Cisco Systems, Inc.

Welcome to Cisco's fourth quarter and fiscal year 2021 financial results conference call. At the request of Cisco, today's conference is being recorded. If you have any objections, you may disconnect. Now I would like to introduce Marilyn Mora, head of investor relations. Ma'am, you may begin.

Thanks, Michelle. Welcome everyone to Cisco's fourth quarter fiscal 2021 quarterly earnings conference call. This is Marilyn Mora, Head of Investor Relations, and I'm joined by Chuck Robbins, our Chair and CEO, and Scott Herron, our CFO. By now you should have seen our earnings press release. A corresponding webcast with slides, including supplemental information, will be made available on our website in the Investor Relations section following the call. Income statements, full GAAP to non-GAAP reconciliation information, balance sheets, cash flow statements, and other financial information can also be found in the financial information section of our investor relations website. Throughout this conference call, we will be referencing both GAAP and non-GAAP financial results, and we'll discuss product results in terms of revenue and geographic and customer results in terms of product orders unless stated otherwise. All comparisons made throughout this call will be made on a year-over-year basis. The matters we will be discussing today include forward-looking statements, including the guidance we will be providing for the first quarter and full year of fiscal 2022. They are subject to the risks and uncertainties, including COVID-19, that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements. With respect to guidance, please also see the slides and press release that accompany this call for further details. CISCO will not comment on its financial guidance during the quarter unless it is done through an explicit public disclosure. With that, I'll now turn it over to Chip.

Thank you, Marilyn, and good afternoon, everyone. I hope you're all remaining healthy and staying safe. Our team at CISCO ended fiscal 2021 with an incredibly strong finish. We had an outstanding Q4 performance and fiscal year revenue reflecting strength across our portfolio, customer segments, and geographies. Our product order growth was the highest we've seen in over a decade, and we're continuing to see strong customer reception to the accelerated investments in software and subscriptions. This great momentum is reaffirming our position as the worldwide leader in technology that powers the Internet and the digital enterprise. As I think about our achievements over the past year, three things stand out to me. First, the exceptional execution of our teams. We achieved these results through the extraordinary efforts of our leadership team, our partners, and most importantly, our people around the world who operated with incredible speed and at an unprecedented scale to deliver this growth. Second, our transformation and strategic investments are paying off. The benefits of our shift to software and subscriptions are clear, and they are helping both Cisco and our customers move with greater speed and agility. And third, the power of our portfolio. The groundbreaking innovation we are investing in today will serve as the foundation for our customers' futures. These three factors position us exceptionally well for growth as we enter our next fiscal year, as evidenced by our results this quarter. We are more confident than ever that we are in a strong position to help our customers be successful. As we look forward, we are laser focused on providing our customers the technologies they will need to successfully navigate highly dynamic environments at an incredibly rapid pace. With the rise of COVID variants and the inconsistent pace of vaccine deployment around the globe, organizations must be resilient and adaptable as we've seen how quickly the world around us can change. While this may impact certain short-term plans like return to office for many, one thing is clear. There is tremendous demand for Cisco's technology. No matter how or when the global recovery takes shape, we are executing on our vision of rebuilding a better world, one that is digital, sustainable, inclusive, and highly secure. I believe we're at a pivotal moment in our company's history as we have a massive opportunity to transform what has been the traditional office and define the future of hybrid work. As our customers look to create safer hybrid workplaces, as well as collaborative and engaging experiences for their customers and employees, we believe they are becoming increasingly reliant on Cisco technologies to help them with their transformation and resiliency. Enterprises are increasingly seeking digital and cloud enabled services, which is driving demand for our solutions and leading to new and expansive market opportunities for Cisco. We're in a unique leadership position to build and deliver innovative cloud to edge infrastructure platforms that our customers need. With the depth and breadth of our hardware, software, silicon, and optics solutions, we are helping companies solve their biggest challenges. Whether it's adopting modern application architectures, shifting to hybrid work and hybrid cloud, securing their enterprise, or meeting their ESG goals, Cisco is helping our customers thrive in a hybrid world. These industry dynamics help drive our strong fourth quarter performance. The momentum we saw in Q3 accelerated through Q4 as we delivered robust revenue growth, increased earnings, strong margins, and record operating cash flow. We also generated strong double-digit growth in product deferred revenue, reflecting the success of our transformation around driving subscriptions and recurring revenues, which increases our visibility into future performance. We are seeing IT budgets grow as companies begin to implement their critical future plans and business confidence increases. However, we do recognize that uncertainty remains around COVID-19, and we are closely monitoring the Delta variant and its impact on customer spending. Right now, we are not seeing any additional impact to our business aside from the component shortage we've been facing over the past several months. Moving to the performance of our customer segments, As I mentioned, we delivered the highest product order growth in over a decade, with growth of 31%, driven by strength across all of our end markets. This outstanding performance is also up over 17% from our pre-COVID Q4 levels in fiscal year 2019. We saw double-digit growth in every one of our customer segments. This strength is being driven by stronger customer investment in substantial network upgrades to help modernize and secure their environments to support the new way of working. Specifically in our enterprise business, we had the best quarter in terms of product orders in over a decade and saw very strong order growth of 25%. We also had our third consecutive quarter of acceleration in our commercial, service provider, and public sector businesses, with all of these segments showing growth in excess of 20%. In our web scale business, we saw increased momentum delivering record performance with over 160% order growth. And on a trailing four quarter basis, orders grew over 80% due to customers adopting products across the portfolio and early traction of our 400 gig solutions. A huge testament to the investments we have made in accelerating innovation and the differentiated value we're bringing to these customers. From a product portfolio perspective, we also had a very balanced performance. As customers prepare for office reopenings and hybrid work, they are increasing their investment across our networking, cloud security, and unified communications portfolios. In Q4, we saw double-digit revenue growth in campus switching, Catalyst 9000, high-end routing, wireless, and in our Zero Trust solutions, along with strength in our security endpoint portfolio. We also had very strong adoption of our Acacia optical solutions driven by increasing customer demand for leading-edge technology to address their growing bandwidth requirements. The transformation of our business to more software and subscriptions continues to show tremendous progress as we achieved over $4 billion in software revenue in Q4, an increase of 7% sequentially and up 6% year-over-year. Within that, subscription revenue grew 9% in Q4 and 15% for the full fiscal year. For perspective, software represented 31% of our business in Q4, and for the full year, when combined with our services business, they represent over 53% of revenue, clearly highlighting the success of our continued business transformation. In addition to delivering strong financial results, our innovation engine continues to accelerate. Over the last year, we introduced an impressive number of new capabilities across our entire portfolio, while also doubling down on more flexible consumption models, including our core networking capabilities as a service, highlighted by the recent launch of Cisco+. Our new Cisco Plus solutions deliver cross-portfolio technologies to help solve our customers' biggest needs with faster time-to-value. Our initial network as a service offerings deliver hybrid cloud technologies and will later expand to a broader catalog of services built and delivered with our partner ecosystem. Cisco Plus improves speed, agility, and scale with on-demand solutions that intelligently adapt to our customers' business needs. While still early days in its launch, Cisco Plus directly aligns with our transformation goals around driving more subscription-based recurring revenue via the cloud. Our unique strengths and proven strategy give us the confidence to move at a more accelerated pace. You will see us continue to invest in our key growth areas and technology shifts like hybrid cloud, hybrid work, 5G, Wi-Fi 6, edge, security, and cloud native architectures to extend our technology leadership positions. You will also see us deliver even more strategic offers to enable our customers to thrive in a cloud-first digital world. These include full-stack observability to improve their digital experiences by providing visibility and insights across their entire technology stack, and secure access services edge, or SASE, designed to enable seamless, secure access to applications anywhere their users work. Given the momentum we're seeing in our business, we have more conviction than ever that we're investing in the right areas and will continue to extend our competitive advantages and drive growth. Before I turn it over to Scott for more details on the quarter and our expectations for the next fiscal year, let me give you an update on the supply environment. While we are seeing increasing demand for our technology, we are also continuing to manage through the component shortage challenges that nearly every company is experiencing. Our world-class supply chain team, as always, is doing an incredible job navigating this complex situation by working with our global suppliers to meet customer demand as quickly as possible. Looking ahead, we expect the supply challenges and cost impacts to continue through at least the first half of our fiscal year and potentially into the second half. In summary, demand for our technology is very strong, and our strategy is more relevant than ever. This allows us to deliver greater value to our customers, partners, and communities as we all adapt to new ways of living and working. I am very encouraged by the recovery trajectory across the board and with our momentum. I am confident in our strategy and investments. I feel great about the innovation we are driving in our portfolio, and I'm incredibly proud of what our teams and partners have achieved. I look forward to building on these insights with a more comprehensive deep dive on our multi-year vision and strategic growth drivers at our Virtual Investor Day on September 15th, and I hope you'll join us. Thank you again for your time, and with that, I'll turn it over to Scott for additional detail.