CSCO - Earnings call transcript Q2 2025

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Operator

Welcome to Cisco's Second Quarter Fiscal Year 2025 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. begin. may you Sir,

Ahmed Sami Badri

This by Badri, and Chuck our Scott everyone. Investor CEO; Head Relations, Herren, joined Robbins, CFO. is afternoon, Cisco's Sami of and Good our Chair

including earnings GAAP on Cisco's Investor website. Relations and release supplemental our to reconciliations, are press non-GAAP available information,

available be call, also referencing and financial results. slides both this website. Throughout recorded webcast make GAAP Following the the today's we and will on call, we'll non-GAAP

of and product on discuss of in orders, customer All results otherwise. results terms a made geographic will We revenue comparisons in terms product basis. be stated unless and will year-on-year

note forward-looking our Please quarter that from including and contained today to filings, recent most SEC and are XX-Q include third our XXXX. results differ year materially forward-looking risks These statements particularly which factors our that statements, statements. risk discussion and identify our important fiscal subject our could XX-K the in guidance reports, those actual detailed for cause to will uncertainties in

With see call respect the through public that on for not is further will unless the to this it its disclosure. release press comment quarter explicit Cisco guidance, done accompany guidance slides during details. and an please financial also

turn it I'll Chuck. over to Now

Charles Robbins

high We the thank end for and at share of per you revenue, guidance Thanks, Sami, margins earnings above results joining our saw us all in today. strong and with in QX all or ranges. coming

the for strong of revenue, Our XX% revenue, technology, top revenue accounted remaining subscription positive and demand double-digit total our obligations which growth our performance by supported annualized in performance was generating in recurring line quarter. for

to on $XXX bringing webscalers infrastructure exceed in billion track million, in of 'XX. our infrastructure and orders year-to-date surpassed QX Importantly, are year with $XXX fiscal our orders $X AI to we million, approximately total AI

in share all additional an Board commitment billion billion demonstrating shareholders, dividend, to in returning year-to-date. we billion Today, to shareholders $X.X totaling returned repurchases, through increase $XX our authorized returns. also our value an capital announced value to to $X.X we Cisco's QX, In and our consistent

insight the quarter. positive provide environment I'll the we some demand Now into saw during

orders to and product our when testament of geographic our New of fourth This the our a XX%, growth grew XX% orders Splunk, value double-digit accelerating excluding customers. power all marking order we is across bring were portfolio consecutive XX% organically product the growth. Enterprise up segments. to with quarter up

orders see of webscale. driven We strong our X XX%. XX% digits, in grew momentum and X service infrastructure with growth the X by continue very in in scale this the their AI. they than provider the Three triple cloud, product This orders triple-digit each grew more top to webscalers to each high-growth of market for and shows increasing customer relevance up as

demand governments AI XX%, XX% and the trusted services. digitally particularly clouds with their geographies as develop continued turn indicated to transform sector and were more Cisco to telco in they they cloud, to core customers as all in for growth up partner grew deploy from world as end-to-end government SP than with sovereign their around Within as connectivity. networks orders Public ready reinvest be orders AI

WiFi products. portfolio increasing demand on policies. we with applications Networking and our expect double as perspective. digits, enterprise up infrastructure and well webscale switching, double from color campus gain some Now to access traction as our X driven industrial digits a product by orders points in grew routing, IoT our return-to-office were switching switching product networking orders Campus

fourth this growth of being growth. also continue data consecutive our for to switching, see We center robust quarter double-digit order

become for expect Silicon on this AI available April as to XX.X-terabit We buildouts. based cloud chip our XXX-gig our continue Nexus switches One in

partners leverage their bought the applications and for enterprises growth several this market In solutions and seek systems, integrated to Nexus, large QX, and that they as UCS environments AI open We're customers deals opportunity enterprise in starts production to customers also security orders up proprietary additional signed starting AI system our see AI to data. including seamless from power are where installation we today. deploying

launched Cisco hardware POD of AI sell and early to to product, for and infrastructure. to it beginning Additionally, our easier software, making recently AI customers consisting deploy partners Cisco gain is traction,

prepare the I AI-powered sell 'XX, saw security. Industrial our which also first Things of to of the of than more XX%. customers. orders XX%, industrial comprised strong QX, our acceleration industrial products, in of more solutions grew of growth for want and customers to And we Catalyst performance call out ruggedized year fiscal Internet robotics we manufacturing deployment and product of In the an as than signaling half

to strategic investments onshore connect manufacturing we the portfolio fabrication steps capital-intensive scaled sources, AI such market-leading States scale. secure takes the and at as plants, networking help have and these semiconductor infrastructure As United protect to power

and Our have Splunk this months, security million of users key data our threat X analytics Access firewall. each. than more just orders detection for In gained driven like by demand than more customers enterprise capabilities XX doubled Cisco Secure approximately XDR advanced and and refreshed by and X,XXX products management, quarter both the again combined

deals security fundamentally Even X enterprise a solid Hypershield network customers leveraging before into way. are Hypershield production, deploy new seeing the is to in it's major in momentum. Fortune In full we platform who QX, with booked also XXX

momentum. and multiple without shows Cisco platform Since Splunk part which third a success continue Cisco products ago, of XX joint almost our involving became the and deal we businesses services fuel our was spearheaded cross-selling Splunk, to motions. integrate months synergies of A disrupting by and

Talos Observer. Log the X.X Splunk's we into and released AppDynamics Security During newly integrated on-prem also solution into Enterprise quarter, Splunk's

for the to launched Splunk quarter. Azure, we in also I'd some Assistant side, Observability. innovation and AI Federated Splunk the like on on Continuing highlight rolled we Splunk out Analytics key Splunk

response leverages for safeguard at leakage misuse and has confidence. delivering AI unmatched last In By Defense, for AI their applications threats. the unveiled March. in offering Defense our can, deploy been in a tools, sophisticated month, reliable early-access latest phenomenal visibility AI launch consistent way network applications. breakthrough, Cisco data our AI availability purpose-built level to only develop, increasingly our enterprises customers, a AI secure of security major we network from to AI and with security Defense to protection general and with we The are enterprises the against

The opportunities XX,XXX launch such of AI well data registrants. we online pioneers discuss with Fortune AI advancements silicon Summit AI to and from the breakthroughs close in half of our where explore challenges in and brought AI crucial Defense several to of and as coincided luminaries, the over and XXX policy ethics, technology with topics and together science, leaders

investments will fueling network speed top especially adoption capacity competition infrastructure, AI on and emergence playing data for light security. reinforced are mind models. of scale, customers best-in-class to our of And for is adoption of all security innovation, for battle have with which and AI AI Cisco. field the tailwinds global all demand AI AI leadership These the of in accelerate and the a further of be that new for

on multifunctional meet The data make combines At and launched programmable centers Cisco we DPUs processing performance Live built to switch networking device One. smart with more them EMEA in AI. single center this and our smart switch high-capacity, data a efficient week, simplify the embedded Silicon to demands both data first of

their and a as incorporates their optics, new services to evolve enhanced Silicon deliver automation for connectivity to customers. which Services One-based Agile Networking, We new end providers service they also assurance offer infrastructure and introduced architecture,

opportunity engine AI that innovation line X in Cisco's we Cisco connected with powerful. but more Overall, worth is has frame been pillars. the reiterating never In that, it distinct

Silicon XXXX, infrastructure our their AI systems optics First, X optical for deployed largest networks. training training by webscale Combinations Cisco being the One webscalers in customers. are of and of back-end

enterprise and inference AI Second, clouds.

Hyperfabric AI the platforms connectivity. requirements will simplify servers, and to power hyperscale networking private Defense software of switches, from PODs combined AI AI front-end And across for and secure enterprise. observability open technology NVIDIA-based applications. public networks. AI Our derisk deployment Customers to pervasive models, both leveraging security are and prepare mature modernize, AI third, and and routing, AI back-end their deployment lead of to bring switching, and Nexus to operations with are and This, increased capacity our AI infrastructure network network the automate cloud to designed

into also products across many in collaboration developing of and our platforms agentic fuse AI our production with security capabilities continue portfolio. AI assistance and to We the across

across time build proactive AI-led network derisk change our well as greatly we that and new assistant to customer In experience network In addition, agentic to products are as maximize Renewals AI advanced the important technical to proposals. customer support launched co-developed digitize an and boost milestones with management, analysis customer experience. We productivity. resolution. using These towards QX, added agentic we predictive security AI-driven help customers to reduce Agent, are a streamlines renewal to we value we launched solution Mistral as and

Before integration our President announcement I and in at be leadership Steele, instrumental on has touch Splunk Cisco. a we of the earlier will Cisco want CEO Gary of been of quarter of Go-to-Market the I for departing former Splunk, close, to end external an opportunity. CEO Gary's an today. made into ensuring successful

expectations. and Splunk the well said, of with well ahead revenue in we've with our line As has profitability expectations integration gone extremely

Gary really terrific has So a done job.

customers President growth the In motions also sales and with for the his and our Go-to-Market, drive future. our and addition, today of align time evolve he our to of go-to-market and during as helped partners needs

leadership partnership, unwavering commitment acquire I we ago. want Splunk Gary to his our since to and months intent for thank announced XX

search we internal transition. As launching an the Gary are go-to-market and QX a external of new through ensure with for smooth Cisco a to and leader, of result immediately will end this, stay a

Now strong which is let There as has our results. me demand evidenced summarize Cisco's accelerated the for quarter. technologies, clear by

products. Our allocation The as into innovation build to to our capital pipeline return model security significant deep accelerating our we of product value our is of strength our performance enabled shareholders. networking

us enter believe we we position year well 'XX. and second momentum strong as our fiscal Lastly, of half execution the

on more for outlook. and you to over the our quarter detail Scott,

Richard Herren

quarter, Thanks, margins guidance operating revenue Chuck. with delivered strong with a and the coupled high share earnings cash above solid of our We flow. ranges, and end per

revenue was and net X% $X.XX. quarter, $X.X the per For year-over-year. total was billion earnings billion, was share non-GAAP Non-GAAP up $XX income

included at a revenue with and X%. revenue our 'XX shipments. billion, SASE growth note $XX.X backlog network billion, in X%, decline QX the to was by driven by was Networking last Looking wireless our offerings down product that from in was and It's primarily and in Security our detail. $X.X QX was up elevated offset Total of more servers. up security. XX% switching growth portion in service XXX% revenue up Splunk, important

X% Splunk, And was observability Excluding by up in X%. in collaboration Collaboration center, CPaaS our a was devices, suite by offerings XX%. partially growth grew offerings. and decline driven offset up Webex security contact on-prem

observability grew Excluding Splunk, quarter. X% the for

of And XX% increase an at and of RPO recurring Total software product with QX Cisco's growth billion, Looking product was XX%, metrics. XX% $X.X subscription to revenue XX% XX% increased represents Total orders quarter up revenue the billion RPO software our total subscription at billion, billion, revenue XX% was up ended XX% Total billion. up and $X.X total with was to at XX%. XX%, product were revenue. ARR ARR $XX.X of total RPO short-term XX%. grew $XX $XX.X up year-over-year. up now

year-over-year. were XX% Excluding up Splunk, organic product orders

our and was up our at service sector XX%, public cloud across customer orders EMEA enterprise up provider XX%. and up APJC geographic segments. XX%. XX%, Looking and XX%, XX%, up Americas was In was was our was up was up product markets,

coming guidance XXX year-over-year, XX.X%, gross was by XXX points, by gross points margin productivity our offset in basis was driven Product XX.X%, with margin Splunk line up Total up margin XX.X%, came non-GAAP partially improvements, up in basis range. basis points. Services and at gross pricing. XXX

financial at discipline non-GAAP continued with and the guidance high our range We above end margin on our operating of focus profitability XX.X%.

up We to was ended driven in and $XX.X the flow by billion. primarily of total prior the balance cash higher billion, with Operating cash, XXX% Shifting sheet. year. investments cash equivalents tax payments QX $X.X

dividend $X.X we share for returned billion cap From and the to our of quarterly billion a $X.X cash quarter, allocation billion of repurchases. $X.X perspective, shareholders comprised during

has to share into the and $X.XX the for quarter, billion. repurchases, we billion authorized the our represents We're raising our also to approximately $XX $XX our bringing Board by consecutive outstanding have confidence which increase. annual future, authorization in today an per $X.XX Given total XXth our additional business dividend

in pipeline. invest organically and our We inorganically innovation continue to

with Cisco's our QX, During expand technology closed innovation to our our capabilities and customer M&A. is and Insights highly accelerating Deeper of the with footprint talent, strategy complementary internal momentum position teams, experience strategic we to R&D This investment strengthen AI engineering of targeted and AI to acquisition aligns our and CX services.

powerful opportunities bottom disciplined focused and continues in top order to best to making with growth strategic we quarter, significant our well great that growth as business flow remain innovation across shareholders. driven capitalize by performance return strong a significant line on see management. had exceeding we all summarize, to To our as investments margins. expectations, strong and by our underpinned this the We spend our combination It's generation value our ahead, cash fuel to ability on

Before our flexibility provide we years. of into agility a tariffs. over proposed to have our and is increased few have U.S. strength some best-in-class we dynamic want the environment China operations we to time our Canada. as move supply the as and Mexico for, on tariffs team the proposed I the context recently a of tariffs guidance, on significant to global spent outlook, by accounted have chain last amount we added cost driven planning the This but built the related leveraging one In and the the that for high-level well

to are into tariffs impact and We effect. mitigate go take to prepared as the actions when

Turning financial to our guidance.

our fiscal is For QX, as follows. guidance

in expected Non-GAAP the operating earnings non-GAAP XX%. margin gross We to to $XX.X expect non-GAAP be is XX% is XX% expected in from billion to XX%. the revenue of $X.XX range share to to range to the margin We range of to billion. to $X.XX. And $XX.X per anticipate in be range of be

to our Non-GAAP assuming range to the $X.XX. of expect of share fiscal For $X.XX a in tax be XX%. expected $XX guidance per We're 'XX, year we non-GAAP rate to is, to revenue $XX.X from is effective billion billion. approximately earnings range

now let's move into the Sami, Q&A.

Ahmed Sami Badri

Thank Scott. you,

single can queue? the we question. to Before first the portion of Q&A to a we follow-up analyst remind ask start move to like the call, I'd in question Michelle, the analysts one and

Operator

with Simon Raymond James. Leopold

Simon Leopold

bigger and DOGE. around tariffs, one I federal on might the but answer, issue is the noise the comment I know the all be the this government to a difficult appreciate maybe around

employment. down love exposure follow-up. if on envisioning you if government scenarios layoffs there drill then got the and I've And could I'd from quick so you're And your are a major the U.S. federal

Charles Robbins

Okay. obviously the efficiency of important the think technology. significantly. I have driving effort is question. to for which been really government, this understand this Thanks, productivity we very in and it's that And Simon, use following actually is many Look, cases in via about delivered

our U.S. be could the our that we important and of activity other in for DoD, thing federal to keep less business, think mind of the side So federal than positives know is is that from the on business us. business all. of there this the first total XX% business. is It's occurring of that some to U.S. federal civilian of most XX% -- actually And comes the

get a would working on executive everything back seems -- still be out. a seen expected. flurry I'd we had of to we've when came large saw lot of we as we Initially, and sort orders had we've we reasonable the confusion, a a of I So been quarter, on progressing that And say, deals then say. track

out we not in and higher in performance material As materially we're modeling last QX quarter. you federal performance to saw than lower QX, any any or what look

Ahmed Sami Badri

Thank you, Go Simon. please. ahead,

Simon Leopold

follow-up, Just please. Yes.

around been how about technology optics, integration, strategy. routing, co-packaged your say, there's longer-term increasing And that So just known given switching, Cisco's, optics. thinking wondering ingredients noise the in having as you're let's vertical

Charles Robbins

it today to silicon. we about integrated think them is them Simon, optical the go we is sell with or I sell with optics, market systems systems optics, the way stand-alone we webscalers think, the we way that

evolve procure they and market them the to want to we'll meet offerings our how portfolio our products. our evolves, evolve they where to So and however are just continue

Operator

Morgan with Marshall Stanley. Meta

Meta Marshall

that the customers. you're kind year seeing But of of kind customers to from of just ask of kind a data on good administration less strength kind side lot of what but just you -- the start directionality, but from and broaden just the Clearly, And of side. of on Chuck, kind more strength on portfolio? some kind to maybe out on if kind to could of as campus entered what kind we've are hearing center you spoke of of how seeing the propensity a are then on of resolution just you're seeing very spend. on second, I quarter, and resolution to kind maybe seeing campus just clearly, into

Charles Robbins

Yes.

I you think if look thanks, -- Meta.

largely U.S. high Asia, up the think I strong performance as good across you saw earlier, and, I federal we digits, in across had relatively demand as across the the public look think, if both segments sector the strength of we and that outside board, Europe, the across it well. had exception was single we well. We U.S. saw geographies, portfolio with discussion

So it saw there. we

talked into seen demand Nexus cloud X demand obviously, for the for XXX% or X wireless in saw I'm X predominantly portfolio, it quarter with over data of the the We've our fourth out that about switching, X in And over webscale of saw campus our we growth actually, double-digit the the and routing, XX% then goes of year-over-year. X switching, campus. year-over-year, infrastructure then saw performance the the which demand enterprise private good into enterprise. We consecutive growing center -- double-digit similar growing sorry, in of

balanced. So it was very

your letting right so little excitement much about fear ahead And and a of of that opportunity, continue our that think much the the the now too and And uncertainty risk, going think in get slowing is the geopolitical despite perspective too change both U.S. on of so down on I world, technology competition candidly, just there's around that's one and spending the you. to their despite there's that the understand is on bit in much there's far, going technology there. marketplace customers from the thing I need a

So solid saw demand. we

Ahmed Sami Badri

remind question just to And Meta. you, question at follow-up want to ask I analysts and Thank same a the one time.

Operator

Reitzes Research. Melius with Ben

Benjamin Reitzes

the quarter. there's questions Congrats a a got switch XXXX that market lot to very lot of strong programmable like It's switch this And on good recently Chuck, the you you guys with the looks put we've a out, prospects Nexus. new just see momentum. about of there.

So you means -- maybe product that about what little NVIDIA products. could your with just and your for why AMD more went talk if and versus that a for you the product bit wondering

the too than -- sounds you And getting ready -- my X you I'll you. to just and this comment getting know of follow-up it like that I demand for run people do you for firm, Hopefully, heard just just think on that view that, but don't the just And just -- that last overall for some ago. little still I better was is think Or wanted color if long, to regard quarters, overall wondering didn't thinking up. with back Sami, few little people more this that. the much quarters time so just AI? from you ready sounded a in were were AI picked a I a pass yes, it are on more but I

Charles Robbins

you security going the space of switch is Look, No, infrastructure. we that in our core are a in and and last thank Thanks, the I DPU with long that example that think foremost, I in team networking seen a over we time. got a haven't innovation silicon it our first they've lot them because referenced, we months delivering space, Ben. great the innovation the drive now XX very a both. at then in want in in has the webscale pace a portfolio. this seen lot XX to We've what the in been been to the in collab the to organization the product space, just And

and put it can't a the security the was an and -- deeply really this solution in to other is -- it's chose we it's I I'm did to for deployed take the sure and thought at allows this of to they to Security so it And exactly us. the of into everywhere, network. they allows and where analysis the us can the it that team DPU is breakthrough a be everywhere. than out which network AMD these why speak product it best security candidly, because But us -- integrate appliances belongs, come speed needs real

power us services place So by to to speed what to traffic moving DPUs can single ASICs this to of on where network be the box. or the is, this you run security these central do a limited opposed the of network you're as a allows processing in going services at the

use Fortune capabilities Hypershield, as first aware, you announced, had of out the couple the we're on we quarter prior wins even is and in as a so which And final case, big Hypershield. are just building the we

be to the going that's first deployment. So

you traffic different from of data at running If between via center could about and speed use switches and in at to case, the you these security zones through think doing a put all it east-west inspection protect one Hypershield zones sitting line the threats.

with. So is it's -- just it's and lot got up have that service we first the use come of the a potential, this or think teams case first

AI-as-a-Service your be demand absolutely is this networks being deliver by question, to lot or to out even lot AI. telco building for we are On that a believe prepared demand see their We customers services. second AI-driven driven telcos the a think the of that -- of preparing is we

what it role going AI, network. going need. to that and we talk the of we capacity didn't call they're put do work there's it's our to trying are AI more to streams that out, I to onto while get agentic the an so clear And about It's prepared one are pillars that for companies think of acceleration just in relative

Operator

Deutsche Niknam with Matthew Bank.

Matthew Niknam

a how front for business gross as meaningful it maybe this And your is past margin a just the I'm the what front then year, on into dovetail on as question, follow-up, little AI customers today. hearing calendar enterprise to from maybe a for the more you investing enterprises new in XX.X% you're seeing you prior bit -- come wondering, about on quarter. and and Scott, they've just did talk talked Just AI. about specifically

informs implies view. to between I to maybe XX%. step that think down what XX% wondering guide I'm the a

Charles Robbins

So AI Hyperfabric it's AI-driven see I cases still customers we all the enterprise there, to coming, some We're we are. we what and AI very days, going we to out on And think would AI specific are we're early market, out to and -- exactly be starting what as new got we say relative is figure switch, coming, the in still the realize in side infrastructure PODs spending, DPU infrastructure. use though, AI get part seeing their they need are they the to a got applications. got Defense Hypershield of we they all this have to support these on

leverage we're be to private then beginning magnitude understand good on put innovate and really inference we're training to in it think beneficiary that, in real So proprietary a see in that, to like they'll data, higher as we're important as going also continues pretty as feel accelerate. enterprises -- they'll but order against we've position capabilities training to run to to build I continue of we But and their to today, that we is to and of believe than seen obviously that opportunity the ourselves shape. We'll do data, date. a better what happen, this it's their some an

Richard Herren

year, this XX% on and we for noted were into -- is we that in that and settles the cost the Matthew, it what's range that on down -- -- the at and And so XX% XX% full commentary proposed the think upfront, way, from far. seen guide built your for was gross I in to QX, in built in by question we have driving margin, in QX we've have step tariffs the in the the my of where

the and And those China, out, Canada has -- March Canada assuming on again, in negligible the has XX% aluminum, Mexico, date. us. on impact additional and a quantified we've X no steel the So XX% the

I to that's what's a fluid going and such been the built think to very proposed. XX% say actually now. right in ensure we've that environment It's But protect to the happen. wanted guide it's I difficult

I do a we've muscle XX%. supply now, will tariff had imposed you, around of our by our and the work over exposure activities there that to time chain built where several are way we And has team how that tell years our was got that. mitigation last the China about we that a lot first reduced in around have from the we

So Depending the on could full to no steps mitigation of into we've where that's out with point steps sold, mitigate several take cost take. goes we'll Mexico, what impact goods XX% of in effect, into start what tariffs. hit, -- mitigation and will the the the additional XX% game-planned to I Canada of scenarios is China actually this those tariffs the time. no in and built we built this effect at at with in But

Operator

Samik with Chatterjee JPMorgan.

Samik Chatterjee

up guess to maybe I I'll follow on that question tariff start off.

of how questions the about tariffs, we're think lot of terms to getting also demand. You do cost in but mention you're embedding a of I the in think

your mean of are how terms avoid expect any demand? sort of forward enterprise I tariffs on And to seen previous seeing And tariffs? of in customers inform Scott, customers respond does pull demand a or in terms you've what to of for basis view in Chuck to thoughts -- how So these from any the you enterprises some place? first that

And for you're my follow-up, there. I think seeing AI momentum about more the and the it's hyperscaler

us You're terms on give of expected? of but deployment but strong there if in orders, track sort acceleration what more deployments, some the CapEx you pace is see is or can to guidance can -- them, insights from any seeing what or numbers you relative strong on in maybe momentum we

Richard Herren

Samik. Yes,

On the first question, we're not seeing any evidence of ahead. customer pulling demand

fluid a very dynamic tariff environment. now. I right think It's environment very the it's is

to going know While customers actually we think taking be decide difficult will everyone for it our is what's note, do. to until what I into go effect, to very

the envision other steps number considerations don't not we lever, I of that. tariff What mitigate at we need a into now, the in we number whatever of mitigate any look cost. take place, the we is that supply to can to would through first we seeing to of evidence the inside changes a make think Right do there have steps demand. of would as are there. of but thing have look offset I so got to make we to before put a would the chain gets impact to there's ahead that as pull take regime price obviously go the any the demand, impact some of we We

Charles Robbins

you the buy and looked with is build line units on think they initial think I how targets had -- me sat more." think up bottom that a deployments, we I gone Samik, and at by that they've XXXX, many all relative And So that to more, has their versus number couple demand for webscale wanted these XX%. already I've I in the Yes. can I their said, think and them question "If will customers, of that the

on and market. their I all of the a to the And strategy it So deployments their moving make they It's as are and very respond very very demand. frankly, evolves dynamic. changes think continue rapidly that dynamic track, we on to is

Operator

Tal Liani Securities. with BofA

Tal Liani

us quarter Splunk I'm can you the wrong, numbers what's my a need but are totally give I have update on about question Great math and happening clarification, is so my parts. if trends. not it's Splunk down sure with XX% If right, was this Maybe and year-over-year. I clarify weaker maybe the quarter, right, so an

kind last and of this And observability. supposed It's of accelerate about growth? the the it good and you -- Can the quarter and is the quarter. second parts the to accelerated talk security bad trends question parts

Richard Herren

if we and take want. first tag-team I'll the Chuck, second one, the can then, you Okay. on

On not doing, -- math Tal. the you're sure what I'm

their Splunk's end that been to is January one end by the the was fiscal the you've got you think their quarter, -- have is math with of would QX. prior this of thing I visible way, -- that end not front of in the you of the

So quarter. biggest that the software every as enterprise it the is quarter fact, course, with week week biggest that of company, the the loaded in back-end year. gets the is their And of QX XX -- of QX so of

the our XX. quarter The ended this January fiscal way calendar year, on fell

line double line with is growing well to our QX of results. our ahead It's may when digits. the will still of on expected expectations QX of it week was last historically we what's modestly ahead math. it not profitable QX actually that growing that top is be throwing captured So Splunk's the That results, on off into expectations, our profitable. January you is our be in flow in right Splunk and

So us. Splunk's quite nicely performing for

Charles Robbins

Yes.

say, saw the innovation look, the had security front, a of acceleration which growth a in a X we've from we to good year. said We perspective the we sign. that I Tal, would this is quarters the couple launched what takes this in all time And points. ramp, last of of demand give can new On just second expected organic security, I is is half to you but what see that data always

If those have XDR, you two million Access Secure just them are and those between two, look actually at at Cisco customers, the we each X over products, users over X,XXX now of each. supporting deployed and enterprise of

I past said Hypershield. XXX there's excitement. ramp. to this success. deal Fortune So need also won and launched They We've X we're a earlier, of great we seeing quarter, enterprise customers just the time

recently, with the of who XXX did in that We AI now right look us AI with Summit on had it. about to Fortune think I interested Defense If the XX-some-odd we -- half you there almost going there's proof customers concept there's that for at are event.

are. to we as demand about where It we these scale continue greater good turn feel will just into I products. So

Operator

Amit Daryanani with ISI. Evercore

Michael Fisher

Michael Fisher for is This on Amit.

expecting and you the Or if this curious a some AI $XXX other switching you're seeing just then orders Just in 'XX And more a fiscal year. optical this Or is products? you've so some to kind of of orders. mainly are Are year? quick on strong revenue expecting very that of -- seen question it far into these thing? these million wins? Are wins start AI fiscal we converting any

Charles Robbins

Thanks, Amit. I'll can you take one, the Scott, and the revenue. take first

systems, that great job They increasing They've silicon, We've front. in were for on -- the multiple their million teams to it's a the the invested chips and silicon frames. development running optical say AI but optics it's And -- the in of if team On resources in I'd break worked there. yield, a have and heavily half systems. thing. accelerate. hard. positive think And is parallel silicon time are is and done efforts combination staggered about which The a more down, orders, it's is $XXX systems, you I in continues it it

it, we're so the feel And things good combination a of customers. that those we it's to about but all selling

revenue the side? on Scott,

Richard Herren

expect of no what said of it's the Amit, actual Yes. different revenue to and revenue. second in when would into we year, do with the ramp than the the said what We that's orders begin start. the We come about from all to this along we've ship consistent dates. see in we've to well expect this knew ahead half turn

Operator

Jim Our Fish Sandler. caller is next Piper with

James Fish

you Working Splunk have further -- penetration to actual X,XXX guys us you off here, what just and an give have the go about bundling a just you any large expected after between few to announced? plans guys as can the beyond and you just customers of talked first you update but Cisco jointly things

the within question, to from between center with where of the wins? love AI approach sort And there. your Would the systems versus then you're Silicon additional last winning guys data secondly, you the what One seeing color are approach

Charles Robbins

Thanks, Jim.

progress. So say early. still cycles. continuing it's Splunk And we're make These I side, sales to still on would long the are

mean having wins. are there. We out clearly I they're

were of coming And WPA and our broad-based, also with seen a expanded footprint. benefit doing that had large Splunk inclusive Splunk. Splunk of WPAs We team that Cisco actually old have they the talked inclusive call now, Cisco are leading deal that the the portfolio are we about of the what together we customers the that

continue as to and to go beginning So it we forward. that, we'll see see we are

and continue incentives get more quarters, more we'll to cross-selling in as place couple teams think see, I to sales you'll we going think the into that. I the are that that you're see of putting next accelerate

And it systems One... was on versus looking at the I second Silicon how question, they're think about

Richard Herren

Yes, versus silicon.

Charles Robbins

Yes.

sales that think business. Actual systems. are and percentage small raw very total of it's the by silicon just still a large, as I

just buy the consumption general to systems. method of So is the

Operator

with UBS. David Vogt

David Vogt

So I'll give you both obviously at the same time.

So sequentially mostly SP comments business looks it Americas the seeing Splunk you're about the decelerated I'm -- enterprise a I the just and like because maybe and in trying like to guess across was cloud. it square, that little ex strength your the orders looks strength Chuck, bit

project high is And white-box number I of number then with last announcements longer a have maybe of ODM wins the question announcements some maybe well. term, space the big second a weeks some as or over been with couple there's the large pretty from big

competitive by announced, you're So other these how have the about the out some bigger on risks announced maybe landscape. maybe thinking and you're from can projects of market a wins from these touch like been then that thinking of some some anything there maybe DeepSeek these have on alternatives you about how been perspective ODM of that and the

Charles Robbins

Yes.

Okay.

all, I had it was more QX, of little understand, enterprise, in $X the a was QX. We continued than of year-over-year we've up but slower first recovery. So quarters was QX important on It over QX over in in QX it's X took than XX%. orders think to literally billion growth

in a think in to I little had QX. we real digits. strength U.S. of Asia down them right there. think think digits, I that just slowed just anything double in to good don't of there's And big was And a saw kind close overly I about concerned bunch double deals QX and So Europe for bit enterprise be

not particular, more faster facilitate but other as of advancement at of we see think you DeepSeek, I it's first in like these all. technology AI we the think the of if applications just access enterprise, that in of deals, On look democratization mean going DeepSeek a this as -- to we

Secondly, I think we Defense AI model. ran our

thing this XX hours thing was think pretty this that prompts, could being and did of they I they easily. every time out, the I we XX team in and -- think proved jailbreak this

got be well. careful as think I we So to

these there, these chosen in I'd as to final of being I they that the if come we're say deals, we'll think thing bigger space, space. real other out deals lot good a these think having webscale well. in think about success opportunity on have unique the in we'll I I a as opportunities emerging And And we're play --

Operator

Research. Antoine New with Chkaiban Street

Antoine Chkaiban

you enterprise on additional color of on AI. cases, Ethernet where to like size, gain up cluster I'd question the customers regarding from Could follow use So seeing enterprise you some momentum kind are provide verticals? what segment, traction what which the in

year. a potentially And from out space follow-up, data you're your in to in to hear what a then this perspective bottleneck power terms on of I'd and, being particular, hearing to as center these customers love as roll access infrastructure

Charles Robbins

training it. -- candid, stack have the we're then I think and renting to that the like are and the providers that they're don't build. space that models Yes, by side their bought massive one we're about thinking own support really going building whole bought it on training actually them. not is back. the GPU be to clusters pulling from have so They're do And infrastructure of to just or from do who major far talking large, enterprises Antoine. of to their inferencing certainly clusters GPUs the I customers And about think Thanks, to from the NVIDIA

in not emerging And opportunity hasn't to the be a under major in It's we today, future. enterprise really an GPUs the opportunity so that think Ethernet will date. been

combined things a we're there being been the we like webscale AI the think NVIDIA equipment stack, that in GPUs, accomplish think the concern the space. that will And partnership, believe over in future. candidly, building, networking don't has reference issue stack we it to lead integrate that's our we we and been lot that Hyperfabric as Now with to the of the we'll I enterprise how PODs, with hasn't that in power -- and the architectures have these that build they together NVIDIA think that the that

Operator

Rakers with Fargo. Wells Aaron

Aaron Rakers

the then with stick I'll quick theme quarter. and the I'll on follow-up. first, AI my out throw Congrats

the side, April will was it time On I think the had out, come mentioned you I silicon prepared AI your comments, in think that frame. XX.XT

on would up monetization your you wins AI like kind that that of just the how majority Or is inflection, are to being -- of of of tied orders this understand of to of XX.XT opportunity. silicon, kind your trying the silicon? opening to that As business the you XX% that say the AI switch Silicon One of point think about tied and kind

starting I'm curious follow-up, that. us thinking see X to cycle that side, like about of a kind the upgrade appreciate the you're just help just maybe as then campus how on And or you're WiFi

Charles Robbins

Yes.

an comment the I but One-based. it enterprise XX.X think the comments Nexus Silicon in on was of more the made on -- we portfolio, really is

it's And as an if is the to XXXXs that silicon discussion mean I customer. Do in all develop designing these play Do different into use the team buffers? the -- really multiple earlier, based But pieces of deep mean deep buffers? they need they a for that get on these you -- so be this example. those not low-latency is marketplace. silicon chips of they had a the need used come as cases back things I on we architectures will -- it silicon application? that is

then they're So we'll in continue is -- will and the subsequent chips up XX.X continue to to working and just already beyond, centers. that and speeds develop crank these on data

it's early infrastructure, think as we're WiFi customers campus on I On I the about begin ready X. getting see switching to talked side, that campus earlier. I'd the to the say deploying. And are continuing days

see next full the both and cloud points into X over then to a in transition on-prem access going the think where the managed. in traditional X quarters we're to also we'll that I move

Operator

Karl Ackerman Paribas. with BNP

Karl Ackerman

times normal to weeks. Hypershield Is you that? networking, operators addition extending even across a bottom few patterns? support and the service return a AI from to begin offerings Or Within from coming your order think April quarter enterprise lead out of outlook some a of on-prem couple those customer perhaps enterprises as out and quarters telco quarter greater I are introduce just beyond just ago, a lead to visibility PODs and in customers times and at

Charles Robbins

ordering. of normalization just It's

pressure any We all. lead at had haven't time

Richard Herren

today Karl, not seeing case. we're the seeing times ago? we're is, a that That's question, demand what's couple not of is of like that -- we behind lead a function Yes, extended saw the years

extending. times are not lead Our

Operator

Citi. with Malik Atif

Adrienne Colby

some some I embrace Cisco Atif. Colby customer traditional for size these the them Cisco for help terms What helping are just in this this Earlier you week, understand you where service providers. Adrienne customers of geared segment their that of are is It's if AI? of announced could us address? was towards and issues offerings wondering key

Charles Robbins

of size us? do segment telco comment Scott, to for you on want the the

Richard Herren

international, a Overall, in saw good That's AI, Yes. what and of load driven in doing. QX. some they enterprises what financials And networks networks hear the the know hear particularly of sweated they've out table demand increased those the actually same in quarter. continuation cases, telco are in in is They a coming. had the we the they're on state telco, of In last to anticipation of by their their that doing so from many quarter because there's back industry, of we assets for we that in anticipation to time increased demand. build coming the thing

deals be that big I that episodic little telco think the we'll one and bit, can in next. bit little in the period by continue have to size and see of for the quarter a its we Telco nature not some customers time. of a

I see. that it. see trend enterprises thing, we're but load steady the as be on the to would coming, right ready see network same something now need not we state, that it's good same they There's seeing a expect exact demand for to So

Charles Robbins

customers, they're the we their looking managing think delivering of are of some for that I AI And et that are right. of that's them planning applications sitting cetera. lot edge a see, European that see operators think other edge the I thing the Yes, at We AI-as-a-Service. networks at for

So they sure. are preparing for

Ahmed Sami Badri

it for Thank over And to to hand closing you, some remarks. Chuck I Adrienne. want

Charles Robbins

these to both thank for our want today, front results, been proud engaging teams. and innovation I'm great the of and want just have doing really with the and joining teams job I everybody on a to I us really our customers. thank Well,

value, appropriate in live how the confident teams Splunk in far about will Scott taking. AI so potential it's the I the momentum. world. can. dynamic the [ very portfolio we've mitigate just the we earlier, impact integration and more steps tailwind clearly, as Again, in that of I'm clearly particularly -- the good has our been this customer these and a as our and pure clear, product the to become the occurred the through And team's innovation steps said ], out-execution our innovation as where as do tariffs feel We well take translating core, relative to to

I the just to it a think our and lead want we partner performance, right technology, be for deliver to trusted the durability and of them. value customers, deliver will right the continue to for

being So we to us, look thank soon. to you for with talking and you forward

Ahmed Sami Badri

Eastern results, X:XX reflect third p.m. p.m. May quarter our fiscal will Time. call, next Time, XXXX, Pacific This on will XXXX be today's XX, X:XX concludes at which Cisco's quarterly call. Wednesday, year

the any joining Relations have Investor to very and free questions, you feel thank today. department, for further much If you please the Cisco we contact call

Operator

conference call. Thank you for participating on today's

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Cisco Systems (CSCO) 12 Feb 252025 Q2 Earnings call transcript