2. FORWARD-LOOKING STATEMENTS
This presentation contains projections and other forward-looking statements regarding future events or the future
financial performance of Cisco, including future operating results. These projections and statements are only predictions.
Actual events or results may differ materially from those in the projections or other forward-looking statements. Please
see Cisco’s filings with the SEC, including its most recent filing on Form 10-K, for a discussion of important risk factors
that could cause actual events or results to differ materially from those in the projections or other forward-looking
statements.
GAAP RECONCILIATION
During this presentation references to financial measures of Cisco will include references to non-GAAP financial
measures. Cisco provides a reconciliation between GAAP and non-GAAP financial information on our website at
www.cisco.com under “Financial Info” in the “Investor Relations” section.
http://investor.cisco.com/investor-relations/financial-information/Financial-Results/default.aspx
3. Business Momentum & Key Trends
Financial Overview
Business Outlook
Q&A
4. Q1 FY 2017 Highlights
• Delivered strong Q1 and executed very well: revenue growth of 1% y/y* and non-GAAP EPS
growth of 3% y/y* with continued strength in non-GAAP gross and operating margins
• Total product orders declined 2% y/y*, largely due to Service Provider orders declining 12% y/y*
• Continue to show great progress in how we are aligning our business model to the way our
customers want to consume Cisco technology…48% y/y growth in our product deferred revenue
relating to our recurring software and subscriptions
• Delivering more innovation with simple, intelligent, automated solutions with industry-leading
security across our portfolio
• Success in accelerating our momentum in our key investment areas and commitment to
operational discipline…while the dynamics in Service Provider and Emerging Markets continue
to present headwinds to overall growth
* Year-over-year change normalized to exclude the SP Video CPE Business for Q1 FY 2016, which was divested during Q2 FY 2016 on November 20, 2015.
5. Business Momentum & Key Trends
Financial Overview
Business Outlook
Q&A
6. $M
Y/Y %
Change*
Switching $3,716 (7%)
NGN Routing 2,089 6%
Collaboration 1,081 (3%)
Data Center 834 (3%)
Wireless 632 (2%)
Security 540 11%
Service Provider Video 271 (2%)
Other Products 139 88%
Service 3,050 7%
Total Cisco $12,352 1%
Q1 FY 2017 – Revenue Highlights
Certain reclassifications have been made to the amounts for prior periods in order to conform to the
current period’s presentation. Historical revenue by product category and service is available on our
website at http://investor.cisco.com under “Financial Info” in the “Investor Relations” section.
30%
17%
9%
7%
5%
4%
2%
1%
25% Switching
NGN Routing
Collaboration
Data Center
Wireless
Security
SP Video
Other
Service
Revenue % of Total
Percentages may not sum to 100% due to rounding
* Year-over-year change normalized to exclude the SP Video CPE Business for Q1 FY 2016, which was divested during Q2 FY 2016 on November 20, 2015.
SP Video CPE Business revenue was $411M for Q1 FY 2016.
7. Q1 FY 2017 Product Orders: Geographic Regions & Customer
Segments
Geographic Region Y/Y % Change*
Americas (4%)
EMEA 1%
APJC 4%
Total Cisco (2%)
Product Book to Bill Below 1
Customer Segment Y/Y % Change*
Enterprise 5%
Public Sector 0%
Commercial 1%
Service Provider (12%)
Total Cisco (2%)
* Year-over-year change is normalized to exclude the SP Video CPE Business for Q1 FY 2016, which was divested during Q2 FY 2016 on November 20, 2015.
8. Q1 FY 2017 Q1 FY 2016
Y/Y Change
Excluding SP
Video CPE
Business
$M (except per-share amounts and percentages)
Total Cisco Total Cisco SP Video
CPE
Business
Excluding SP
Video CPE
Business
Revenue $12,352 $12,682 $411 $12,271 1%
Gross Margin 65.2% 63.2% 10.4% 64.9% 0.3 pts
Operating Expenses $4,150 $4,141 $32 $4,109 1%
OPEX (% of Revenue) 33.6% 32.7% 7.9% 33.5% 0.1 pts
Operating Income $3,900 $3,869 $11 $3,858 1%
Operating Income (% of Revenue) 31.6% 30.5% 2.6% 31.4% 0.2 pts
Net Income $3,101 $3,024 $8 $3,016 3%
EPS (diluted) $0.61 $0.59 $0.00 $0.59 3%
Q1 FY 2017 Non-GAAP Income Statement Details
Amounts may not sum due to rounding.
9. Q1 FY 2017 GAAP Income Statement Highlights
$M (except per-share amounts and percentages) Q1 FY 2016 Q4 FY 2016 Q1 FY 2017
Revenue* $12,682 $12,638 $12,352
Product
Service
$9,844
$2,838
$9,552
$3,086
$9,302
$3,050
Gross Margin 61.8% 63.1% 63.8%
Product Gross Margin
Service Gross Margin
60.9%
64.9%
62.2%
66.0%
63.4%
65.1%
Operating Expenses $4,753 $4,672 $5,007
OPEX (% of Revenue) 37.5% 37.0% 40.5%
Operating Income (% of Revenue) 24.3% 26.1% 23.3%
Net Income $2,430 $2,813 $2,322
Year/Year Change 33% 21% (4%)
EPS (diluted) $0.48 $0.56 $0.46
Year/Year Change 37% 24% (4%)
*Includes SP Video CPE Business revenue for Q1 FY 2016 of $411M. The SP Video CPE Business was divested during Q2 FY 2016 on November 20, 2015.
10. Capital Allocation
$M Q1 FY 2016 Q2 FY 2016 Q3 FY 2016 Q4 FY 2016 Q1 FY 2017
Share Repurchases $1,207 $1,262 $649 $800 $1,001
Dividends Paid 1,068 1,065 1,308 1,309 1,308
Total $2,275 $2,327 $1,957 $2,109 $2,309
Share Repurchase Program*
Amount Purchased
($M)
Number of Shares
(M)
Avg. Price Per
Share
Q1 FY 2017 Purchases $1,001 32 $31.12
Q1 FY 2016 Q2 FY 2016 Q3 FY 2016 Q4 FY 2016 Q1 FY 2017
Dividends per Share $0.21 $0.21 $0.26 $0.26 $0.26
*Approximately $14.4B remaining authorized funds in repurchase program as of the end of Q1 FY 2017.
11. Business Momentum & Key Trends
Financial Overview
Business Outlook
Q&A
12. Business Momentum & Key Trends
Financial Overview
Business Outlook
Q&A
14. FORWARD-LOOKING STATEMENTS
These presentation slides and the related conference call contain forward-looking statements, which are subject to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as the impact
of the challenging global business environment, our ability to successfully perform in our priority areas and invest in key growth areas, our ability to lead our
customers in their digital transition, adoption by customers of our subscription-based and software offerings, our innovation pipeline, the transition of our business
to a more recurring revenue model, and our ability to deliver shareholder value) and the future financial performance of Cisco that involve risks and uncertainties.
Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of
factors, including: business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global
economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth and evolution of the Internet and
levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market and
other customer markets; the return on our investments in certain priorities, key growth areas, and in certain geographical locations, as well (as maintaining
leadership in routing, switching and services; the timing of orders and manufacturing and customer lead times; changes in customer order patterns or customer
mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to
successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; our ability to achieve
expected benefits of our partnerships; increased competition in our product and service markets, including the data center market; dependence on the
introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product
defects and returns; litigation involving patents, intellectual property, antitrust, shareholder and other matters, and governmental investigations; our ability to
achieve the benefits of the announced restructuring and possible changes in the size and timing of the related charges; man-made problems such as cyber-
attacks, data protection breaches, computer viruses or terrorism; natural catastrophic events; a pandemic or epidemic; our ability to achieve the benefits
anticipated from our investments in sales, engineering, service, marketing and manufacturing activities; our ability to recruit and retain key personnel; our ability
to manage financial risk, and to manage expenses during economic downturns; risks related to the global nature of our operations, including our operations in
emerging markets, currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws and regulations or
adverse outcomes resulting from examinations of our income tax returns; potential volatility in operating results; and other factors listed in Cisco’s most recent
report on Form 10-K filed on September 8, 2016, respectively. The financial information contained in these presentation slides and the related conference call
should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco’s most recent report on Form 10-K as it may be
amended from time to time. Cisco’s results of operations for the three months ended October 29, 2016 are not necessarily indicative of Cisco’s operating results
for any future periods. Any projections in these presentation slides and the related conference call are based on limited information currently available to Cisco,
which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information,
since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of these presentation slides and the related
conference call.
16. Performance Against Q1 FY 2017 Guidance
$M (except percentages) Q1 FY 2017 Guidance Q1 FY 2017 Actual
Revenue $12,352
Year/Year Change* -1% to 1% growth 1%
Non-GAAP Gross Margin 63% - 64% 65.2%
Non-GAAP Earnings per Share $0.58 - $0.60 $0.61
* Year over year change normalized to exclude SP Video CPE Business for Q1 FY 2016, which was divested during Q2 FY 2016 on November 20, 2015.
17. Q1 FY 2017 Non-GAAP Income Statement Highlights
$M (except per-share amounts and percentages) Q1 FY 2016 Q4 FY 2016 Q1 FY 2017
Revenue* $12,682 $12,638 $12,352
Year/Year Change
Product
Service
4%
$9,844
$2,838
(2%)
$9,552
$3,086
(3%)
$9,302
$3,050
Gross Margin 63.2% 64.6% 65.2%
Product Gross Margin
Service Gross Margin
62.3%
66.2%
63.9%
67.0%
64.8%
66.2%
Operating Expenses $4,141 $4,202 $4,150
OPEX (% of Revenue) 32.7% 33.2% 33.6%
Operating Income (% of Revenue) 30.5% 31.4% 31.6%
Net Income $3,024 $3,189 $3,101
Year/Year Change 8% 6% 3%
EPS (diluted) $0.59 $0.63 $0.61
Year/Year Change 9% 7% 3%
*Includes SP Video CPE Business revenue for Q1 FY 2016 of $411M. The SP Video CPE Business was divested during Q2 FY 2016 on November 20, 2015.
19. $M (except per-share amounts)
Q1
FY 2015
Q2
FY 2015
Q3
FY 2015
Q4
FY 2015
Q1
FY 2016
Q2
FY 2016**
Revenue $479 $361 $519 $487 $411 $93
Gross Margin $96 $66 $84 $83 $43 $13
Operating Expenses $38 $35 $37 $37 $32 $11
Operating Income $58 $31 $47 $46 $11 $2
Net Income $45 $24 $36 $37 $8 $2
EPS (diluted) $0.01 — $0.01 $0.01 — —
SP Video CPE Business
Historical Financial Information*
* Stand-alone financial information is unaudited.
** Represents one month of results as the SP Video CPE Business was divested during Q2 FY 2016 on November 20, 2015.
20. Q1 FY 2017 Geographic Revenue and Total Gross Margin
Excluding SP Video CPE Business
Revenue Total Gross Margin Percentage
$M (except percentages) Q1 FY 2016 Q4 FY 2016 Q1 FY 2017 Q1 FY 2016 Q4 FY 2016 Q1 FY 2017
Americas $7,481 $7,633 $7,443 65.7% 64.9% 64.9%
EMEA 3,009 3,109 3,013 65.6% 65.2% 66.8%
APJC 1,781 1,896 1,896 60.5% 62.5% 63.5%
Geographic Total $12,271 $12,638 $12,352 64.9% 64.6% 65.2%
Including SP Video CPE Business
Revenue* Total Gross Margin Percentage
$M (except percentages) Q1 FY 2016 Q4 FY 2016 Q1 FY 2017 Q1 FY 2016 Q4 FY 2016 Q1 FY 2017
Americas $7,792 $7,633 $7,443 63.4% 64.9% 64.9%
EMEA 3,094 3,109 3,013 64.3% 65.2% 66.8%
APJC 1,796 1,896 1,896 60.0% 62.5% 63.5%
Geographic Total $12,682 $12,638 $12,352 63.2% 64.6% 65.2%
*Includes SP Video CPE Business revenue for Q1 FY 2016 of $411M. The SP Video CPE Business was divested during Q2 FY 2016 on November 20, 2015.
Certain reclassifications have been made to the amounts for prior periods in order to conform to the current
period’s presentation. Historical revenue and gross margin by segment is available on our website at
http://investor.cisco.com under “Financial Info” in the “Investor Relations” section.
