News Release

Cisco Reports Fourth Quarter And Fiscal Year 2020 Earnings

Cisco Press Release
  • Q4 Results:
    • Revenue: $12.2 billion
      • Decrease of (9)% year over year
    • Earnings per Share: GAAP: $0.62; Non-GAAP: $0.80
      • GAAP EPS increased 22% year over year
      • Non-GAAP EPS decreased (4)% year over year
  • FY 2020 Results:
    • Revenue: $49.3 billion
      • Decrease of (5)% year over year
      • 51% of revenue from software and services
    • Earnings per Share: GAAP: $2.64; Non-GAAP: $3.21
      • GAAP EPS increased 1% year over year
      • Non-GAAP EPS increased 4% year over year
  • Q1 Guidance:
    • Revenue: (9)% to (11)% decline year over year
    • Earnings per Share: GAAP: $0.41 to $0.47; Non-GAAP: $0.69 to $0.71

    Q4FY20 Earnings Infographics

     

SAN JOSE, Calif., Aug. 12, 2020 -- Cisco today reported fourth quarter and fiscal year results for the period ended July 25, 2020. Cisco reported fourth quarter revenue of $12.2 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.6 billion or $0.62 per share, and non-GAAP net income of $3.4 billion or $0.80 per share.

 

As previously disclosed, Cisco completed the divestiture of the Service Provider Video Software Solutions (SPVSS) business in the second quarter of fiscal 2019 on October 28, 2018. Revenue and non-GAAP financial information have been normalized to exclude the SPVSS business from prior periods for comparative purposes.

"By the end of fiscal 2020, we achieved our goal of more than half of our revenue coming from software and services, and this strategy continues to resonate with customers as they digitize their organizations. Throughout fiscal 2020, Cisco has demonstrated operational resilience based on our strong customer relationships, solid financial foundation, and differentiated innovation," said Chuck Robbins, chairman and CEO of Cisco. "As we focus on the future, we are rebalancing our R&D investments to focus on new areas so we can continue to offer customers the best, most relevant technology in simpler, more easily consumable ways."

Q4 GAAP Results

 
 

Q4 FY 2020

 

Q4 FY 2019

 

Vs. Q4 FY 2019

Revenue

$

12.2

billion

 

$

13.4

billion

 

(9)%

Net Income

$

2.6

billion

 

$

2.2

billion

 

19%

Diluted Earnings per Share (EPS)

$

0.62

   

$

0.51

   

22%

Q4 GAAP results for fiscal 2019 include a $0.9 billion charge related to the Tax Cuts and Jobs Act.

Q4 Non-GAAP Results

 
   

Q4 FY 2020

 

Q4 FY 2019

 

Vs. Q4 FY 2019

Net Income

 

$

3.4

billion

 

$

3.6

billion

 

(5)%

EPS

 

$

0.80

   

$

0.83

   

(4)%

 

Fiscal Year GAAP Results

 
 

FY 2020

 

FY 2019

 

Vs. FY 2019

Revenue (including SPVSS business for all periods)

$

49.3

billion

 

$

51.9

billion

 

(5)%

Revenue (excluding SPVSS business for all periods)

$

49.3

billion

 

$

51.7

billion

 

(5)%

Net Income

$

11.2

billion

 

$

11.6

billion

 

(4)%

EPS

$

2.64

   

$

2.61

   

1%

GAAP results for fiscal 2019 include charges related to the Tax Cuts and Jobs Act of $0.9 billion.

Fiscal Year Non-GAAP Results

 
 

FY 2020

 

FY 2019

 

Vs. FY 2019

Net Income (excluding SPVSS business for all periods)

$

13.7

billion

 

$

13.8

billion

 

(1)%

EPS (excluding SPVSS business for all periods)

$

3.21

   

$

3.10

   

4%

Reconciliations between net income, EPS, and other measures on a GAAP and non-GAAP basis are provided in the tables located in the section entitled "Reconciliations of GAAP to non-GAAP Measures."

"We executed well in Q4, delivering strong margins despite the very challenging environment," said Kelly Kramer, CFO of Cisco. "Software subscriptions now make up 78% of our software revenue and remaining performance obligations continued to grow strongly in the quarter, reflecting the strength of our portfolio of software and services.  We are seeing the returns on our investments in innovation as we focus on delivering long term growth and shareholder value."

Financial Summary

All comparative percentages are on a year-over-year basis unless otherwise noted.

All revenue, non-GAAP, and geographic financial information in the "FY 2020 Highlights" sections are presented excluding the SPVSS business for all prior periods as it was divested during the second quarter of fiscal 2019, on October 28, 2018.

Q4 FY 2020 Highlights

Revenue -- Total revenue was $12.2 billion, down 9%, with product revenue down 13% and service revenue was flat. Revenue by geographic segment was: Americas down 12%, EMEA down 6%, and APJC down 7%. Product revenue was led by growth in Security, up 10%. Infrastructure Platforms was down 16% and Applications was down 9%.

Gross Margin --  On a GAAP basis, total gross margin, product gross margin, and service gross margin were 63.2%, 61.2%, and 68.7%, respectively, as compared with 63.9%, 62.9%, and 66.8%, respectively, in the fourth quarter of 2019.

On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 65.0%, 63.2%, and 69.8%, respectively, as compared with 65.5%, 64.7%, and 67.9%, respectively, in the fourth quarter of 2019.

Total gross margins by geographic segment were: 65.6% for the Americas, 64.9% for EMEA and 63.2% for APJC.

Operating Expenses -- On a GAAP basis, operating expenses were $4.4 billion, down 9%, and were 36.5% of revenue. Non-GAAP operating expenses were $3.9 billion, down 12%, and were 32.0% of revenue.

Operating Income -- GAAP operating income was $3.2 billion, down 12%, with GAAP operating margin of 26.7%. Non-GAAP operating income was $4.0 billion, down 8%, with non-GAAP operating margin at 33.0%.

Provision for Income Taxes -- The GAAP tax provision rate was 20.3%. The non-GAAP tax provision rate was 16.7%.

Net Income and EPS -- On a GAAP basis, net income was $2.6 billion, an increase of 19%, and EPS was $0.62, an increase of 22%. On a non-GAAP basis, net income was $3.4 billion, a decrease of 5%, and EPS was $0.80, a decrease of 4%.

Cash Flow from Operating Activities -- $3.8 billion for the fourth quarter of fiscal 2020, a decrease of 4% compared with $3.9 billion for the fourth quarter of fiscal 2019.

FY 2020 Highlights

Revenue -- Total revenue was $49.3 billion, a decrease of 5%.

Net Income and EPS -- On a GAAP basis, net income was $11.2 billion, a decrease of 4%, and EPS was $2.64, an increase of 1%. On a non-GAAP basis, net income was $13.7 billion, a decrease of 1% compared to fiscal 2019, and EPS was $3.21, an increase of 4%.

Cash Flow from Operating Activities -- $15.4 billion for fiscal 2020 compared with $15.8 billion for fiscal 2019, a decrease of 3%. Operating cash flow for fiscal 2019 includes the receipt of $0.4 billion related to a litigation settlement with Arista Networks. Operating cash flow was flat normalized for this item.

Balance Sheet and Other Financial Highlights

Cash and Cash Equivalents and Investments -- $29.4 billion at the end of the fourth quarter of fiscal 2020, compared with $28.6 billion at the end of the third quarter of fiscal 2020, and compared with $33.4 billion at the end of fiscal 2019.

Deferred Revenue -- $20.4 billion, up 11% in total, with deferred product revenue up 17%. Deferred service revenue was up 7%.

Remaining Performance Obligations -- $28.4 billion at the end of fiscal 2020, up 12%.

Capital Allocation -- In the fourth quarter of fiscal 2020, we declared and paid a cash dividend of $0.36 per common share, or $1.5 billion.

Acquisitions

In the first quarter of fiscal 2021, we closed the acquisition of privately held ThousandEyes, Inc. ThousandEyes' Internet and Cloud intelligence platform delivers deep visibility and insights into the digital delivery of applications and services over the Internet.

Guidance for Q1 FY 2021

Cisco expects to achieve the following results for the first quarter of fiscal 2021:

Q1 FY 2021

   

Revenue

 

(9)% - (11)% decline Y/Y

Non-GAAP gross margin rate

 

64% - 65%

Non-GAAP operating margin rate

 

30% - 31%

Non-GAAP tax provision rate

 

19%

Non-GAAP EPS

 

$0.69 - $0.71

Cisco estimates that GAAP EPS will be $0.41 to $0.47 in the first quarter of fiscal 2021.

A reconciliation between the Guidance for Q1 FY 2021 on a GAAP and non-GAAP basis is provided in the table entitled "GAAP to non-GAAP Guidance for Q1 FY 2021" located in the section entitled "Reconciliations of GAAP to non-GAAP Measures."

Editor's Notes:

  • Q4 fiscal year 2020 conference call to discuss Cisco's results along with guidance will be held on Wednesday, August 12, 2020 at 1:30 p.m. Pacific Time. Conference call number is 1-888-848-6507 (United States) or 1-212-519-0847 (international).
  • Conference call replay will be available from 4:00 p.m. Pacific Time, August 12, 2020 to 4:00 p.m. Pacific Time, August 19, 2020 at 1-866-429-0574 (United States) or 1-203-369-0916 (international). The replay will also be available via webcast on the Cisco Investor Relations website at https://investor.cisco.com.
  • Additional information regarding Cisco's financials, as well as a webcast of the conference call with visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, August 12, 2020. Text of the conference call's prepared remarks will be available within 24 hours of completion of the call. The webcast will include both the prepared remarks and the question-and-answer session. This information, along with the GAAP to non-GAAP reconciliation information, will be available on the Cisco Investor Relations website at https://investor.cisco.com.

 

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per-share amounts)

(Unaudited)

 
 

Three Months Ended

 

Fiscal Year Ended

 

July 25,

2020

 

July 27,

2019

 

July 25,

2020

 

July 27,

2019

REVENUE:

             

Product

$

8,832

   

$

10,120

   

$

35,978

   

$

39,005

 

Service

3,322

   

3,308

   

13,323

   

12,899

 

Total revenue

12,154

   

13,428

   

49,301

   

51,904

 

COST OF SALES:

             

Product

3,429

   

3,757

   

13,199

   

14,863

 

Service

1,041

   

1,097

   

4,419

   

4,375

 

Total cost of sales

4,470

   

4,854

   

17,618

   

19,238

 

GROSS MARGIN

7,684

   

8,574

   

31,683

   

32,666

 

OPERATING EXPENSES:

             

Research and development

1,565

   

1,753

   

6,347

   

6,577

 

Sales and marketing

2,218

   

2,487

   

9,169

   

9,571

 

General and administrative

494

   

566

   

1,925

   

1,827

 

Amortization of purchased intangible assets

33

   

38

   

141

   

150

 

Restructuring and other charges

127

   

40

   

481

   

322

 

Total operating expenses

4,437

   

4,884

   

18,063

   

18,447

 

OPERATING INCOME

3,247

   

3,690

   

13,620

   

14,219

 

Interest income

187

   

305

   

920

   

1,308

 

Interest expense

(119)

   

(204)

   

(585)

   

(859)

 

Other income (loss), net

(9)

   

(87)

   

15

   

(97)

 

Interest and other income (loss), net

59

   

14

   

350

   

352

 

INCOME BEFORE PROVISION FOR INCOME TAXES

3,306

   

3,704

   

13,970

   

14,571

 

Provision for income taxes (1)

670

   

1,498

   

2,756

   

2,950

 

NET INCOME

$

2,636

   

$

2,206

   

$

11,214

   

$

11,621

 
               

Net income per share:

             

Basic

$

0.62

   

$

0.52

   

$

2.65

   

$

2.63

 

Diluted

$

0.62

   

$

0.51

   

$

2.64

   

$

2.61

 

Shares used in per-share calculation:

             

Basic

4,227

   

4,269

   

4,236

   

4,419

 

Diluted

4,244

   

4,307

   

4,254

   

4,453

 
 

The Consolidated Statements of Operations include the results of the SPVSS business prior to its divestiture during the second quarter of fiscal 2019 on October 28, 2018. Accordingly, the fiscal year ended July 27, 2019 includes three months of financial results for this business.

 

(1) The provision for income taxes included a $0.9 billion charge for the three months and fiscal year ended July 27, 2019 related to the Tax Cuts and Jobs Act.

 

CISCO SYSTEMS, INC.

REVENUE BY SEGMENT

(In millions, except percentages)

 
 

July 25, 2020

 

Three Months Ended

 

Fiscal Year Ended

             

Excluding

SPVSS

business

 

Including

SPVSS

business

 

Amount

 

Y/Y%

 

Amount

 

Y/Y%

 

Y/Y%

Revenue:

                 

Americas

$

7,185

   

(12)%

 

$

29,291

   

(5)%

 

(5)%

EMEA

3,106

   

(6)%

 

12,659

   

(3)%

 

(3)%

APJC

1,863

   

(7)%

 

7,352

   

(6)%

 

(7)%

Total

$

12,154

   

(9)%

 

$

49,301

   

(5)%

 

(5)%

 

Amounts may not sum and percentages may not recalculate due to rounding.

 

During the second quarter of fiscal 2019 on October 28, 2018, we completed the divestiture of the SPVSS business. SPVSS business revenue for the fiscal year ended July 27, 2019 was $168 million.

 

CISCO SYSTEMS, INC.

GROSS MARGIN PERCENTAGE BY SEGMENT

(In percentages)

 
   

July 25, 2020

   

Three Months Ended

 

Fiscal Year Ended

Gross Margin Percentage:

       

Americas

 

65.6%

 

66.7%

EMEA

 

64.9%

 

65.6%

APJC

 

63.2%

 

63.8%

 

CISCO SYSTEMS, INC.

REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES

(In millions, except percentages)

 
   

July 25, 2020

   

Three Months Ended

 

Fiscal Year Ended

               

Excluding
SPVSS
business

 

Including
SPVSS
business

   

Amount

 

Y/Y %

 

Amount

 

Y/Y%

 

Y/Y %

Revenue:

                   

Infrastructure Platforms

 

$

6,626

   

(16)%

 

$

27,122

   

(10)%

 

(10)%

Applications

 

1,357

   

(9)%

 

5,568

   

(4)%

 

(4)%

Security

 

814

   

10%

 

3,154

   

12%

 

12%

Other Products

 

35

   

(17)%

 

135

   

—%

 

(52)%

Total Product

 

8,832

   

(13)%

 

35,978

   

(7)%

 

(8)%

Services

 

3,322

   

—%

 

13,323

   

3%

 

3%

Total

 

$

12,154

   

(9)%

 

$

49,301

   

(5)%

 

(5)%

 

Amounts may not sum and percentages may not recalculate due to rounding.

 

During the second quarter of fiscal 2019 on October 28, 2018, we completed the divestiture of the SPVSS business. SPVSS business revenue for the fiscal year ended July 27, 2019 was $168 million.

 

CISCO SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 
 

July 25,

2020

 

July 27,

2019

ASSETS

     

Current assets:

     

Cash and cash equivalents

$

11,809

   

$

11,750

 

Investments

17,610

   

21,663

 

Accounts receivable, net of allowance for doubtful accounts of $143 at July 25, 2020 and $136 at July 27, 2019

5,472

   

5,491

 

Inventories

1,282

   

1,383

 

Financing receivables, net

5,051

   

5,095

 

Other current assets

2,349

   

2,373

 

Total current assets

43,573

   

47,755

 

Property and equipment, net

2,453

   

2,789

 

Financing receivables, net

5,714

   

4,958

 

Goodwill

33,806

   

33,529

 

Purchased intangible assets, net

1,576

   

2,201

 

Deferred tax assets

3,990

   

4,065

 

Other assets

3,741

   

2,496

 

TOTAL ASSETS

$

94,853

   

$

97,793

 

LIABILITIES AND EQUITY

     

Current liabilities:

     

Short-term debt

$

3,005

   

$

10,191

 

Accounts payable

2,218

   

2,059

 

Income taxes payable

839

   

1,149

 

Accrued compensation

3,122

   

3,221

 

Deferred revenue

11,406

   

10,668

 

Other current liabilities

4,741

   

4,424

 

Total current liabilities

25,331

   

31,712

 

Long-term debt

11,578

   

14,475

 

Income taxes payable

8,837

   

8,927

 

Deferred revenue

9,040

   

7,799

 

Other long-term liabilities

2,147

   

1,309

 

Total liabilities

56,933

   

64,222

 

Total equity

37,920

   

33,571

 

     TOTAL LIABILITIES AND EQUITY

$

94,853

   

$

97,793

 

 

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 
 

Fiscal Year Ended

 

July 25,

2020

 

July 27,

2019

Cash flows from operating activities:

     

Net income

$

11,214

   

$

11,621

 

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation, amortization, and other

1,808

   

1,897

 

Share-based compensation expense

1,569

   

1,570

 

Provision for receivables

93

   

40

 

Deferred income taxes

(38)

   

(350)

 

(Gains) losses on divestitures, investments and other, net

(138)

   

(24)

 

Change in operating assets and liabilities, net of effects of acquisitions and divestitures:

     

Accounts receivable

(107)

   

(84)

 

Inventories

84

   

131

 

Financing receivables

(797)

   

(249)

 

Other assets

96

   

(955)

 

Accounts payable

141

   

87

 

Income taxes, net

(322)

   

312

 

Accrued compensation

(78)

   

277

 

Deferred revenue

2,011

   

1,407

 

Other liabilities

(110)

   

151

 

Net cash provided by operating activities

15,426

   

15,831

 

Cash flows from investing activities:

     

Purchases of investments

(9,212)

   

(2,416)

 

Proceeds from sales of investments

5,631

   

7,388

 

Proceeds from maturities of investments

7,975

   

12,928

 

Acquisitions and divestitures

(327)

   

(2,175)

 

Purchases of investments in privately held companies

(190)

   

(148)

 

Return of investments in privately held companies

224

   

159

 

Acquisition of property and equipment

(770)

   

(909)

 

Proceeds from sales of property and equipment

179

   

22

 

Other

(10)

   

(12)

 

Net cash provided by investing activities

3,500

   

14,837

 

Cash flows from financing activities:

     

Issuances of common stock

655

   

640

 

Repurchases of common stock - repurchase program

(2,659)

   

(20,717)

 

Shares repurchased for tax withholdings on vesting of restricted stock units

(727)

   

(862)

 

Short-term borrowings, original maturities of 90 days or less, net

(3,470)

   

3,446

 

Issuances of debt

   

2,250

 

Repayments of debt

(6,720)

   

(6,780)

 

Dividends paid

(6,016)

   

(5,979)

 

Other

51

   

113

 

Net cash used in financing activities

(18,886)

   

(27,889)

 

Net increase in cash, cash equivalents, and restricted cash

40

   

2,779

 

Cash, cash equivalents, and restricted cash, beginning of fiscal year

11,772

   

8,993

 

Cash, cash equivalents, and restricted cash, end of fiscal year

$

11,812

   

$

11,772

 
       

Supplemental cash flow information:

     

Cash paid for interest

$

603

   

$

892

 

Cash paid for income taxes, net

$

3,116

   

$

2,986

 

 

CISCO SYSTEMS, INC.

DEFERRED REVENUE

(In millions)

 
 

July 25,

2020

 

April 25,

2020

 

July 27,

2019

Deferred revenue:

         

Service

$

12,551

   

$

11,423

   

$

11,709

 

Product

7,895

   

7,225

   

6,758

 

Total

$

20,446

   

$

18,648

   

$

18,467

 

Reported as:

         

Current

$

11,406

   

$

10,710

   

$

10,668

 

Noncurrent

9,040

   

7,938

   

7,799

 

Total

$

20,446

   

$

18,648

   

$

18,467

 

 

CISCO SYSTEMS, INC.

REMAINING PERFORMANCE OBLIGATIONS

(In millions, except percentages)

 
 

July 25, 2020

 

April 25, 2020

 

July 27, 2019

 

Amount

 

Y/Y %

 

Amount

 

Y/Y %

 

Amount

 

Y/Y %

Product

$

11,261

   

17

%

 

$

10,386

   

25

%

 

$

9,603

   

N/A

Service

17,093

   

9

%

 

15,142

   

3

%

 

15,702

   

N/A

Total

$

28,354

   

12

%

 

$

25,528

   

11

%

 

$

25,305

   

N/A

 

CISCO SYSTEMS, INC.

DIVIDENDS PAID AND REPURCHASES OF COMMON STOCK

(In millions, except per-share amounts)

 
   

DIVIDENDS

 

STOCK REPURCHASE PROGRAM

 

TOTAL

Quarter Ended

 

Per Share

 

Amount

 

Shares

 

Weighted-

Average Price

per Share

 

Amount

 

Amount

Fiscal 2020

                       

July 25, 2020

 

$

0.36

   

$

1,525

   

   

$

   

$

   

$

1,525

 

April 25, 2020

 

$

0.36

   

$

1,519

   

25

   

$

39.71

   

$

981

   

$

2,500

 

January 25, 2020

 

$

0.35

   

$

1,486

   

18

   

$

46.71

   

$

870

   

$

2,356

 

October 26, 2019

 

$

0.35

   

$

1,486

   

16

   

$

48.91

   

$

768

   

$

2,254

 
                         

Fiscal 2019

                       

July 27, 2019

 

$

0.35

   

$

1,490

   

82

   

$

54.99

   

$

4,515

   

$

6,005

 

April 27, 2019

 

$

0.35

   

$

1,519

   

116

   

$

52.14

   

$

6,020

   

$

7,539

 

January 26, 2019

 

$

0.33

   

$

1,470

   

111

   

$

45.09

   

$

5,016

   

$

6,486

 

October 27, 2018

 

$

0.33

   

$

1,500

   

109

   

$

46.01

   

$

5,026

   

$

6,526

 
 

The remaining authorized amount for stock repurchases under the program is $10.8 billion with no termination date.

 

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

 

GAAP TO NON-GAAP NET INCOME

(In millions)

 
 

Three Months Ended

 

Fiscal Year Ended

 

July 25,

2020

 

July 27,

2019

 

July 25,

2020

 

July 27,

2019

GAAP net income

$

2,636

   

$

2,206

   

$

11,214

   

$

11,621

 

Adjustments to cost of sales:

             

Share-based compensation expense

61

   

57

   

237

   

220

 

Amortization of acquisition-related intangible assets

157

   

144

   

611

   

562

 

Supplier component remediation charge (adjustment), net

   

17

   

   

16

 

Acquisition-related/divestiture costs

   

1

   

3

   

10

 

Legal and indemnification settlements

   

   

4

   

5

 

Total adjustments to GAAP cost of sales

218

   

219

   

855

   

813

 

Adjustments to operating expenses:

             

Share-based compensation expense

332

   

335

   

1,307

   

1,309

 

Amortization of acquisition-related intangible assets

33

   

38

   

141

   

150

 

Acquisition-related/divestiture costs

55

   

61

   

246

   

299

 

Legal and indemnification settlements

   

   

   

(396)

 

Significant asset impairments and restructurings

127

   

40

   

481

   

322

 

Total adjustments to GAAP operating expenses

547

   

474

   

2,175

   

1,684

 

Adjustments to GAAP interest and other income (loss), net:

             

(Gains) and losses on equity investments

2

   

20

   

(97)

   

(57)

 

Total adjustments to GAAP income before provision for income taxes

767

   

713

   

2,933

   

2,440

 

Income tax effect of non-GAAP adjustments

(175)

   

(168)

   

(722)

   

(722)

 

Significant tax matters (1)

166

   

835

   

233

   

448

 

Total adjustments to GAAP provision for income taxes

(9)

   

667

   

(489)

   

(274)

 

Non-GAAP net income

$

3,394

   

$

3,586

   

$

13,658

   

$

13,787

 
 

(1)  The three months and fiscal year ended July 27, 2019 includes a $0.9 billion charge related to the Tax Cuts and Jobs Act.

 

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

 

GAAP TO NON-GAAP EPS

 
 

Three Months Ended

 

Fiscal Year Ended

 

July 25,

2020

 

July 27,

2019

 

July 25,

2020

 

July 27,

2019

GAAP EPS

$

0.62

   

$

0.51

   

$

2.64

   

$

2.61

 

Adjustments to GAAP:

             

Share-based compensation expense

0.09

   

0.09

   

0.36

   

0.34

 

Amortization of acquisition-related intangible assets

0.04

   

0.04

   

0.18

   

0.16

 

Acquisition-related/divestiture costs

0.01

   

0.01

   

0.06

   

0.07

 

Legal and indemnification settlements

   

   

   

(0.09)

 

Significant asset impairments and restructurings

0.03

   

0.01

   

0.11

   

0.07

 

(Gains) and losses on equity investments

   

   

(0.02)

   

(0.01)

 

Income tax effect of non-GAAP adjustments

(0.04)

   

(0.04)

   

(0.17)

   

(0.16)

 

Significant tax matters

0.04

   

0.19

   

0.05

   

0.10

 

Non-GAAP EPS

$

0.80

   

$

0.83

   

$

3.21

   

$

3.10

 
 

Amounts may not sum due to rounding.

 

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

 

GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET, AND NET INCOME

(In millions, except percentages)

 
 

Three Months Ended

 

July 25, 2020

 

Product

Gross

Margin

 

Service

Gross

Margin

 

Total

Gross

Margin

 

Operating

Expenses

 

Y/Y

 

Operating

Income

 

Y/Y

 

Interest

and

other

income

(loss),

net

 

Net

Income

 

Y/Y

GAAP amount

$

5,403

   

$

2,281

   

$

7,684

   

$

4,437

   

(9)%

 

$

3,247

   

(12)%

 

$

59

   

$

2,636

   

19%

% of revenue

61.2

%

 

68.7

%

 

63.2

%

 

36.5

%

     

26.7

%

     

0.5

%

 

21.7

%

   

Adjustments to GAAP amounts:

                                     

Share-based compensation expense

24

   

37

   

61

   

332

       

393

       

   

393

     

Amortization of acquisition-related intangible assets

157

   

   

157

   

33

       

190

       

   

190

     

Acquisition/divestiture-related costs

   

   

   

55

       

55

       

   

55

     

Significant asset impairments and restructurings

   

   

   

127

       

127

       

   

127

     

(Gains) and losses on equity investments

   

   

   

       

       

2

   

2

     

Income tax effect/significant tax matters

   

   

   

       

       

   

(9)

     

Non-GAAP amount

$

5,584

   

$

2,318

   

$

7,902

   

$

3,890

   

(12)%

 

$

4,012

   

(8)%

 

$

61

   

$

3,394

   

(5)%

% of revenue

63.2

%

 

69.8

%

 

65.0

%

 

32.0

%

     

33.0

%

     

0.5

%

 

27.9

%

   
 

Amounts may not sum and percentages may not recalculate due to rounding.

 

 

Three Months Ended

 

July 27, 2019

 

Product

Gross

Margin

 

Service

Gross

Margin

 

Total

Gross

Margin

 

Operating

Expenses

 

Operating

Income

 

Interest

and

other

income

(loss),

net

 

Net

Income

GAAP amount

$

6,363

   

$

2,211

   

$

8,574

   

$

4,884

   

$

3,690

   

$

14

   

$

2,206

 

% of revenue

62.9

%

 

66.8

%

 

63.9

%

 

36.4

%

 

27.5

%

 

0.1

%

 

16.4

%

Adjustments to GAAP amounts:

                         

Share-based compensation expense

23

   

34

   

57

   

335

   

392

   

   

392

 

Amortization of acquisition-related intangible assets

144

   

   

144

   

38

   

182

   

   

182

 

Supplier component remediation charge (adjustment), net

17

   

   

17

   

   

17

   

   

17

 

Acquisition/divestiture-related costs

   

1

   

1

   

61

   

62

   

   

62

 

Significant asset impairments and restructurings

   

   

   

40

   

40

   

   

40

 

(Gains) and losses on equity investments

   

   

   

   

   

20

   

20

 

Income tax effect/significant tax matters (1)

   

   

   

   

   

   

667

 

Non-GAAP amount

$

6,547

   

$

2,246

   

$

8,793

   

$

4,410

   

$

4,383

   

$

34

   

$

3,586

 

% of revenue

64.7

%

 

67.9

%

 

65.5

%

 

32.8

%

 

32.6

%

 

0.3

%

 

26.7

%

 

Amounts may not sum and percentages may not recalculate due to rounding.

 

(1) Includes a $0.9 billion charge related to the Tax Cuts and Jobs Act.

 

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

 

GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET, AND NET INCOME

(In millions, except percentages)

 
 

Fiscal Year Ended

 

July 25, 2020

 

Product

Gross

Margin

 

Service

Gross

Margin

 

Total

Gross

Margin

 

Operating

Expenses

 

Y/Y

 

Operating

Income

 

Y/Y

 

Interest

and

other

income

(loss),

net

 

Net

Income

 

Y/Y

GAAP amount

$

22,779

   

$

8,904

   

$

31,683

   

$

18,063

   

(2)%

 

$

13,620

   

(4)%

 

$

350

   

$

11,214

   

(4)%

% of revenue

63.3

%

 

66.8

%

 

64.3

%

 

36.6

%

     

27.6

%

     

0.7

%

 

22.7

%

   

Adjustments to GAAP amounts:

                                     

Share-based compensation expense

93

   

144

   

237

   

1,307

       

1,544

       

   

1,544

     

Amortization of acquisition-related intangible assets

611

   

   

611

   

141

       

752

       

   

752

     

Legal and indemnification settlements

4

   

   

4

   

       

4

       

   

4

     

Acquisition/divestiture-related costs

   

3

   

3

   

246

       

249

       

   

249

     

Significant asset impairments and restructurings

   

   

   

481

       

481

       

   

481

     

(Gains) and losses on equity investments

   

   

   

       

       

(97)

   

(97)

     

Income tax effect/significant tax matters

   

   

   

       

       

   

(489)

     

Non-GAAP amount

$

23,487

   

$

9,051

   

$

32,538

   

$

15,888

   

(5)%

 

$

16,650

   

—%

 

$

253

   

$

13,658

   

(1)%

% of revenue

65.3

%

 

67.9

%

 

66.0

%

 

32.2

%

     

33.8

%

     

0.5

%

 

27.7

%

   
 

Amounts may not sum and percentages may not recalculate due to rounding.

 

During the second quarter of fiscal 2019 on October 28, 2018, we completed the divestiture of the SPVSS business. Accordingly, the non-GAAP growth rates are normalized to exclude the SPVSS business for fiscal 2019.

 

 

Fiscal Year Ended

 

July 27, 2019

 

Product

Gross

Margin

 

Service

Gross

Margin

 

Total

Gross

Margin

 

Operating

Expenses

 

Operating

Income

 

Interest

and

other

income

(loss),

net

 

Net

Income

GAAP amount

$

24,142

   

$

8,524

   

$

32,666

   

$

18,447

   

$

14,219

   

$

352

   

$

11,621

 

% of revenue

61.9

%

 

66.1

%

 

62.9

%

 

35.5

%

 

27.4

%

 

0.7

%

 

22.4

%

Adjustments to GAAP amounts:

                         

Share-based compensation expense

90

   

130

   

220

   

1,309

   

1,529

   

   

1,529

 

Amortization of acquisition-related intangible assets

562

   

   

562

   

150

   

712

   

   

712

 

Supplier component remediation charge (adjustment), net

16

   

   

16

   

   

16