CISCO REPORTS FOURTH QUARTER AND FISCAL YEAR 2022 EARNINGS

·11 min read

SAN JOSE, Calif., Aug. 17, 2022 /PRNewswire/ --

Cisco Logo (PRNewsfoto/Cisco)
Cisco Logo (PRNewsfoto/Cisco)

News Summary:

  • Cisco ended fiscal 2022 with Q4 revenue at $13.1 billion, flat year over year and fiscal year revenue of $51.6 billion, up 3% year over year

  • Strong demand with record full year product orders and backlog

  • Progress on business model transformation with total Annualized Recurring Revenue (ARR) at $22.9 billion in the fourth quarter of fiscal 2022, up 8% year over year

  • Q4 FY 2022 Results:

  •  

  • FY 2022 Results:

  • Q1 FY 2023 Guidance:

  • FY 2023 Guidance:

Cisco today reported fourth quarter and fiscal year results for the period ended July 30, 2022. Cisco reported fourth quarter revenue of $13.1 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.8 billion or $0.68 per share, and non-GAAP net income of $3.4 billion or $0.83 per share.

"We had a strong end to our fiscal year thanks to our Q4 performance. Our teams executed well in the midst of an incredibly dynamic environment, resulting in the highest full year non-GAAP earnings per share in the history of the company," said Chuck Robbins, chair and CEO of Cisco. "Full year product orders and backlog are both at record highs and reflect the strong demand we continue to see for our innovation and the overall value we bring to our customers as they accelerate their digital transformation."

"Total revenue exceeded our expectations in Q4, as a result of our strong execution and the numerous initiatives we have taken to reduce the impact of the global supply situation," said Scott Herren, CFO of Cisco. "Our operational discipline is reflected in our healthy operating margin and strong cash flow generation, enabling us to return nearly $4 billion to our shareholders in Q4. And we continue to make good progress in our business model transformation with RPO of over $31 billion, which, coupled with our record backlog, provide us with substantial visibility and confidence in our future revenue."

 

Q4 GAAP Results




Q4 FY 2022


Q4 FY 2021


Vs. Q4 FY 2021

Revenue


$             13.1

billion


$             13.1

billion


— %

Net Income


$               2.8

billion


$               3.0

billion


(6) %

Diluted Earnings per Share (EPS)


$             0.68



$             0.71



(4) %


Q4 Non-GAAP Results




Q4 FY 2022


Q4 FY 2021


Vs. Q4 FY 2021

Net Income


$               3.4

billion


$               3.6

billion


(3) %

EPS


$             0.83



$             0.84



(1) %


Fiscal Year GAAP Results




FY 2022


FY 2021


Vs. FY 2021

Revenue


$             51.6

billion


$             49.8

billion


3 %

Net Income


$             11.8

billion


$             10.6

billion


12 %

EPS


$             2.82



$             2.50



13 %


Fiscal Year Non-GAAP Results




FY 2022


FY 2021


Vs. FY 2021

Net Income


$             14.1

billion


$             13.6

billion


3 %

EPS


$             3.36



$             3.22



4 %

 

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."

Financial Summary

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

Q4 FY 2022 Highlights

Revenue -- Total revenue was flat at $13.1 billion, with both product revenue and service revenue flat year over year. Revenue by geographic segment was: Americas down 3%, EMEA up 8%, and APJC down 2%. Product revenue performance was led by growth in End-to-End Security up 20%, Optimized Application Experiences up 8%, and Collaboration up 2%. Secure, Agile Networks was down 1% and Internet for the Future was down 10%.

Gross Margin -- On a GAAP basis, total gross margin, product gross margin, and service gross margin were 61.3%, 59.1%, and 67.5%, respectively, as compared with 63.6%, 62.7%, and 66.2%, respectively, in the fourth quarter of fiscal 2021.

On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 63.3%, 61.3%, and 69.0%, respectively, as compared with 65.6%, 65.0%, and 67.4%, respectively, in the fourth quarter of fiscal 2021.

Total gross margins by geographic segment were: 62.6% for the Americas, 64.4% for EMEA and 63.6% for APJC.

Operating Expenses -- On a GAAP basis, operating expenses were $4.6 billion, down 4%, and were 35.0% of revenue. Non-GAAP operating expenses were $4.1 billion, down 4%, and were 30.9% of revenue.

Operating Income -- GAAP operating income was $3.4 billion, down 4%, with GAAP operating margin of 26.2%. Non-GAAP operating income was $4.2 billion, down 4%, with non-GAAP operating margin at 32.4%.

Provision for Income Taxes -- The GAAP tax provision rate was 17.6%. The non-GAAP tax provision rate was 18.5%.

Net Income and EPS -- On a GAAP basis, net income was $2.8 billion, a decrease of 6%, and EPS was $0.68, a decrease of 4%. On a non-GAAP basis, net income was $3.4 billion, a decrease of 3%, and EPS was $0.83, a decrease of 1%.

Cash Flow from Operating Activities -- $3.7 billion for the fourth quarter of fiscal 2022, a decrease of 18% compared with $4.5 billion for the fourth quarter of fiscal 2021.

FY 2022 Highlights

Revenue -- Total revenue was $51.6 billion, an increase of 3%.

Net Income and EPS -- On a GAAP basis, net income was $11.8 billion, an increase of 12%, and EPS was $2.82, an increase of 13%. On a non-GAAP basis, net income was $14.1 billion, an increase of 3% compared to fiscal 2021, and EPS was $3.36,  an increase of 4%.

Cash Flow from Operating Activities -- $13.2 billion for fiscal 2022, a decrease of 14% compared with fiscal 2021.

Balance Sheet and Other Financial Highlights

Cash and Cash Equivalents and Investments -- $19.3 billion at the end of the fourth quarter of fiscal 2022, compared with $20.1 billion at the end of the third quarter of fiscal 2022, and compared with $24.5 billion at the end of fiscal 2021.

Remaining Performance Obligations (RPO) -- $31.5 billion, up 2% in total, with 54% of this amount to be recognized as revenue over the next 12 months. Product RPO were up 6% and service RPO were down 1%.

Deferred Revenue -- $23.3 billion, up 5% in total, with deferred product revenue up 11%. Deferred service revenue was up 1%.

Capital Allocation -- In the fourth quarter of fiscal 2022, we returned $4.0 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.38 per common share, or $1.6 billion, and repurchased approximately 54 million shares of common stock under our stock repurchase program at an average price of $44.02 per share for an aggregate purchase price of $2.4 billion. The remaining authorized amount for stock repurchases under the program is $15.2 billion with no termination date.

Guidance

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

Q1 FY 2023



Revenue


2% - 4% growth Y/Y

Non-GAAP gross margin rate


63% - 64%

Non-GAAP operating margin rate


31.5% - 32.5%

Non-GAAP EPS


$0.82 - $0.84

Cisco estimates that GAAP EPS will be $0.64 to $0.68 for the first quarter of fiscal 2023.

Cisco expects to achieve the following results for fiscal 2023:

FY 2023



Revenue


4% - 6% growth Y/Y

Non-GAAP EPS


$3.49 - $3.56

Cisco estimates that GAAP EPS will be $2.77 to $2.88 for fiscal 2023.

Our Q1 FY 2023 and FY 2023 guidance assumes an effective tax provision rate of 19% for GAAP and 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:

  • Q4 fiscal year 2022 conference call to discuss Cisco's results along with its guidance will be held on Wednesday, August 17, 2022 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, August 17, 2022 to 4:00 p.m. Pacific Time, August 24, 2022 at 1-866-517-3736 (United States) or 1-203-369-2047 (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, August 17, 2022. 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.

 

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per-share amounts)

(Unaudited) 



Three Months Ended


Fiscal Year Ended


July 30,
2022


July 31,
2021


July 30,
2022


July 31,
2021

REVENUE:








Product

$         9,688


$         9,716


$      38,018


$       36,014

Service

3,414


3,410


13,539


13,804

Total revenue

13,102


13,126


51,557


49,818

COST OF SALES:








Product

3,966


3,628


14,814


13,300

Service

1,111


1,154


4,495


4,624

Total cost of sales

5,077


4,782


19,309


17,924

GROSS MARGIN

8,025


8,344


32,248


31,894

OPERATING EXPENSES:








Research and development

1,682


1,713


6,774


6,549

Sales and marketing

2,349


2,448


9,085


9,259

General and administrative

489


521


2,101


2,152

Amortization of purchased intangible assets

73


79


313


215

Restructuring and other charges

(2)


8


6


886

Total operating expenses

4,591


4,769


18,279


19,061

OPERATING INCOME

3,434


3,575


13,969


12,833

Interest income

129


130


476


618

Interest expense

(93)


(98)


(360)


(434)

Other income (loss), net

(54)


128


392


245

Interest and other income (loss), net

(18)


160


508


429

INCOME BEFORE PROVISION FOR INCOME TAXES

3,416


3,735


14,477


13,262

Provision for income taxes

601


726


2,665


2,671

NET INCOME

$         2,815


$         3,009


$      11,812


$       10,591









Net income per share:








Basic

$           0.68


$           0.71


$           2.83


$           2.51

Diluted

$           0.68


$           0.71


$           2.82


$           2.50

Shares used in per-share calculation:








Basic

4,128


4,216


4,170


4,222

Diluted

4,137


4,238


4,192


4,236

 

CISCO SYSTEMS, INC.

REVENUE BY SEGMENT

(In millions, except percentages)




July 30, 2022



Three Months Ended


Fiscal Year Ended



Amount


Y/Y%


Amount


Y/Y%

Revenue:









Americas


$         7,470


(3) %


$       29,814


2 %

EMEA


3,577


8 %


13,715


6 %

APJC


2,055


(2) %


8,027


4 %

Total


$       13,102


— %


$       51,557


3 %


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

 

CISCO SYSTEMS, INC.

GROSS MARGIN PERCENTAGE BY SEGMENT

(In percentages)




July 30, 2022



Three Months Ended


Fiscal Year Ended

Gross Margin Percentage:





Americas


62.6 %


64.1 %

EMEA


64.4 %


65.4 %

APJC


63.6 %


65.3 %

 

CISCO SYSTEMS, INC.

REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES

(In millions, except percentages)




July 30, 2022



Three Months Ended


Fiscal Year Ended



Amount


Y/Y %


Amount


Y/Y %

Revenue:









Secure, Agile Networks


$         6,094


(1) %


$       23,829


5 %

Internet for the Future


1,257


(10) %


5,278


17 %

Collaboration


1,164


2 %


4,472


(5) %

End-to-End Security


984


20 %


3,699


9 %

Optimized Application Experiences


185


8 %


729


11 %

Other Products


3


(22) %


11


(29) %

Total Product


9,688


— %


38,018


6 %

Services


3,414


— %


13,539


(2) %

Total


$       13,102


— %


$       51,557