
8,053
|
|
|
$
|
4,615
|
|
|
(8)%
|
|
$
|
3,438
|
|
|
34%
|
|
$
|
219
|
|
|
$
|
2,980
|
|
|
37%
|
% of
revenue
|
61.5
|
%
|
|
65.2
|
%
|
|
62.4
|
%
|
|
35.8
|
%
|
|
|
|
26.7
|
%
|
|
|
|
1.7
|
%
|
|
23.1
|
%
|
|
|
Adjustments to GAAP
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
25
|
|
|
44
|
|
|
69
|
|
|
383
|
|
|
|
|
452
|
|
|
|
|
—
|
|
|
452
|
|
|
|
Amortization of
acquisition-related intangible assets
|
198
|
|
|
—
|
|
|
198
|
|
|
84
|
|
|
|
|
282
|
|
|
|
|
—
|
|
|
282
|
|
|
|
Acquisition/divestiture-related costs
|
1
|
|
|
—
|
|
|
1
|
|
|
112
|
|
|
|
|
113
|
|
|
|
|
—
|
|
|
113
|
|
|
|
Significant asset
impairments and restructurings
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
—
|
|
|
5
|
|
|
|
(Gains) and losses on
equity investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(219)
|
|
|
(219)
|
|
|
|
Income tax
effect/significant tax matters
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
(138)
|
|
|
|
Non-GAAP
amount
|
$
|
6,080
|
|
|
$
|
2,241
|
|
|
$
|
8,321
|
|
|
$
|
4,031
|
|
|
2%
|
|
$
|
4,290
|
|
|
10%
|
|
$
|
—
|
|
|
$
|
3,475
|
|
|
8%
|
% of
revenue
|
63.8
|
%
|
|
66.5
|
%
|
|
64.5
|
%
|
|
31.2
|
%
|
|
|
|
33.3
|
%
|
|
|
|
—
|
%
|
|
26.9
|
%
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
October 24,
2020
|
|
Product
Gross
Margin
|
|
Service
Gross
Margin
|
|
Total
Gross
Margin
|
|
Operating
Expenses
|
|
Operating
Income
|
|
Interest
and
other
income
(loss),
net
|
|
Net
Income
|
GAAP
amount
|
$
|
5,381
|
|
|
$
|
2,200
|
|
|
$
|
7,581
|
|
|
$
|
5,011
|
|
|
$
|
2,570
|
|
|
$
|
111
|
|
|
$
|
2,174
|
|
% of
revenue
|
62.7
|
%
|
|
65.8
|
%
|
|
63.6
|
%
|
|
42.0
|
%
|
|
21.5
|
%
|
|
0.9
|
%
|
|
18.2
|
%
|
Adjustments to GAAP
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
24
|
|
|
41
|
|
|
65
|
|
|
362
|
|
|
427
|
|
|
—
|
|
|
427
|
|
Amortization of
acquisition-related intangible assets
|
163
|
|
|
—
|
|
|
163
|
|
|
36
|
|
|
199
|
|
|
—
|
|
|
199
|
|
Acquisition/divestiture-related costs
|
—
|
|
|
1
|
|
|
1
|
|
|
59
|
|
|
60
|
|
|
—
|
|
|
60
|
|
Legal and
indemnification settlements/charges
|
43
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
Significant asset
impairments and restructurings
|
—
|
|
|
—
|
|
|
—
|
|
|
602
|
|
|
602
|
|
|
—
|
|
|
602
|
|
(Gains) and losses on
equity investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48)
|
|
|
(48)
|
|
Income tax
effect/significant tax matters
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(246)
|
|
Non-GAAP
amount
|
$
|
5,611
|
|
|
$
|
2,242
|
|
|
$
|
7,853
|
|
|
$
|
3,952
|
|
|
$
|
3,901
|
|
|
$
|
63
|
|
|
$
|
3,211
|
|
% of
revenue
|
65.3
|
%
|
|
67.1
|
%
|
|
65.8
|
%
|
|
33.1
|
%
|
|
32.7
|
%
|
|
0.5
|
%
|
|
26.9
|
%
|
|
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
|
|
October
30,
2021
|
|
October
24,
2020
|
GAAP effective tax
rate
|
18.5
|
%
|
|
18.9
|
%
|
Total adjustments to
GAAP provision for income taxes
|
0.5
|
%
|
|
0.1
|
%
|
Non-GAAP effective
tax rate
|
19.0
|
%
|
|
19.0
|
%
|
GAAP TO NON-GAAP
GUIDANCE
|
|
Q2 FY 2022
|
|
Gross
Margin
Rate
|
|
Operating
Margin
Rate
|
|
Earnings
per
Share
(1)
|
GAAP
|
|
61.5% -
62.5%
|
|
26% - 27%
|
|
$0.64 -
$0.68
|
Estimated adjustments
for:
|
|
|
|
|
|
|
Share-based
compensation expense
|
|
0.5%
|
|
4.0%
|
|
$0.08 -
$0.09
|
Amortization of
acquisition-related intangible assets and
acquisition/divestiture-related costs
|
|
1.5%
|
|
2.5%
|
|
$0.06 -
$0.07
|
Non-GAAP
|
|
63.5% -
64.5%
|
|
32.5% -
33.5%
|
|
$0.80 -
$0.82
|
|
|
FY 2022
|
|
Earnings
per
Share
(1)
|
GAAP
|
|
$2.77 -
$2.89
|
Estimated adjustments
for:
|
|
|
Share-based
compensation expense
|
|
$0.34 -
$0.36
|
Amortization of
acquisition-related intangible assets and
acquisition/divestiture-related costs
|
|
$0.26 -
$0.28
|
Significant asset
impairments and restructurings
|
|
$0.00 -
$0.01
|
(Gains) and losses on
equity investments
|
|
($0.04)
|
Non-GAAP
|
|
$3.38 -
$3.45
|
|
(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,
restructurings, (gains) and losses on equity investments and
significant tax matters or other events, which may or may not be
significant unless specifically stated.
Forward Looking Statements, Non-GAAP Information and
Additional Information
This release may be deemed to contain
forward-looking statements, which are subject to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, among other things,
statements regarding future events (such as our ability to
innovate, the demand for our technology, the continued success of
our business transformation, the growth of our business, and the
continued progress in our business model transformation to more
recurring revenue) and the future financial performance of Cisco
(including the guidance for Q2 FY 2022 and full year FY 2022) 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; 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 report on Form 10-K filed on September 9, 2021. 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 report on Form 10-K as it may be amended from
time to time. Cisco's results of operations for the three months
ended October 30, 2021 are not necessarily indicative of
Cisco's operating results for any future periods. Any projections
in this release are based on limited information currently
available to Cisco, which is subject to change. Although any such
projections and the factors influencing them will likely change,
Cisco will not necessarily update the information, since Cisco will
only provide guidance at certain points during the year. Such
information speaks only as of the date of this release.
This release includes non-GAAP net income, non-GAAP gross
margins, non-GAAP operating expenses, non-GAAP operating income and
margin, non-GAAP effective tax rates, non-GAAP interest and other
income (loss), net, and non-GAAP net income per share data for the
periods presented. It also includes future estimated ranges for
gross margin, operating margin, tax provision rate and EPS on a
non-GAAP basis.
These non-GAAP measures are not in accordance with, or an
alternative for, measures prepared in accordance with generally
accepted accounting principles and may be different from non-GAAP
measures used by other companies. In addition, these non-GAAP
measures are not based on any comprehensive set of accounting rules
or principles. Cisco believes that non-GAAP measures have
limitations in that they do not reflect all of the amounts
associated with Cisco's results of operations as determined in
accordance with GAAP and that these measures should only be used to
evaluate Cisco's results of operations in conjunction with the
corresponding GAAP measures.
Cisco believes that the presentation of non-GAAP measures when
shown in conjunction with the corresponding GAAP measures, provides
useful information to investors and management regarding financial
and business trends relating to its financial condition and its
historical and projected results of operations.
For its internal budgeting process, Cisco's management uses
financial statements that do not include, when applicable,
share-based compensation expense, amortization of
acquisition-related intangible assets,
acquisition-related/divestiture costs, significant asset
impairments and restructurings, significant litigation settlements
and other contingencies, gains and losses on equity 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, 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 © 2021 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.