Cisco Systems Files Q3 2024 10-Q

TL;DR

CSCO Q3 2024 10-Q filed. Financials and ops update.

AI Summary

Cisco Systems, Inc. filed its 10-Q for the period ending April 27, 2024, reporting on its third fiscal quarter of 2024. The filing details financial performance and operational updates for the company, which is a major player in computer communications equipment.

Why It Matters

This filing provides investors and analysts with the latest financial results and operational insights from Cisco Systems, a key technology company.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing financial information, not indicating any immediate or unusual risks.

Key Players & Entities

• CISCO SYSTEMS, INC. (company) — Filer
• 20240427 (date) — Period of Report
• 0000858877 (company) — Central Index Key
• 3576 (number) — Standard Industrial Classification
• DE (state) — State of Incorporation
• 0727 (date) — Fiscal Year End
• 1934 Act (regulation) — SEC Act
• 001-39940 (number) — SEC File Number
• 24970017 (number) — Film Number
• 170 WEST TASMAN DR (address) — Business Street 1

FAQ

Key Financial Figures

• $0.001 — ich registered Common Stock, par value $0.001 per share CSCO The Nasdaq Stock Market

Filing Documents

• csco-20240427.htm (10-Q) — 2959KB
• exh102mariamartinezseparat.htm (EX-10.2) — 70KB
• exh311-q3fy24.htm (EX-31.1) — 8KB
• exh312-q3fy24.htm (EX-31.2) — 8KB
• exh321-q3fy24.htm (EX-32.1) — 5KB
• exh322-q3fy24.htm (EX-32.2) — 4KB
• csco-20240427_g1.jpg (GRAPHIC) — 32KB
• image.jpg (GRAPHIC) — 7KB
• 0000858877-24-000007.txt ( ) — 16082KB
• csco-20240427.xsd (EX-101.SCH) — 89KB
• csco-20240427_cal.xml (EX-101.CAL) — 160KB
• csco-20240427_def.xml (EX-101.DEF) — 485KB
• csco-20240427_lab.xml (EX-101.LAB) — 1068KB
• csco-20240427_pre.xml (EX-101.PRE) — 804KB
• csco-20240427_htm.xml (XML) — 3218KB

Financial Information

Part I Financial Information 3

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 3 Consolidated Balance Sheets at April 27, 2024 and July 29, 2023 3 Consolidated Statements of Operations for the Three and Nine Months Ended April 27, 2024 and April 29, 2023 4 Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended April 27, 2024 and April 29, 2023 5 Consolidated Statements of Cash Flows for the Nine Months Ended April 27, 2024 and April 29, 2023 6 Consolidated Statements of Equity for the Three and Nine Months Ended April 27, 2024 and April 29, 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 41

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 62

Controls and Procedures

Item 4. Controls and Procedures 63

Other Information

Part II. Other Information 63

Legal Proceedings

Item 1. Legal Proceedings 63

Risk Factors

Item 1A. Risk Factors 64

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 80

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 80

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 80

Other Information

Item 5. Other Information 81

Exhibits

Item 6. Exhibits 82 Signature 83 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) CISCO SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (in millions, except par value) (Unaudited) April 27, 2024 July 29, 2023 ASSETS Current assets: Cash and cash equivalents $ 8,913 $ 10,123 Investments 9,857 16,023 Accounts receivable, net of allowance of $ 81 at April 27, 2024 and $ 85 at July 29, 2023 5,127 5,854 Inventories 3,118 3,644 Financing receivables, net 3,443 3,352 Other current assets 5,428 4,352 Total current assets 35,886 43,348 Property and equipment, net 2,000 2,085 Financing receivables, net 3,251 3,483 Goodwill 58,633 38,535 Purchased intangible assets, net 11,819 1,818 Deferred tax assets 5,527 6,576 Other assets 5,882 6,007 TOTAL ASSETS $ 122,998 $ 101,852 LIABILITIES AND EQUITY Current liabilities: Short-term debt $ 11,891 $ 1,733 Accounts payable 2,054 2,313 Income taxes payable 1,867 4,235 Accrued compensation 3,211 3,984 Deferred revenue 15,751 13,908 Other current liabilities 5,334 5,136 Total current liabilities 40,108 31,309 Long-term debt 20,102 6,658 Income taxes payable 2,869 5,756 Deferred revenue 11,724 11,642 Other long-term liabilities 2,427 2,134 Total liabilities 77,230 57,499 Commitments and contingencies (Note 14) Equity: Cisco stockholders' equity: Preferred stock, $ 0.001 par value: 5 shares authorized; none issued and outstanding — — Common stock and additional paid-in capital, $ 0.001 par value: 20,000 shares authorized; 4,031 and 4,066 shares issued and outstanding at April 27, 2024 and July 29, 2023, respectively 45,343 44,289 Retained earnings 2,055 1,639 Accumulated other comprehensive loss ( 1,630 ) ( 1,575 ) Total equity 45,768 44,353 TOTAL LIABILITIES AND EQUITY $ 122,998 $ 101,852 See Notes to Consolidated Financial Statements. 3 Table of Contents CISCO SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per-share amounts) (Unaudited) Three Months Ended Nine Months Ended April 27, 2024 April 29, 2

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Organization and Basis of Presentation The fiscal year for Cisco Systems, Inc. (the "Company," "Cisco," "we," "us," or "our") is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2024 and fiscal 2023 are each 52-week fiscal years. The Consolidated Financial Statements include our accounts and those of our subsidiaries. All intercompany accounts and transactions have been eliminated. We conduct business globally and are primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC). We have prepared the accompanying financial data as of April 27, 2024 and for the third quarter and first nine months of fiscal 2024 and 2023, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. The July 29, 2023 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 29, 2023. In the opinion of management, all normal recurring adjustments necessary to state fairly the consolidated balance sheet as of April 27, 2024, the results of operations, the statements of comprehensive income and the statements of equity for the third quarter and first nine months of fis

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) 3. Revenue We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers. We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment, electronic delivery (or when the software is available for download by the customer), or once title and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include mu

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) (a) Disaggregation of Revenue We disaggregate our revenue into groups of similar products and services that depict the nature, amount, and timing of revenue and cash flows for our various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies differ for each of our product categories, resulting in different economic risk profiles for each category. Effective in the first quarter of fiscal 2024, we began reporting our product and service revenue in the following categories: Networking, Security, Collaboration, Observability, and Services and conformed our product revenue for prior periods to the current period presentation. The following table presents this disaggregation of revenue (in millions): Three Months Ended Nine Months Ended April 27, 2024 April 29, 2023 April 27, 2024 April 29, 2023 Product revenue: Networking $ 6,522 $ 8,982 $ 22,425 $ 25,105 Security 1,304 958 3,288 2,872 Collaboration 987 985 3,093 3,029 Observability 211 167 589 486 Total Product 9,024 11,092 29,395 31,492 Services 3,678 3,479 10,766 10,303 Total $ 12,702 $ 14,571 $ 40,161 $ 41,795 Amounts may not sum due to rounding. Networking consists of our core networking technologies of switching, routing, wireless, 5G, silicon, optics solutions and compute products. These technologies consist of both hardware and software offerings, including software licenses and SaaS. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized r

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) In addition to our product offerings, we

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