Cisco Systems Files Q1 2025 10-Q

TL;DR

CSCO Q1 2025 10-Q filed. Financials and ops update.

AI Summary

Cisco Systems, Inc. filed its 10-Q for the period ending October 26, 2024, reporting on its first quarter of fiscal year 2025. 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 health and operational insights into Cisco Systems, a key technology provider.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing financial updates, not indicating immediate new risks.

Key Players & Entities

• CISCO SYSTEMS, INC. (company) — Filer
• 20241026 (date) — Reporting period end date
• 0000858877 (company) — Central Index Key
• COMPUTER COMMUNICATIONS EQUIPMENT [3576] (industry) — Standard Industrial Classification
• 20241119 (date) — Filing date

FAQ

Key Financial Figures

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

Filing Documents

• csco-20241026.htm (10-Q) — 2334KB
• exh311-q1fy25.htm (EX-31.1) — 8KB
• exh312-q1fy25.htm (EX-31.2) — 8KB
• exh321-q1fy25.htm (EX-32.1) — 5KB
• exh322-q1fy25.htm (EX-32.2) — 4KB
• csco-20241026_g1.jpg (GRAPHIC) — 32KB
• 0000858877-24-000030.txt ( ) — 14041KB
• csco-20241026.xsd (EX-101.SCH) — 83KB
• csco-20241026_cal.xml (EX-101.CAL) — 144KB
• csco-20241026_def.xml (EX-101.DEF) — 443KB
• csco-20241026_lab.xml (EX-101.LAB) — 1031KB
• csco-20241026_pre.xml (EX-101.PRE) — 761KB
• csco-20241026_htm.xml (XML) — 2667KB

Financial Information

Part I Financial Information 3

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 3 Consolidated Balance Sheets at October 26, 2024 and July 27, 2024 3 Consolidated Statements of Operations for the Three Months Ended October 26, 2024 and October 28, 2023 4 Consolidated Statements of Comprehensive Income for the Three Months Ended October 26, 2024 and October 28, 2023 5 Consolidated Statements of Cash Flows for the Three Months Ended October 26, 2024 and October 28, 2023 6 Consolidated Statements of Equity for the Three Months Ended October 26, 2024 and October 28, 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8

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 38

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 58

Controls and Procedures

Item 4. Controls and Procedures 59

Other Information

Part II. Other Information 59

Legal Proceedings

Item 1. Legal Proceedings 59

Risk Factors

Item 1A. Risk Factors 60

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 75

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 75

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 75

Other Information

Item 5. Other Information 76

Exhibits

Item 6. Exhibits 77 Signature 78 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) October 26, 2024 July 27, 2024 ASSETS Current assets: Cash and cash equivalents $ 9,065 $ 7,508 Investments 9,606 10,346 Accounts receivable, net of allowance of $ 78 at October 26, 2024 and $ 87 at July 27, 2024 4,457 6,685 Inventories 3,143 3,373 Financing receivables, net 3,123 3,338 Other current assets 6,358 5,612 Total current assets 35,752 36,862 Property and equipment, net 2,082 2,090 Financing receivables, net 3,411 3,376 Goodwill 58,774 58,660 Purchased intangible assets, net 10,744 11,219 Deferred tax assets 6,514 6,262 Other assets 6,056 5,944 TOTAL ASSETS $ 123,333 $ 124,413 LIABILITIES AND EQUITY Current liabilities: Short-term debt $ 12,364 $ 11,341 Accounts payable 1,996 2,304 Income taxes payable 2,096 1,439 Accrued compensation 2,861 3,608 Deferred revenue 15,615 16,249 Other current liabilities 5,610 5,643 Total current liabilities 40,542 40,584 Long-term debt 19,623 19,621 Income taxes payable 3,367 3,985 Deferred revenue 11,887 12,226 Other long-term liabilities 2,637 2,540 Total liabilities 78,056 78,956 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; 3,974 and 4,007 shares issued and outstanding at October 26, 2024 and July 27, 2024, respectively 45,991 45,800 Retained earnings 662 1,087 Accumulated other comprehensive loss ( 1,376 ) ( 1,430 ) Total equity 45,277 45,457 TOTAL LIABILITIES AND EQUITY $ 123,333 $ 124,413 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 October 26, 2024 October 28, 2023 REV

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 2025 and fiscal 2024 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 October 26, 2024 and for the first quarter of fiscal 2025 and 2024, 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 27, 2024 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 27, 2024. In the opinion of management, all normal recurring adjustments necessary to state fairly the consolidated balance sheet as of October 26, 2024, the results of operations, the statements of comprehensive income, the statements of cash flows and the statements of equity for the first quarter of fiscal 2025 a

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. Revenue from subscription offers includes revenue recognized over time as well as upfront. 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 wher

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. The following table presents this disaggregation of revenue (in millions): Three Months Ended October 26, 2024 October 28, 2023 Product revenue: Networking $ 6,753 $ 8,822 Security 2,017 1,010 Collaboration 1,085 1,117 Observability 258 190 Total Product 10,114 11,139 Services 3,727 3,529 Total $ 13,841 $ 14,668 Amounts may not sum due to rounding. Networking consists of our core networking technologies of switching, routing, wireless, and servers. 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 ratably over the contract term. Security consists of our Network Security, Identity and Access Management, Secure Access Service Edge (SASE) and Threat Intelligence, Detection, and Response offerings. These products consist of both hardware and software offerings, including software licenses and SaaS. Updates and upgrades for the term software licenses are critical for our software to perform its intended commercial purpose because of the continuou

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) The sales arrangements as discussed above are typically made pursuant to customer purchase orders based on master purchase or partner agreements. Cash is received based on our standard payment terms which is typically 30 days. We provide financing arrangements to customers for our hardware, software and service offerings. Refer to Note 9 for additional information. For these arrangements, cash is typically received over time. Subscription revenue includes revenue recognized from our term software licenses, security software licenses, SaaS, and associated service arrangements. Our subscription revenue is recorded in product and services revenue in our Consolidated Statements of Operations as follows (in millions): Three Months Ended October 26, 2024 October 28, 2023 Product $ 4,419 $ 3,207 Services 3,425 3,254 Total $ 7,844 $ 6,461 The majority of our product subscription revenue is recognized over time and the remainder is recognized upfront. Substantially all of our services subscription revenue is recognized over time based on the contract term. (b) Contract Balances Accounts Receivable Accounts receivable, net was $ 4.5 billion as of October 26, 2024 compared to $ 6.7 billion as of July 27, 2024, as reported on the Consolidated Balance Sheets. The allowances for credit loss for our accounts receivable are summarized as follows (in millions): Three Months Ended October 26, 2024 October 28, 2023 Allowance for credit loss at beginning of period $ 87 $ 85 Provisions (benefits) — 2 Recoveries (write-offs), net ( 9 ) ( 5 ) Allowance for credit loss at end of period $ 78 $ 82 Contract Assets and Liabilities Gross contract assets by our internal risk ratings are summarized as follows (in millions): October 26, 2024 July 27, 2024 1 to 4 $ 1,244 $ 1,266 5 to 6 1,599 1,456 7 and Higher 71 72 Total $ 2,914 $ 2,794 Contract assets consist of unbilled receivables and are record

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