Form 8-K - Current report

false 0000858877 0000858877 2025-02-12 2025-02-12

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 12, 2025

 

 

CISCO SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-39940		77-0059951
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

170 West Tasman Drive, San Jose, California		95134-1706
(Address of principal executive offices)		(Zip Code)

[phone]

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		CSCO		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On February 12, 2025, Cisco Systems, Inc. (“Cisco”) reported its results of operations for its fiscal second quarter 2025 ended January 25, 2025. A copy of the press release issued by Cisco concerning the foregoing results is furnished herewith as Exhibit 99.1.

The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of Cisco, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

The attached exhibit 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 (such as legal and indemnification settlements and the supplier component remediation amounts), 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.

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As described above, Cisco excludes the following items from one or more of its non-GAAP measures when applicable:

Share-based compensation expense. These expenses consist primarily of expenses for employee restricted stock and restricted stock units, employee stock options, and employee stock purchase rights, including such expenses associated with acquisitions. Cisco excludes share-based compensation expense from its non-GAAP measures primarily because they are non-cash expenses and Cisco believes that it is useful to investors to understand the impact of share-based compensation to its results of operations.

Amortization of acquisition-related intangible assets. Cisco incurs amortization of intangible assets (which may include impairment charges from the write-downs of purchased intangible assets) in connection with acquisitions. Such intangible assets may include purchased intangible assets with finite lives, capitalized in process research and development and goodwill. Cisco excludes these items because Cisco does not believe these expenses are reflective of ongoing operating results in the period incurred. These amounts arise from Cisco’s prior acquisitions and have no direct correlation to the operation of Cisco’s business.

Acquisition-related/divestiture costs. In connection with its business combinations, Cisco incurs compensation expense, changes to the fair value of contingent consideration, as well as professional fees and other direct expenses such as restructuring activities related to the acquired company. In addition, from time to time Cisco enters into foreign currency transactions related to pending acquisitions, and may incur gains or losses on such transactions. Cisco may also from time to time incur gains or losses from divestitures of a business area as well as professional fees and other direct expenses associated with such transactions. Cisco excludes such compensation expense, changes to the fair value of contingent consideration, fees, other direct expenses, and gains and losses, as they are related to acquisitions and divestitures and have no direct correlation to the operation of Cisco’s business.

Significant asset impairments and restructurings. Cisco from time to time incurs significant asset impairments, restructuring charges, and gains or losses on asset disposals. Cisco excludes these items, when significant, because it does not believe they are reflective of ongoing business and operating results.

Significant litigation settlements and other contingencies. Cisco from time to time may incur charges or benefits related to significant litigation settlements and other contingencies. Cisco excludes these charges or benefits, when significant, because it does not believe they are reflective of ongoing business and operating results.

Russia-Ukraine war costs. In past periods, in connection with the Russian invasion of Ukraine, Cisco announced its intention to stop business operations in Russia and Belarus. Cisco began an orderly wind-down and exit of its business in Russia and Belarus. Cisco had incurred certain non-recurring charges related to this exit plan. These charges included non-recoverability of certain assets, special personnel-related charges in order to support impacted employees (unrelated to ordinary compensation expenses), potential future litigation and other contingencies, and other exit related costs, among others. Cisco excluded these charges because it believed they were not normal and recurring with respect to ongoing business and operating results. These excluded amounts did not include any impacts to revenue.

Gains and losses on investments. Cisco excludes gains and losses on our marketable equity investments and our investments in privately held companies, because it does not believe they are reflective of ongoing business and operating results.

Income tax effects of the foregoing. This amount is used to present each of the amounts described above on an after-tax basis consistent with the presentation of non-GAAP net income.

Significant tax matters. Cisco may incur tax charges or benefits that are (i) related to prior periods or (ii) not reflective of its ongoing provision for income taxes. These tax charges or benefits may be the result of events such as changes in tax legislation, court decisions, and/or tax settlements. Cisco excludes these charges or benefits, when significant, because it does not believe they are reflective of ongoing business and operating results.

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From time to time in the future, there may be other items that Cisco may exclude if it believes that doing so is consistent with the goal of providing useful information to investors and management.

Cisco will incur share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs, and gains and losses on investments, in future periods. Significant asset impairments, restructurings, significant litigation settlements and other contingencies, and divestiture costs could occur in future periods. Cisco could also be impacted by significant tax matters in future periods.

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Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit Number		Description of Document
99.1		Press Release of Cisco, dated February 12, 2025, reporting the results of operations for Cisco’s fiscal second quarter 2025 ended January 25, 2025.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

						CISCO SYSTEMS, INC.
Dated: February 12, 2025				By:		/s/ R. Scott Herren
				Name:		R. Scott Herren
				Title:		Executive Vice President and Chief Financial Officer

Exhibit 99.1

 

 

Press Contact:				Investor Relations Contact:
Robyn Blum				Sami Badri
Cisco				Cisco
1 [phone]				1 [phone]
[e-mail]				[e-mail]

CISCO REPORTS SECOND QUARTER EARNINGS

News Summary:

 

•

Broad-based strength in product orders demonstrating growing demand for Cisco technologies

 

•

Product orders up 29% year over year; up 11% excluding Splunk

 

•

AI Infrastructure orders of more than $350 million, bringing the total for 1HFY25 to approximately $700 million

 

•

Revenue of $14.0 billion, above the high end of our guidance range

 

•

Strong profitability:

 

•

GAAP gross margin of 65.1% and non-GAAP gross margin of 68.7%

 

•

GAAP EPS of $0.61 and non-GAAP EPS of $0.94, above the high end of our guidance range

 

•

Quarterly dividend increased to $0.41 per share, up 3%, and additional $15 billion authorized for stock repurchases

 

•

Q2 FY 2025 Results:

 

•

Revenue: $14.0 billion

 

•

Increase of 9% year over year

 

•

Earnings per Share: GAAP: $0.61; Non-GAAP: $0.94

 

•

GAAP EPS decreased 6% year over year

 

•

Non-GAAP EPS increased 8% year over year

 

•

Q3 FY 2025 Guidance:

 

•

Revenue: $13.9 billion to $14.1 billion

 

•

Earnings per Share: GAAP: $0.57 to $0.61; Non-GAAP: $0.90 to $0.92

 

•

FY 2025 Guidance:

 

•

Revenue: $56.0 billion to $56.5 billion

 

•

Earnings per Share: GAAP: $2.40 to $2.52; Non-GAAP: $3.68 to $3.74

SAN JOSE, Calif. — February 12, 2025 — Cisco today reported second quarter results for the period ended January 25, 2025. Cisco reported second quarter revenue of $14.0 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.4 billion or $0.61 per share, and non-GAAP net income of $3.8 billion or $0.94 per share.

“Cisco’s strong quarterly results were driven by accelerating customer demand for our technology” said Chuck Robbins, chair and CEO of Cisco. “As AI becomes more pervasive, we are well positioned to help our customers scale their network infrastructure, increase their data capacity requirements, and adopt best-in-class AI security.”

“Q2 was another quarter of solid execution which drove revenue and EPS above our guidance ranges. Splunk continues to perform in line with our expectations on the top line, and was accretive to Q2 non-GAAP EPS, earlier than we had planned” said Scott Herren, CFO of Cisco. “Our strong cash flows have led us to increase our annual dividend again this year, as well as our overall share repurchase authorization.”

 

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GAAP Results

 

		Q2 FY 2025				Q2 FY 2024				Vs. Q2 FY 2024
Revenue		$	14.0 billion			$	12.8 billion			9%
Net Income		$	2.4 billion			$	2.6 billion			(8)%
Diluted Earnings per Share (EPS)		$	0.61			$	0.65			(6)%

Non-GAAP Results

 

		Q2 FY 2025				Q2 FY 2024				Vs. Q2 FY 2024
Net Income		$	3.8 billion			$	3.5 billion			6%
EPS		$	0.94			$	0.87			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.”

Cisco Increases Quarterly Dividend; Stock Repurchase Program Authorization Increased

Cisco has declared a quarterly dividend of $0.41 per common share, a 1-cent increase or up 3% over the previous quarter’s dividend, to be paid on April 23, 2025, to all stockholders of record as of the close of business on April 3, 2025. Future dividends will be subject to Board approval.

Cisco’s board of directors has also approved a $15 billion increase to the authorization of the stock repurchase program. There is no fixed termination date for the repurchase program. The remaining authorized fixed amount for stock repurchases including the additional authorization is approximately $17 billion.

 

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Financial Summary

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

Q2 FY 2025 Highlights

Revenue — Total revenue was $14.0 billion, up 9%, with product revenue up 11% and services revenue up 6%. Excluding the contribution from Splunk, total revenue was down 1%.

Revenue by geographic segment was: Americas up 9%, EMEA up 11%, and APJC up 8%. Product revenue performance reflected growth in Security up 117%, Observability up 47%, and Collaboration up 1%. Networking was down 3%. Excluding Splunk, Security and Observability grew 4% and 3%, respectively, in the second quarter of fiscal 2025.

Gross Margin — On a GAAP basis, total gross margin, product gross margin, and services gross margin were 65.1%, 63.7%, and 68.9%, respectively, as compared with 64.2%, 62.7%, and 68.2%, respectively, in the second quarter of fiscal 2024.

On a non-GAAP basis, total gross margin, product gross margin, and services gross margin were 68.7%, 67.7%, and 71.6%, respectively, as compared with 66.7%, 65.2%, and 70.5%, respectively, in the second quarter of fiscal 2024.

Total gross margins by geographic segment were: 67.6% for the Americas, 71.3% for EMEA and 68.3% for APJC.

Operating Expenses — On a GAAP basis, operating expenses were $6.0 billion, up 17%, and were 42.9% of revenue. Non-GAAP operating expenses were $4.8 billion, up 10%, and were 34.0% of revenue.

Operating Income — GAAP operating income was $3.1 billion, up 1%, with GAAP operating margin of 22.3%. Non-GAAP operating income was $4.9 billion, up 15%, with non-GAAP operating margin at 34.7%.

Provision for Income Taxes — The GAAP tax provision rate was 15.9%. The non-GAAP tax provision rate was 19.0%.

Net Income and EPS — On a GAAP basis, net income was $2.4 billion, a decrease of 8%, and EPS was $0.61, a decrease of 6%. On a non-GAAP basis, net income was $3.8 billion, an increase of 6%, and EPS was $0.94, an increase of 8%.

Cash Flow from Operating Activities — $2.2 billion for the second quarter of fiscal 2025, an increase of 177%, compared with $0.8 billion for the second quarter of fiscal 2024.

Balance Sheet and Other Financial Highlights

Cash and Cash Equivalents and Investments — $16.9 billion at the end of the second quarter of fiscal 2025, compared with $17.9 billion at the end of fiscal 2024.

Remaining Performance Obligations (RPO) — $41.3 billion, up 16% in total, with 51% of this amount to be recognized as revenue over the next 12 months. Product RPO up 25% and services RPO up 8%.

Deferred Revenue — $27.8 billion, up 8% in total, with deferred product revenue up 12%. Deferred services revenue up 4%.

Capital Allocation — In the second quarter of fiscal 2025, we returned $2.8 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.40 per common share, or $1.6 billion, and repurchased approximately 21 million shares of common stock under our stock repurchase program at an average price of $58.58 per share for an aggregate purchase price of $1.2 billion.

Acquisitions

In the second quarter of fiscal 2025, we closed the acquisition of Deeper Insights AI Ltd., a privately held AI services company.

 

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Guidance

Cisco estimates the following results for the third quarter of fiscal 2025:

 

Q3 FY 2025
Revenue			$13.9 billion - $14.1 billion
Non-GAAP gross margin			67% - 68%
Non-GAAP operating margin			33% - 34%
Non-GAAP EPS			$0.90 - $0.92

Gross margin guidance includes the estimated impact of proposed tariffs on Mexico, Canada, and China.

Cisco estimates that GAAP EPS will be $0.57 to $0.61 for the third quarter of fiscal 2025.

Cisco estimates the following results for fiscal 2025:

 

FY 2025
Revenue			$56.0 billion - $56.5 billion
Non-GAAP EPS			$3.68 - $3.74

Gross margin guidance includes the estimated impact of proposed tariffs on Mexico, Canada, and China.

Cisco estimates that GAAP EPS will be $2.40 to $2.52 for fiscal 2025.

Our Q3 FY 2025 guidance assumes an effective tax provision rate of approximately 17% for GAAP and approximately 19% for non-GAAP results. Our FY 2025 guidance assumes an effective tax provision rate of approximately 9% for GAAP and approximately 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:

 

•

Q2 fiscal year 2025 conference call to discuss Cisco’s results along with its guidance will be held on Wednesday, February 12, 2025 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, February 12, 2025 to 4:00 p.m. Pacific Time, February 18, 2025 at 1-800-395-6236 (United States) or 1-203-369-3270 (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, February 12, 2025. 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.

 

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CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per-share amounts)

(Unaudited)

 

		Three Months Ended								Six Months Ended
		January 25, 2025				January 27, 2024				January 25, 2025				January 27, 2024
REVENUE:
Product		$	10,234			$	9,232			$	20,348			$	20,371
Services			3,757				3,559				7,484				7,088
Total revenue			13,991				12,791				27,832				27,459
COST OF SALES:
Product			3,713				3,443				7,239				7,400
Services			1,167				1,131				2,361				2,285
Total cost of sales			4,880				4,574				9,600				9,685
GROSS MARGIN			9,111				8,217				18,232				17,774
OPERATING EXPENSES:
Research and development			2,299				1,943				4,585				3,856
Sales and marketing			2,672				2,458				5,424				4,964
General and administrative			752				642				1,547				1,314
Amortization of purchased intangible assets			265				66				530				133
Restructuring and other charges			10				12				675				135
Total operating expenses			5,998				5,121				12,761				10,402
OPERATING INCOME			3,113				3,096				5,471				7,372
Interest income			238				324				524				684
Interest expense			(404	)			(120	)			(822	)			(231	)
Other income (loss), net			(60	)			(139	)			(19	)			(222	)
Interest and other income (loss), net			(226	)			65				(317	)			231
INCOME BEFORE PROVISION FOR INCOME TAXES			2,887				3,161				5,154				7,603
Provision for income taxes			459				527				15				1,331
NET INCOME		$	2,428			$	2,634			$	5,139			$	6,272
Net income per share:
Basic		$	0.61			$	0.65			$	1.29			$	1.55
Diluted		$	0.61			$	0.65			$	1.28			$	1.54
Shares used in per-share calculation:
Basic			3,981				4,055				3,986				4,056
Diluted			4,005				4,073				4,008				4,079

 

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CISCO SYSTEMS, INC.

REVENUE BY SEGMENT

(In millions, except percentages)

 

		January 25, 2025
		Three Months Ended						Six Months Ended
		Amount				Y/Y %		Amount				Y/Y %
Revenue:
Americas		$	8,202			9%		$	16,454				—%
EMEA			3,855			11%			7,444				4%
APJC			1,934			8%			3,934				4%
Total		$	13,991			9%		$	27,832				1%

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

CISCO SYSTEMS, INC.

GROSS MARGIN PERCENTAGE BY SEGMENT

(In percentages)

 

		January 25, 2025
		Three Months Ended		Six Months Ended
Gross Margin Percentage:
Americas		67.6%		68.6%
EMEA		71.3%		70.8%
APJC		68.3%		67.3%

CISCO SYSTEMS, INC.

REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES

(In millions, except percentages)

 

		January 25, 2025
		Three Months Ended						Six Months Ended
		Amount				Y/Y %		Amount				Y/Y %
Revenue:
Networking		$	6,850			(3)%		$	13,603			(14)%
Security			2,111			117%			4,129			108%
Collaboration			996			1%			2,081			(1)%
Observability			277			47%			535			42%
Total Product			10,234			11%			20,348			—%
Services			3,757			6%			7,484			6%
Total		$	13,991			9%		$	27,832			1%

Excluding Splunk, Security and Observability grew 4% and 3% year over year, respectively, in the second quarter of fiscal 2025.

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

 

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CISCO SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

		January 25, 2025				July 27, 2024
ASSETS
Current assets:
Cash and cash equivalents		$	8,556			$	7,508
Investments			8,297				10,346
Accounts receivable, net of allowance of $80 at January 25, 2025 and $87 at July 27, 2024			5,669				6,685
Inventories			2,927				3,373
Financing receivables, net			3,074				3,338
Other current assets			6,158				5,612
Total current assets			34,681				36,862
Property and equipment, net			1,992				2,090
Financing receivables, net			3,240				3,376
Goodwill			58,719				58,660
Purchased intangible assets, net			10,139				11,219
Deferred tax assets			6,591				6,262
Other assets			6,013				5,944
TOTAL ASSETS		$	121,375			$	124,413
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt		$	11,413			$	11,341
Accounts payable			1,902				2,304
Income taxes payable			1,884				1,439
Accrued compensation			3,299				3,608
Deferred revenue			15,999				16,249
Other current liabilities			5,522				5,643
Total current liabilities			40,019				40,584
Long-term debt			19,625				19,621
Income taxes payable			1,756				3,985
Deferred revenue			11,796				12,226
Other long-term liabilities			2,649				2,540
Total liabilities			75,845				78,956
Total equity			45,530				45,457
TOTAL LIABILITIES AND EQUITY		$	121,375			$	124,413

 

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CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

		Six Months Ended
		January 25, 2025				January 27, 2024
Cash flows from operating activities:
Net income		$	5,139			$	6,272
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other			1,550				823
Share-based compensation expense			1,748				1,463
Provision for receivables			7				12
Deferred income taxes			(382	)			(816	)
(Gains) losses on divestitures, investments and other, net			(5	)			205
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable			969				941
Inventories			441				442
Financing receivables			330				(33	)
Other assets			(427	)			(403	)
Accounts payable			(359	)			(476	)
Income taxes, net			(2,285	)			(4,656	)
Accrued compensation			(293	)			(763	)
Deferred revenue			(555	)			293
Other liabilities			24				(125	)
Net cash provided by operating activities			5,902				3,179
Cash flows from investing activities:
Purchases of investments			(2,261	)			(2,253	)
Proceeds from sales of investments			1,791				2,484
Proceeds from maturities of investments			2,703				4,044
Acquisitions, net of cash and cash equivalents acquired and divestitures			(257	)			(878	)
Purchases of investments in privately held companies			(137	)			(50	)
Return of investments in privately held companies			94				123
Acquisition of property and equipment			(427	)			(304	)
Other			(5	)			(1	)
Net cash provided by investing activities			1,501				3,165
Cash flows from financing activities:
Issuances of common stock			320				349
Repurchases of common stock—repurchase program			(3,243	)			(2,504	)
Shares repurchased for tax withholdings on vesting of restricted stock units			(655	)			(581	)
Short-term borrowings, original maturities of 90 days or less, net			1,012				1,398
Issuances of debt			10,406				2,537
Repayments of debt			(11,382	)			(750	)
Dividends paid			(3,185	)			(3,163	)
Other			(2	)			(7	)
Net cash used in financing activities			(6,729	)			(2,721	)
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents			(8	)			(32	)
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents			666				3,591
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period			8,842				11,627
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period		$	9,508			$	15,218
Supplemental cash flow information:
Cash paid for interest		$	769			$	203
Cash paid for income taxes, net		$	2,682			$	6,804

 

8

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CISCO SYSTEMS, INC.

REMAINING PERFORMANCE OBLIGATIONS

(In millions, except percentages)

 

		January 25, 2025								October 26, 2024								January 27, 2024
		Amount				Y/Y%				Amount				Y/Y%				Amount				Y/Y%
Product		$	20,321				25	%		$	19,882				24	%		$	16,249				12	%
Services			20,947				8	%			20,108				7	%			19,407				12	%
Total		$	41,268				16	%		$	39,990				15	%		$	35,656				12	%

We expect 51% of total RPO at January 25, 2025 will be recognized as revenue over the next 12 months.

CISCO SYSTEMS, INC.

DEFERRED REVENUE

(In millions)

 

		January 25, 2025				October 26, 2024				January 27, 2024
Deferred revenue:
Product		$	13,033			$	12,941			$	11,640
Services			14,762				14,561				14,131
Total		$	27,795			$	27,502			$	25,771
Reported as:
Current		$	15,999			$	15,615			$	14,011
Noncurrent			11,796				11,887				11,760
Total		$	27,795			$	27,502			$	25,771

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 2025
January 25, 2025		$	0.40			$	1,593				21			$	58.58			$	1,236			$	2,829
October 26, 2024		$	0.40			$	1,592				40			$	49.56			$	2,003			$	3,595
Fiscal 2024
July 27, 2024		$	0.40			$	1,606				43			$	46.80			$	2,002			$	3,608
April 27, 2024		$	0.40			$	1,615				26			$	49.22			$	1,256			$	2,871
January 27, 2024		$	0.39			$	1,583				25			$	49.54			$	1,254			$	2,837
October 28, 2023		$	0.39			$	1,580				23			$	54.53			$	1,252			$	2,832

 

9

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CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP NET INCOME

(In millions)

 

		Three Months Ended								Six Months Ended
		January 25, 2025				January 27, 2024				January 25, 2025				January 27, 2024
GAAP net income		$	2,428			$	2,634			$	5,139			$	6,272
Adjustments to cost of sales:
Share-based compensation expense			151				139				282				242
Amortization of acquisition-related intangible assets			335				175				654				356
Acquisition/divestiture-related costs			17				1				36				1
Total adjustments to GAAP cost of sales			503				315				972				599
Adjustments to operating expenses:
Share-based compensation expense			765				662				1,444				1,212
Amortization of acquisition-related intangible assets			265				66				530				133
Acquisition/divestiture-related costs			205				64				490				139
Russia-Ukraine war costs			—				—				—				(2	)
Significant asset impairments and restructurings			10				12				675				135
Total adjustments to GAAP operating expenses			1,245				804				3,139				1,617
Adjustments to interest and other income (loss), net:
(Gains) and losses on investments			7				88				(91	)			139
Total adjustments to GAAP interest and other income (loss), net			7				88				(91	)			139
Total adjustments to GAAP income before provision for income taxes			1,755				1,207				4,020				2,355
Income tax effect of non-GAAP adjustments			(423	)			(303	)			(899	)			(561	)
Significant tax matters (1)			—				—				(829	)			—
Total adjustments to GAAP provision for income taxes			(423	)			(303	)			(1,728	)			(561	)
Non-GAAP net income		$	3,760			$	3,538			$	7,431			$	8,066

 

(1)	The six months ended January 25, 2025 include a $720 million benefit due to a recent U.S. Tax Court decision regarding the U.S. taxation of deemed foreign dividends in the transition year of the Tax Cuts and Jobs Act.

 

10

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CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP EPS

 

		Three Months Ended								Six Months Ended
		January 25, 2025				January 27, 2024				January 25, 2025				January 27, 2024
GAAP EPS		$	0.61			$	0.65			$	1.28			$	1.54
Adjustments to GAAP:
Share-based compensation expense			0.23				0.20				0.43				0.36
Amortization of acquisition-related intangible assets			0.15				0.06				0.30				0.12
Acquisition/divestiture-related costs			0.06				0.02				0.13				0.03
Significant asset impairments and restructurings			—				—				0.17				0.03
(Gains) and losses on investments			—				0.02				(0.02	)			0.03
Income tax effect of non-GAAP adjustments			(0.11	)			(0.07	)			(0.22	)			(0.14	)
Significant tax matters			—				—				(0.21	)			—
Non-GAAP EPS		$	0.94			$	0.87			$	1.85			$	1.98

Amounts may not sum due to rounding.

 

11

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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
		January 25, 2025
		Product Gross Margin				Services 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		$	6,521			$	2,590			$	9,111			$	5,998				17	%		$	3,113				1	%		$	(226	)		$	2,428				(8	)%
% of revenue			63.7	%			68.9	%			65.1	%			42.9	%							22.3	%							(1.6	)%			17.4	%
Adjustments to GAAP amounts:
Share-based compensation expense			65				86				151				765								916								—				916
Amortization of acquisition-related intangible assets			335				—				335				265								600								—				600
Acquisition/divestiture-related costs			3				14				17				205								222								—				222
Significant asset impairments and restructurings			—				—				—				10								10								—				10
(Gains) and losses on investments			—				—				—				—								—								7				7
Income tax effect/significant tax matters			—				—				—				—								—								—				(423	)
Non-GAAP amount		$	6,924			$	2,690			$	9,614			$	4,753				10	%		$	4,861				15	%		$	(219	)		$	3,760				6	%
% of revenue			67.7	%			71.6	%			68.7	%			34.0	%							34.7	%							(1.6	)%			26.9	%

 

		Three Months Ended
		January 27, 2024
		Product Gross Margin				Services Gross Margin				Total Gross Margin				Operating Expenses				Operating Income				Interest and other income (loss), net				Net Income
GAAP amount		$	5,789			$	2,428			$	8,217			$	5,121			$	3,096			$	65			$	2,634
% of revenue			62.7	%			68.2	%			64.2	%			40.0	%			24.2	%			0.5	%			20.6	%
Adjustments to GAAP amounts:
Share-based compensation expense			58				81				139				662				801				—				801
Amortization of acquisition-related intangible assets			175				—				175				66				241				—				241
Acquisition/divestiture-related costs			1				—				1				64				65				—				65
Significant asset impairments and restructurings			—				—				—				12				12				—				12
(Gains) and losses on investments			—				—				—				—				—				88				88
Income tax effect/significant tax matters			—				—				—				—				—				—				(303	)
Non-GAAP amount		$	6,023			$	2,509			$	8,532			$	4,317			$	4,215			$	153			$	3,538
% of revenue			65.2	%			70.5	%			66.7	%			33.8	%			33.0	%			1.2	%			27.7	%

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

 

12

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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)

 

		Six Months Ended
		January 25, 2025
		Product Gross Margin				Services 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		$	13,109			$	5,123			$	18,232			$	12,761				23	%		$	5,471				(26	)%		$	(317	)		$	5,139				(18	)%
% of revenue			64.4	%			68.5	%			65.5	%			45.9	%							19.7	%							(1.1	)%			18.5	%
Adjustments to GAAP amounts:
Share-based compensation expense			122				160				282				1,444								1,726								—				1,726
Amortization of acquisition-related intangible assets			654				—				654				530								1,184								—				1,184
Acquisition/divestiture-related costs			8				28				36				490								526								—				526
Significant asset impairments and restructurings			—				—				—				675								675								—				675
(Gains) and losses on investments			—				—				—				—								—								(91	)			(91	)
Income tax effect/significant tax matters			—				—				—				—								—								—				(1,728	)
Non-GAAP amount		$	13,893			$	5,311			$	19,204			$	9,622				10	%		$	9,582				—	%		$	(408	)		$	7,431				(8	)%
% of revenue			68.3	%			71.0	%			69.0	%			34.6	%							34.4	%							(1.5	)%			26.7	%

 

		Six Months Ended
		January 27, 2024
		Product Gross Margin				Services Gross Margin				Total Gross Margin				Operating Expenses				Operating Income				Interest and other income (loss), net				Net Income
GAAP amount		$	12,971			$	4,803			$	17,774			$	10,402			$	7,372			$	231			$	6,272
% of revenue			63.7	%			67.8	%			64.7	%			37.9	%			26.8	%			0.8	%			22.8	%
Adjustments to GAAP amounts:
Share-based compensation expense			100				142				242				1,212				1,454				—				1,454
Amortization of acquisition-related intangible assets			356				—				356				133				489				—				489
Acquisition/divestiture-related costs			1				—				1				139				140				—				140
Significant asset impairments and restructurings			—				—				—				135				135				—				135
Russia-Ukraine war costs			—				—				—				(2	)			(2	)			—				(2	)
(Gains) and losses on investments			—				—				—				—				—				139				139
Income tax effect/significant tax matters			—				—				—				—				—				—				(561	)
Non-GAAP amount		$	13,428			$	4,945			$	18,373			$	8,785			$	9,588			$	370			$	8,066
% of revenue			65.9	%			69.8	%			66.9	%			32.0	%			34.9	%			1.3	%			29.4	%

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

 

13

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CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

EFFECTIVE TAX RATE

(In percentages)

 

		Three Months Ended								Six Months Ended
		January 25, 2025				January 27, 2024				January 25, 2025				January 27, 2024
GAAP effective tax rate			15.9	%			16.7	%			0.3	%			17.5	%
Total adjustments to GAAP provision for income taxes			3.1	%			2.3	%			18.7	%			1.5	%
Non-GAAP effective tax rate			19.0	%			19.0	%			19.0	%			19.0	%

GAAP TO NON-GAAP GUIDANCE

 

Q3 FY 2025		Gross Margin Rate		Operating Margin Rate		Earnings per Share (1)
GAAP		64% - 65%		21% - 22%		$0.57 - $0.61
Estimated adjustments for:
Share-based compensation expense		1.0%		7.0%		$0.17 - $0.18
Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs		2.0%		5.0%		$0.14 - $0.15
Non-GAAP		67% - 68%		33% - 34%		$0.90 - $0.92

 

FY 2025		Earnings per Share (1)
GAAP		$2.40 - $2.52
Estimated adjustments for:
Share-based compensation expense		$0.69 - $0.71
Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs		$0.60 - $0.62
Significant asset impairments and restructurings		$0.16 - $0.18
(Gains) and losses on investments		($0.02)
Significant tax matters		($0.21)
Non-GAAP		$3.68 - $3.74

 

(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, significant asset impairments and restructurings, significant litigation settlements and other contingencies, gains and losses on investments, significant tax matters, or other items, which may or may not be significant.

 

14

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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 customer demand and our position to help our customers scale their network infrastructure, increase their data capacity requirements, and adopt best-in-class AI security) and the future financial performance of Cisco (including the guidance for Q3 FY 2025 and full year FY 2025) 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: 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; our development and use of artificial intelligence; 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, cloud, enterprise and other customer markets; the return on our investments in certain key priority areas, and in certain geographical locations, as well as maintaining leadership in Networking and services; the timing of orders and manufacturing and customer lead times; 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 services 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 other incidents; vulnerabilities and critical security defects; our ability to protect personal data; evolving regulatory uncertainty; terrorism; natural catastrophic events (including as a result of global climate change); any 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 November 19, 2024 and September 5, 2024, 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 six months ended January 25, 2025 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.

 

15

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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/divestiture-related 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.

About Cisco

Cisco (NASDAQ: CSCO) is the worldwide technology leader that is revolutionizing the way organizations connect and protect in the AI era. For more than 40 years, Cisco has securely connected the world. With its industry leading AI-powered solutions and services, Cisco enables its customers, partners and communities to unlock innovation, enhance productivity and strengthen digital resilience. With purpose at its core, Cisco remains committed to creating a more connected and inclusive future for all. Discover more on The Newsroom and follow us on X at @Cisco.

Copyright ^© 2025 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.

RSS Feed for Cisco: https://newsroom.cisco.com/rss-feeds

 

16

Document and Entity Information	Feb. 12, 2025
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0000858877
Document Type	8-K
Document Period End Date	Feb. 12, 2025
Entity Registrant Name	CISCO SYSTEMS, INC.
Entity Incorporation State Country Code	DE
Entity File Number	001-39940
Entity Tax Identification Number	77-0059951
Entity Address, Address Line One	170 West Tasman Drive
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95134-1706
City Area Code	(408)
Local Phone Number	526-4000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, par value $0.001 per share
Trading Symbol	CSCO
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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