01—Abstract
Summary
Summary of the 10-K filed September 9, 2021. Cited figures are marked; the original filing is the authoritative source.
Cisco Systems, Inc. (CSCO) reported its annual results for the fiscal year ended July 31, 2021.
The company experienced a modest 1% increase in total revenue compared to the previous fiscal year, reaching $49.8 billiona. This growth was driven by a 4% increase in service revenue, while product revenue remained flat. Geographically, revenue saw growth in EMEA and APJC segments, while the Americas remained flat.
The company's strategic priorities include reimagining applications, powering hybrid work, transforming infrastructure, and securing the enterprise. Cisco continues its business model transformation, with software and subscription-based offerings showing growth, indicating a strategic shift towards recurring revenue streams. The company faced a challenging macroeconomic environment, further impacted by the COVID-19 pandemic, which led to supply chain constraints and cost pressures that affected product gross margins.
Despite these challenges, Cisco demonstrated resilience, maintaining strong cash flow from operations and returning significant capital to shareholders through dividends and stock repurchases. The company ended the fiscal year with a robust cash position, underscoring its financial stability. Cisco also highlighted ongoing investments in research and development to drive future innovation and maintain its competitive edge in the evolving technology landscape.
02—Key points
Key Highlights
- Total revenue increased by 1% year-over-year to $49.8 billion.
- Service revenue grew by 4%, while product revenue was flat, reflecting a shift towards services.
- Security product revenue saw a significant increase of 7%, indicating strong performance in this segment.
- The company continued to invest in its business model transformation, with total software revenue increasing by 7% and subscription revenue up 15%.
- Free cash flow remained strong at $14.76 billion, demonstrating efficient operations and cash generation.
- Cisco returned $9.1 billion to shareholders through dividends and stock repurchases, highlighting its commitment to shareholder returns.
- The company actively managed supply chain challenges, though they contributed to a slight decrease in product gross margin and increased inventory levels.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Cisco Systems, Inc. kept $0.21.
- Revenue$49.82B100.0%
- Cost of revenue−$17.92B36.0%
- Gross profit$31.89B64.0%
- Operating costs−$19.06B38.3%
- Operating income$12.83B25.8%
- Interest, other & tax−$2.24B4.5%
- Net income$10.59B21.3%
Where FY2021 revenue went
$49.82B- Cost of revenue: $17.92B, 36% of revenue
- Other operating costs: $12.51B, 25% of revenue
- Net income: $10.59B, 21% of revenue
- R&D: $6.55B, 13% of revenue
- Interest, other & tax: $2.24B, 4.5% of revenue
Kept 21% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed September 9, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $49.82B$49.30B | +1.0% |
| Cost of Revenue | $17.92B$17.62B | +1.7% |
| Gross Profit | $31.89B$31.68B | +0.7% |
| R&D Expenses | $6.55B$6.35B | +3.2% |
| Operating Expenses | $19.06B$18.06B | +5.5% |
| Operating Income | $12.83B$13.62B | −5.8% |
| Interest Expense | $434.00M$585.00M | −25.8% |
| Net Income | $10.59B$11.21B | −5.6% |
| EPS (Basic) | $2.51$2.65 | −5.3% |
| EPS (Diluted) | $2.50$2.64 | −5.3% |
| Shares Outstanding (Basic) | 4.22B4.24B | −0.3% |
| Shares Outstanding (Diluted) | 4.24B4.25B | −0.4% |
05—Questions
Frequently Asked Questions
What was Cisco's overall financial performance for the fiscal year ended July 31, 2021?
Cisco reported a total revenue of $49.8 billion for the fiscal year ended July 31, 2021, representing a 1% increase compared to the prior year. Service revenue grew by 4%, while product revenue remained flat. Net income decreased by 6% to $10.6 billion, impacted by restructuring charges and a slight decrease in gross margin percentage.
How did Cisco's different product categories perform?
Infrastructure Platforms revenue was flat year-over-year. Applications revenue saw a slight decline of 1%. Security product revenue demonstrated strong growth, increasing by 7%. Other Products revenue decreased significantly by 43%.
What are Cisco's key strategic priorities and how are they reflected in the results?
Cisco's strategic priorities include reimagining applications, powering hybrid work, transforming infrastructure, and securing the enterprise. The growth in Security revenue and the increase in software and subscription revenue align with these priorities, particularly in addressing evolving customer needs for digital transformation and enhanced security.
What is Cisco's financial health and capital allocation strategy?
Cisco maintained a strong liquidity position with $24.5 billion in cash and investments. The company generated $15.5 billion in cash from operating activities and $14.76 billion in free cash flow. Cisco returned $9.1 billion to shareholders through dividends ($6.2 billion) and stock repurchases ($2.9 billion) during fiscal year 2021, demonstrating a commitment to shareholder returns.
06—Continue