01—Abstract
Summary
Summary of the 10-K filed September 8, 2022. Cited figures are marked; the original filing is the authoritative source.
Cisco Systems, Inc. (CSCO) reported its fiscal year 2022 results, characterized by a 3% increase in total revenue to $51.6 billiona.
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 $2.82b.
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 billionc 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.
02—Key points
Key Highlights
- Total revenue increased by 3% to $51.6 billion for fiscal year 2022, driven by a 6% increase in product revenue.
- Gross margin decreased by 1.5 percentage points to 62.5% due to increased costs related to supply constraints and component shortages.
- Operating income increased by 9% to $14.0 billion, and operating income as a percentage of revenue improved to 27.1%.
- Diluted earnings per share (EPS) grew by 13% to $2.82, demonstrating strong profitability.
- The company returned $13.9 billion to stockholders through $7.7 billion in share repurchases and $6.2 billion in dividends.
- Product revenue in "Internet for the Future" saw a significant 17% increase, driven by webscale provider demand and the Acacia acquisition.
- Cisco is actively transforming its business to deliver more software and subscription-based offerings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Cisco Systems, Inc. kept $0.23.
- Revenue$51.56B100.0%
- Cost of revenue−$19.31B37.5%
- Gross profit$32.25B62.5%
- Operating costs−$18.28B35.5%
- Operating income$13.97B27.1%
- Interest, other & tax−$2.16B4.2%
- Net income$11.81B22.9%
Where FY2022 revenue went
$51.56B- Cost of revenue: $19.31B, 37% of revenue
- Net income: $11.81B, 23% of revenue
- Other operating costs: $11.51B, 22% of revenue
- R&D: $6.77B, 13% of revenue
- Interest, other & tax: $2.16B, 4.2% of revenue
Kept 23% as net incomeR&D $6.77B · 13%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed September 8, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $51.56B$49.82B | +3.5% |
| Cost of Revenue | $19.31B$17.92B | +7.7% |
| Gross Profit | $32.25B$31.89B | +1.1% |
| R&D Expenses | $6.77B$6.55B | +3.4% |
| Operating Expenses | $18.28B$19.06B | −4.1% |
| Operating Income | $13.97B$12.83B | +8.9% |
| Interest Expense | $360.00M$434.00M | −17.1% |
| Net Income | $11.81B$10.59B | +11.5% |
| EPS (Basic) | $2.83$2.51 | +12.7% |
| EPS (Diluted) | $2.82$2.50 | +12.8% |
| Shares Outstanding (Basic) | 4.17B4.22B | −1.2% |
| Shares Outstanding (Diluted) | 4.19B4.24B | −1.0% |
05—Questions
Frequently Asked Questions
What were Cisco's main growth drivers in fiscal year 2022?
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.
What challenges did Cisco face in fiscal year 2022?
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.
How did Cisco return capital to shareholders in fiscal year 2022?
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.
What is Cisco's strategy for future growth?
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.
06—Continue