q4 fy16 earnings slides final no guidance

August 17, 2016

Q4 Fiscal Year 2016 Conference Call

FORWARD-LOOKING STATEMENTS This presentation contains projections and other forward-looking statements regarding future events or the future financial performance of Cisco, including future operating results. These projections and statements are only predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements. Please see Cisco’s filings with the SEC, including its most recent filings on Forms 10-K and 10-Q, for a discussion of important risk factors that could cause actual events or results to differ materially from those in the projections or other forward-looking statements.

GAAP RECONCILIATION During this presentation references to financial measures of Cisco will include references to non-GAAP financial measures. Cisco provides a reconciliation between GAAP and non-GAAP financial information on our website at www.cisco.com under “Financial Info” in the “Investor Relations” section. http://investor.cisco.com/investor-relations/financial-information/Financial-Results/default.aspx

http://investor.cisco.com/investor-relations/financial-information/Financial-Results/default.aspx









Business Momentum & Key Trends

Financial Overview

Business Outlook

Q&A

Q4 & FY 2016 Highlights

• Executed extremely well in Q4: revenue growth of 2% y/y* and record non-GAAP EPS which grew 9% y/y*

• FY16 revenue of $48.7B, up 3% y/y* and record non-GAAP EPS of $2.36, up 8% y/y*

• Gross and operating margins consistently strong throughout the year

• Service Provider and Emerging Markets turned negative in Q4 with orders down 5% and 6% respectively y/y*…the remainder of the business remained healthy with orders growing 5% y/y*

• Overall macro environment remains uncertain….well positioned to capture the benefits of any tailwinds

• Aggressively investing in priority areas to drive growth over the long term, regardless of the environment

• Strong performance in security, data center switching, collaboration and services as well as continued success in the transition of our business model to software and subscriptions

• Focused on accelerating innovation across our portfolio

* Year-over-year growth normalized to exclude the SP Video CPE Business for Q4 and FY 2015, which was divested during Q2 FY 2016 on November 20, 2015.


Financial Overview

Business Outlook

Q&A

$M

Y/Y %

Change*

Switching $3,794 2%

NGN Routing 1,876 (6%)

Collaboration 1,149 6%

Data Center 873 (1%)

Wireless 752 5%

Security 540 16%

Service Provider Video 444 (12%)

Other Products 124 114%

Service 3,086 5%

Total Cisco $12,638 2%

Q4 FY 2016 – Revenue Highlights

Certain reclassifications have been made to the amounts for prior periods in order to conform to the current period’s presentation. Historical revenue by product category and service is available on our website at http://investor.cisco.com under “Financial Info” in the “Investor Relations” section.

30%

15%

9% 7%

6%

4%

4%

1%

24% Switching

NGN Routing

Collaboration

Data Center

Wireless

Security

SP Video

Other

Service

Revenue % of Total

Percentages may not sum to 100% due to rounding

* Year-over-year growth normalized to exclude the SP Video CPE Business for Q4 FY 2015, which was divested during Q2 FY 2016 on November 20, 2015. SP Video CPE Business revenue was $487M for Q4 FY 2015.

http://investor.cisco.com/

Q4 FY 2016 Product Orders: Geographic Regions & Customer Segments

Geographic Region Y/Y % Change*

Americas 3%

EMEA (3%)

APJC 4%

Total Cisco 1%

Product Book to Bill Comfortably above 1

Customer Segment Y/Y % Change*

Enterprise 3%

Public Sector 1%

Commercial 5%

Service Provider (5%)

Total Cisco 1%

* Year-over-year growth is normalized to exclude the SP Video CPE Business for Q4 FY 2015, which was divested during Q2 FY 2016 on November 20, 2015.

Q4 FY 2016 Q4 FY 2015 Y/Y Change

Excluding SP

Video CPE

Business $M (except per-share amounts and percentages)

Total Cisco Total Cisco SP Video

CPE

Business

Excluding SP

Video CPE

Business

Revenue $12,638 $12,843 $487 $12,356 2%

Gross Margin 64.6% 62.1% 17.1% 63.9% 0.7pts

Operating Expenses $4,202 $4,216 $37 $4,179 1%

OPEX (% of Revenue) 33.2% 32.8% 7.5% 33.8% -0.6pts

Operating Income $3,966 $3,759 $46 $3,713 7%

Operating Income (% of Revenue) 31.4% 29.3% 9.5% 30.1% 1.3pts

Net Income $3,189 $3,012 $37 $2,975 7%

EPS (diluted)* $0.63 $0.59 $0.01 $0.58 9%

Q4 FY 2016 Non-GAAP Income Statement Details

* Amounts may not sum due to rounding.

Q4 FY 2016 GAAP Income Statement Highlights

$M (except per-share amounts and percentages) Q4 FY 2015 Q3 FY 2016 Q4 FY 2016

Revenue* $12,843 $12,000 $12,638

Product

Service

$9,911

$2,932

$8,875

$3,125

$9,552

$3,086

Gross Margin 60.2% 64.3% 63.1%

Product Gross Margin

Service Gross Margin

59.0%

64.5% 63.8%

65.9%

62.2%

66.0%

Operating Expenses $4,852 $4,737 $4,672

OPEX (% of Revenue) 37.8% 39.5% 37.0%

Operating Income (% of Revenue) 22.4% 24.9% 26.1%

Net Income $2,319 $2,349 $2,813

Year/Year Change 3% (4%) 21%

EPS (diluted) $0.45 $0.46 $0.56

Year/Year Change 5% (2%) 24%

*Includes SP Video CPE Business revenue for Q4 FY 2015 of $487M. The SP Video CPE Business was divested during Q2 FY 2016 on November 20, 2015.

Capital Allocation

$M Q1 FY 2016 Q2 FY 2016 Q3 FY 2016 Q4 FY 2016 FY 2016

Share Repurchases $1,207 $1,262 $649 $800 $3,918

Dividends Paid 1,068 1,065 1,308 1,309 4,750

Total $2,275 $2,327 $1,957 $2,109 $8,668

Share Repurchase Program*

Amount Purchased

($M)

Number of Shares

(M)

Avg. Price Per

Share

Q4 FY 2016 Purchases $800 28 $28.70

FY 2016 Purchases $3,918 148 $26.45

Q1 FY 2016 Q2 FY 2016 Q3 FY 2016 Q4 FY 2016 FY 2016

Dividends per Share $0.21 $0.21 $0.26 $0.26 $0.94

*Approximately $15.4B remaining authorized funds in repurchase program as of the end of Q4 FY 2016.


Financial Overview

Business Outlook

Q&A

FORWARD-LOOKING STATEMENTS These presentation slides and the related conference call 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 impact of the challenging macro environment, our ability to successfully invest in key priority areas such as security, IoT, collaboration, next generation data center and cloud, our ability to deliver shareholder value, profitable growth and strong margins, continued growth of our software and subscriptions business, and the size of the restructuring and the amount and timing of the related charges) and the future financial performance of Cisco 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: 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 routing, switching and services; the timing of orders and manufacturing and customer lead times; 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, intellectual property, antitrust, shareholder and other matters, and governmental investigations; our ability to achieve the benefits of the announced restructuring and possible changes in the size and timing of the related charges; man-made problems such as cyber-attacks, data protection breaches, computer viruses or terrorism; natural catastrophic events; a 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 reports on Forms 10-Q and 10-K filed on May 24, 2016 and September 8, 2015, respectively. The financial information contained in these presentation slides and the related conference call should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco’s most recent reports on Forms 10-Q and 10-K as each may be amended from time to time. Cisco’s results of operations for the three months and the year ended July 30, 2016 are not necessarily indicative of Cisco’s operating results for any future periods. Any projections in these presentation slides and the related conference call 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 these presentation slides and the related conference call.

Supplemental Materials

Performance Against Q4 FY 2016 Guidance

$M (except percentages) Q4 FY 2016 Guidance Q4 FY 2016 Actual

Revenue $12,638

Year/Year Change* 0% - 3% growth 2%

Non-GAAP Gross Margin 63% - 64% 64.6%

Non-GAAP Earnings per Share $0.59 - $0.61 $0.63

* Year over year growth normalized to exclude SP Video CPE Business for Q4 FY 2015, which was divested during Q2 FY 2016 on November 20, 2015.

Q4 FY 2016 Non-GAAP Income Statement Highlights $M (except per-share amounts and percentages) Q4 FY 2015 Q3 FY 2016 Q4 FY 2016

Revenue* $12,843 $12,000 $12,638

Year/Year Change

Product

Service

4%

$9,911

$2,932

(1%)

$8,875

$3,125

(2%)

$9,552

$3,086

Gross Margin 62.1% 65.2% 64.6%



61.0%

65.9% 64.5%

67.1%

63.9%

67.0%

Operating Expenses $4,216 $4,226 $4,202

OPEX (% of Revenue) 32.8% 35.2% 33.2%

Operating Income (% of Revenue) 29.3% 30.0% 31.4%

Net Income $3,012 $2,880 $3,189

Year/Year Change 6% 3% 6%

EPS (diluted) $0.59 $0.57 $0.63

Year/Year Change 7% 6% 7%

*Includes SP Video CPE Business revenue for Q4 FY 2015 of $487M. The SP Video CPE Business was divested during Q2 FY 2016 on November 20, 2015.

Q4 FY 2016 Key Financial Measures

$M (except DSO, non-GAAP inventory turns and headcount) Q4 FY 2015 Q3 FY 2016 Q4 FY 2016

Cash and Cash Equivalents and

Investments $60,416 $63,512 $65,756

Operating Cash Flow $4,138 $3,064 $3,818

Accounts Receivable $5,344 $4,047 $5,847

Days Sales Outstanding 38 33 42

Inventory $1,627 $1,343 $1,217

Non-GAAP Inventory Turns 11.5 11.7 14.0

Purchase Commitments $4,078 $3,794 $3,896

Deferred Revenue $15,183 $15,272 $16,472

Product Deferred Revenue $5,426 $5,406 $5,851

Service Deferred Revenue $9,757 $9,866 $10,621

Headcount 71,833 73,104 73,711

$M (except per-share amounts)

Q1

FY 2015

Q2

FY 2015

Q3

FY 2015

Q4

FY 2015

Q1

FY 2016

Q2

FY 2016**

Revenue $479 $361 $519 $487 $411 $93

Gross Margin $96 $66 $84 $83 $43 $13

Operating Expenses $38 $35 $37 $37 $32 $11

Operating Income $58 $31 $47 $46 $11 $2

Net Income $45 $24 $36 $37 $8 $2

EPS (diluted) $0.01 — $0.01 $0.01 — —

SP Video CPE Business Historical Financial Information*

* Stand-alone financial information is unaudited.

** Represents one month of results as the SP Video CPE Business was divested during Q2 FY 2016 on November 20, 2015.

Q4 FY 2016 Geographic Revenue and Total Gross Margin

Excluding SP Video CPE Business

Revenue Total Gross Margin Percentage

$M (except percentages) Q4 FY 2015 Q3 FY 2016 Q4 FY 2016 Q4 FY 2015 Q3 FY 2016 Q4 FY 2016

Americas $7,410 $7,062 $7,638 65.0% 66.3% 64.9%

EMEA 3,021 3,001 3,105 63.6% 65.5% 65.2%

APJC 1,925 1,937 1,895 59.8% 60.4% 62.5%

Geographic Total $12,356 $12,000 $12,638 63.9% 65.2% 64.6%

Including SP Video CPE Business

Revenue* Total Gross Margin Percentage

$M (except percentages) Q4 FY 2015 Q3 FY 2016 Q4 FY 2016 Q4 FY 2015 Q3 FY 2016 Q4 FY 2016

Americas $7,801 $7,062 $7,638 62.7% 66.3% 64.9%

EMEA 3,110 3,001 3,105 62.1% 65.5% 65.2%

APJC 1,932 1,937 1,895 59.5% 60.4% 62.5%

Geographic Total $12,843 $12,000 $12,638 62.1% 65.2% 64.6%

*Includes SP Video CPE Business revenue for Q4 FY 2015 of $487M . The SP Video CPE Business was divested during Q2 FY 2016 on November 20, 2015.

FY 2016 Non-GAAP Income Statement Highlights $M (except per-share amounts and percentages) FY 2015 FY 2016

Revenue* $49,161 $49,247

Year/Year Change

Product

Service

4%

$37,750

$11,411

0%

$37,254

$11,993

Gross Margin 62.4% 64.2%



61.5%

65.4%

63.3%

66.8%

Operating Expenses $16,482 $16,482

OPEX (% of Revenue) 33.5% 33.5%

Operating Income (% of Revenue) 28.9% 30.7%

Net Income $11,354 $12,022

Year/Year Change 5% 6%

EPS (diluted) $2.21 $2.36


*Includes SP Video CPE Business revenue for FY 2016 and FY 2015 of $504M and $1,846M, respectively. The SP Video CPE Business was divested during Q2 FY

2016 on November 20, 2015.

FY 2016 GAAP Income Statement Highlights

$M (except per-share amounts and percentages) FY 2015 FY 2016

Revenue $49,161 $49,247

Product

Service

$37,750

$11,411

$37,254

$11,993

Gross Margin 60.4% 62.9%



59.3%

64.0%

62.0%

65.6%

Operating Expenses $18,911 $18,300

OPEX (% of Revenue) 38.5% 37.2%

Operating Income (% of Revenue) 21.9% 25.7%

Net Income $8,981 $10,739


EPS (diluted) $1.75 $2.11


*Includes SP Video CPE Business revenue for FY 2016 and FY 2015 of $504M and $1,846M, respectively. The SP Video CPE Business was divested during Q2 FY

2016 on November 20, 2015.