01—Abstract
Summary
Summary of the 10-K filed September 7, 2023. Cited figures are marked; the original filing is the authoritative source.
Cisco Systems, Inc. (CSCO) reported solid performance in its fiscal year ending July 28, 2023, with total revenue increasing by 11% year-over-year to $56.998 billiona.
This growth was driven by a 13% increase in product revenue, reaching $43.142 billionb, and a 2% increase in service revenue, totaling $13.856 billion. The company highlighted an improvement in supply constraints during fiscal 2023, allowing for increased product deliveries and positively impacting revenue. Cisco continues its strategic shift towards software and subscription-based offerings, with total software revenue growing 12% and subscription revenue increasing by 16%.
The company emphasized its commitment to innovation across its technology portfolio, focusing on key customer priorities such as transforming infrastructure, securing enterprises, powering hybrid work, reimagining applications, and driving sustainability. Cisco's strategy revolves around securely connecting everything and delivering a trusted customer experience.
The report also detailed significant investments in research and development, sales, and marketing, alongside efforts to manage costs and operational efficiencies. Despite a challenging macroeconomic environment and intense competition, Cisco demonstrated resilience and continued investment in growth areas.
02—Key points
Key Highlights
- Total revenue grew 11% to $56.998 billion in fiscal year 2023, driven by a 13% increase in product revenue.
- Software revenue increased 12% to $17.0 billion, with subscription revenue up 16%, indicating a successful shift in business model.
- Supply chain constraints improved in fiscal 2023, enabling higher product deliveries.
- Operating income increased by 8% to $15.031 billion, although operating income as a percentage of revenue slightly decreased by 0.7 percentage points to 26.4%.
- Diluted earnings per share (EPS) rose by 9% to $3.07.
- The company returned significant capital to shareholders through $6.3 billion in dividends and $4.3 billion in stock repurchases.
- Cisco continues to invest in its strategic pillars: Secure, Agile Networks; Internet for the Future; Collaboration; End-to-End Security; Optimized Application Experiences; and Capabilities at the Edge.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Cisco Systems, Inc. kept $0.22.
- Revenue$57.00B100.0%
- Cost of revenue−$21.25B37.3%
- Gross profit$35.75B62.7%
- Operating costs−$20.72B36.4%
- Operating income$15.03B26.4%
- Interest, other & tax−$2.42B4.2%
- Net income$12.61B22.1%
Where FY2023 revenue went
$57.00B- Cost of revenue: $21.25B, 37% of revenue
- Other operating costs: $13.17B, 23% of revenue
- Net income: $12.61B, 22% of revenue
- R&D: $7.55B, 13% of revenue
- Interest, other & tax: $2.42B, 4.2% of revenue
Kept 22% as net incomeR&D $7.55B · 13%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed September 7, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $57.00B$51.56B | +10.6% |
| Cost of Revenue | $21.25B$19.31B | +10.0% |
| Gross Profit | $35.75B$32.25B | +10.9% |
| R&D Expenses | $7.55B$6.77B | +11.5% |
| Operating Expenses | $20.72B$18.28B | +13.4% |
| Operating Income | $15.03B$13.97B | +7.6% |
| Interest Expense | $427.00M$360.00M | +18.6% |
| Net Income | $12.61B$11.81B | +6.8% |
| EPS (Basic) | $3.08$2.83 | +8.8% |
| EPS (Diluted) | $3.07$2.82 | +8.9% |
| Shares Outstanding (Basic) | 4.09B4.17B | −1.8% |
| Shares Outstanding (Diluted) | 4.11B4.19B | −2.1% |
05—Questions
Frequently Asked Questions
What were Cisco's key financial drivers in fiscal year 2023?
Cisco's financial performance in fiscal year 2023 was primarily driven by an 11% increase in total revenue, reaching $56.998 billion. This growth was fueled by a strong 13% rise in product revenue and a more modest 2% increase in service revenue. The company also saw positive momentum in its software offerings, with a 12% increase in software revenue and a 16% jump in subscription revenue, reflecting a successful transition towards recurring revenue models.
How did Cisco address supply chain challenges?
Cisco reported an overall improvement in supply chain constraints during fiscal year 2023, which allowed them to increase product deliveries to customers and positively impact product revenue. The company implemented various mitigating actions in prior periods, including collaborating with key suppliers, optimizing inventory, and revising supplier arrangements to secure supply and pricing for critical components.
What is Cisco's strategy and outlook for future growth?
Cisco's core strategy is to 'securely connect everything,' focusing on customer priorities like infrastructure transformation, enterprise security, hybrid work enablement, application reimagining, and sustainability. The company is heavily investing in innovation across its product portfolio, including AI and machine learning capabilities. Cisco aims to drive profitable growth by continuing its transition to software and subscription-based offerings and by adapting to evolving market demands and customer needs in a dynamic economic and competitive landscape.
How did Cisco return capital to shareholders?
Cisco demonstrated a strong commitment to returning capital to shareholders in fiscal year 2023. The company paid $6.3 billion in dividends and repurchased approximately $4.3 billion worth of its common stock under its ongoing stock repurchase program. This reflects the company's strategy to return a minimum of 50% of its free cash flow annually to stockholders.
06—Continue