10-KPeriod: FY2016

CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 30, 2016

Filed September 8, 2016For Securities:CSCO

Summary

Cisco Systems, Inc. reported flat revenue for fiscal year 2016 compared to fiscal year 2015, with a 0.2% increase to $49.25 billion. This was driven by a 5.1% increase in service revenue, which offset a 1.3% decrease in product revenue. The company completed the sale of its Service Provider Video CPE Business in fiscal 2016, impacting comparable revenue figures. Profitability improved significantly, with net income increasing by 19.6% to $10.74 billion, and diluted earnings per share rising by 20.6% to $2.11, reflecting strong operational execution, productivity improvements, and a favorable tax settlement. Cisco continued to invest in priority growth areas like security and collaboration, with the security segment seeing a 12.7% revenue increase. The company also repurchased $3.9 billion in stock and paid $4.8 billion in dividends, underscoring a commitment to returning capital to shareholders.

Financial Highlights

59 data points
Beta

Revenue

$49.25B

62.9% Gross Margin

Net Income

$10.74B

21.8% Net Margin

EPS (Diluted)

$2.11

Total Assets

$121.65B

Cash & Equivalents

$7.63B

Free Cash Flow

$12.42B

Financial Statements
Beta
Revenue$49.25B
Cost of Revenue$18.29B
Gross Profit$30.96B
R&D Expenses$6.30B
Operating Expenses$18.30B
Operating Income$12.66B
Interest Expense$676.00M
Net Income$10.74B
EPS (Basic)$2.13
EPS (Diluted)$2.11
Shares Outstanding (Basic)5.05B
Shares Outstanding (Diluted)5.09B

Key Highlights

  • 1Total revenue remained flat year-over-year at $49.25 billion, but excluding the divested SP Video CPE Business, revenue saw a 3% increase.
  • 2Service revenue grew 5.1% to $11.99 billion, indicating a successful shift towards recurring revenue streams.
  • 3Net income surged by 19.6% to $10.74 billion, driven by operational efficiencies, a favorable tax settlement, and the divestiture gain.
  • 4Product revenue declined slightly by 1.3% to $37.25 billion, with notable growth in Security (12.7%) and Collaboration (8.7%) segments, while NGN Routing saw a 3.8% decline.
  • 5The company returned significant capital to shareholders, repurchasing $3.92 billion in stock and paying $4.75 billion in dividends.
  • 6Cash and cash equivalents, along with investments, increased to $65.76 billion, providing a strong liquidity position.
  • 7Despite a challenging macro environment, Cisco is strategically investing in key priority areas such as security, IoT, collaboration, next-generation data center, and cloud solutions.

Frequently Asked Questions

Cisco reported total revenue of $49.25 billion for fiscal year 2016, which was a slight increase of 0.2% compared to fiscal year 2015. However, excluding the impact of the divested Service Provider Video CPE Business, the company's revenue saw a 3% increase. Service revenue grew by 5.1%, while product revenue experienced a 1.3% decline.

Cisco demonstrated strong profitability in fiscal year 2016. Net income increased by 19.6% to $10.74 billion, and diluted earnings per share grew by 20.6% to $2.11. This improvement was supported by increased gross margins, operational efficiencies, a favorable tax settlement with the IRS, and the positive impact from the sale of the SP Video CPE Business.

Cisco is strategically focused on key growth areas including security, Internet of Things (IoT), collaboration, next-generation data centers, and cloud solutions. The company is transforming its business model to emphasize software and subscriptions and is investing in innovation across its portfolio to address market transitions and customer digital transformation initiatives.

Cisco demonstrated a strong commitment to returning capital to shareholders. During fiscal year 2016, the company repurchased $3.92 billion of its common stock and paid $4.75 billion in cash dividends.