Cisco Systems Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Matthew Hedberg - RBC Capital Markets - Analyst : So let's start -- we're going to obviously talk a lot more about this, but you guys just reported results middle of last week. Middle of last middle of last week, yeah, I think it was yeah, Tuesday or Wednesday or whatever that day was. You had a really solid quarter. And you've got such a global perspective on IT buying patterns. And so I wanted to spend just a minute on just helping us kind of think about where we are in the economic cycle? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 4:20PM, CSCO.OQ - Cisco Systems Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference One question that I've been asking folks is like -- and it's hard because there's a lot of idiosyncratic elements to companies. But like do we think we've seen the worst of sort of some of the pressure out there? How are customers thinking about deploying capital as you just start this new quarter?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : The one area, I think, of weakness, you saw a little deceleration in federal --

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Yeah, US Fed. And that obviously, in the year-end for them, what drove that? And ultimately, then I want to get to like kind of the new administration and what that could lead, but what -- how should we think about pub -- US pub sec spending?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : The other thing -- sticking on like the new administration, one of the questions that we get from everybody is like, okay, what does this mean from a -- obviously, there could be a corporate tax benefit. But like what does it mean from a tariffs perspective? What does it mean from potentially easing some of the M&A constraints? What does it mean from government efficiency doge? I mean any thoughts from your perspective on what that could mean?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : We got a keynote yesterday, somebody was like I don't think Elon's going to be in position -- be in the same spot in a year from now, which may be true, but --

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Yeah. We'll get to capital allocation in a bit here. But we've seen strong growth at Cisco with both SP and Cloud. And I guess the question is, what's driving the robust growth there? And is it all cloud? Or are there other aspects that's driving the business there?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Would you attribute that to Splunk?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Yeah. Well, that's literally the next question. You read my mind. Talk about some of the strength there in the enterprise, whether it's by geo or product or any sort of like vertical that you think is interesting from an enterprise perspective.

Question: Matthew Hedberg - RBC Capital Markets - Analyst : That's exciting. I wonder -- before we get into more granular product related questions, I'm really curious on cyber and observability. You raised full year guidance on the Q1 call, and you talked about not anticipating any sort of federal improvement. I guess what gave you the confidence after Q1 to take the full year up this early in the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 4:20PM, CSCO.OQ - Cisco Systems Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Yeah. Back in our Autodesk days, the fact that we're 90 days in, and I think you have that kind of visibility that says something. You touched on -- I'm going to pivot to AI. You touched on it a little bit 5 minutes ago, when you talked about taking over $300 million of AI orders in Q1. I guess could you double-click on that? Is that optics? Is it systems -- system one? Is it or Silicon One, Yeah, what -- could you just put a finer point on that because it really feels like you guys are in a unique position to continue to drive AI awareness within the customer base?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Yeah. When -- I guess if AI continues to ramp within your overall mix, and this continues to increase over time, obviously, you're seeing a real strong mix shift towards software. Would that -- could that cause you to reassess the fiscal '26 and fiscal '27 targets -- because at the time, I think it was

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Yeah. It certainly feels like whether it's AI and we're going to pivot to Splunk here, there certainly seems to be some catalyst on that mix shift that could help improve kind of the overall growth profile.

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Yeah, let's pivot to Splunk. We had a call with Gary not long ago. And clearly, every investor -- or every company out there feels like Splunk is fair game for displacements. And I think Gary whether that was a couple of months ago, I said we're not seeing any change in renewal rates. That's been strong. Level set us on where we are at, how does it perform versus your expectations? And maybe talk about why some of those competitors won't be successful in taking Splunk share? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 4:20PM, CSCO.OQ - Cisco Systems Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference

Question: Matthew Hedberg - RBC Capital Markets - Analyst : It's because it feels like it's not just AppD, but it's also some of the existing cyber assets.

Question: Matthew Hedberg - RBC Capital Markets - Analyst : At Cisco. Talk about like how 1 plus 1 equals 3 in this case.

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Egress. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 4:20PM, CSCO.OQ - Cisco Systems Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference

Question: Matthew Hedberg - RBC Capital Markets - Analyst : What it feels like when you guys acquired AppD years ago, to me -- from an outsider perspective, it feels like there's more unification this time around versus when AppD was acquired back in the day. It feels like a more holistic solution set it goes like different leadership from a product perspective as well. I mean do you think Splunk is going to be different than AppD?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : This is going fast, we only have 5 minutes to go. I'm going to pivot. I wanted to ask more about Splunk, but let's just look at security. I think it grew 2% ex Splunk. We spend a lot of time in the channel on the cyber side. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 4:20PM, CSCO.OQ - Cisco Systems Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference And it really does feel like -- I mentioned this on our bus tour this summer, Cisco is coming up more often on the cyber side. And when we had the bus tour in there, it was like what's changed? It really feels like it's been a whole leadership refresh that's really driven a lot of that unification of networking, cyber, observability. It feels like that's driving it. Talk about sort of the outlook on the cyber side?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : I lied. We don't have time for questions. We have 3 minutes, and there's like 10 questions more that I have for you. But from -- like myself who's coming at it from a software perspective, I'm curious -- from your perspective, what's some of the biggest misconceptions right now about Cisco? Because to me, I look at this as like a simple mix shift game, where I'm like I see a faster growing cyber observability, AI piece and then you've got the core Cisco business. Is the right way to think about like the core kind of growing in that maybe low to mid-singles and then you've kind of got that mix shift that could ultimately take those fiscal '26 and '27 targets, maybe up a bit as time progresses?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : So kind of what I'm hearing is it's in a lot of regards different Cisco than what you might remember even five years ago, let alone 10 or 15 years ago and then it's this mix shift, even benefits to the core that could cause people to kind of think a little bit differently about Cisco over the next 5 to 10 years.

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Well, we are out of time. Listen, Sami, Scott, thanks for coming. Really appreciate your time. Best of luck. And yes, we're going to be watching you guys closely from -- certainly from -- you guys are a lot more relevant in my world than you used to be.

Question: Matthew Hedberg - RBC Capital Markets - Analyst : We're going to -- yeah, we've got to try to take on number one. So we I appreciate that, Scott. Yeah.

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Thanks, Scott. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2024 / 4:20PM, CSCO.OQ - Cisco Systems Inc at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference