SAN
JOSE, Calif., May 18, 2022
/PRNewswire/ --
News Summary:
- $12.8 billion in revenue, flat
year over year; GAAP EPS $0.73, up 7%
year over year, and Non-GAAP EPS $0.87, up 5% year over year
- Solid demand with product order growth up 8% year over
year
- Progress on business model transformation with total Annualized
Recurring Revenue (ARR) at $22.4
billion in the third quarter of fiscal 2022, up 11% year
over year
- Q3 Results:
-
- Revenue: $12.8
billion
-
- Earnings per Share: GAAP: $0.73; Non-GAAP: $0.87
-
- GAAP EPS increased 7% year over year
- Non-GAAP EPS increased 5% year over year
- Q4 Guidance:
-
- Revenue: (1)% to (5.5)% decline year over year
- Earnings per Share: GAAP: $0.60 to $0.70;
Non-GAAP: $0.76 to $0.84
- FY 2022 Guidance:
-
- Revenue: 2% to 3% growth year over year
- Earnings per Share: GAAP: $2.75 to $2.85;
Non-GAAP: $3.29 to $3.37
Cisco today reported third quarter results for the period ended
April 30, 2022. Cisco reported third
quarter revenue of $12.8 billion, net
income on a generally accepted accounting principles (GAAP) basis
of $3.0 billion or $0.73 per share, and non-GAAP net income of
$3.6 billion or $0.87 per share.
"We continued to see solid demand for our technologies and our
business transformation is progressing well," said Chuck Robbins, chair and CEO of Cisco. "While
Covid lockdowns in China and the
war in Ukraine impacted our
revenue in the quarter, the fundamental drivers across our business
are strong and we remain confident in the long term."
"We delivered healthy earnings despite unanticipated disruptions
through strong pricing and disciplined spend management," said
Scott Herren, CFO of Cisco. "Our
product backlog is well over $15
billion and product ARR and RPO again grew double digits.
The continued progress in our business model transformation
reflects the success of our strategy and underpins our long-term
confidence."
GAAP
Results
|
|
|
|
Q3 FY 2022
|
|
Q3 FY 2021
|
|
Vs. Q3 FY 2021
|
Revenue
|
|
$
12.8 billion
|
|
$
12.8 billion
|
|
—%
|
Net Income
|
|
$
3.0 billion
|
|
$
2.9 billion
|
|
6%
|
Diluted Earnings per
Share (EPS)
|
|
$
0.73
|
|
$
0.68
|
|
7%
|
Non-GAAP
Results
|
|
|
|
Q3 FY 2022
|
|
Q3 FY 2021
|
|
Vs. Q3 FY 2021
|
Net Income
|
|
$
3.6 billion
|
|
$
3.5 billion
|
|
3%
|
EPS
|
|
$
0.87
|
|
$
0.83
|
|
5%
|
The third quarter of fiscal 2022 had 13 weeks compared with 14
weeks in the third quarter of fiscal 2021.
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.
Q3 FY 2022 Highlights
Revenue -- Total revenue was flat at $12.8 billion, with product revenue up 3% and
service revenue down 8%. Revenue by geographic segment was:
Americas up 5%, EMEA down 6%, and APJC down 6%. Product revenue
performance was led by growth in Secure, Agile Networks up 4%,
Internet for the Future up 6%, End-to-End Security up 7%, and
Optimized Application Experiences up 8%. Collaboration was down
7%.
The third quarter of fiscal 2022 had 13 weeks compared with 14
weeks in the third quarter of fiscal 2021. The total
additional revenue associated with the extra week in the
third quarter of fiscal 2021 was approximately 3% of revenue
growth.
In March 2022, in connection with
the Russian invasion of Ukraine,
Cisco announced its intention to stop business operations in
Russia and Belarus for the foreseeable future. The total
negative impact to revenue was approximately $200 million in the third quarter of fiscal 2022.
Historically, Russia, Belarus and Ukraine collectively, represented
approximately 1% of our total revenue.
Gross Margin -- On a GAAP basis, total gross
margin, product gross margin, and service gross margin were 63.3%,
61.8%, and 67.3%, respectively, as compared with 63.9%, 62.6%, and
67.4%, respectively, in the third quarter of fiscal 2021.
On a non-GAAP basis, total gross margin, product gross margin,
and service gross margin were 65.3%, 64.1%, and 68.9%,
respectively, as compared with 66.0%, 64.9%, and 68.7%,
respectively, in the third quarter of fiscal 2021.
Total gross margins by geographic segment were: 64.8% for the
Americas, 65.9% for EMEA and 66.4% for APJC.
Operating Expenses -- On a GAAP basis,
operating expenses were $4.5 billion,
down 4%, and were 35.1% of revenue. Non-GAAP operating expenses
were $3.9 billion, down 5%, and were
30.7% of revenue.
Operating Income -- GAAP operating income was
$3.6 billion, up 4%, with GAAP
operating margin of 28.1%. Non-GAAP operating income was
$4.5 billion, up 4%, with non-GAAP
operating margin at 34.7%.
Provision for Income Taxes -- The GAAP tax
provision rate was 19.9%. 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 6%,
and EPS was $0.73, an increase of 7%.
On a non-GAAP basis, net income was $3.6
billion, an increase of 3%, and EPS was $0.87, an increase of 5%.
Cash Flow from Operating Activities --
$3.7 billion for the third quarter of
fiscal 2022, a decrease of 6% compared with $3.9 billion for the third quarter of fiscal
2021.
Balance Sheet and Other Financial Highlights
Cash and Cash Equivalents and Investments --
$20.1 billion at the end of the third
quarter of fiscal 2022, compared with $24.5
billion at the end of fiscal 2021.
Remaining Performance Obligations (RPO)
-- $30.2 billion, up 7%
in total, with 54% of this amount to be recognized as revenue over
the next 12 months. Product RPO were up 13% and service RPO were up
3%.
Deferred Revenue -- $22.3
billion, up 7% in total, with deferred product revenue up
13%. Deferred service revenue was up 2%.
Capital Allocation -- In the third quarter of
fiscal 2022, we returned $1.8 billion
to stockholders through share buybacks and dividends. We declared
and paid a cash dividend of $0.38 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 $54.20 per share for an aggregate purchase price
of $252 million. The remaining
authorized amount for stock repurchases under the program is
$17.6 billion with no termination
date.
Acquisitions
In the third quarter of fiscal 2022, we closed the acquisition
of Opsani, a privately held enterprise software company.
Guidance
Cisco expects to achieve the following results for the fourth
quarter of fiscal 2022:
Q4 FY 2022
|
|
|
Revenue
|
|
(1)% - (5.5)% decline
Y/Y
|
Non-GAAP gross margin
rate
|
|
64% - 65%
|
Non-GAAP operating
margin rate
|
|
31.5% -
33.5%
|
Non-GAAP EPS
|
|
$0.76 -
$0.84
|
Cisco estimates that GAAP EPS will be $0.60 to $0.70 for
the fourth quarter of fiscal 2022.
Cisco expects to achieve the following results for fiscal
2022:
FY 2022
|
|
|
Revenue
|
|
2% - 3% growth
Y/Y
|
Non-GAAP EPS
|
|
$3.29 -
$3.37
|
Cisco estimates that GAAP EPS will be $2.75 to $2.85 for
fiscal 2022.
Our fiscal 2022 has 52 weeks compared with 53 weeks in fiscal
2021 which is reflected in the guidance.
Our Q4 FY 2022 and FY 2022 guidance assumes an effective tax
provision rate of 19% for GAAP and 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:
- Q3 fiscal year 2022 conference call to discuss Cisco's results
along with its guidance will be held on Wednesday, May 18,
2022 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, May 18, 2022 to
4:00 p.m. Pacific Time, May 25,
2022 at 1-800-388-4923 (United
States) or 1-203-369-3800 (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, May 18, 2022. 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
|
|
Nine Months
Ended
|
|
April 30,
2022
|
|
May 1,
2021
|
|
April 30,
2022
|
|
May 1,
2021
|
REVENUE:
|
|
|
|
|
|
|
|
Product
|
$
9,448
|
|
$
9,139
|
|
$
28,330
|
|
$
26,298
|
Service
|
3,387
|
|
3,664
|
|
10,125
|
|
10,394
|
Total revenue
|
12,835
|
|
12,803
|
|
38,455
|
|
36,692
|
COST OF SALES:
|
|
|
|
|
|
|
|
Product
|
3,606
|
|
3,422
|
|
10,848
|
|
9,672
|
Service
|
1,108
|
|
1,196
|
|
3,384
|
|
3,470
|
Total cost of sales
|
4,714
|
|
4,618
|
|
14,232
|
|
13,142
|
GROSS MARGIN
|
8,121
|
|
8,185
|
|
24,223
|
|
23,550
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
Research and development
|
1,708
|
|
1,697
|
|
5,092
|
|
4,836
|
Sales and marketing
|
2,209
|
|
2,317
|
|
6,736
|
|
6,811
|
General and administrative
|
517
|
|
603
|
|
1,612
|
|
1,631
|
Amortization of purchased intangible assets
|
77
|
|
61
|
|
240
|
|
136
|
Restructuring and other charges
|
—
|
|
42
|
|
8
|
|
878
|
Total operating
expenses
|
4,511
|
|
4,720
|
|
13,688
|
|
14,292
|
OPERATING INCOME
|
3,610
|
|
3,465
|
|
10,535
|
|
9,258
|
Interest income
|
115
|
|
153
|
|
347
|
|
488
|
Interest expense
|
(90)
|
|
(111)
|
|
(267)
|
|
(336)
|
Other income (loss), net
|
166
|
|
84
|
|
446
|
|
117
|
Interest and other income
(loss), net
|
191
|
|
126
|
|
526
|
|
269
|
INCOME BEFORE PROVISION FOR INCOME
TAXES
|
3,801
|
|
3,591
|
|
11,061
|
|
9,527
|
Provision for income
taxes
|
757
|
|
728
|
|
2,064
|
|
1,945
|
NET INCOME
|
$
3,044
|
|
$
2,863
|
|
$
8,997
|
|
$
7,582
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.73
|
|
$
0.68
|
|
$
2.15
|
|
$
1.79
|
Diluted
|
$
0.73
|
|
$
0.68
|
|
$
2.14
|
|
$
1.79
|
Shares used in
per-share calculation:
|
|
|
|
|
|
|
|
Basic
|
4,152
|
|
4,219
|
|
4,184
|
|
4,224
|
Diluted
|
4,170
|
|
4,238
|
|
4,204
|
|
4,237
|
CISCO SYSTEMS,
INC.
|
REVENUE BY
SEGMENT
|
(In millions, except
percentages)
|
|
|
|
April 30,
2022
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
Amount
|
|
Y/Y %
|
|
Amount
|
|
Y/Y%
|
Revenue:
|
|
|
|
|
|
|
|
|
Americas
|
|
$
7,638
|
|
5%
|
|
$
22,344
|
|
4%
|
EMEA
|
|
3,271
|
|
(6)%
|
|
10,138
|
|
5%
|
APJC
|
|
1,926
|
|
(6)%
|
|
5,972
|
|
6%
|
Total
|
|
$
12,835
|
|
—%
|
|
$
38,455
|
|
5%
|
|
Amounts may not sum and
percentages may not recalculate due to rounding.
|
CISCO SYSTEMS,
INC.
|
GROSS MARGIN
PERCENTAGE BY SEGMENT
|
(In
percentages)
|
|
|
|
April 30,
2022
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
Gross Margin Percentage:
|
|
|
|
|
Americas
|
|
64.8%
|
|
64.6%
|
EMEA
|
|
65.9%
|
|
65.7%
|
APJC
|
|
66.4%
|
|
65.9%
|
CISCO SYSTEMS,
INC.
|
REVENUE FOR GROUPS
OF SIMILAR PRODUCTS AND SERVICES
|
(In millions, except
percentages)
|
|
|
|
April 30,
2022
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
Amount
|
|
Y/Y %
|
|
Amount
|
|
Y/Y%
|
Revenue:
|
|
|
|
|
|
|
|
|
Secure, Agile Networks
|
|
$
5,869
|
|
4%
|
|
$
17,735
|
|
7%
|
Internet for the Future
|
|
1,324
|
|
6%
|
|
4,021
|
|
29%
|
Collaboration
|
|
1,132
|
|
(7)%
|
|
3,308
|
|
(8)%
|
End-to-End Security
|
|
938
|
|
7%
|
|
2,716
|
|
6%
|
Optimized Application Experiences
|
|
183
|
|
8%
|
|
544
|
|
13%
|
Other Products
|
|
2
|
|
(58)%
|
|
7
|
|
(32)%
|
Total Product
|
|
9,448
|
|
3%
|
|
28,330
|
|
8%
|
Services
|
|
3,387
|
|
(8)%
|
|
10,125
|
|
(3)%
|
Total
|
|
$
12,835
|
|
—%
|
|
$
38,455
|
|
5%
|
|
Amounts may not sum and
percentages may not recalculate due to rounding.
|
CISCO SYSTEMS,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
(Unaudited)
|
|
|
April 30,
2022
|
|
July 31,
2021
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash equivalents
|
$
6,952
|
|
$
9,175
|
Investments
|
13,156
|
|
15,343
|
Accounts receivable, net of allowance of $78 at
April 30, 2022 and $109 at July 31, 2021
|
5,783
|
|
5,766
|
Inventories
|
2,231
|
|
1,559
|
Financing receivables, net
|
3,804
|
|
4,380
|
Other current assets
|
4,055
|
|
2,889
|
Total current assets
|
35,981
|
|
39,112
|
Property and equipment,
net
|
2,046
|
|
2,338
|
Financing receivables,
net
|
3,959
|
|
4,884
|
Goodwill
|
38,452
|
|
38,168
|
Purchased intangible
assets, net
|
2,811
|
|
3,619
|
Deferred tax
assets
|
4,276
|
|
4,360
|
Other assets
|
5,272
|
|
5,016
|
TOTAL
ASSETS
|
$
92,797
|
|
$
97,497
|
LIABILITIES AND EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term debt
|
$
1,000
|
|
$
2,508
|
Accounts payable
|
2,289
|
|
2,362
|
Income taxes payable
|
852
|
|
801
|
Accrued compensation
|
3,032
|
|
3,818
|
Deferred revenue
|
12,249
|
|
12,148
|
Other current liabilities
|
4,728
|
|
4,620
|
Total current
liabilities
|
24,150
|
|
26,257
|
Long-term
debt
|
8,418
|
|
9,018
|
Income taxes
payable
|
7,689
|
|
8,538
|
Deferred
revenue
|
10,044
|
|
10,016
|
Other long-term
liabilities
|
2,096
|
|
2,393
|
Total liabilities
|
52,397
|
|
56,222
|
Total equity
|
40,400
|
|
41,275
|
TOTAL LIABILITIES AND
EQUITY
|
$
92,797
|
|
$
97,497
|
CISCO SYSTEMS,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
Nine Months
Ended
|
|
April 30,
2022
|
|
May 1,
2021
|
Cash flows from
operating activities:
|
|
|
|
Net
income
|
$
8,997
|
|
$
7,582
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
Depreciation, amortization, and
other
|
1,527
|
|
1,373
|
Share-based compensation
expense
|
1,407
|
|
1,337
|
Provision (benefit) for
receivables
|
49
|
|
(4)
|
Deferred income
taxes
|
(167)
|
|
(89)
|
(Gains) losses on divestitures,
investments and other, net
|
(470)
|
|
(201)
|
Change in operating assets and
liabilities, net of effects of acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(134)
|
|
1,250
|
Inventories
|
(683)
|
|
(260)
|
Financing
receivables
|
1,431
|
|
1,160
|
Other assets
|
(1,295)
|
|
(233)
|
Accounts
payable
|
(54)
|
|
24
|
Income taxes,
net
|
(730)
|
|
(828)
|
Accrued
compensation
|
(730)
|
|
145
|
Deferred
revenue
|
292
|
|
263
|
Other
liabilities
|
109
|
|
(569)
|
Net
cash provided by operating activities
|
9,549
|
|
10,950
|
Cash flows from
investing activities:
|
|
|
|
Purchases of investments
|
(5,383)
|
|
(7,855)
|
Proceeds from sales of investments
|
2,488
|
|
2,724
|
Proceeds from maturities of investments
|
4,308
|
|
6,445
|
Acquisitions, net of cash and cash equivalents acquired and
divestitures
|
(373)
|
|
(6,333)
|
Purchases of investments in privately held
companies
|
(158)
|
|
(138)
|
Return of investments in privately held companies
|
149
|
|
96
|
Acquisition of property and equipment
|
(338)
|
|
(530)
|
Proceeds from sales of property and equipment
|
6
|
|
14
|
Other
|
(15)
|
|
(56)
|
Net
cash provided by (used in) investing activities
|
684
|
|
(5,633)
|
Cash flows from
financing activities:
|
|
|
|
Issuances of common stock
|
306
|
|
307
|
Repurchases of common stock - repurchase program
|
(5,347)
|
|
(2,096)
|
Shares repurchased for tax withholdings on vesting of
restricted stock units
|
(546)
|
|
(419)
|
Short-term borrowings, original maturities of 90 days or
less, net
|
9
|
|
—
|
Issuances of debt
|
1,049
|
|
—
|
Repayments of debt
|
(3,050)
|
|
(3,000)
|
Dividends paid
|
(4,657)
|
|
(4,601)
|
Other
|
(230)
|
|
39
|
Net
cash used in financing activities
|
(12,466)
|
|
(9,770)
|
Net decrease in cash,
cash equivalents, restricted cash and restricted cash
equivalents
|
(2,233)
|
|
(4,453)
|
Cash, cash equivalents,
restricted cash and restricted cash equivalents, beginning of
period
|
9,942
|
|
11,812
|
Cash, cash equivalents,
restricted cash and restricted cash equivalents, end of
period
|
$
7,709
|
|
$
7,359
|
Supplemental cash flow
information:
|
|
|
|
Cash paid for
interest
|
$
292
|
|
$
377
|
Cash paid for income
taxes, net
|
$
2,960
|
|
$
2,862
|
CISCO SYSTEMS,
INC.
|
REMAINING
PERFORMANCE OBLIGATIONS
|
(In millions, except
percentages)
|
|
|
April 30,
2022
|
|
January 29,
2022
|
|
May 1,
2021
|
|
Amount
|
|
Y/Y%
|
|
Amount
|
|
Y/Y%
|
|
Amount
|
|
Y/Y%
|
Product
|
$
13,416
|
|
13 %
|
|
$
13,532
|
|
16 %
|
|
$
11,903
|
|
15 %
|
Service
|
16,789
|
|
3 %
|
|
16,986
|
|
3 %
|
|
16,235
|
|
7 %
|
Total
|
$
30,205
|
|
7 %
|
|
$
30,518
|
|
8 %
|
|
$
28,138
|
|
10 %
|
|
We expect 54% of total
RPO at April 30, 2022 will be recognized as revenue over the
next 12 months.
|
CISCO SYSTEMS,
INC.
|
DEFERRED
REVENUE
|
(In
millions)
|
|
|
April 30,
2022
|
|
January 29,
2022
|
|
May 1,
2021
|
Deferred
revenue:
|
|
|
|
|
|
Product
|
$
9,835
|
|
$
9,767
|
|
$
8,698
|
Service
|
12,458
|
|
12,546
|
|
12,191
|
Total
|
$
22,293
|
|
$
22,313
|
|
$
20,889
|
Reported as:
|
|
|
|
|
|
Current
|
$
12,249
|
|
$
12,268
|
|
$
11,492
|
Noncurrent
|
10,044
|
|
10,045
|
|
9,397
|
Total
|
$
22,293
|
|
$
22,313
|
|
$
20,889
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
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
|
|
Nine Months
Ended
|
|
April 30,
2022
|
|
May 1,
2021
|
|
April 30,
2022
|
|
May 1,
2021
|
GAAP net
income
|
$
3,044
|
|
$
2,863
|
|
$
8,997
|
|
$
7,582
|
Adjustments to cost of sales:
|
|
|
|
|
|
|
|
Share-based compensation
expense
|
83
|
|
75
|
|
233
|
|
208
|
Amortization of
acquisition-related intangible assets
|
176
|
|
184
|
|
571
|
|
499
|
Acquisition-related/divestiture
costs
|
1
|
|
1
|
|
3
|
|
3
|
Russia-Ukraine war
costs
|
5
|
|
—
|
|
5
|
|
—
|
Legal and indemnification
settlements/charges
|
—
|
|
—
|
|
—
|
|
43
|
Total adjustments to GAAP cost of sales
|
265
|
|
260
|
|
812
|
|
753
|
Adjustments to operating expenses:
|
|
|
|
|
|
|
|
Share-based compensation
expense
|
394
|
|
383
|
|
1,173
|
|
1,103
|
Amortization of
acquisition-related intangible assets
|
92
|
|
61
|
|
255
|
|
136
|
Acquisition-related/divestiture
costs
|
29
|
|
86
|
|
261
|
|
179
|
Russia-Ukraine war
costs
|
62
|
|
—
|
|
62
|
|
—
|
Significant asset impairments
and restructurings
|
—
|
|
42
|
|
8
|
|
878
|
Total adjustments to GAAP operating expenses
|
577
|
|
572
|
|
1,759
|
|
2,296
|
Adjustments to interest and other income (loss),
net:
|
|
|
|
|
|
|
|
Acquisition-related/divestiture
costs
|
—
|
|
6
|
|
—
|
|
4
|
(Gains) and losses on equity
investments
|
(159)
|
|
(96)
|
|
(478)
|
|
(131)
|
Total adjustments to GAAP interest and other income (loss),
net
|
(159)
|
|
(90)
|
|
(478)
|
|
(127)
|
Total adjustments to GAAP income before provision for income
taxes
|
683
|
|
742
|
|
2,093
|
|
2,922
|
Income tax effect of non-GAAP
adjustments
|
(95)
|
|
(95)
|
|
(435)
|
|
(503)
|
Significant tax
matters
|
—
|
|
—
|
|
—
|
|
83
|
Total adjustments to GAAP provision for income
taxes
|
(95)
|
|
(95)
|
|
(435)
|
|
(420)
|
Non-GAAP net
income
|
$
3,632
|
|
$
3,510
|
|
$
10,655
|
|
$
10,084
|
CISCO SYSTEMS,
INC.
|
RECONCILIATIONS OF
GAAP TO NON-GAAP MEASURES
|
|
GAAP TO NON-GAAP
EPS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
April 30,
2022
|
|
May 1,
2021
|
|
April 30,
2022
|
|
May 1,
2021
|
GAAP EPS
|
$
0.73
|
|
$
0.68
|
|
$
2.14
|
|
$
1.79
|
Adjustments to GAAP:
|
|
|
|
|
|
|
|
Share-based compensation
expense
|
0.11
|
|
0.11
|
|
0.33
|
|
0.31
|
Amortization of
acquisition-related intangible assets
|
0.06
|
|
0.06
|
|
0.20
|
|
0.15
|
Acquisition-related/divestiture
costs
|
0.01
|
|
0.02
|
|
0.06
|
|
0.04
|
Russia-Ukraine war
costs
|
0.02
|
|
—
|
|
0.02
|
|
—
|
Legal and indemnification
settlements/charges
|
—
|
|
—
|
|
—
|
|
0.01
|
Significant asset impairments
and restructurings
|
—
|
|
0.01
|
|
—
|
|
0.21
|
(Gains) and losses on equity
investments
|
(0.04)
|
|
(0.02)
|
|
(0.11)
|
|
(0.03)
|
Income tax effect of non-GAAP
adjustments
|
(0.02)
|
|
(0.02)
|
|
(0.10)
|
|
(0.12)
|
Significant tax
matters
|
—
|
|
—
|
|
—
|
|
0.02
|
Non-GAAP EPS
|
$
0.87
|
|
$
0.83
|
|
$
2.53
|
|
$
2.38
|
|
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
|
|
April 30,
2022
|
|
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
|
$ 5,842
|
|
$ 2,279
|
|
$ 8,121
|
|
$ 4,511
|
|
(4)%
|
|
$ 3,610
|
|
4%
|
|
$
191
|
|
$ 3,044
|
|
6%
|
% of revenue
|
61.8
%
|
|
67.3
%
|
|
63.3
%
|
|
35.1
%
|
|
|
|
28.1
%
|
|
|
|
1.5
%
|
|
23.7
%
|
|
|
Adjustments to GAAP
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense
|
30
|
|
53
|
|
83
|
|
394
|
|
|
|
477
|
|
|
|
—
|
|
477
|
|
|
Amortization of acquisition-related intangible
assets
|
176
|
|
—
|
|
176
|
|
92
|
|
|
|
268
|
|
|
|
—
|
|
268
|
|
|
Acquisition/divestiture-related costs
|
1
|
|
—
|
|
1
|
|
29
|
|
|
|
30
|
|
|
|
—
|
|
30
|
|
|
Russia-Ukraine war costs
|
4
|
|
1
|
|
5
|
|
62
|
|
|
|
67
|
|
|
|
—
|
|
67
|
|
|
(Gains) and losses on equity investments
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
(159)
|
|
(159)
|
|
|
Income tax effect/significant tax matters
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(95)
|
|
|
Non-GAAP
amount
|
$ 6,053
|
|
$ 2,333
|
|
$ 8,386
|
|
$ 3,934
|
|
(5)%
|
|
$ 4,452
|
|
4%
|
|
$
32
|
|
$ 3,632
|
|
3%
|
% of revenue
|
64.1
%
|
|
68.9
%
|
|
65.3
%
|
|
30.7
%
|
|
|
|
34.7
%
|
|
|
|
0.2
%
|
|
28.3
%
|
|
|
|
Three Months
Ended
|
|
May 1,
2021
|
|
Product
Gross
Margin
|
|
Service
Gross
Margin
|
|
Total
Gross
Margin
|
|
Operating
Expenses
|
|
Operating
Income
|
|
Interest
and
other
income
(loss),
net
|
|
Net
Income
|
GAAP amount
|
$
5,717
|
|
$
2,468
|
|
$
8,185
|
|
$
4,720
|
|
$
3,465
|
|
$ 126
|
|
$
2,863
|
% of revenue
|
62.6
%
|
|
67.4
%
|
|
63.9
%
|
|
36.9
%
|
|
27.1
%
|
|
1.0
%
|
|
22.4
%
|
Adjustments to GAAP
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense
|
26
|
|
49
|
|
75
|
|
383
|
|
458
|
|
—
|
|
458
|
Amortization of acquisition-related intangible
assets
|
184
|
|
—
|
|
184
|
|
61
|
|
245
|
|
—
|
|
245
|
Acquisition/divestiture-related costs
|
1
|
|
—
|
|
1
|
|
86
|
|
87
|
|
6
|
|
93
|
Significant asset impairments and restructurings
|
—
|
|
—
|
|
—
|
|
42
|
|
42
|
|
—
|
|
42
|
(Gains) and losses on equity investments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(96)
|
|
(96)
|
Income tax effect/significant tax matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(95)
|
Non-GAAP
amount
|
$
5,928
|
|
$
2,517
|
|
$
8,445
|
|
$
4,148
|
|
$
4,297
|
|
$
36
|
|
$
3,510
|
% of revenue
|
64.9
%
|
|
68.7
%
|
|
66.0
%
|
|
32.4
%
|
|
33.6
%
|
|
0.3
%
|
|
27.4
%
|
|
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)
|
|
|
Nine Months
Ended
|
|
April 30,
2022
|
|
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
|
$ 17,482
|
|
$ 6,741
|
|
$ 24,223
|
|
$ 13,688
|
|
(4)%
|
|
$ 10,535
|
|
14%
|
|
$
526
|
|
$ 8,997
|
|
19%
|
% of revenue
|
61.7
%
|
|
66.6
%
|
|
63.0
%
|
|
35.6
%
|
|
|
|
27.4
%
|
|
|
|
1.4
%
|
|
23.4
%
|
|
|
Adjustments to GAAP
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense
|
84
|
|
149
|
|
233
|
|
1,173
|
|
|
|
1,406
|
|
|
|
—
|
|
1,406
|
|
|
Amortization of acquisition-related intangible
assets
|
571
|
|
—
|
|
571
|
|
255
|
|
|
|
826
|
|
|
|
—
|
|
826
|
|
|
Acquisition/divestiture-related costs
|
3
|
|
—
|
|
3
|
|
261
|
|
|
|
264
|
|
|
|
—
|
|
264
|
|
|
Russia-Ukraine war costs
|
4
|
|
1
|
|
5
|
|
62
|
|
|
|
67
|
|
|
|
—
|
|
67
|
|
|
Significant asset impairments and restructurings
|
—
|
|
—
|
|
—
|
|
8
|
|
|
|
8
|
|
|
|
—
|
|
8
|
|
|
(Gains) and losses on equity investments
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
(478)
|
|
(478)
|
|
|
Income tax effect/significant tax matters
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(435)
|
|
|
Non-GAAP
amount
|
$ 18,144
|
|
$ 6,891
|
|
$ 25,035
|
|
$ 11,929
|
|
(1)%
|
|
$ 13,106
|
|
6%
|
|
$
48
|
|
$ 10,655
|
|
6%
|
% of revenue
|
64.0
%
|
|
68.1
%
|
|
65.1
%
|
|
31.0
%
|
|
|
|
34.1
%
|
|
|
|
0.1
%
|
|
27.7
%
|
|
|
|
Nine Months
Ended
|
|
May 1,
2021
|
|
Product
Gross
Margin
|
|
Service
Gross
Margin
|
|
Total
Gross
Margin
|
|
Operating
Expenses
|
|
Operating
Income
|
|
Interest
and
other
income
(loss),
net
|
|
Net
Income
|
GAAP amount
|
$ 16,626
|
|
$
6,924
|
|
$ 23,550
|
|
$ 14,292
|
|
$
9,258
|
|
$ 269
|
|
$
7,582
|
% of revenue
|
63.2
%
|
|
66.6
%
|
|
64.2
%
|
|
39.0
%
|
|
25.2
%
|
|
0.7
%
|
|
20.7
%
|
Adjustments to GAAP
amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense
|
75
|
|
133
|
|
208
|
|
1,103
|
|
1,311
|
|
—
|
|
1,311
|
Amortization of acquisition-related intangible
assets
|
499
|
|
—
|
|
499
|
|
136
|
|
635
|
|
—
|
|
635
|
Acquisition/divestiture-related costs
|
2
|
|
1
|
|
3
|
|
179
|
|
182
|
|
4
|
|
186
|
Legal and indemnification settlements/charges
|
43
|
|
—
|
|
43
|
|
—
|
|
43
|
|
—
|
|
43
|
Significant asset impairments and restructurings
|
—
|
|
—
|
|
—
|
|
878
|
|
878
|
|
—
|
|
878
|
(Gains) and losses on equity investments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(131)
|
|
(131)
|
Income tax effect/significant tax matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(420)
|
Non-GAAP
amount
|
$ 17,245
|
|
$
7,058
|
|
$ 24,303
|
|
$ 11,996
|
|
$ 12,307
|
|
$ 142
|
|
$ 10,084
|
% of revenue
|
65.6
%
|
|
67.9
%
|
|
66.2
%
|
|
32.7
%
|
|
33.5
%
|
|
0.4
%
|
|
27.5
%
|
|
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
|
|
Nine Months
Ended
|
|
April 30,
2022
|
|
May 1,
2021
|
|
April 30,
2022
|
|
May 1,
2021
|
GAAP effective tax
rate
|
19.9 %
|
|
20.3 %
|
|
18.7 %
|
|
20.4 %
|
Total adjustments to GAAP provision for income
taxes
|
(0.9) %
|
|
(1.3) %
|
|
0.3 %
|
|
(1.4) %
|
Non-GAAP effective tax
rate
|
19.0 %
|
|
19.0 %
|
|
19.0 %
|
|
19.0 %
|
GAAP TO NON-GAAP
GUIDANCE
|
|
|
|
|
|
Q4 FY 2022
|
|
Gross Margin
Rate
|
|
Operating Margin
Rate
|
|
Earnings per Share
(1)
|
GAAP
|
|
62% - 63%
|
|
25% - 27%
|
|
$0.60 -
$0.70
|
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
|
|
64% - 65%
|
|
31.5% -
33.5%
|
|
$0.76 -
$0.84
|
|
|
|
|
|
|
FY 2022
|
|
|
|
Earnings per
Share (1)
|
GAAP
|
|
|
|
$2.75 -
$2.85
|
Estimated adjustments
for:
|
|
|
|
|
Share-based compensation expense
|
|
|
|
$0.33 -
$0.34
|
Amortization of acquisition-related intangible assets and
acquisition/divestiture-related costs
|
|
|
|
$0.27 -
$0.28
|
Russia-Ukraine war costs
|
|
|
|
$0.01
|
(Gains) and losses on equity investments
|
|
|
|
($0.09)
|
Non-GAAP
|
|
|
|
$3.29 -
$3.37
|
|
|
(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 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 manage through
ongoing supply constraints, the success of our strategy and
confidence in our long-term growth, the fundamental drivers across
our business being strong, the strong demand resulting in record
backlogs, our business transformation shifting to more software and
subscriptions, and our strategic investments in innovation to
capitalize on significant growth opportunities and expanding
addressable markets) and the future financial performance of Cisco
(including the guidance for Q4 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; 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
February 22, 2022 and September 9, 2021, 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 and nine months ended April 30, 2022
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, Russia-Ukraine war costs, 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
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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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Press
Contact:
|
|
Investor Relations
Contact:
|
Robyn Blum
|
|
Marilyn Mora
|
Cisco
|
|
Cisco
|
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|
|
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527-7452
|
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|
|
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