8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 17, 2023

CISCO SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-39940	77-0059951
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

170 West Tasman Drive, San Jose, California	95134-1706
(Address of principal executive offices)	(Zip Code)

(408) 526-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CSCO	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02. Results of Operations and Financial Condition.

On May 17, 2023, Cisco Systems, Inc. (“Cisco”) reported its results of operations for its fiscal third quarter 2023 ended April 29, 2023. A copy of the press release issued by Cisco concerning the foregoing results is furnished herewith as Exhibit 99.1.

The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of Cisco, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

The attached exhibit includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share data for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco’s results of operations in conjunction with the corresponding GAAP measures.

Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations.

For its internal budgeting process, Cisco’s management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related/divestiture costs, significant asset impairments and restructurings, significant litigation settlements and other contingencies (such as legal and indemnification settlements and the supplier component remediation amounts), Russia-Ukraine war costs, gains and losses on investments, the income tax effects of the foregoing, and significant tax matters. Cisco’s management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future, there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results.

As described above, Cisco excludes the following items from one or more of its non-GAAP measures when applicable:

Share-based compensation expense. These expenses consist primarily of expenses for employee restricted stock and restricted stock units, employee stock options, and employee stock purchase rights, including such expenses associated with acquisitions. Cisco excludes share-based compensation expense from its non-GAAP measures primarily because they are non-cash expenses and Cisco believes that it is useful to investors to understand the impact of share-based compensation to its results of operations.

Amortization of acquisition-related intangible assets. Cisco incurs amortization of intangible assets (which may include impairment charges from the write-downs of purchased intangible assets) in connection with acquisitions. Such intangible assets may include purchased intangible assets with finite lives, capitalized in process research and development and goodwill. Cisco excludes these items because Cisco does not believe these expenses are reflective of ongoing operating results in the period incurred. These amounts arise from Cisco’s prior acquisitions and have no direct correlation to the operation of Cisco’s business.

Acquisition-related/divestiture costs. In connection with its business combinations, Cisco incurs compensation expense, changes to the fair value of contingent consideration, as well as professional fees and other direct expenses such as restructuring activities related to the acquired company. In addition, from time to time Cisco enters into foreign currency transactions related to pending acquisitions, and may incur gains or losses on such transactions. Cisco may also from time to time incur gains or losses from divestitures of a business area as well as professional fees and other direct expenses associated with such transactions. Cisco excludes such compensation expense, changes to the fair value of contingent consideration, fees, other direct expenses, and gains and losses, as they are related to acquisitions and divestitures and have no direct correlation to the operation of Cisco’s business.

Significant asset impairments and restructurings. Cisco from time to time incurs significant asset impairments, restructuring charges, and gains or losses on asset disposals. Cisco excludes these items, when significant, because it does not believe they are reflective of ongoing business and operating results.

Significant litigation settlements and other contingencies. Cisco from time to time may incur charges or benefits related to significant litigation settlements and other contingencies. Cisco excludes these charges or benefits, when significant, because it does not believe they are reflective of ongoing business and operating results.

Russia-Ukraine War Costs. In March 2022, in connection with the Russian invasion of Ukraine, Cisco announced its intention to stop business operations in Russia and Belarus for the foreseeable future. Cisco has begun an orderly wind-down and exit of its business in Russia and Belarus. Cisco has and may incur certain non-recurring charges related to this exit plan. These charges include non-recoverability of certain assets, special personnel-related charges in order to support impacted employees (unrelated to ordinary compensation expenses), potential future litigation and other contingencies, and other exit related costs, among others. Cisco excludes these charges because it believes they are not normal and recurring with respect to ongoing business and operating results. These excluded amounts do not include any impacts to revenue.

Gains and losses on investments. Cisco excludes gains and losses on our marketable equity investments and our investments in privately held companies, because it does not believe they are reflective of ongoing business and operating results.

Income tax effects of the foregoing. This amount is used to present each of the amounts described above on an after-tax basis consistent with the presentation of non-GAAP net income.

Significant tax matters. Cisco may incur tax charges or benefits that are (i) related to prior periods or (ii) not reflective of its ongoing provision for income taxes. These tax charges or benefits may be the result of events such as changes in tax legislation, court decisions, and/or tax settlements. Cisco excludes these charges or benefits, when significant, because it does not believe they are reflective of ongoing business and operating results.

From time to time in the future, there may be other items that Cisco may exclude if it believes that doing so is consistent with the goal of providing useful information to investors and management.

Cisco will incur share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs, and gains and losses on investments, in future periods. Significant asset impairments, restructurings, significant litigation settlements and other contingencies, Russia-Ukraine war costs, and divestiture costs could occur in future periods. Cisco could also be impacted by significant tax matters in future periods.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description of Document
99.1	Press Release of Cisco, dated May 17, 2023, reporting the results of operations for Cisco’s fiscal third quarter 2023 ended April 29, 2023.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		CISCO SYSTEMS, INC.
Dated: May 17, 2023	By:	/s/ R. Scott Herren
	Name:	R. Scott Herren
	Title:	Executive Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

Press Contact:	Investor Relations Contact:
Robyn Blum	Marilyn Mora
Cisco	Cisco
1 (408) 930-8548	1 (408) 527-7452
rojenkin@cisco.com	marilmor@cisco.com

CISCO REPORTS THIRD QUARTER EARNINGS

News Summary:

• $14.6 billion in revenue, up 14% year over year; GAAP EPS $0.78, up 7% year over year, and Non-GAAP EPS $1.00, up 15% year over year

• Q3 FY 2023 operating cash flow of $5.2 billion, up 43%

• Continued progress on business model transformation:

• Total software revenue up 18% year over year and software subscription revenue up 17% year over year

• Total annualized recurring revenue (ARR) at $23.8 billion, up 6% year over year and product ARR up 10% year over year

• Remaining performance obligations (RPO) at $32.1 billion, up 6% year over year and product RPO up 9% year over year

• Q3 FY 2023 Results:

• Revenue: $14.6 billion

• Increase of 14% year over year

• Earnings per Share: GAAP: $0.78; Non-GAAP: $1.00

• GAAP EPS increased 7% year over year

• Non-GAAP EPS increased 15% year over year

• Q4 FY 2023 Guidance:

• Revenue: 14% to 16% growth year over year

• Earnings per Share: GAAP: $0.82 to $0.87; Non-GAAP: $1.05 to $1.07

• FY 2023 Guidance:

• Revenue: 10% to 10.5% growth year over year

• Earnings per Share: GAAP: $2.93 to $2.98; Non-GAAP: $3.80 to $3.82

SAN JOSE, Calif. — May 17, 2023 — Cisco today reported third quarter results for the period ended April 29, 2023. Cisco reported third quarter revenue of $14.6 billion, net income on a generally accepted accounting principles (GAAP) basis of $3.2 billion or $0.78 per share, and non-GAAP net income of $4.1 billion or $1.00 per share.

“We once again delivered a strong quarter in a dynamic environment,” said Chuck Robbins, chair and CEO of Cisco. “In Q3, we delivered record revenue and double-digit growth in both software and subscription revenue. As key technologies like cloud, AI and security continue to scale, Cisco’s long-established leadership in networking, and the breadth of our portfolio position us well for the future.”

“Our operational discipline and focused execution resulted in strong top and bottom-line growth, margin expansion and record operating cash flow,” said Scott Herren, CFO of Cisco. “Our healthy backlog, recurring revenue streams and RPO, as well as the improving availability of supply, underpin our confidence to increase full year guidance.”

1

GAAP Results

	Q3 FY 2023		Q3 FY 2022		Vs. Q3 FY 2022
Revenue	$	14.6 billion	$	12.8 billion		14	%
Net Income	$	3.2 billion	$	3.0 billion		6	%
Diluted Earnings per Share (EPS)	$	0.78	$	0.73		7	%

Non-GAAP Results

	Q3 FY 2023		Q3 FY 2022		Vs. Q3 FY 2022
Net Income	$	4.1 billion	$	3.6 billion		13	%
EPS	$	1.00	$	0.87		15	%

Reconciliations between net income, EPS, and other measures on a GAAP and non-GAAP basis are provided in the tables located in the section entitled “Reconciliations of GAAP to non-GAAP Measures.”

Cisco Declares Quarterly Dividend

Cisco has declared a quarterly dividend of $0.39 per common share to be paid on July 26, 2023, to all stockholders of record as of the close of business on July 6, 2023. Future dividends will be subject to Board approval.

2

Financial Summary

All comparative percentages are on a year-over-year basis unless otherwise noted.

Q3 FY 2023 Highlights

Revenue — Total revenue was up 14% at $14.6 billion, with product revenue up 17% and service revenue was up 3%. Revenue by geographic segment was: Americas up 13%, EMEA up 16%, and APJC was up 11%. Product revenue performance was led by growth in Secure, Agile Networks up 29%, Internet for the Future up 5%, End-to-End Security up 2%, and Optimized Application Experiences up 12%. Collaboration was down 13%.

Gross Margin — On a GAAP basis, total gross margin, product gross margin, and service gross margin were 63.4%, 62.7%, and 65.4%, respectively, as compared with 63.3%, 61.8%, and 67.3%, respectively, in the third quarter of fiscal 2022.

On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 65.2%, 64.5%, and 67.3%, respectively, as compared with 65.3%, 64.1%, and 68.9%, respectively, in the third quarter of fiscal 2022.

Total gross margins by geographic segment were: 64.2% for the Americas, 66.6% for EMEA and 66.4% for APJC.

Operating Expenses — On a GAAP basis, operating expenses were $5.3 billion, up 17%, and were 36.3% of revenue. Non-GAAP operating expenses were $4.6 billion, up 16%, and were 31.3% of revenue.

Operating Income — GAAP operating income was $3.9 billion, up 9%, with GAAP operating margin of 27.1%. Non-GAAP operating income was $4.9 billion, up 11%, with non-GAAP operating margin at 33.9%.

Provision for Income Taxes — The GAAP tax provision rate was 18.8%. The non-GAAP tax provision rate was 19.0%.

Net Income and EPS — On a GAAP basis, net income was $3.2 billion, an increase of 6%, and EPS was $0.78, an increase of 7%. On a non-GAAP basis, net income was $4.1 billion, an increase of 13%, and EPS was $1.00, an increase of 15%.

Cash Flow from Operating Activities — $5.2 billion for the third quarter of fiscal 2023, an increase of 43% compared with $3.7 billion for the third quarter of fiscal 2022.

Balance Sheet and Other Financial Highlights

Cash and Cash Equivalents and Investments — $23.3 billion at the end of the third quarter of fiscal 2023, compared with $19.3 billion at the end of fiscal 2022.

Remaining Performance Obligations (RPO) — $32.1 billion, up 6% in total, with 53% of this amount to be recognized as revenue over the next 12 months. Product RPO were up 9% and service RPO were up 4%.

Deferred Revenue — $24.3 billion, up 9% in total, with deferred product revenue up 11%. Deferred service revenue was up 7%.

Capital Allocation — In the third quarter of fiscal 2023, we returned $2.9 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.39 per common share, or $1.6 billion, and repurchased approximately 25 million shares of common stock under our stock repurchase program at an average price of $49.45 per share for an aggregate purchase price of $1.3 billion. The remaining authorized amount for stock repurchases under the program is $12.2 billion with no termination date.

Acquisitions

In the third quarter of fiscal 2023, we closed the acquisition of Valtix, a privately held cloud network security company.

3

Guidance

Cisco expects to achieve the following results for the fourth quarter of fiscal 2023:

Q4 FY 2023
Revenue	14% - 16% growth Y/Y
Non-GAAP gross margin rate	64.5% - 65.5%
Non-GAAP operating margin rate	34% - 35%
Non-GAAP EPS	$1.05 - $1.07

Cisco estimates that GAAP EPS will be $0.82 to $0.87 for the fourth quarter of fiscal 2023.

Cisco expects to achieve the following results for fiscal 2023:

FY 2023
Revenue	10% - 10.5% growth Y/Y
Non-GAAP EPS	$3.80 - $3.82

Cisco estimates that GAAP EPS will be $2.93 to $2.98 for fiscal 2023.

Our Q4 FY 2023 guidance assumes an effective tax provision rate of 18% for GAAP and 19% for non-GAAP results. Our FY 2023 guidance assumes an effective tax provision rate of 20% for GAAP and 19% for non-GAAP results.

A reconciliation between the Guidance on a GAAP and non-GAAP basis is provided in the tables entitled “GAAP to non-GAAP Guidance” located in the section entitled “Reconciliations of GAAP to non-GAAP Measures.”

Editor’s Notes:

• Q3 fiscal year 2023 conference call to discuss Cisco’s results along with its guidance will be held on Wednesday, May 17, 2023 at 1:30 p.m. Pacific Time. Conference call number is 1-888-848-6507 (United States) or 1-212-519-0847 (international).

• Conference call replay will be available from 4:00 p.m. Pacific Time, May 17, 2023 to 4:00 p.m. Pacific Time, May 24, 2023 at 1-800-395-6236 (United States) or 1-203-369-3270 (international). The replay will also be available via webcast on the Cisco Investor Relations website at https://investor.cisco.com.

• Additional information regarding Cisco’s financials, as well as a webcast of the conference call with visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, May 17, 2023. Text of the conference call’s prepared remarks will be available within 24 hours of completion of the call. The webcast will include both the prepared remarks and the question-and-answer session. This information, along with the GAAP to non-GAAP reconciliation information, will be available on the Cisco Investor Relations website at https://investor.cisco.com.

4

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per-share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	April 29, 2023			April 30, 2022			April 29, 2023			April 30, 2022
REVENUE:
Product	$	11,092		$	9,448		$	31,492		$	28,330
Service		3,479			3,387			10,303			10,125
Total revenue		14,571			12,835			41,795			38,455
COST OF SALES:
Product		4,136			3,606			12,353			10,848
Service		1,203			1,108			3,437			3,384
Total cost of sales		5,339			4,714			15,790			14,232
GROSS MARGIN		9,232			8,121			26,005			24,223
OPERATING EXPENSES:
Research and development		1,962			1,708			5,598			5,092
Sales and marketing		2,526			2,209			7,301			6,736
General and administrative		641			517			1,788			1,612
Amortization of purchased intangible assets		70			77			212			240
Restructuring and other charges		87			—			328			8
Total operating expenses		5,286			4,511			15,227			13,688
OPERATING INCOME		3,946			3,610			10,778			10,535
Interest income		262			115			650			347
Interest expense		(109	)		(90	)		(316	)		(267	)
Other income (loss), net		(142	)		166			(265	)		446
Interest and other income (loss), net		11			191			69			526
INCOME BEFORE PROVISION FOR INCOME TAXES		3,957			3,801			10,847			11,061
Provision for income taxes		745			757			2,192			2,064
NET INCOME	$	3,212		$	3,044		$	8,655		$	8,997
Net income per share:
Basic	$	0.79		$	0.73		$	2.11		$	2.15
Diluted	$	0.78		$	0.73		$	2.11		$	2.14
Shares used in per-share calculation:
Basic		4,089			4,152			4,100			4,184
Diluted		4,110			4,170			4,111			4,204

5

CISCO SYSTEMS, INC.

REVENUE BY SEGMENT

(In millions, except percentages)

	April 29, 2023
	Three Months Ended					Nine Months Ended
	Amount		Y/Y%			Amount		Y/Y%
Revenue:
Americas	$	8,634		13	%	$	24,372		9	%
EMEA		3,806		16	%		11,209		11	%
APJC		2,131		11	%		6,214		4	%
Total	$	14,571		14	%	$	41,795		9	%

Amounts may not sum and percentages may not recalculate due to rounding.

CISCO SYSTEMS, INC.

GROSS MARGIN PERCENTAGE BY SEGMENT

(In percentages)

	April 29, 2023
	Three Months Ended		Nine Months Ended
Gross Margin Percentage:
Americas		64.2%		63.4%
EMEA		66.6%		65.4%
APJC		66.4%		64.2%

CISCO SYSTEMS, INC.

REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES

(In millions, except percentages)

	April 29, 2023
	Three Months Ended					Nine Months Ended
	Amount		Y/Y%			Amount		Y/Y%
Revenue:
Secure, Agile Networks	$	7,550		29	%	$	20,980		18	%
Internet for the Future		1,392		5	%		4,007		—	%
Collaboration		985		(13	)%		3,029		(8	)%
End-to-End Security		958		2	%		2,872		6	%
Optimized Application Experiences		204		12	%		597		10	%
Other Products		3		19	%		7		(7	)%
Total Product		11,092		17	%		31,492		11	%
Services		3,479		3	%		10,303		2	%
Total	$	14,571		14	%	$	41,795		9	%

Amounts may not sum and percentages may not recalculate due to rounding.

6

CISCO SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

	April 29, 2023		July 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	8,044	$	7,079
Investments		15,244		12,188
Accounts receivable, net of allowance of $83 as of each of April 29, 2023 and July 30, 2022		5,104		6,622
Inventories		3,474		2,568
Financing receivables, net		3,402		3,905
Other current assets		4,682		4,355
Total current assets		39,950		36,717
Property and equipment, net		2,047		1,997
Financing receivables, net		3,393		4,009
Goodwill		38,369		38,304
Purchased intangible assets, net		1,966		2,569
Deferred tax assets		5,817		4,449
Other assets		5,987		5,957
TOTAL ASSETS	$	97,529	$	94,002
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	1,731	$	1,099
Accounts payable		2,442		2,281
Income taxes payable		3,132		961
Accrued compensation		3,352		3,316
Deferred revenue		13,249		12,784
Other current liabilities		4,813		5,199
Total current liabilities		28,719		25,640
Long-term debt		6,663		8,416
Income taxes payable		6,725		7,725
Deferred revenue		11,011		10,480
Other long-term liabilities		2,116		1,968
Total liabilities		55,234		54,229
Total equity		42,295		39,773
TOTAL LIABILITIES AND EQUITY	$	97,529	$	94,002

7

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Nine Months Ended
	April 29, 2023			April 30, 2022
Cash flows from operating activities:
Net income	$	8,655		$	8,997
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other		1,304			1,527
Share-based compensation expense		1,720			1,407
Provision (benefit) for receivables		11			49
Deferred income taxes		(1,343	)		(167	)
(Gains) losses on divestitures, investments and other, net		243			(470	)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		1,494			(134	)
Inventories		(894	)		(683	)
Financing receivables		1,126			1,431
Other assets		(428	)		(1,295	)
Accounts payable		156			(54	)
Income taxes, net		1,120			(730	)
Accrued compensation		25			(730	)
Deferred revenue		1,055			292
Other liabilities		(324	)		109
Net cash provided by operating activities		13,920			9,549
Cash flows from investing activities:
Purchases of investments		(7,652	)		(5,383	)
Proceeds from sales of investments		802			2,488
Proceeds from maturities of investments		3,789			4,308
Acquisitions, net of cash and cash equivalents acquired and divestitures		(96	)		(373	)
Purchases of investments in privately held companies		(162	)		(158	)
Return of investments in privately held companies		72			149
Acquisition of property and equipment		(616	)		(338	)
Proceeds from sales of property and equipment		2			6
Other		(26	)		(15	)
Net cash (used in) provided by investing activities		(3,887	)		684
Cash flows from financing activities:
Issuances of common stock		316			306
Repurchases of common stock - repurchase program		(3,029	)		(5,347	)
Shares repurchased for tax withholdings on vesting of restricted stock units		(444	)		(546	)
Short-term borrowings, original maturities of 90 days or less, net		(602	)		9
Issuances of debt		—			1,049
Repayments of debt		(500	)		(3,050	)
Dividends paid		(4,713	)		(4,657	)
Other		(4	)		(108	)
Net cash used in financing activities		(8,976	)		(12,344	)
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents		(90	)		(122	)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents		967			(2,233	)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period		8,579			9,942
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	$	9,546		$	7,709
Supplemental cash flow information:
Cash paid for interest	$	306		$	292
Cash paid for income taxes, net	$	2,414		$	2,960

8

CISCO SYSTEMS, INC.

REMAINING PERFORMANCE OBLIGATIONS

(In millions, except percentages)

	April 29, 2023					January 28, 2023					April 30, 2022
	Amount		Y/Y%			Amount		Y/Y%			Amount		Y/Y%
Product	$	14,681		9	%	$	14,517		7	%	$	13,416		13	%
Service		17,401		4	%		17,255		2	%		16,789		3	%
Total	$	32,082		6	%	$	31,772		4	%	$	30,205		7	%

We expect 53% of total RPO at April 29, 2023 will be recognized as revenue over the next 12 months.

CISCO SYSTEMS, INC.

DEFERRED REVENUE

(In millions)

	April 29, 2023		January 28, 2023		April 30, 2022
Deferred revenue:
Product	$	10,895	$	10,679	$	9,835
Service		13,365		13,248		12,458
Total	$	24,260	$	23,927	$	22,293
Reported as:
Current	$	13,249	$	13,109	$	12,249
Noncurrent		11,011		10,818		10,044
Total	$	24,260	$	23,927	$	22,293

CISCO SYSTEMS, INC.

DIVIDENDS PAID AND REPURCHASES OF COMMON STOCK

(In millions, except per-share amounts)

	DIVIDENDS				STOCK REPURCHASE PROGRAM						TOTAL
Quarter Ended	Per Share		Amount		Shares		Weighted- Average Price per Share		Amount		Amount
Fiscal 2023
April 29, 2023	$	0.39	$	1,593		25	$	49.45	$	1,259	$	2,852
January 28, 2023	$	0.38	$	1,560		26	$	47.72	$	1,256	$	2,816
October 29, 2022	$	0.38	$	1,560		12	$	43.76	$	502	$	2,062
Fiscal 2022
July 30, 2022	$	0.38	$	1,567		54	$	44.02	$	2,402	$	3,969
April 30, 2022	$	0.38	$	1,555		5	$	54.20	$	252	$	1,807
January 29, 2022	$	0.37	$	1,541		82	$	58.36	$	4,824	$	6,365
October 30, 2021	$	0.37	$	1,561		5	$	56.49	$	256	$	1,817

9

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP NET INCOME

(In millions)

	Three Months Ended						Nine Months Ended
	April 29, 2023			April 30, 2022			April 29, 2023			April 30, 2022
GAAP net income	$	3,212		$	3,044		$	8,655		$	8,997
Adjustments to cost of sales:
Share-based compensation expense		106			83			293			233
Amortization of acquisition-related intangible assets		156			176			462			571
Acquisition-related/divestiture costs		1			1			4			3
Russia-Ukraine war costs		—			5			—			5
Total adjustments to GAAP cost of sales		263			265			759			812
Adjustments to operating expenses:
Share-based compensation expense		518			394			1,431			1,173
Amortization of acquisition-related intangible assets		70			92			212			255
Acquisition-related/divestiture costs		55			29			178			261
Russia-Ukraine war costs		2			62			7			62
Significant asset impairments and restructurings		87			—			328			8
Total adjustments to GAAP operating expenses		732			577			2,156			1,759
Adjustments to interest and other income (loss), net:
(Gains) and losses on investments		123			(159	)		188			(478	)
Total adjustments to GAAP interest and other income (loss), net		123			(159	)		188			(478	)
Total adjustments to GAAP income before provision for income taxes		1,118			683			3,103			2,093
Income tax effect of non-GAAP adjustments		(219	)		(95	)		(623	)		(435	)
Significant tax matters		—			—			164			—
Total adjustments to GAAP provision for income taxes		(219	)		(95	)		(459	)		(435	)
Non-GAAP net income	$	4,111		$	3,632		$	11,299		$	10,655

10

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP EPS

	Three Months Ended						Nine Months Ended
	April 29, 2023			April 30, 2022			April 29, 2023			April 30, 2022
GAAP EPS	$	0.78		$	0.73		$	2.11		$	2.14
Adjustments to GAAP:
Share-based compensation expense		0.15			0.11			0.42			0.33
Amortization of acquisition-related intangible assets		0.06			0.06			0.16			0.20
Acquisition-related/divestiture costs		0.01			0.01			0.04			0.06
Russia-Ukraine war costs		—			0.02			—			0.02
Significant asset impairments and restructurings		0.02			—			0.08			—
(Gains) and losses on investments		0.03			(0.04	)		0.05			(0.11	)
Income tax effect of non-GAAP adjustments		(0.05	)		(0.02	)		(0.15	)		(0.10	)
Significant tax matters		—			—			0.04			—
Non-GAAP EPS	$	1.00		$	0.87		$	2.75		$	2.53

Amounts may not sum due to rounding.

11

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME  (LOSS), NET,

AND NET INCOME

(In millions, except percentages)

	Three Months Ended
	April 29, 2023
	Product Gross Margin			Service Gross Margin			Total Gross Margin			Operating Expenses			Y/Y			Operating Income			Y/Y			Interest and other income (loss), net			Net Income			Y/Y
GAAP amount	$	6,956		$	2,276		$	9,232		$	5,286			17	%	$	3,946			9	%	$	11		$	3,212			6	%
% of revenue		62.7	%		65.4	%		63.4	%		36.3	%					27.1	%					0.1	%		22.0	%
Adjustments to GAAP amounts:
Share-based compensation expense		40			66			106			518						624						—			624
Amortization of acquisition-related intangible assets		156			—			156			70						226						—			226
Acquisition/divestiture-related costs		1			—			1			55						56						—			56
Significant asset impairments and restructurings		—			—			—			87						87						—			87
Russia-Ukraine war costs		—			—			—			2						2						—			2
(Gains) and losses on investments		—			—			—			—						—						123			123
Income tax effect/significant tax matters		—			—			—			—						—						—			(219	)
Non-GAAP amount	$	7,153		$	2,342		$	9,495		$	4,554			16	%	$	4,941			11	%	$	134		$	4,111			13	%
% of revenue		64.5	%		67.3	%		65.2	%		31.3	%					33.9	%					0.9	%		28.2	%

	Three Months Ended
	April 30, 2022
	Product Gross Margin			Service Gross Margin			Total Gross Margin			Operating Expenses			Operating Income			Interest and other income (loss), net			Net Income
GAAP amount	$	5,842		$	2,279		$	8,121		$	4,511		$	3,610		$	191		$	3,044
% of revenue		61.8	%		67.3	%		63.3	%		35.1	%		28.1	%		1.5	%		23.7	%
Adjustments to GAAP amounts:
Share-based compensation expense		30			53			83			394			477			—			477
Amortization of acquisition-related intangible assets		176			—			176			92			268			—			268
Acquisition/divestiture-related costs		1			—			1			29			30			—			30
Russia-Ukraine war costs		4			1			5			62			67			—			67
(Gains) and losses on investments		—			—			—			—			—			(159	)		(159	)
Income tax effect/significant tax matters		—			—			—			—			—			—			(95	)
Non-GAAP amount	$	6,053		$	2,333		$	8,386		$	3,934		$	4,452		$	32		$	3,632
% of revenue		64.1	%		68.9	%		65.3	%		30.7	%		34.7	%		0.2	%		28.3	%

Amounts may not sum and percentages may not recalculate due to rounding.

12

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME  (LOSS), NET,

AND NET INCOME

(In millions, except percentages)

	Nine Months Ended
	April 29, 2023
	Product Gross Margin			Service Gross Margin			Total Gross Margin			Operating Expenses			Y/Y			Operating Income			Y/Y			Interest and other income (loss), net			Net Income			Y/Y
GAAP amount	$	19,139		$	6,866		$	26,005		$	15,227			11	%	$	10,778			2	%	$	69		$	8,655			(4	)%
% of revenue		60.8	%		66.6	%		62.2	%		36.4	%					25.8	%					0.2	%		20.7	%
Adjustments to GAAP amounts:
Share-based compensation expense		111			182			293			1,431						1,724						—			1,724
Amortization of acquisition-related intangible assets		462			—			462			212						674						—			674
Acquisition/divestiture-related costs		4			—			4			178						182						—			182
Significant asset impairments and restructurings		—			—			—			328						328						—			328
Russia-Ukraine war costs		—			—			—			7						7						—			7
(Gains) and losses on investments		—			—			—			—						—						188			188
Income tax effect/significant tax matters		—			—			—			—						—						—			(459	)
Non-GAAP amount	$	19,716		$	7,048		$	26,764		$	13,071			10	%	$	13,693			4	%	$	257		$	11,299			6	%
% of revenue		62.6	%		68.4	%		64.0	%		31.3	%					32.8	%					0.6	%		27.0	%

	Nine Months Ended
	April 30, 2022
	Product Gross Margin			Service Gross Margin			Total Gross Margin			Operating Expenses			Operating Income			Interest and other income (loss), net			Net Income
GAAP amount	$	17,482		$	6,741		$	24,223		$	13,688		$	10,535		$	526		$	8,997
% of revenue		61.7	%		66.6	%		63.0	%		35.6	%		27.4	%		1.4	%		23.4	%
Adjustments to GAAP amounts:
Share-based compensation expense		84			149			233			1,173			1,406			—			1,406
Amortization of acquisition-related intangible assets		571			—			571			255			826			—			826
Acquisition/divestiture-related costs		3			—			3			261			264			—			264
Russia-Ukraine war costs		4			1			5			62			67			—			67
Significant asset impairments and restructurings		—			—			—			8			8			—			8
(Gains) and losses on investments		—			—			—			—			—			(478	)		(478	)
Income tax effect/significant tax matters		—			—			—			—			—			—			(435	)
Non-GAAP amount	$	18,144		$	6,891		$	25,035		$	11,929		$	13,106		$	48		$	10,655
% of revenue		64.0	%		68.1	%		65.1	%		31.0	%		34.1	%		0.1	%		27.7	%

Amounts may not sum and percentages may not recalculate due to rounding.

13

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

EFFECTIVE TAX RATE

(In percentages)

	Three Months Ended						Nine Months Ended
	April 29, 2023			April 30, 2022			April 29, 2023			April 30, 2022
GAAP effective tax rate		18.8	%		19.9	%		20.2	%		18.7	%
Total adjustments to GAAP provision for income taxes		0.2	%		(0.9	)%		(1.2	)%		0.3	%
Non-GAAP effective tax rate		19.0	%		19.0	%		19.0	%		19.0	%

GAAP TO NON-GAAP GUIDANCE

Q4 FY 2023	Gross Margin Rate	Operating Margin Rate	Earnings per Share (2)
GAAP	62.5% - 63.5%	26.5% - 27.5%	$0.82 - $0.87
Estimated adjustments for:
Share-based compensation expense	1.0%	4.0%	$0.11 - $0.12
Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs	1.0%	2.0%	$0.05 - $0.06
Significant asset impairments and restructurings (1)	—	1.5%	$0.04 - $0.05
Non-GAAP	64.5% - 65.5%	34% - 35%	$1.05 - $1.07

FY 2023	Earnings per Share (2)
GAAP	$2.93 - $2.98
Estimated adjustments for:
Share-based compensation expense	$0.45 - $0.46
Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs	$0.22 - $0.23
Significant asset impairments and restructurings (1)	$0.10 - $0.11
(Gains) and losses on investments	$0.03
Significant tax matters	$0.04
Non-GAAP	$3.80 - $3.82

⁽¹⁾  On November 16, 2022, Cisco announced a restructuring plan in order to rebalance the organization and enable further investment in key priority areas. We expect to recognize approximately $200 million of restructuring charges in the fourth quarter of fiscal 2023.

⁽²⁾  Estimated adjustments to GAAP earnings per share are shown after income tax effects.

Except as noted above, this guidance does not include the effects of any future acquisitions/divestitures, asset impairments, Russia-Ukraine war costs, restructurings, (gains) and losses on investments and significant tax matters or other events, which may or may not be significant unless specifically stated.

14

Forward Looking Statements, Non-GAAP Information and Additional Information

This release may be deemed to 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 key technologies like cloud, AI and security continuing to scale, our continued leadership in networking, the breadth of our portfolio to position us well for the future, our healthy backlog, recurring revenue streams, RPO and the continued improving availability of supply) and the future financial performance of Cisco (including the guidance for Q4 FY 2023 and full year FY 2023) 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: the impact of the COVID-19 pandemic and related public health measures; 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 Secure, Agile Networks and services; the timing of orders and manufacturing and customer lead times; significant supply constraints; 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, other intellectual property, antitrust, stockholder and other matters, and governmental investigations; our ability to achieve the benefits of restructurings and possible changes in the size and timing of related charges; cyber-attacks, data breaches or malware; vulnerabilities and critical security defects; terrorism; natural catastrophic events (including as a result of global climate change); any other 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 reports on Forms 10-Q and 10-K filed on February 21, 2023 and September 8, 2022, respectively. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco’s most recent reports on Forms 10-Q and 10-K as each may be amended from time to time. Cisco’s results of operations for the three and nine months ended April 29, 2023 are not necessarily indicative of Cisco’s operating results for any future periods. Any projections in this release 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 this release.

This release includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share data for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco’s results of operations in conjunction with the corresponding GAAP measures.

Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations.

For its internal budgeting process, Cisco’s management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related/divestiture costs, significant asset impairments and restructurings, significant litigation settlements and other contingencies, Russia-Ukraine war costs, gains and losses on investments, the income tax effects of the foregoing and significant tax matters. Cisco’s management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial

15

results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results. For additional information on the items excluded by Cisco from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

Annualized recurring revenue represents the annualized revenue run-rate of active subscriptions, term licenses, operating leases and maintenance contracts at the end of a reporting period, net of rebates to customers and partners as well as certain other revenue adjustments. Includes both revenue recognized ratably as well as upfront on an annualized basis.

About Cisco

Cisco (Nasdaq: CSCO) is the worldwide leader in technology that powers the Internet. Cisco inspires new possibilities by reimagining your applications, securing your data, transforming your infrastructure, and empowering your teams for a global and inclusive future. Discover more at newsroom.cisco.com and follow us on Twitter at @Cisco.

Copyright © 2023 Cisco and/or its affiliates. All rights reserved. Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. To view a list of Cisco trademarks, go to: www.cisco.com/go/trademarks. Third-party trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.

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16

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Cover [Abstract]
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Entity Central Index Key	0000858877
Document Type	8-K
Document Period End Date	May 17, 2023
Entity Registrant Name	CISCO SYSTEMS, INC.
Entity Incorporation State Country Code	DE
Entity File Number	001-39940
Entity Tax Identification Number	77-0059951
Entity Address, Address Line One	170 West Tasman Drive
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
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