10-QPeriod: Q1 FY2022

CISCO SYSTEMS, INC. Quarterly Report for Q1 Ended Oct 30, 2021

Filed November 23, 2021For Securities:CSCO

Summary

Cisco Systems, Inc. reported strong financial results for the first quarter of fiscal year 2022, with total revenue reaching $12.9 billion, an increase of 8% year-over-year. This growth was primarily driven by an 11% increase in product revenue, while service revenue saw a modest 1% increase. The company's gross margin percentage was 62.4%, a slight decrease from the prior year, impacted by increased costs related to supply chain constraints. However, operating income saw a significant improvement, increasing by 34% to $3.4 billion, with operating income as a percentage of revenue rising to 26.7%. Diluted earnings per share grew by 37% to $0.70. The company is navigating industry-wide supply constraints, particularly in component shortages, which are expected to persist into the second half of fiscal year 2022. Despite these challenges, Cisco continues to invest in innovation and its strategic priorities, focusing on connecting, securing, and automating for digital agility in a cloud-first world. The company also returned significant capital to shareholders through $1.6 billion in dividends and $256 million in share repurchases during the quarter.

Financial Highlights

55 data points
Beta

Revenue

$12.90B

62.4% Gross Margin

Net Income

$2.98B

23.1% Net Margin

EPS (Diluted)

$0.70

Total Assets

$95.98B

Cash & Equivalents

$7.62B

Free Cash Flow

$3.31B

Financial Statements
Beta
Revenue$12.90B
Cost of Revenue$4.85B
Gross Profit$8.05B
R&D Expenses$1.71B
Operating Expenses$4.62B
Operating Income$3.44B
Interest Expense$89.00M
Net Income$2.98B
EPS (Basic)$0.71
EPS (Diluted)$0.70
Shares Outstanding (Basic)4.22B
Shares Outstanding (Diluted)4.24B

Key Highlights

  • 1Total revenue increased by 8% to $12.9 billion, driven by robust product revenue growth.
  • 2Net income surged by 37% to $3.0 billion, translating to a diluted EPS of $0.70.
  • 3Operating income grew 34% to $3.4 billion, with operating margin expanding to 26.7%.
  • 4Despite supply chain challenges, the company declared $1.6 billion in dividends and repurchased $256 million in stock.
  • 5Product revenue saw an 11% increase, with notable growth in Secure, Agile Networks and Internet for the Future categories.
  • 6Service revenue experienced a 1% increase, reflecting continued demand for support and maintenance.
  • 7The company is actively managing industry-wide supply constraints, expecting them to continue through the second half of fiscal year 2022.

Frequently Asked Questions

Cisco reported total revenue of $12.9 billion for the first quarter of fiscal year 2022, an increase of 8% compared to the same period last year. Product revenue grew by 11%, while service revenue increased by 1%.

Supply chain constraints, primarily due to component shortages, negatively impacted Cisco's product gross margin percentage, leading to increased costs. The company expects these constraints to persist into the second half of fiscal year 2022, but is taking steps to mitigate their effects and manage inventory.

Cisco has a commitment to return a minimum of 50% of its free cash flow annually to stockholders through cash dividends and stock repurchases. In the first quarter of fiscal year 2022, the company paid $1.6 billion in dividends and repurchased $256 million of its common stock.

Profitability significantly improved. Operating income increased by 34% to $3.4 billion, and operating income as a percentage of revenue expanded to 26.7%. Net income rose by 37% to $3.0 billion, resulting in diluted earnings per share of $0.70, a 37% increase year-over-year.