8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 16, 2022

CISCO SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-39940	77-0059951
(State or other jurisdiction<br> <br>of incorporation)	(Commission<br> <br>File Number)	(IRS Employer<br> <br>Identification No.)
170 West Tasman Drive, San Jose, California	95134-1706
---	---
(Address of principal executive offices)	(Zip Code)

(408) 526-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading<br>Symbol(s)	Name of each exchange<br> <br>on which registered
Common Stock, par value $0.001 per share	CSCO	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.	Results of Operations and Financial Condition.

On November 16, 2022, Cisco Systems, Inc. (“Cisco”) reported its results of operations for its fiscal first quarter 2023 ended October 29, 2022. A copy of the press release issued by Cisco concerning the foregoing results is furnished herewith as Exhibit 99.1.

The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of Cisco, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

The attached exhibit includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share data for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco’s results of operations in conjunction with the corresponding GAAP measures.

Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations.

For its internal budgeting process, Cisco’s management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related/divestiture costs, significant asset impairments and restructurings, significant litigation settlements and other contingencies (such as legal and indemnification settlements and the supplier component remediation amounts), Russia-Ukraine war costs, gains and losses on equity investments, the income tax effects of the foregoing, and significant tax matters. Cisco’s management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future, there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results.

As described above, Cisco excludes the following items from one or more of its non-GAAP measures when applicable:

Share-based compensation expense. These expenses consist primarily of expenses for employee restricted stock and restricted stock units, employee stock options, and employee stock purchase rights, including such expenses associated with acquisitions. Cisco excludes share-based compensation expense from its non-GAAP measures primarily because they are non-cash expenses and Cisco believes that it is useful to investors to understand the impact of share-based compensation to its results of operations.

Amortization of acquisition-related intangible assets. Cisco incurs amortization of intangible assets (which may include impairment charges from the write-downs of purchased intangible assets) in connection with acquisitions. Such intangible assets may include purchased intangible assets with finite lives, capitalized in process research and development and goodwill. Cisco excludes these items because Cisco does not believe these expenses are reflective of ongoing operating results in the period incurred. These amounts arise from Cisco’s prior acquisitions and have no direct correlation to the operation of Cisco’s business.

Acquisition-related/divestiture costs. In connection with its business combinations, Cisco incurs compensation expense, changes to the fair value of contingent consideration, as well as professional fees and other direct expenses such as restructuring activities related to the acquired company. In addition, from time to time Cisco enters into foreign currency transactions related to pending acquisitions, and may incur gains or losses on such transactions. Cisco may also from time to time incur gains or losses from divestitures of a business area as well as professional fees and other direct expenses associated with such transactions. Cisco excludes such compensation expense, changes to the fair value of contingent consideration, fees, other direct expenses, and gains and losses, as they are related to acquisitions and divestitures and have no direct correlation to the operation of Cisco’s business.

Significant asset impairments and restructurings. Cisco from time to time incurs significant asset impairments, restructuring charges, and gains or losses on asset disposals. Cisco excludes these items, when significant, because it does not believe they are reflective of ongoing business and operating results.

Significant litigation settlements and other contingencies. Cisco from time to time may incur charges or benefits related to significant litigation settlements and other contingencies. Cisco excludes these charges or benefits, when significant, because it does not believe they are reflective of ongoing business and operating results.

Russia-Ukraine War Costs. In March 2022, in connection with the Russian invasion of Ukraine, Cisco announced its intention to stop business operations in Russia and Belarus for the foreseeable future. Further, on June 23, 2022, Cisco announced that it will begin an orderly wind-down and exit of its business in Russia and Belarus. Cisco has and may incur certain non-recurring charges related to this exit plan. These charges include non-recoverability of certain assets, special personnel-related charges in order to support impacted employees (unrelated to ordinary compensation expenses), potential future litigation and other contingencies, and other exit related costs, among others. Cisco excludes these charges because it believes they are not normal and recurring with respect to ongoing business and operating results. These excluded amounts do not include any impacts to revenue.

Gains and losses on equity investments. Cisco excludes gains and losses on equity investments because it does not believe they are reflective of ongoing business and operating results.

Income tax effects of the foregoing. This amount is used to present each of the amounts described above on an after-tax basis consistent with the presentation of non-GAAP net income.

Significant tax matters. Cisco may incur tax charges or benefits that are (i) related to prior periods or (ii) not reflective of its ongoing provision for income taxes. These tax charges or benefits may be the result of events such as changes in tax legislation, court decisions, and/or tax settlements. Cisco excludes these charges or benefits, when significant, because it does not believe they are reflective of ongoing business and operating results.

From time to time in the future, there may be other items that Cisco may exclude if it believes that doing so is consistent with the goal of providing useful information to investors and management.

Cisco will incur share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs, and gains and losses on equity investments, in future periods. Significant asset impairments, restructurings, significant litigation settlements and other contingencies, Russia-Ukraine war costs, and divestiture costs could occur in future periods. Cisco could also be impacted by significant tax matters in future periods.

Item 2.05.	Costs Associated with Exit or Disposal Activities.

On November 16, 2022, Cisco announced a restructuring plan in order to rebalance the organization and enable further investment in key priority areas. This rebalancing will include talent movement options and restructuring. Additionally, Cisco will optimize its real estate portfolio, aligned to the broader hybrid work strategy. Cisco will take action under this plan beginning in the second quarter of fiscal 2023. Cisco currently estimates that it will recognize pre-tax charges to its GAAP financial results of approximately $600 million consisting of severance and other one-time termination benefits, real estate-related charges, and other costs. These charges are primarily cash-based. Cisco expects to recognize approximately $300 million of these charges in the second quarter of fiscal 2023, approximately $200 million of these charges during the second half of fiscal 2023, and the remaining amount of these charges primarily through the first quarter of fiscal 2024.

The foregoing contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include the size and scope of the restructuring, and the approximate amount and expected timing of the related charges. Statements regarding future events are based on Cisco’s current expectations and are necessarily subject to associated risks related to the completion of the restructuring in the manner anticipated by Cisco. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: Cisco’s ability to achieve the benefits of the announced restructuring and possible changes in the size and timing of the related charges. For information regarding other factors that could cause Cisco’s results to vary from expectations, please see the “Risk Factors” section of Cisco’s periodic report filings with the Securities and Exchange Commission, including its most recent report on Form 10-K. Cisco undertakes no obligation to revise or update publicly any forward-looking statements.

Item 9.01.	Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description of Document
99.1	Press Release of Cisco, dated November 16, 2022, reporting the results of operations for Cisco’s fiscal first quarter 2023 ended October 29, 2022.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		CISCO SYSTEMS, INC.
Dated: November 16, 2022	By:	/s/ R. Scott Herren
	Name:	R. Scott Herren
	Title:	Executive Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

Press Contact:	Investor Relations Contact:
Robyn Blum	Marilyn Mora
Cisco	Cisco
1 (408) 930-8548	1 (408) 527-7452
rojenkin@cisco.com	marilmor@cisco.com

CISCO REPORTS FIRST QUARTER EARNINGS

News Summary:

•	$13.6 billion in revenue, up 6% year over year; GAAP EPS $0.65, down 7% year over year, and Non-GAAP EPS $0.86, up 5% year over year
•	Continued progress on business model transformation:
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•	Total annualized recurring revenue (ARR) at $23.2 billion, up 7% year over year and product ARR up 12% year<br>over year
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•	Total software revenue up 5% year over year and software subscription revenue up 11% year over year<br>
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•	Remaining performance obligations (RPO) at $30.9 billion, up 3% year over year and product RPO up 5% year<br>over year
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•	Q1 FY 2023 Results:
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•	Revenue: $13.6 billion
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•	Increase of 6% year over year
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•	Earnings per Share: GAAP: $0.65; Non-GAAP: $0.86<br>
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•	GAAP EPS decreased (7)% year over year
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•	Non-GAAP EPS increased 5% year over year
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•	Q2 FY 2023 Guidance:
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•	Revenue: 4.5% to 6.5% growth year over year
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•	Earnings per Share: GAAP: $0.59 to $0.64; Non-GAAP: $0.84 to $0.86<br>
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•	FY 2023 Guidance:
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•	Revenue: 4.5% to 6.5% growth year over year
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•	Earnings per Share: GAAP: $2.63 to $2.76; Non-GAAP: $3.51 to $3.58<br>
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SAN JOSE, Calif. — November 16, 2022 — Cisco today reported first quarter results for the period ended October 29, 2022. Cisco reported first quarter revenue of $13.6 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.7 billion or $0.65 per share, and non-GAAP net income of $3.5 billion or $0.86 per share.

“Our fiscal 2023 is off to a good start as we delivered the largest quarterly revenue and second highest quarterly non-GAAP earnings per share in our history,” said Chuck Robbins, chair and CEO of Cisco. “These results demonstrate the relevance of our strategy, our differentiated innovation, and our unique position to help our customers become more resilient.”

“We delivered strong results in Q1 and continued to make progress on our business transformation,” said Scott Herren, CFO of Cisco. “Our annualized recurring revenue increased to more than $23 billion, with product ARR growing 12%. This, together with our significant backlog, strong RPO, and easing supply situation, provides us with great visibility and predictability, and supports our increased full year guidance.”

1

GAAP Results

	Q1 FY 2023		Q1 FY 2022		Vs. Q1 FY 2022
Revenue	$	13.6 billion	$	12.9 billion		6	%
Net Income	$	2.7 billion	$	3.0 billion		(10	)%
Diluted Earnings per Share (EPS)	$	0.65	$	0.70		(7	)%

Non-GAAP Results

	Q1 FY 2023		Q1 FY 2022		Vs. Q1 FY 2022
Net Income	$	3.5 billion	$	3.5 billion		2	%
EPS	$	0.86	$	0.82		5	%

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.”

2

Financial Summary

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

Q1 FY 2023 Highlights

***Revenue —***Total revenue was up 6% at $13.6 billion, with product revenue up 8% and service revenue was flat. Revenue by geographic segment was: Americas up 5%, EMEA up 11%, and APJC was flat. Product revenue performance was led by growth in Secure, Agile Networks up 12%, End-to-End Security up 9%, and Optimized Application Experiences up 7%. Internet for the Future was down 5% and Collaboration was down 2%.

Gross Margin — On a GAAP basis, total gross margin, product gross margin, and service gross margin were 61.2%, 59.2%, and 67.3%, respectively, as compared with 62.4%, 61.5%, and 65.2%, respectively, in the first quarter of fiscal 2022.

On a non-GAAP basis, total gross margin, product gross margin, and service gross margin were 63.0%, 61.0%, and 68.8%, respectively, as compared with 64.5%, 63.8%, and 66.5%, respectively, in the first quarter of fiscal 2022.

Total gross margins by geographic segment were: 63.0% for the Americas, 63.3% for EMEA and 62.3% for APJC.

Operating Expenses — **** On a GAAP basis, operating expenses were $4.8 billion, up 4%, and were 35.3% of revenue. Non-GAAP operating expenses were $4.2 billion, up 5%, and were 31.1% of revenue.

Operating Income— GAAP operating income was $3.5 billion, up 3%, with GAAP operating margin of 26.0%. Non-GAAP operating income was $4.3 billion, up 1%, with non-GAAP operating margin at 31.8%.

Provision for Income Taxes — The GAAP tax provision rate was 23.2%. The non-GAAP tax provision rate was 19.0%.

Net Income and EPS — On a GAAP basis, net income was $2.7 billion, a decrease of 10%, and EPS was $0.65, a decrease of 7%. On a non-GAAP basis, net income was $3.5 billion, an increase of 2%, and EPS was $0.86, an increase of 5%.

Cash Flow from Operating Activities — $4.0 billion for the first quarter of fiscal 2023, an increase of 16% compared with $3.4 billion for the first quarter of fiscal 2022.

Balance Sheet and Other Financial Highlights

Cash and Cash Equivalents and Investments — $19.8 billion at the end of the first quarter of fiscal 2023, compared with $19.3 billion at the end of fiscal 2022.

Remaining Performance Obligations (RPO) — $30.9 billion, up 3% in total, with 53% of this amount to be recognized as revenue over the next 12 months. Product RPO were up 5% and service RPO were up 1%.

DeferredRevenue — $23.0 billion, up 4% in total, with deferred product revenue up 7%. Deferred service revenue was up 2%.

CapitalAllocation — In the first quarter of fiscal 2023, we returned $2.1 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.38 per common share, or $1.6 billion, and repurchased approximately 12 million shares of common stock under our stock repurchase program at an average price of $43.76 per share for an aggregate purchase price of $0.5 billion. The remaining authorized amount for stock repurchases under the program is $14.7 billion with no termination date.

3

Guidance

Cisco expects to achieve the following results for the second quarter of fiscal 2023:

Q2 FY 2023
Revenue	4.5% - 6.5% growth Y/Y
Non-GAAP gross margin rate	63% - 64%
Non-GAAP operating margin rate	31.5% - 32.5%
Non-GAAP EPS	$0.84 - $0.86

Cisco estimates that GAAP EPS will be $0.59 to $0.64 for the second quarter of fiscal 2023.

Cisco expects to achieve the following results for fiscal 2023:

FY 2023
Revenue	4.5% - 6.5% growth Y/Y
Non-GAAP EPS	$3.51 - $3.58

Cisco estimates that GAAP EPS will be $2.63 to $2.76 for fiscal 2023.

Our Q2 FY 2023 guidance assumes an effective tax provision rate of 19% for GAAP and non-GAAP results. Our FY 2023 guidance assumes an effective tax provision rate of 20% for GAAP and 19% for non-GAAP results.

A reconciliation between the Guidance on a GAAP and non-GAAP basis is provided in the tables entitled “GAAP to non-GAAP Guidance” located in the section entitled “Reconciliations of GAAP to non-GAAP Measures.”

Editor’s Notes:

•	Q1 fiscal year 2023 conference call to discuss Cisco’s results along with its guidance will be held on<br>Wednesday, November 16, 2022 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, November 16, 2022 to 4:00 p.m. Pacific<br>Time, November 23, 2022 at 1-800-835-5808 (United States) or<br>1-203-369-3353 (international). The replay will also be available via webcast on the Cisco Investor Relations website at<br>https://investor.cisco.com.
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•	Additional information regarding Cisco’s financials, as well as a webcast of the conference call with<br>visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, November 16, 2022. Text of the conference call’s prepared remarks will be available within 24 hours of completion of the call. The<br>webcast will include both the prepared remarks and the question-and-answer session. This information, along with the GAAP to<br>non-GAAP reconciliation information, will be available on the Cisco Investor Relations website at https://investor.cisco.com.
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4

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per-share amounts)

(Unaudited)

	Three Months Ended
	October 29,<br>2022			October 30,<br>2021
REVENUE:
Product	$	10,245		$	9,529
Service		3,387			3,371
Total revenue		13,632			12,900
COST OF SALES:
Product		4,179			3,673
Service		1,107			1,174
Total cost of sales		5,286			4,847
GROSS MARGIN		8,346			8,053
OPERATING EXPENSES:
Research and development		1,781			1,714
Sales and marketing		2,391			2,261
General and administrative		565			551
Amortization of purchased intangible assets		71			84
Restructuring and other charges		(2	)		5
Total operating expenses		4,806			4,615
OPERATING INCOME		3,540			3,438
Interest income		169			121
Interest expense		(100	)		(89	)
Other income (loss), net		(134	)		187
Interest and other income (loss), net		(65	)		219
INCOME BEFORE PROVISION FOR INCOME TAXES		3,475			3,657
Provision for income taxes		805			677
NET INCOME	$	2,670		$	2,980
Net income per share:
Basic	$	0.65		$	0.71
Diluted	$	0.65		$	0.70
Shares used in per-share calculation:
Basic		4,108			4,218
Diluted		4,116			4,243

5

CISCO SYSTEMS, INC.

REVENUE BY SEGMENT

(Inmillions, except percentages)

	Three Months Ended<br>October 29, 2022
	Amount		Y/Y%
Revenue:
Americas	$	7,914		5	%
EMEA		3,675		11	%
APJC		2,043		—	%
Total	$	13,632		6	%

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

CISCO SYSTEMS, INC.

GROSS MARGIN PERCENTAGE BY SEGMENT

(In percentages)

	Three Months Ended<br>October 29, 2022
Gross Margin Percentage:
Americas		63.0%
EMEA		63.3%
APJC		62.3%

CISCO SYSTEMS, INC.

REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES

(In millions, except percentages)

	Three Months Ended<br>October 29, 2022
	Amount		Y/Y%
Revenue:
Secure, Agile Networks	$	6,684		12	%
Internet for the Future		1,310		(5	)%
Collaboration		1,086		(2	)%
End-to-End<br>Security		971		9	%
Optimized Application Experiences		193		7	%
Other Products		2		(47	)%
Total Product		10,245		8	%
Services		3,387		—	%
Total	$	13,632		6	%

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

6

CISCO SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

		July 30,<br>2022
ASSETS
Current assets:
Cash and cash equivalents	7,292	$	7,079
Investments	12,492		12,188
Accounts receivable, net of allowance of 88 at October 29, 2022 and 83 at July 30,<br>2022	5,439		6,622
Inventories	2,664		2,568
Financing receivables, net	3,683		3,905
Other current assets	4,571		4,355
Total current assets	36,141		36,717
Property and equipment, net	1,972		1,997
Financing receivables, net	3,618		4,009
Goodwill	38,160		38,304
Purchased intangible assets, net	2,360		2,569
Deferred tax assets	4,891		4,449
Other assets	5,912		5,957
TOTAL ASSETS	93,054	$	94,002
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	1,249	$	1,099
Accounts payable	2,316		2,281
Income taxes payable	890		961
Accrued compensation	2,907		3,316
Deferred revenue	12,578		12,784
Other current liabilities	4,956		5,199
Total current liabilities	24,896		25,640
Long-term debt	7,629		8,416
Income taxes payable	7,835		7,725
Deferred revenue	10,441		10,480
Other long-term liabilities	1,981		1,968
Total liabilities	52,782		54,229
Total equity	40,272		39,773
TOTAL LIABILITIES AND EQUITY	93,054	$	94,002

All values are in US Dollars.

7

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Three Months Ended
	October 29,<br>2022			October 30,<br>2021
Cash flows from operating activities:
Net income	$	2,670		$	2,980
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other		415			533
Share-based compensation expense		496			453
Provision (benefit) for receivables		7			1
Deferred income taxes		(366	)		(98	)
(Gains) losses on divestitures, investments and other, net		131			(211	)
Change in operating assets and liabilities, net of effects of acquisitions and<br>divestitures:
Accounts receivable		1,119			427
Inventories		(108	)		(275	)
Financing receivables		556			672
Other assets		(316	)		(170	)
Accounts payable		42			(93	)
Income taxes, net		20			17
Accrued compensation		(384	)		(585	)
Deferred revenue		(78	)		(95	)
Other liabilities		(242	)		(129	)
Net cash provided by operating activities		3,962			3,427
Cash flows from investing activities:
Purchases of investments		(1,943	)		(2,951	)
Proceeds from sales of investments		407			580
Proceeds from maturities of investments		971			1,856
Acquisitions, net of cash and cash equivalents acquired and divestitures		—			(336	)
Purchases of investments in privately held companies		(48	)		(101	)
Return of investments in privately held companies		10			53
Acquisition of property and equipment		(176	)		(122	)
Proceeds from sales of property and equipment		—			1
Other		(20	)		—
Net cash used in investing activities		(799	)		(1,020	)
Cash flows from financing activities:
Repurchases of common stock - repurchase program		(556	)		(273	)
Shares repurchased for tax withholdings on vesting of restricted stock units		(108	)		(133	)
Short-term borrowings, original maturities of 90 days or less, net		(602	)		—
Repayments of debt		—			(2,000	)
Dividends paid		(1,560	)		(1,561	)
Other		(29	)		(3	)
Net cash used in financing activities		(2,855	)		(3,970	)
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and<br>restricted cash equivalents		(95	)		—
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash<br>equivalents		213			(1,563	)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of<br>period		8,579			9,942
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	$	8,792		$	8,379
Supplemental cash flow information:
Cash paid for interest	$	114		$	124
Cash paid for income taxes, net	$	1,150		$	758

8

CISCO SYSTEMS, INC.

REMAINING PERFORMANCE OBLIGATIONS

(In millions, except percentages)

	October 29, 2022					July 30, 2022					October 30, 2021
	Amount		Y/Y%			Amount		Y/Y%			Amount		Y/Y%
Product	$	14,013		5	%	$	14,090		6	%	$	13,384		18	%
Service		16,897		1	%		17,449		(1	)%		16,751		4	%
Total	$	30,910		3	%	$	31,539		2	%	$	30,135		10	%

We expect 53% of total RPO at October 29, 2022 will be recognized as revenue over the next 12 months.

CISCO SYSTEMS, INC.

DEFERRED REVENUE

(Inmillions)

	October 29,<br>2022		July 30,<br>2022		October 30,<br>2021
Deferred revenue:
Product	$	10,404	$	10,427	$	9,681
Service		12,615		12,837		12,391
Total	$	23,019	$	23,264	$	22,072
Reported as:
Current	$	12,578	$	12,784	$	12,017
Noncurrent		10,441		10,480		10,055
Total	$	23,019	$	23,264	$	22,072

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-<br>Average Price<br>per Share		Amount		Amount
Fiscal 2023
October 29, 2022	$	0.38	$	1,560		12	$	43.76	$	502	$	2,062
Fiscal 2022
July 30, 2022	$	0.38	$	1,567		54	$	44.02	$	2,402	$	3,969
April 30, 2022	$	0.38	$	1,555		5	$	54.20	$	252	$	1,807
January 29, 2022	$	0.37	$	1,541		82	$	58.36	$	4,824	$	6,365
October 30, 2021	$	0.37	$	1,561		5	$	56.49	$	256	$	1,817

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CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP NET INCOME

(In millions)

	Three Months Ended
	October 29,<br>2022			October 30,<br>2021
GAAP net income	$	2,670		$	2,980
Adjustments to cost of sales:
Share-based compensation expense		81			69
Amortization of acquisition-related intangible assets		153			198
Acquisition-related/divestiture costs		2			1
Total adjustments to GAAP cost of sales		236			268
Adjustments to operating expenses:
Share-based compensation expense		415			383
Amortization of acquisition-related intangible assets		71			84
Acquisition-related/divestiture costs		75			112
Russia-Ukraine war costs		3			—
Significant asset impairments and restructurings		(2	)		5
Total adjustments to GAAP operating expenses		562			584
Adjustments to interest and other income (loss), net:
(Gains) and losses on equity investments		109			(219	)
Total adjustments to GAAP interest and other income (loss), net		109			(219	)
Total adjustments to GAAP income before provision for income taxes		907			633
Income tax effect of non-GAAP adjustments		(192	)		(138	)
Significant tax matters		164			—
Total adjustments to GAAP provision for income taxes		(28	)		(138	)
Non-GAAP net income	$	3,549		$	3,475

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CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP EPS

	Three Months Ended
	October 29,<br>2022			October 30,<br>2021
GAAP EPS	$	0.65		$	0.70
Adjustments to GAAP:
Share-based compensation expense		0.12			0.11
Amortization of acquisition-related intangible assets		0.05			0.07
Acquisition-related/divestiture costs		0.02			0.03
(Gains) and losses on equity investments		0.03			(0.05	)
Income tax effect of non-GAAP adjustments		(0.05	)		(0.03	)
Significant tax matters		0.04			—
Non-GAAP EPS	$	0.86		$	0.82

Amounts may not sum due to rounding.

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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

(Inmillions, except percentages)

	Three Months Ended
	October 29, 2022
	Product<br>Gross<br>Margin			Service<br>Gross<br>Margin			Total<br>Gross<br>Margin			Operating<br>Expenses			Y/Y			Operating<br>Income			Y/Y			Interest<br>and<br>other<br>income<br>(loss),<br>net			Net<br>Income			Y/Y
GAAP amount	$	6,066		$	2,280		$	8,346		$	4,806			4	%	$	3,540			3	%	$	(65	)	$	2,670			(10	)%
% of revenue		59.2	%		67.3	%		61.2	%		35.3	%					26.0	%					(0.5	)%		19.6	%
Adjustments to GAAP amounts:
Share-based compensation expense		31			50			81			415						496						—			496
Amortization of acquisition-related intangible assets		153			—			153			71						224						—			224
Acquisition/divestiture-related costs		2			—			2			75						77						—			77
Significant asset impairments and restructurings		—			—			—			(2	)					(2	)					—			(2	)
Russia-Ukraine war costs		—			—			—			3						3						—			3
(Gains) and losses on equity investments		—			—			—			—						—						109			109
Income tax effect/significant tax matters		—			—			—			—						—						—			(28	)
Non-GAAP amount	$	6,252		$	2,330		$	8,582		$	4,244			5	%	$	4,338			1	%	$	44		$	3,549			2	%
% of revenue		61.0	%		68.8	%		63.0	%		31.1	%					31.8	%					0.3	%		26.0	%
	Three Months Ended
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	October 30, 2021
	Product<br>Gross<br>Margin			Service<br>Gross<br>Margin			Total<br>Gross<br>Margin			Operating<br>Expenses			Operating<br>Income			Interest<br>and other<br>income<br>(loss), net			Net<br>Income
GAAP amount	$	5,856		$	2,197		$	8,053		$	4,615		$	3,438		$	219		$	2,980
% of revenue		61.5	%		65.2	%		62.4	%		35.8	%		26.7	%		1.7	%		23.1	%
Adjustments to GAAP amounts:
Share-based compensation expense		25			44			69			383			452			—			452
Amortization of acquisition-related intangible assets		198			—			198			84			282			—			282
Acquisition/divestiture-related costs		1			—			1			112			113			—			113
Significant asset impairments and restructurings		—			—			—			5			5			—			5
(Gains) and losses on equity investments		—			—			—			—			—			(219	)		(219	)
Income tax effect/significant tax matters		—			—			—			—			—			—			(138	)
Non-GAAP amount	$	6,080		$	2,241		$	8,321		$	4,031		$	4,290		$	—		$	3,475
% of revenue		63.8	%		66.5	%		64.5	%		31.2	%		33.3	%		—	%		26.9	%

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

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CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

EFFECTIVE TAX RATE

(Inpercentages)

	Three Months Ended
	October 29,<br>2022			October 30,<br>2021
GAAP effective tax rate		23.2	%		18.5	%
Total adjustments to GAAP provision for income taxes		(4.2	)%		0.5	%
Non-GAAP effective tax rate		19.0	%		19.0	%

GAAP TO NON-GAAP GUIDANCE

Q2 FY 2023	Gross Margin<br>Rate	Operating Margin<br>Rate	Earnings per<br>Share ^(2)^
GAAP	61% - 62%	22.5% - 23.5%	$0.59 - $0.64
Estimated adjustments for:
Share-based compensation expense	1.0%	4.5%	$0.12 - $0.13
Amortization of acquisition-related intangible assets and acquisition/divestiture-related<br>costs	1.0%	2.0%	$0.05 - $0.06
Significant asset impairments and restructurings<br>^(1)^	—	2.5%	$0.05 - $0.06
Non-GAAP	63% - 64%	31.5% -32.5%	$0.84 - $0.86
FY 2023	Earnings per<br>Share ^(2)^
---	---
GAAP	$2.63 - $2.76
Estimated adjustments for:
Share-based compensation expense	$0.46 - $0.48
Amortization of acquisition-related intangible assets and acquisition/divestiture-related<br>costs	$0.21 - $0.23
Significant asset impairments and restructurings<br>^(1)^	$0.09 - $0.11
(Gains) and losses on equity investments	$0.02
Significant tax matters	$0.04
Non-GAAP	$3.51 - $3.58
^(1)^	On November 16, 2022, Cisco announced a restructuring plan in order to rebalance the organization and<br>enable further investment in key priority areas. This rebalancing will include talent movement options and restructuring. Additionally, Cisco will optimize its real estate portfolio, aligned to the broader hybrid work strategy. Cisco will take<br>action under this plan beginning in the second quarter of fiscal 2023. Cisco currently estimates that it will recognize pre-tax charges to its GAAP financial results of approximately $600 million<br>consisting of severance and other one-time termination benefits, real estate-related charges, and other costs. These charges are primarily cash-based. Cisco expects to recognize approximately $300 million<br>of these charges in the second quarter of fiscal 2023, approximately $200 million of these charges during the second half of fiscal 2023, and the remaining amount of these charges primarily through the first quarter of fiscal 2024.<br>
---	---
^(2)^	Estimated adjustments to GAAP earnings per share are shown after income tax effects.
---	---

Except as noted above, this guidance does not include the effects of any future acquisitions/divestitures, asset impairments, Russia-Ukraine war costs, restructurings, (gains) and losses on equity investments and significant tax matters or other events, which may or may not be significant unless specifically stated.

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Forward Looking Statements, Non-GAAP Information and AdditionalInformation

This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as the relevance of our strategy, our differentiated innovation, our ability to help our customers become more resilient, our continued progress on our business model transformation, and the visibility and predictability provided by backlog, RPO, easing of the supply situation and the growth of annualized recurring revenue) and the future financial performance of Cisco (including the guidance for Q2 FY 2023 and full year FY 2023) that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: the impact of the COVID-19 pandemic and related public health measures; business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth and evolution of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market and other customer markets; the return on our investments in certain priorities, key growth areas, and in certain geographical locations, as well as maintaining leadership in Secure, Agile Networks and services; the timing of orders and manufacturing and customer lead times; significant supply constraints; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; our ability to achieve expected benefits of our partnerships; increased competition in our product and service markets, including the data center market; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, other intellectual property, antitrust, stockholder and other matters, and governmental investigations; our ability to achieve the benefits of restructurings and possible changes in the size and timing of related charges; cyber-attacks, data breaches or malware; vulnerabilities and critical security defects; terrorism; natural catastrophic events (including as a result of global climate change); any other pandemic or epidemic; our ability to achieve the benefits anticipated from our investments in sales, engineering, service, marketing and manufacturing activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during economic downturns; risks related to the global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws and regulations or adverse outcomes resulting from examinations of our income tax returns; potential volatility in operating results; and other factors listed in Cisco’s most recent report on Form 10-K filed on September 8, 2022. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco’s most recent report on Form 10-K as it may be amended from time to time. Cisco’s results of operations for the three months ended October 29, 2022 are not necessarily indicative of Cisco’s operating results for any future periods. Any projections in this release are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.

This release includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share data for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco’s results of operations in conjunction with the corresponding GAAP measures.

Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations.

For its internal budgeting process, Cisco’s management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related/divestiture costs, significant asset impairments and restructurings, significant litigation settlements and other contingencies, Russia-Ukraine war costs, gains and losses on equity investments, the income tax effects of the foregoing and significant tax matters. Cisco’s management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the

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financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results. For additional information on the items excluded by Cisco from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

Annualized recurring revenue represents the annualized revenue run-rate of active subscriptions, term licenses, and maintenance contracts at the end of a reporting period, net of rebates to customers and partners as well as certain other revenue adjustments. Includes both revenue recognized ratably as well as upfront on an annualized basis.

About Cisco

Cisco (Nasdaq: CSCO) is the worldwide leader in technology that powers the Internet. Cisco inspires new possibilities by reimagining your applications, securing your data, transforming your infrastructure, and empowering your teams for a global and inclusive future. Discover more at newsroom.cisco.com and follow us on Twitter at @Cisco.

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