Cisco Systems, Inc.

Welcome to Cisco's Fourth Quarter in Fiscal Year 2024 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 Sami Badri, Head of Investor Relations. Sir, you may begin.

This is Sami Badri, Cisco's Head of Investor Relations, and I am joined by Chuck Robbins, 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 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 on a year-over-year basis. The matters we'll be discussing today include forward-looking statements, including the guidance we'll be providing for the first quarter and full-year fiscal 2025. They are subject to the risks and certainties that we discuss in detail in our documents filed with the SEC, specifically the most recent report 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. Fiscal will not comment on its financial guidance during the quarter unless it is done through an explicit public disclosure. I will now turn it over to Chuck.

Thanks, Sammy, and thank you all for joining us today. We had a strong close to fiscal 24, delivering $13.6 billion in revenue for the fourth quarter, coming in above the high end of our guidance range, and $53.8 billion in revenue for the year, coupled with growth in annualized recurring revenue, remaining performance obligations, and subscription revenue. We also generated excellent margins boosted by Splunk. Our gross margin of 67.5% was the highest for Cisco in 20 years. We saw steady demand as we closed the year, with total product order growth of 14% and growth of 6%, excluding Splunk, indicating that the period of inventory digestion by our customers is now largely behind us as we expected. We've also been investing to accelerate critical innovation in key areas, with HyperShield and HyperFabric for AI being two outstanding examples. With Splunk now part of Cisco, we believe we have an unmatched capability to unlock the full power of the network with market-leading security and observability solutions to deliver even greater value for our customers. We have hit the ground running since we brought the Splunk and Cisco teams together, integrating powerful new customer solutions, and beginning to realize early synergies. We know that our biggest competitive differentiator is the power of our full portfolio. This is why earlier today, we announced that we will be bringing our networking, security, and collaboration teams together as one organization, with G2 Patel stepping into an expanded role as chief product officer to lead this group effective immediately. As we complete the full integration of Splunk into Cisco, the Splunk product line will also integrate into this new organization at the right time, bringing our entire product portfolio together as one team. With this new organization, our products will come together in a more integrated way than ever before, positioning us to deliver incredibly powerful outcomes for our customers. Looking ahead, we remain laser-focused on growth and consistent execution as we invest to win in AI, cloud, and cybersecurity. To focus on these key priority areas, today we announced a restructuring plan to allow us to both invest in key growth opportunities as well as drive more efficiency in our business. Now let me share some details on our fourth quarter. We delivered solid performance in Q4, with revenue coming above the high end of our guidance range. Strong operating leverage across our business once again drove non-GAAP margins above the high end of our expectations, resulting in earnings per share also coming in above the high end of our guidance range. We continue to focus on growth and our recurring revenue streams, annualized recurring revenue, remaining performance obligations and subscription revenue all showed solid growth and subscriptions made up 56% of our revenue in the quarter. We also continue to deliver on our commitment to consistent capital returns. In Q4, we returned 3.6 billion in value to our shareholders through share repurchases and cash dividends, bringing the total to 12.1 billion in value returned in fiscal 24 or 119% of free cash flow. In terms of customer demand, as I mentioned earlier, we saw steady demand in Q4. This resulted in double-digit product order growth across all geographies and strength in all customer markets, despite persistent macro uncertainty. Public sector demand was particularly strong worldwide, driven by federal spending in the U.S. and strength in APJC. Enterprise demand returned a strength in the quarter with solid performance in the Americas and EMEA and even stronger results in APJC. We signed several $100 million plus transactions in the quarter with global enterprises who are leveraging the breadth of our technology platforms to modernize and automate their network operations and deploy next generation machine learning and AI applications. I'd like to highlight one of the largest deals we signed in the quarter with a leading global logistics company, To advance their efforts in creating the world's most flexible, efficient, and intelligent logistics network, Cisco's technology platforms across switching, routing, security, and observability will enable our customer to automate network operations with cutting-edge innovations like AI-powered robotics and unmatched supply chain visibility. We also signed our first cross-portfolio agreement that includes Splunk with a major automotive company in this quarter. AI is transforming every aspect of our customers' IT environments. They need to modernize their infrastructure, harness the full power of AI and data, and improve their cybersecurity posture, all while building agility and resiliency across their entire digital footprint. Our customers continue to put their trust in Cisco, and we are very well positioned to be their strategic partner for this era. In service provider, while our telco and cable customer demand remain muted overall amid continued industry-wide pressure, we saw strength in EMEA driven by investment in AI operations and autonomous networks by service providers to help them monetize their B2B offerings. We're also encouraged to see signs of stabilization and improved performance in web scale in terms of pipeline and demand with double digit order growth. To provide some incremental color, Let me share some data on demand through the lens of our products. Excluding Splunk, security product orders grew double digits. Collaboration product orders grew double digits. In our networking portfolio, data center switching also saw double digit product order growth. And enterprise routing, campus switching, and wireless orders were also strong, with wireless orders greater than one million, up more than 20% year over year as customers look to enhance their office environments. Across the breadth of our portfolio and global customer base, our product order results demonstrate strengthening demand as our customers focus on their next top priority technology investments. While customers continue to ruthlessly prioritize their investments, our product order results demonstrate that our customers continue to look to Cisco as they focus on their most important technology initiatives. Now turning to look at our product categories in more detail. We saw revenue growth in security and double-digit growth in observability year-over-year, excluding Splunk, as customers looked to enhance their digital resilience with Cisco's technologies. We've had extremely positive feedback from customers with early access to HyperShield, the first truly distributed AI-native cybersecurity solution built into the fabric of the network. HyperShield furthers our vision for the Cisco Security Cloud, which is expected to deliver the industry's most comprehensive, unified platform with end-to-end solutions, making it easier for our customers to protect against evolving threats, and we look forward to making it available this fall. Our new security solutions, XDR and Secure Access, are continuing to gain strong traction. We added over 230 new XDR customers in Q4. Early in the quarter, we announced the integration of Cisco XDR with Splunk Enterprise Security, And at the Black Hat Cybersecurity Conference earlier this month, we announced the availability of Talos Incident Response for Splunk customers, enabling access to the full suite of proactive and emergency services to help prepare for, respond to, and recover from a breach. We also continue to capitalize on the multibillion-dollar AI infrastructure opportunity. We have now crossed $1 billion in AI orders with web-scale customers to date, with three of the top four hyperscalers deploying our Ethernet AI fabric, leveraging Cisco validated designs for AI infrastructure. We expect an additional one billion of AI product orders in fiscal year 25. As I shared at our investor day in June, this momentum is being fueled by multiple use cases in production with the hyperscalers, several of which are in AI. In addition, we have multiple design wins with roughly two-third of these in AI. Over and above the web-scale AI opportunity, we believe we are well-positioned to be the key beneficiary of AI application proliferation in the enterprise. Our HyperFabric AI cluster solution, created with NVIDIA, helps our enterprise customers build infrastructure to run generative AI models and inference applications. The on-premise solution will guide users from design to validated deployment to monitoring and assurance when it becomes available later this fiscal year. We are also enhancing our own productivity by using AI in our services and customer experience organization. We have a robust AI and automation framework that touches at least 50% of our service requests. In addition, we are incorporating AI assistance into our products so that our customer and partners have efficient options to access support. Before I hand it over to Scott, I want to take a moment to thank our teams for all their hard work to close out the year and their relentless focus on our customers. In closing, while we're pleased with our performance in a dynamic environment, we know we have to drive strong execution to be successful in the growing markets we serve. We believe this will result in strong growth and profitability as we enter fiscal 2025. I'll now turn it over to Scott to provide more detail on the quarter and our outlook. Thanks, Chuck.