You are on page 1of 22

Q1 Fiscal Year 2012 Conference Call

November 9, 2011

FORWARD-LOOKING STATEMENTS
This presentation contains projections and other forward-looking statements regarding future events or the future financial performance of Cisco, including future operating results. These projections and statements are only predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements. Please see Ciscos filings with the SEC, including its most recent filing on Form 10-K, for a discussion of important risk factors that could cause actual events or results to differ materially from those in the projections or other forward-looking statements.

GAAP RECONCILIATION
During this presentation references to financial measures of Cisco will include references to non-GAAP financial measures. Cisco provides a reconciliation between GAAP and non-GAAP financial information on our website at www.cisco.com under About Cisco in the Investor Relations section. http://investor.cisco.com/financialstatements.cfm

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

Geographic Regions Reporting Evolution


Previous Geographic Regions U.S. & Canada European Markets Emerging Markets
Eastern Europe

New Geographic Regions Americas


United States Latin America Canada

Middle East & Africa Latin America Russia

EMEA
Europe (includes Eastern Europe) Middle East & Africa Russia

Asia Pacific Markets

APJC

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

Evolution of Product Reporting


Previous Reporting Switches Routers New Products
Collaboration Unified Communications TelePresence Video Connected Home Virtual Home (Linksys & Pure Digital) Video Systems Cable Wireless Security Data Center Application Networking Services Storage Virtualization Unified Computing System (UCS)

New Reporting Switching


Switching Storage

Next Generation Network (NGN) Routing


Routing Optical/Other

Collaboration
Unified Communications TelePresence

Service Provider Video


Video Systems Cable

Wireless Security Data Center


Unified Computing System (UCS) Virtualization

Other
Optical Emerging Technologies Other

Other
Emerging Technologies Application Networking Services Virtual Home (Linksys) Other (including Pure Digital)
Cisco Confidential 4

2010 Cisco and/or its affiliates. All rights reserved.

Business Overview
Financial Overview Guidance Summary

Q&A

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

Q1 FY12 Revenue Highlights


Y/Y Growth $M %
20% Switching 33% NGN Routing Collaboration SP Video Wireless Security Data Center 8% 10% 19%

Revenue % of Total

Switching

$3,675

0%

NGN Routing
Collaboration Service Provider Video

2,108
1,093 879

(3%)
12% 13%

2% 2% 3% 3%

Other
Service

Wireless
Security Data Center

362
320 259

8%
10% 107%

Other Product
Service Total Cisco

256
2,304 $11,256

(22%)
12% 5%

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

Q1 FY12 Product Orders: Geographic Regions & Customer Segments


Geographic Region
Y/Y Growth %

Customer Segment Enterprise

Y/Y Growth %

Americas
EMEA APJC Total Cisco

12%
13% 13% 13%

11%

Public Sector
Commercial* Service Provider Total Cisco

10%
12% 16% 13%

Product Book to Bill

Approximately 1

* Includes Consumer

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

Q1 FY12 Key Takeaways


Strategy and vision outlined in our three year plan is taking hold

and off to a very good start.


Customers understand and appreciate our strategy, organization

changes and our technology and business architectures built upon integrated products, services and software platforms.
Ability to help them solve their most important business issues

through these intelligent networks is our strategic differentiator.


Better positioned versus our competitors based on architectural

leadership, product leadership, emerging markets leadership, the strength of our customer and partner relationships

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

Business Overview
Financial Overview Guidance Summary

Q&A

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

Q1 FY12 Revenue Highlights


Y/Y Growth $M %
20% Switching 33% NGN Routing Collaboration SP Video Wireless Security Data Center 8% 10% 19%

Revenue % of Total

Switching

$3,675

0%

NGN Routing
Collaboration Service Provider Video

2,108
1,093 879

(3%)
12% 13%

2% 2% 3% 3%

Other
Service

Wireless
Security Data Center

362
320 259

8%
10% 107%

Other Product
Service Total Cisco

256
2,304 $11,256

(22%)
12% 5%

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

10

FY11 Revenue (as reclassified)


Q1 FY11
($M)

Q2 FY11
$3,341 1,919 952 825

Q3 FY11
$3,480 2,150 1,008 898

Q4 FY11
$3,620 2,018 1,076 982

FY11
$14,130 8,264 4,013 3,483

Switching NGN Routing Collaboration Service Provider Video

$3,689 2,177 977 778

Wireless
Security Data Center Other Product

334
290 125 330

335
270 177 417

353
316 173 291

405
324 219 277

1,427
1,200 694 1,315

Service
Total

2,050
$10,750

2,171
$10,407

2,197
$10,866

2,274
$11,195

8,692
$43,218

Historical product revenue as previously reported and as reclassified are available on our website at http://investor.cisco.com under Financial Reporting in the Investor Relations section.

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

11

Q1 FY12 Geographic Revenue and Gross Margin


Gross Margin Net Sales
$M (except percentages)

Percentage Q1 FY12 $6,588 2,845 1,823 $11,256 Q1 FY11 64.1% 64.7% 64.3% 64.3% Q4 FY11 62.4% 63.1% 63.1% 62.7% Q1 FY12 63.1% 61.7% 60.8% 62.4%

Q1 FY11 $6,316 2,795 1,639 $10,750

Q4 FY11 $6,423 2,954 1,818 $11,195

Americas EMEA APJC Segment Total

Historical product revenue as previously reported and as reclassified are available on our website at http://investor.cisco.com under Financial Reporting in the Investor Relations section.

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

12

Q1 FY12 non-GAAP Income Statement Highlights


$M (except per-share amounts and percentages)

Q1 FY11 $10,750 19% 8,700 2,050 64.3% 64.0% 65.7% 3,897 36.3% 28.1% $2,411 14% $0.42 17%
Cisco Confidential

Q4 FY11 $11,195 3% 8,921 2,274 62.7% 61.2% 68.6% 4,201 37.5% 25.2% $2,195 (12%) $0.40 (7%)

Q1 FY12 $11,256 5% 8,952 2,304 62.4% 61.3% 66.8% 4,080 36.2% 26.1% $2,322 (4%) $0.43 2%
13

Net Sales Year/Year Growth Product Service Gross Margin Product Gross Margin Service Gross Margin Operating Expenses OPEX (% of Revenue) Operating Income (% of Revenue) Net Income Year/Year Growth EPS (diluted) Year/Year Growth
2010 Cisco and/or its affiliates. All rights reserved.

Q1 FY12 GAAP to non-GAAP Reconciliation (Operating Income)


$M (except percentage)

Q1 FY12 $ 2,210 341 186 8 197 $ 732

GAAP Operating Income Share-based compensation expense Amortization of acquisition-related intangible assets Other acquisition-related costs Significant asset impairments and restructurings Total non-GAAP adjustments

Non-GAAP Operating Income


% of Revenue

$ 2,942
26.1%

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

14

Q1 FY12 GAAP Income Statement Highlights


$M (except per-share amounts and percentages)

Q1 FY11 $10,750 8,700 2,050 62.8% 62.7% 63.6% 4,404 41.0%

Q4 FY11 $11,195 8,921 2,274 61.3% 59.9% 66.8% 5,405 48.3%

Q1 FY12 $11,256 8,952 2,304 61.2% 60.2% 65.1% 4,680 41.6%

Net Sales Product Service Gross Margin Product Gross Margin Service Gross Margin Operating Expenses OPEX (% of Revenue)

Operating Income (% of Revenue)


Net Income EPS (diluted)

21.9%
$1,930 $0.34

13.0%
$1,232 $0.22

19.6%
$1,777 $0.33

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

15

Q1 FY12 Key Financial Measures


Q1 FY11 Q4 FY11 44,585 2,824 4,698 Q1 FY12 44,388 2,333 4,300

Cash and Cash Equivalents and Investments ($M)


Operating Cash Flow ($M) Accounts Receivables ($M)

38,925 1,667 4,471

Days Sales Outstanding


Inventory ($M) Non-GAAP Inventory Turns Purchase Commitments ($M)

38
1,523 10.8 4,048

38
1,486 11.4 4,313

35
1,622 10.9 4,178

Deferred Revenue ($M)


Headcount Dividends paid ($M)

10,736
72,605 --Amount Purchased ($M)

12,207
71,825 329
Number of Shares (M)

12,396
63,465 322
Avg. Price Per Share

Share Repurchase Program*

Q1 FY12 Purchases

$1,544

100

$15.37

*Approximately $8.7B remaining authorized funds in repurchase program as of the end of Q1 FY12.

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

16

Business Overview
Financial Overview Guidance Summary

Q&A

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

17

GAAP Reconciliation Guidance for Q2 FY12


Share-based compensation expense Amortization of purchased intangible assets and other acquisition-related costs Subtotal Restructuring and other charges Total impact to GAAP EPS Q2 FY12 $0.05 - 0.06 0.02 - 0.03 0.07 - 0.09 0.01 - 0.02 $0.08 - 0.11

Share-based compensation expense is expected to be recorded to the various line items of the GAAP income statement in similar proportions as Q1 FY12. Amortization of purchased intangible assets, other acquisition-related costs, and restructuring and other charges will be reported as GAAP operating expenses, cost of sales, or other income (loss) as applicable. Guidance assumes no additional acquisitions, asset impairments, restructurings, tax or other events, which may or may not be significant.
2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 18

Business Overview
Financial Overview Guidance Summary

Q&A

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

19

Business Overview
Financial Overview Guidance Summary

Q&A

2010 Cisco and/or its affiliates. All rights reserved.

Cisco Confidential

20

Forward-Looking Statements
These presentation slides and the related conference call 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 statements regarding our strategy of providing intelligent networks, architectures and integrated products, product integration, market leadership and positioning, and marketplace trends involving the intelligent network) and the future financial performance of Cisco 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; 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, including our foundational priorities, and in certain geographical locations; the timing of orders and manufacturing and customer lead times; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; increased competition in our product and service markets, including the data center; 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, intellectual property, antitrust, shareholder and other matters, and governmental investigations; natural catastrophic events; a 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 Ciscos most recent report on Form 10-K. The financial information contained in these presentation slides and the related conference call should be read in conjunction with the consolidated financial statements and notes thereto included in Ciscos most recent report on Form 10-K filed on September 14, 2011, as may be amended from time to time. Ciscos results of operations for the three months ended October 29, 2011 are not necessarily indicative of Ciscos operating results for any future periods. Any projections in these presentation slides and the related conference call 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 these presentation slides and the related conference call.
2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 21

You might also like