Cisco Systems Inc at UBS Global Technology and AI Conference Transcript

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

Question: David Vogt - UBS AG - Analyst : Can we rewind the clock? 12 months ago we were here. I think it was at the cusp of this surge or tidal wave of demand from hyperscalers regarding AI and optics. So maybe we can talk about what you've seen over the last 12 months, and maybe let's start with optics. That's I think a little bit more relevant and then the Acacia piece and what's changed over the last, 9 to 12 months if you will. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 5:55PM, CSCO.OQ - Cisco Systems Inc at UBS Global Technology and AI Conference Bill Gartner - Cisco Systems Inc - Senior Vice President and General Manager, Cisco's Optical Systems and Optics business Yeah. so, Acacia has probably provided the most significant upside for us in those three groups that I mentioned. In that we have seen just dramatic demand primarily from the hyperscalers, increasingly from service providers as well, but primarily from hyperscalers for DCI optics that help them interconnect data centers, now scale across and really across all of the hyperscalers. We don't announce specific names with hyperscalers. They would actually not give us permission to do that. But we are in all of the hyperscalers and in the top service providers as well. We've seen tremendous demand. So FY25, we had significantly more demand than our original forecast for the year. In FY26, we have even after the first quarter increased our forecast for the year for that business, as we see just continuing growth. And demand for the optics that are used across data centers.

Question: David Vogt - UBS AG - Analyst : So Is that what you're seeing? So obviously last quarter you had an incredibly strong order number for your Optics business or Acacia business, is that what's driving the strength? I mean, we talked a little bit about it last night at dinner. I mean, it was like a surge in demand that you saw from multiple customers, multiple hyperscalers. Is that kind of the underpinning of what's driving that growth is the demand for scale across, or how would you characterize as kind of the driver? Bill Gartner - Cisco Systems Inc - Senior Vice President and General Manager, Cisco's Optical Systems and Optics business We actually -- I think it's hard for us to tell at times whether that's DCI or scale across, but between the two of them we're certainly seeing a significant ramp in the demand there across all of the hyperscalers and --

Question: David Vogt - UBS AG - Analyst : So you bring up a good point. So when you think about your holistic hyper scale or customer base, customers move at different paces, they have different technological road maps. There's some customers that are deploying, switch and optics at 400, some may skip 800. How do you think about the evolution of your optics business as we go from 400 to 800 to ultimately [one dot six] and kind of how do we think about the timing of, I know it's not a homogeneous group clearly but just maybe help us kind of frame out how you're thinking about that. Bill Gartner - Cisco Systems Inc - Senior Vice President and General Manager, Cisco's Optical Systems and Optics business So there's no question that the hyperscalers lead the demand curve here and they dominate the demand as well, but these things have very long tails, and you know I was speaking with a group just earlier and I think 10 gig still represents a big portion of my optics business, 10 gig -- and 10 gigabyte has been around for 25 years. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 5:55PM, CSCO.OQ - Cisco Systems Inc at UBS Global Technology and AI Conference And the reason that's the case is that what we see is hyperscalers will deploy a technology and maybe even move to the next generation before service providers start deploying that same technology, and service providers can deploy that technology for 10 years or more, and then we'll see enterprises and commercial customers deploy that technology. And so the life span of that technology can be very long. We are at the cusp right now of 400 gig transitioning to 800 gig for service providers, but we've barely touched the service provider market at 400 gig. It's penetrating now and we haven't even begun to touch the enterprise market at 400 gig. So these technologies are all going to have a very long curve, a lifespan curve. We are moving today from 400 gig to 800 gig as you mentioned, David, in some of the hyperscalers. Some decided, they were never going to deploy 400 gig and they're only going to start at 800 gig, and most of them have also decided they needed some 400 gigs, so they've kind of backed off that view. We have some hyperscale customers who have decided they're going to go from 400 gig to [1.60]. They're going to skip the 800 gig transition. A year from now they may decide they need to deploy some 800 gigs, so these things tend to be very fluid, but we are seeing right now a transition from 400 gig to 800 gig on the part of some of those hyperscalers, a pretty aggressive transition, and most of our growth right now is in 800 gig.

Question: David Vogt - UBS AG - Analyst : On both, so presumably you'd have a long tail on optical systems as well, despite the risk of, I think the market's concerned that, plugables is somewhat cannibalistic to systems chassis and transponder business. How do we think about that sort of maybe trade-off between that long tail that you just mentioned where customers have these speeds 10, 15 years versus, maybe SP and enterprise adopting a more plugable architecture. Bill Gartner - Cisco Systems Inc - Senior Vice President and General Manager, Cisco's Optical Systems and Optics business So right now, the SPs are beginning to deploy the luggable technology. I say beginning we've got 400-plus customers that are deploying that, which is a good chunk of the market, but in terms of the total volume, I think we're at an early stage in deploying that technology. Enterprise customers historically have not deployed a lot of the optical systems. They rely on service providers to deliver that capacity, so that's really where our eyes are on what's happening with the service providers. The enterprises would be deploying switches locally and the optics associated with those switches, but not the long reach optics that would span a city or a country. So these technologies will have a long life. We don't expect disruptive changes on the part of any customer, even a service provider who is moving from transponders to plugables. We can make that a very natural transition for them. It's a cap and grow. It's not a rip and replace. And so I think we're very cognizant of how those transitions are going to take place with customers. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 5:55PM, CSCO.OQ - Cisco Systems Inc at UBS Global Technology and AI Conference

Question: David Vogt - UBS AG - Analyst : I didn't ask you this the other day, but would you be open to selling other parts of your ecosystem, whether it's [SSDs], technology, DSP? I know there's some chatter on the marketplace by maybe one of your competitors that they're looking at that down the road as a potential opportunity. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 5:55PM, CSCO.OQ - Cisco Systems Inc at UBS Global Technology and AI Conference Bill Gartner - Cisco Systems Inc - Senior Vice President and General Manager, Cisco's Optical Systems and Optics business So we do sell our DSP today. We do sell our DSP technology. Acacia is probably the example I can give you the most detail on. When Acacia came into Cisco, Acacia was selling DSPs to some customers. They were selling embedded modules, which ultimately landed on a transponder. We still sell that to customers, including hyperscalers who want to build their own. And so we will for anything that's a unit that we would have today, so [SSDs] is more of a technology that gets embedded, but certainly for DSPs, for photonic integrated circuits. We're selling those to module makers who go build an optics module and maybe we buy that back or maybe they sell that more broadly. Yes, we'll sell anything a customer wants to buy.

Question: David Vogt - UBS AG - Analyst : So it's not one of those, well, not to say that it's not something that keeps you up at night, but it's on your long list of things that you're thinking about for fiscal '26. A little bit less relevant than maybe some of the other concerns out there. Bill Gartner - Cisco Systems Inc - Senior Vice President and General Manager, Cisco's Optical Systems and Optics business Yeah. I mean, we do have, we always have, supply chain gaps. We've got an army of people who spend their lives making sure that we've got those covered, but there's nothing that's keeping me up at the moment.

Question: David Vogt - UBS AG - Analyst : And is the backlog related to (multiple speaker).

Question: David Vogt - UBS AG - Analyst : Just so that's great clarification just to be clear, so when I think about your backlog that's both on systems and Acacia and that is a reflection of the strength and orders from AI in '25, but there's no excess backlog in other parts of the business. It's not your purview, but there's no excess backlog sitting in routing, I doubt that, right? Or campus, right? Campus is about to go through a refresh, so this is strictly an AI related backlog. Bill Gartner - Cisco Systems Inc - Senior Vice President and General Manager, Cisco's Optical Systems and Optics business I'd say that's true. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 5:55PM, CSCO.OQ - Cisco Systems Inc at UBS Global Technology and AI Conference

Question: David Vogt - UBS AG - Analyst : Maybe one more for you, Bill. When you think about what your competitors are doing with ZR, there's a lot of noise in the marketplace. A lot of investors, I think, struggle with competitive positioning, market share, how to think about the growth in the underlying market, bandwidth growth, ASP offset, maybe help level set, Obviously, I think from our checks, I think Cisco Acacia has probably the biggest market share in plugables. Correct me if that's not correct, but how are we thinking about your position with the hyperscalers? I know, I think we've talked about that there's multiple hyperscalers you sell to everyone and be kind of level set like how you see the competitive landscape. Bill Gartner - Cisco Systems Inc - Senior Vice President and General Manager, Cisco's Optical Systems and Optics business So, first of all, I don't discount competitors that are like meaningful competitors Ciena, Infinera, [Marvel], I would consider meaningful competitors. Cisco has been -- I think, leading the charge on plugables, since we did the Acacia acquisition, and for the most part our competitors in the optical space discounted that dynamic and said, no, this plugable thing is just going to be a niche market, we're not going to have to worry about that. Our view was and remains that plugables are going to dominate the deployment models for hyperscalers and for service providers as we go forward, and we'll see diminishing role for transponders. It won't be zero, but there'll be a diminishing role, and I think that's largely played out. And now we see others sort of embracing that model, I think more reluctantly in some cases, but out of necessity embracing that model. We're very comfortable with the fact that we've got significant share at all of the hyperscalers. We do not announce specific names, but I would say join the club. We've been there. We're doing that right now. Others may have a need to make a more public announcement with or without the hyperscaler's permission, but we are in all the hyperscalers at this point, and as I mentioned, we're in 400 service providers as well, so including a publicly announced Lumen. Lumen has announced a new metro network that they're building for AI servicing AI needs and basically serving the needs of hyperscalers and carrying capacity across the country. Our architecture using plugables is routed optical networking or RON, and Lumen called their next gen metro network Metron, which is a combination of Metro and RON, so they have fully embraced the idea of using plugable optics for their optical infrastructure.

Question: David Vogt - UBS AG - Analyst : You just touched on it briefly, but I think either chuck or G2 mentioned that the campus refresh cycle is measured in years, not quarters. Is that how we should think about? So it's not going to be this [REVREX] spike in '26, but it's going to be more durable in '26. You're fiscal '26, fiscal '27, and beyond. Is that kind of an underpinning for the next two to three years? Campuses are more -- not muted, but a more balanced growth vector than the spike that people anticipate.

Question: David Vogt - UBS AG - Analyst : So I've got like another 10 questions, but I'd rather ask maybe Bill or Sami what do you think the market is misjudging or what the misperception is? Cisco's gone through an evolution in the last decade, right to your point, six years ago we went to a completely new model effectively, if you will. So what is the market missing today? I know you've executed extremely well for the last couple of years, but you know what was, what hasn't resonated maybe with investors from your perspective? Bill Gartner - Cisco Systems Inc - Senior Vice President and General Manager, Cisco's Optical Systems and Optics business Well, one thing I think is that you know Cisco is in my view, the candidate to basically provide aside from NVIDIA is going to have their proprietary stack. I think Cisco brings all of the pieces together with AMD partnerships and other partnerships, our networking, our optics to really be the open stack for AI and I think customers are going to be looking for an open solution, not necessarily a closed proprietary solution, but an open solution. And I think Cisco is the best company that's positioned to support that need that is definitely growing in the market. We've seen other examples; Broadcom is probably one where customers sort of revolted against what looked like a monopolistic behavior. Customers are going to look for an open solution, and I think Cisco is best positioned to serve that need.