10-KPeriod: FY2022

CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 30, 2022

Filed September 8, 2022For Securities:CSCO

Summary

Cisco Systems, Inc. (CSCO) reported its fiscal year 2022 results, characterized by a 3% increase in total revenue to $51.6 billion. This growth was driven by a 6% rise in product revenue, particularly in "Secure, Agile Networks," "Internet for the Future," "End-to-End Security," and "Optimized Application Experiences," which offset a 5% decline in "Collaboration" product revenue. The company experienced challenges from ongoing industry-wide supply constraints, leading to higher component and logistics costs, which impacted gross margins, causing them to decrease by 1.5 percentage points to 62.5%. Despite these pressures, Cisco demonstrated strong profitability, with operating income increasing by 9% and diluted earnings per share (EPS) growing by 13% to $2.82. The company is actively transforming its business model by increasing software and subscription-based offerings, aiming for greater customer flexibility and recurring revenue. Cisco also returned significant capital to shareholders through $7.7 billion in stock repurchases and $6.2 billion in dividends, reflecting its commitment to shareholder returns. The company continues to invest in R&D and strategic priorities like security and hybrid work solutions to drive future growth in a dynamic and competitive market.

Financial Highlights

58 data points
Beta

Revenue

$51.56B

62.5% Gross Margin

Net Income

$11.81B

22.9% Net Margin

EPS (Diluted)

$2.82

Total Assets

$94.00B

Cash & Equivalents

$7.08B

Free Cash Flow

$12.75B

Financial Statements
Beta
Revenue$51.56B
Cost of Revenue$19.31B
Gross Profit$32.25B
R&D Expenses$6.77B
Operating Expenses$18.28B
Operating Income$13.97B
Interest Expense$360.00M
Net Income$11.81B
EPS (Basic)$2.83
EPS (Diluted)$2.82
Shares Outstanding (Basic)4.17B
Shares Outstanding (Diluted)4.19B

Key Highlights

  • 1Total revenue increased by 3% to $51.6 billion for fiscal year 2022, driven by a 6% increase in product revenue.
  • 2Gross margin decreased by 1.5 percentage points to 62.5% due to increased costs related to supply constraints and component shortages.
  • 3Operating income increased by 9% to $14.0 billion, and operating income as a percentage of revenue improved to 27.1%.
  • 4Diluted earnings per share (EPS) grew by 13% to $2.82, demonstrating strong profitability.
  • 5The company returned $13.9 billion to stockholders through $7.7 billion in share repurchases and $6.2 billion in dividends.
  • 6Product revenue in "Internet for the Future" saw a significant 17% increase, driven by webscale provider demand and the Acacia acquisition.
  • 7Cisco is actively transforming its business to deliver more software and subscription-based offerings.

Frequently Asked Questions

Cisco's revenue growth in fiscal year 2022 was primarily driven by increases in product revenue, specifically within the "Secure, Agile Networks," "Internet for the Future," "End-to-End Security," and "Optimized Application Experiences" categories. The "Internet for the Future" segment showed particularly strong growth at 17%, boosted by demand from webscale providers and the acquisition of Acacia.

Cisco faced significant challenges from ongoing industry-wide supply constraints and component shortages. These issues led to increased costs for components and logistics, which negatively impacted product gross margins. The company also noted the ongoing impact of the Russia and Ukraine war, leading to a suspension of operations and recognized charges.

Cisco demonstrated a strong commitment to returning capital to shareholders. In fiscal year 2022, the company repurchased $7.7 billion of its common stock and paid $6.2 billion in dividends, totaling $13.9 billion in capital returned.

Cisco's strategy focuses on integrating its platforms across networking, security, collaboration, applications, and the cloud to provide a secure, intelligent platform for digital business. Key priorities include reimagining applications, powering hybrid work, transforming infrastructure, and securing the enterprise. The company is also actively transitioning its business model towards delivering more software and subscription-based offerings to provide greater customer flexibility and recurring revenue.