The operator introduces the Cisco Fourth Quarter and Fiscal Year 2024 Financial Results Conference Call, which is being recorded at the request of Cisco. Sami Badri, Head of Investor Relations, is joined by Chuck Robbins, Chair and CEO, and Scott Herren, CFO. The earnings press release and webcast with slides will be available on the website. Both GAAP and non-GAAP financial results will be discussed, and all comparisons will be on a year-over-year basis. Forward-looking statements and guidance for the first quarter and full-year fiscal 2025 will be discussed, with reference to the risks and uncertainties outlined in SEC documents. Cisco will not comment on financial guidance during the quarter unless there is an explicit public disclosure. Chuck will now take over.

Chuck Robbins, CEO of Cisco, discusses the company's strong financial performance in the fourth quarter and fiscal year, with revenue exceeding expectations and strong growth in key areas. He also highlights the successful integration of Splunk into Cisco and the formation of a new organization to bring together networking, security, and collaboration teams, led by Chief Product Officer Jeetu Patel. This integration will allow for a more integrated and powerful product portfolio to better serve customers.

In the fourth quarter, the company exceeded revenue expectations and saw strong operating leverage and non-GAAP margins. They also focused on growth in recurring revenue streams and returned value to shareholders. Customer demand remained steady, with double-digit product order growth across all geographies and strong performance in the public sector and enterprise markets. The company signed several large transactions with global enterprises for the use of their technology platforms in network operations and AI applications.

In the last quarter, Cisco signed a major deal with a global logistics company to help them create a more efficient and intelligent logistics network using Cisco's technology platforms. They also signed a cross-portfolio agreement with a major automotive company, showing the increasing demand for AI in IT environments. While demand from service providers remains muted, there was strength in EMEA and signs of stabilization in webscale. Product orders for security, collaboration, data center switching, enterprise routing, and wireless all saw double-digit growth, indicating a strong demand for these products.

Cisco's product order results show an increase in demand as customers prioritize their technology investments. The company saw growth in security and observability, with positive feedback for their new distributed AI-native cybersecurity solution, Hypershield. Their new security solutions, XDR and Secure Access, are gaining traction, and they have crossed $1 billion in AI orders with web scale customers. Three of the top four hyperscalers are using Cisco's Ethernet AI fabric for their AI infrastructure.

In summary, the company expects to receive an additional $1 billion in AI product orders in fiscal year '25, driven by multiple use cases with hyperscalers and design wins. They also anticipate benefiting from the proliferation of AI applications in the enterprise, aided by their hyperfabric AI cluster solution and incorporation of AI in their own productivity and customer support. The company thanks their teams for their hard work and emphasizes the need for strong execution to succeed in growing markets. The quarter saw solid execution, strong margins, and an increase in orders as customer buying patterns normalize.

In the fourth quarter, Cisco's total revenue was $13.6 billion, exceeding expectations and down 10% from the previous year. Non-GAAP net income was $3.5 billion and non-GAAP earnings per share were $0.87. Product revenue was $9.9 billion, down 15%, while services revenue was $3.8 billion, up 6%. Networking revenue was down 28%, security was up 81% (with the inclusion of Splunk), collaboration was flat, and observability was up 41%. ARR and product ARR increased due to strong performance and contribution from Splunk. Total subscription revenue increased 17% and now represents 56% of Cisco's total revenue.

In the fourth quarter, Cisco's total software revenue was up 15% and software subscription revenue was up 25%, with 92% of total software revenue coming from subscriptions. Total RPO was $41.0 billion, up 18% due to strong organic performance and the addition of Splunk. Without Splunk, RPO was still up 8%. Product orders were up 14% year-over-year, with the Americas, EMEA, and APJC regions all showing growth. Non-GAAP gross margin was 67.9%, up 200 basis points, and non-GAAP operating margin was 32.5%. Cisco ended the quarter with $17.9 billion in cash, cash equivalents, and investments, and returned $3.6 billion to shareholders through dividends and share repurchases. Overall, the full-fiscal year showed strong growth in software revenue and RPO.

Cisco had a strong fiscal year, with revenue of $53.8 billion and non-GAAP earnings per share of $3.73. The acquisition of Splunk contributed to the revenue, but without it, total software revenue still increased by 1%. The company also saw increases in software subscription revenue and non-GAAP gross margin, and returned $12.1 billion to shareholders through dividends and share repurchases. They are also realigning expenses to take advantage of future opportunities.

The company is expecting to impact 7% of its global workforce as part of a restructuring plan, with estimated pre-tax charges of up to $1 billion. Financial guidance for fiscal Q1 and 2025 is provided, with revenue and earnings per share expected to fall within certain ranges. The Q&A portion of the call begins, with analysts reminded to ask one question and a follow-up. The first analyst asks about customer budget prioritization and the balance between different initiatives, and the second analyst asks for clarification on the full-risk embedded in the fiscal '25 guidance. The CEO discusses demand from a geographic perspective, with balanced growth in the Americas, Europe, and Asia.

In the previous quarter, Cisco saw balanced strength across its technology portfolio, with double-digit growth in security and collaboration and high-single-digit growth in enterprise switching and routing. The company also noted that some customers are now upgrading their infrastructure in preparation for AI, with some using funds allocated for AI for this purpose. This was reflected in recent platform sales to a logistics company. In response to a question, Scott Herren clarified that the company's fiscal '25 guidance includes full-risk embedded.

In response to a question about the recent layoffs and cost-cutting measures announced by the company, Cisco's CEO and CFO confirmed that the savings from the 7% cut are included in their fiscal '25 guidance. They also clarified that the restructuring is not solely about cost savings, but rather a reallocation of resources towards faster-growing areas such as AI, cloud, and cybersecurity. The company is shifting hundreds of millions of dollars into these areas. When asked about the timing of the restructuring, the CEO mentioned the fast-paced market and the need to adapt quickly. Another question was asked about the company's improved performance in the security sector.

Chuck Robbins and Scott Herren discuss Cisco's recent restructuring and how it is driven by a need to shift resources into the most important areas in a rapidly evolving market. They assure that there are no other factors influencing the restructuring and that demand for Cisco's products remains strong. They also mention the company's focus on AI, cloud, and cybersecurity, and the financial discipline that has led to high operating margins. Robbins also addresses the impact of the CrowdStrike incident on customer behavior and states that he expects to see improvement in the second half of fiscal '24.

Chuck Robbins, CEO of Cisco, stated in a recent earnings call that they are seeing strong momentum in their business and are optimistic about future growth. In particular, their AI orders have surpassed $1 billion and are on track to reach $1 billion next year. They have added 230 more XDR customers and have 2,200 customers using their AI assistant in security. The company is also seeing faster growth in their secure access product. Analysts asked about the current run rate and timing of orders translating into revenue, as well as the impact of Splunk on the company's growth.

The paragraph discusses the growth of Splunk, which was lower than expected at 5%. The company has reached $1 billion in the web scale space and has a number of design wins, but it is too early to tell how they will impact the rest of the year. The focus of the Splunk transaction was to drive revenue and there has been positive momentum in the field, with double-digit deals already closed. The better metric for Splunk is ARR, which is growing in double-digits.

The company is seeing good momentum and the sales force is starting to sell together. They have also done product integrations, making it harder to differentiate between Splunk and Cisco revenue. The company is performing well and this integration is built into their guidance. The CEO and CFO both mention the success of the sales force selling together and the first cross-portfolio agreement with Splunk included. The next question asks about the integration of the organization, specifically in networking, security, and collaboration.

Chuck Robbins discusses the need for products to be integrated in order to leverage AI and big data sets. He believes that deep cross integration across the portfolio is the company's biggest competitive differentiation in the marketplace. Robbins explains that the pace of the AI revolution and the increasing intertwining of security and networking led to the decision to have a single leader. He praises Jeetu Patel's accomplishments in the collaboration and security portfolios and expects his focus on execution, innovation, and urgency to drive future success. In response to a question about customer demand patterns, Robbins notes that orders are showing positive growth and customer demand is returning to normal, but guidance for overall revenues includes the impact of Splunk.

During a recent earnings call, Cisco's CEO Chuck Robbins addressed concerns about the company losing market share. He explained that the company's projected revenue growth for the year may be impacted by a tough comparison to the previous year, which included a significant amount of product shipments from excess backlog. This will not only affect the first quarter's growth rate, but also impact the entire year. In terms of cost savings from the company's reduction program, Robbins stated that the focus is on finding efficiencies and reallocating resources rather than cutting costs.

Cisco's $1 billion AI orders for fiscal year 2025 will mostly come from the web scale infrastructure space, with some potential for enterprise adoption. The company is reallocating resources to focus on growth areas and maintaining financial discipline, as evidenced by their highest operating margin in company history despite a tough revenue year. The CEO, Chuck Robbins, also declined to provide a specific budget for fiscal year 2025 operating expenses.

The speaker discusses how it is becoming more difficult to identify AI-related orders as more enterprises update their infrastructure for AI. They plan to continue measuring these orders as they have been, but acknowledge that it may change in the future. The speaker also provides additional information on the company's Q1 guidance and mentions the platform approach and how it is resonating with different customer sets. They also mention the trend of purchasing networking and security together and how it may evolve over time.

In a recent earnings call, Cisco CEO Chuck Robbins and CFO Scott Herren discussed the company's growth in large enterprise and public sector customers, particularly in the areas of security and networking. They also mentioned that the company is seeing innovation in the data center with Hypershield and tighter connections between security and the network. In response to a question about the impact of large deals, Herren stated that these deals do not significantly drive growth, as evidenced by the fact that product order bookings growth would have been similar even without them. In his prepared remarks, Cisco's CFO Doug mentioned four examples of $100 million platform deals involving multiple platforms within a single customer.

Chuck Robbins, CEO of Cisco, discussed the company's recent platform deals with existing customers and the incremental value they bring. He highlighted the expansion of their security portfolio and the use cases for AI workloads as key factors. The company also saw significant growth in cloud orders from hyperscalers in the second half of the year, with expectations for normal buying behavior in the future.

During a conference call, Sami Badri thanks Ittai for his comments and then passes the call to Jim Fish from Piper Sandler. Jim asks about the recent 7% reduction in workforce and how it will affect the company's sales efforts and compensation structures. Scott Herren explains that the reduction is more of a reallocation and that it's not as simple as doing a headcount calculation. Chuck Robbins adds that Gary, who is not on the call, is focused on cross-selling incentives and simplifying the sales force.

Chuck Robbins, the CEO of a company, is focused on investing in more capacity in the enterprise space where platform deals are more prevalent. He plans to double down on the focus on core networking and infrastructure. In a recent conference call, he mentioned an uptick in orders from customers who are preparing for AI, either by buying the entire portfolio or updating their infrastructure for smaller training models and inference. Some customers are also interested in the company's partnership with NVIDIA.

The speaker discusses the uncertainty surrounding the future of applications and the need for a modern infrastructure. They mention investments in switching infrastructure, wireless, and data center switching. They also mention their partnership with NVIDIA, but state that it is too early to share any details. The next question asks about the $1 billion of orders and the speaker clarifies that it is primarily for back end network deployment and a combination of Ethernet and optics. The second question asks about the growth of core Cisco and the speaker suggests that it may be flat in the full-year guidance.

The company has a strong optics business that competes with other players in the market. They offer a variety of products and solutions, including silicon, white box solutions, and integrated systems. However, the first quarter of fiscal year 2024 had a significant amount of backlog clearance, which will not be repeated in the current quarter. This will result in a year-on-year headwind compare for the company. The company expects to see a normalization of demand, but the quarterly trends may be impacted by the changing business mix. As for fiscal year 2025, the company expects a strong quarter for Splunk in January.

The company believes that they are back to normal ordering patterns after four years of disruptions due to COVID and supply chain issues. They also expect Splunk's January quarter to have a muted impact on their second quarter due to the difference in fiscal quarter end dates. The inventory digestion for hyperscale and enterprise networking is mostly over, but there was a slight headwind from pricing for product revenue in the quarter.

Scott Herren and Chuck Robbins discuss the improving order visibility and pricing environment at the company since the beginning of the year. They state that teams now have greater visibility for the next 90 days and expect even greater visibility in the future. They also mention that price stability has been achieved and they expect prices to return to their historical range of 0.5% to 1.5% per quarter.

In this paragraph, the speaker thanks everyone for joining the call and acknowledges the challenges of the past year. They express optimism about a return to a more normal demand environment and mention the progress made in areas such as AI, cybersecurity, and networking. The speaker also mentions the company's commitment to financial discipline and investing in future growth. The call will be held again in November 2024. The operator then provides information for those who want to listen to the full call.

This summary was generated with AI and may contain some inaccuracies.