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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
_____________________________________
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 27, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
          
For the transition period from              to             
Commission file number 001-39940 
_____________________________________
imagelogoa.jpg
CISCO SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0059951
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification Number)
170 West Tasman Drive
San Jose, California 95134
(Address of principal executive office and zip code)
(408) 526-4000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and formal fiscal year, if changed since last report.)
_____________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareCSCOThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No    
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No    
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer 
Non-accelerated filerSmaller reporting company 
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  No 
Number of shares of the registrant’s common stock outstanding as of May 16, 2024: 4,028,814,776
____________________________________ 
1

Cisco Systems, Inc.
Form 10-Q for the Quarter Ended April 27, 2024
INDEX
Page
Part I
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

PART I. FINANCIAL INFORMATION 
Item 1.Financial Statements (Unaudited)
CISCO SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except par value)
(Unaudited)
April 27, 2024July 29, 2023
ASSETS
Current assets:
Cash and cash equivalents$8,913 $10,123 
Investments9,857 16,023 
Accounts receivable, net of allowance of $81 at April 27, 2024 and $85 at July 29, 2023
5,127 5,854 
Inventories3,118 3,644 
Financing receivables, net3,443 3,352 
Other current assets5,428 4,352 
Total current assets35,886 43,348 
Property and equipment, net2,000 2,085 
Financing receivables, net3,251 3,483 
Goodwill58,633 38,535 
Purchased intangible assets, net11,819 1,818 
Deferred tax assets5,527 6,576 
Other assets5,882 6,007 
TOTAL ASSETS$122,998 $101,852 
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt$11,891 $1,733 
Accounts payable2,054 2,313 
Income taxes payable1,867 4,235 
Accrued compensation3,211 3,984 
Deferred revenue15,751 13,908 
Other current liabilities5,334 5,136 
Total current liabilities40,108 31,309 
Long-term debt20,102 6,658 
Income taxes payable2,869 5,756 
Deferred revenue11,724 11,642 
Other long-term liabilities2,427 2,134 
Total liabilities77,230 57,499 
Commitments and contingencies (Note 14)
Equity:
Cisco stockholders’ equity:
Preferred stock, $0.001 par value: 5 shares authorized; none issued and outstanding
  
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 4,031 and 4,066 shares issued and outstanding at April 27, 2024 and July 29, 2023, respectively
45,343 44,289 
Retained earnings2,055 1,639 
Accumulated other comprehensive loss(1,630)(1,575)
Total equity45,768 44,353 
TOTAL LIABILITIES AND EQUITY$122,998 $101,852 
See Notes to Consolidated Financial Statements.
3

CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per-share amounts)
(Unaudited) 
Three Months EndedNine Months Ended
April 27, 2024April 29, 2023April 27, 2024April 29, 2023
REVENUE:
Product$9,024 $11,092 $29,395 $31,492 
Service3,678 3,479 10,766 10,303 
Total revenue12,702 14,571 40,161 41,795 
COST OF SALES:
Product3,295 4,136 10,695 12,353 
Service1,134 1,203 3,419 3,437 
Total cost of sales4,429 5,339 14,114 15,790 
GROSS MARGIN8,273 9,232 26,047 26,005 
OPERATING EXPENSES:
Research and development1,948 1,962 5,804 5,598 
Sales and marketing2,559 2,526 7,523 7,301 
General and administrative736 641 2,050 1,788 
Amortization of purchased intangible assets297 70 430 212 
Restructuring and other charges542 87 677 328 
Total operating expenses6,082 5,286 16,484 15,227 
OPERATING INCOME2,191 3,946 9,563 10,778 
Interest income411 262 1,095 650 
Interest expense(357)(109)(588)(316)
Other income (loss), net(10)(142)(232)(265)
Interest and other income (loss), net44 11 275 69 
INCOME BEFORE PROVISION FOR INCOME TAXES2,235 3,957 9,838 10,847 
Provision for income taxes349 745 1,680 2,192 
NET INCOME$1,886 $3,212 $8,158 $8,655 
Net income per share:
Basic$0.47 $0.79 $2.01 $2.11 
Diluted$0.46 $0.78 $2.00 $2.11 
Shares used in per-share calculation:
Basic4,042 4,089 4,051 4,100 
Diluted4,060 4,110 4,071 4,111 
See Notes to Consolidated Financial Statements.
4

CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
Three Months EndedNine Months Ended
April 27, 2024April 29, 2023April 27, 2024April 29, 2023
Net income$1,886 $3,212 $8,158 $8,655 
Available-for-sale investments:
Change in net unrealized gains and losses, net of tax benefit (expense) of $19 and $(14) for the third quarter and first nine months of fiscal 2024, respectively, and $(1) and $11 for the corresponding periods of fiscal 2023, respectively
(39)36 60 (28)
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $(3) and $(12) for the third quarter and first nine months of fiscal 2024, respectively, and $(2) and $(3) for the corresponding periods of fiscal 2023, respectively
11 4 45 12 
(28)40 105 (16)
Cash flow hedging instruments:
Change in unrealized gains and losses, net of tax benefit (expense) of $(20) and $(29) for the third quarter and first nine months of fiscal 2024, respectively, and $(4) and $(1) for the corresponding periods of fiscal 2023, respectively
63 13 93 4 
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $4 and $9 for the third quarter and first nine months of fiscal 2024, respectively, and $3 and $12 for the corresponding periods of fiscal 2023, respectively
(9)(10)(27)(38)
54 3 66 (34)
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $(2) and $(1) for the third quarter and first nine months of fiscal 2024, respectively, and $0 and $24 for the corresponding periods of fiscal 2023, respectively
(144)(63)(226)66 
Other comprehensive income (loss)(118)(20)(55)16 
Comprehensive income$1,768 $3,192 $8,103 $8,671 
See Notes to Consolidated Financial Statements.


5

CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Nine Months Ended
April 27, 2024April 29, 2023
Cash flows from operating activities:
Net income$8,158 $8,655 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other1,684 1,304 
Share-based compensation expense2,274 1,720 
Provision for receivables19 11 
Deferred income taxes(245)(1,343)
(Gains) losses on divestitures, investments and other, net224 243 
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable1,286 1,494 
Inventories530 (894)
Financing receivables92 1,126 
Other assets(382)(428)
Accounts payable(300)156 
Income taxes, net(5,223)1,120 
Accrued compensation(1,092)25 
Deferred revenue211 1,055 
Other liabilities(86)(324)
Net cash provided by operating activities7,150 13,920 
Cash flows from investing activities:
Purchases of investments(3,044)(7,652)
Proceeds from sales of investments3,874 802 
Proceeds from maturities of investments5,804 3,789 
Acquisitions, net of cash and cash equivalents acquired(25,874)(96)
Purchases of investments in privately held companies(82)(162)
Return of investments in privately held companies146 72 
Acquisition of property and equipment(472)(616)
Other(2)(24)
Net cash used in investing activities(19,650)(3,887)
Cash flows from financing activities:
Issuances of common stock347 316 
Repurchases of common stockrepurchase program
(3,772)(3,029)
Shares repurchased for tax withholdings on vesting of restricted stock units(765)(444)
Short-term borrowings, original maturities of 90 days or less, net1,547 (602)
Issuances of debt24,159  
Repayments of debt(2,195)(500)
Repayments of Splunk convertible debt, net(3,140) 
Dividends paid(4,778)(4,713)
Other(52)(4)
Net cash provided by (used in) financing activities11,351 (8,976)
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents(39)(90)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents(1,188)967 
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period11,627 8,579 
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period$10,439 $9,546 
Supplemental cash flow information:
Cash paid for interest$350 $306 
Cash paid for income taxes, net$7,150 $2,414 


See Notes to Consolidated Financial Statements.
6

CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except per-share amounts)
(Unaudited)
Three Months Ended April 27, 2024Shares of
Common
Stock
Common Stock
and
Additional
Paid-In Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
Total
Equity
Balance at January 27, 20244,050 $45,002 $2,761 $(1,512)$46,251 
Net income1,886 1,886 
Other comprehensive income (loss)(118)(118)
Issuance of common stock11 (2)(2)
Repurchase of common stock(26)(283)(973)(1,256)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(4)(186)(186)
Cash dividends declared ($0.40 per common share)
(1,615)(1,615)
Share-based compensation811 811 
Other1 (4)(3)
Balance at April 27, 20244,031$45,343 $2,055 $(1,630)$45,768 

Nine Months Ended April 27, 2024Shares of
Common
Stock
Common Stock
and
Additional
Paid-In Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
Total
Equity
Balance at July 29, 20234,066 $44,289 $1,639 $(1,575)$44,353 
Net income8,158 8,158 
Other comprehensive income (loss)(55)(55)
Issuance of common stock54 347 347 
Repurchase of common stock(74)(811)(2,951)(3,762)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(15)(767)(767)
Cash dividends declared ($1.18 per common share)
(4,778)(4,778)
Share-based compensation2,274 2,274 
Other11 (13)(2)
Balance at April 27, 20244,031 $45,343 $2,055 $(1,630)$45,768 






7

CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except per-share amounts)
(Unaudited)

Three Months Ended April 29, 2023Shares of
Common
Stock
Common Stock
and
Additional
Paid-In Capital
Retained Earnings (Accumulated Deficit)Accumulated
Other
Comprehensive Loss
Total
Equity
Balance at January 28, 20234,095 $43,424 $(364)$(1,586)$41,474 
Net income3,212 3,212 
Other comprehensive income (loss)(20)(20)
Issuance of common stock8   
Repurchase of common stock(25)(270)(989)(1,259)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(3)(139)(139)
Cash dividends declared ($0.39 per common share)
(1,593)(1,593)
Share-based compensation623 623 
Other1 (4)(3)
Balance at April 29, 20234,075$43,639 $262 $(1,606)$42,295 

Nine Months Ended April 29, 2023Shares of
Common
Stock
Common Stock
and
Additional
Paid-In Capital
Retained Earnings (Accumulated Deficit)Accumulated
Other
Comprehensive Loss
Total
Equity
Balance at July 30, 20224,110 $42,714 $(1,319)$(1,622)$39,773 
Net income8,655 8,655 
Other comprehensive income (loss)16 16 
Issuance of common stock38 316 316 
Repurchase of common stock(63)(664)(2,353)(3,017)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(10)(449)(449)
Cash dividends declared ($1.15 per common share)
(4,713)(4,713)
Share-based compensation1,720 1,720 
Other2 (8)(6)
Balance at April 29, 20234,075$43,639 $262 $(1,606)$42,295 







8

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.Organization and Basis of Presentation
The fiscal year for Cisco Systems, Inc. (the “Company,” “Cisco,” “we,” “us,” or “our”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2024 and fiscal 2023 are each 52-week fiscal years. The Consolidated Financial Statements include our accounts and those of our subsidiaries. All intercompany accounts and transactions have been eliminated. We conduct business globally and are primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).
We have prepared the accompanying financial data as of April 27, 2024 and for the third quarter and first nine months of fiscal 2024 and 2023, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. The July 29, 2023 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 29, 2023.
In the opinion of management, all normal recurring adjustments necessary to state fairly the consolidated balance sheet as of April 27, 2024, the results of operations, the statements of comprehensive income and the statements of equity for the third quarter and first nine months of fiscal 2024 and 2023, and the statements of cash flows for the first nine months of fiscal 2024 and 2023, as applicable, have been made. The results of operations for the third quarter and first nine months of fiscal 2024 are not necessarily indicative of the operating results for the full fiscal year or any future periods.
Our consolidated financial statements include our accounts and investments consolidated under the voting interest model. The noncontrolling interests attributed to these investments are not presented as a separate component in the equity section of the Consolidated Balance Sheets as these amounts are not material for any of the fiscal periods presented. The share of earnings attributable to the noncontrolling interests are not presented separately in the Consolidated Statements of Operations as these amounts are not material for any of the fiscal periods presented.
Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation. We have evaluated subsequent events through the date that the financial statements were issued.

2.Recent Accounting Pronouncements
(a)Recent Accounting Standards or Updates Not Yet Effective
Segment Reporting In November 2023, the Financial Accounting Standards Board (FASB) issued an accounting standard update that expands the disclosure requirements for reportable segments, primarily through enhanced disclosures around significant segment expenses. The accounting standard update will be effective for our fiscal 2025 Form 10-K on a retrospective basis, and early adoption is permitted. We are currently evaluating the impact of this accounting standard update on our segment disclosures.
Improvements on Income Tax Disclosures In December 2023, the FASB issued an accounting standard update expanding the requirements for disclosure of disaggregated information about the effective tax rate reconciliation and income taxes paid. The accounting standard update will be effective for our fiscal 2026 Form 10-K. We are currently evaluating the impact of this accounting standard update on our income tax disclosures.

9

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

3.Revenue
We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers.
We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment, electronic delivery (or when the software is available for download by the customer), or once title and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements do not include the right for the customer to take possession of the software during the term, and therefore have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes.
An allowance for future sales returns is established based on historical trends in product return rates. The allowance for future sales returns as of April 27, 2024 and July 29, 2023 was $35 million and $39 million, respectively, and was recorded as a reduction of our accounts receivable and revenue.
Significant Judgments
Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.
We assess relevant contractual terms in our customer contracts to determine the transaction price. We apply judgment in identifying contractual terms and determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes potential contractual penalties and various rebate, cooperative marketing and other incentive programs that we offer to our distributors, channel partners and customers. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers’ right of return in determining the transaction price, where applicable.
We assess certain software licenses, such as for security software, that contain critical updates or upgrades which customers can download throughout the contract term. Without these updates or upgrades, the functionality of the software would diminish over a relatively short time period. These updates or upgrades provide the customer the full functionality of the purchased security software licenses and are required to maintain the security license’s utility as the risks and threats in the environment are rapidly changing. In these circumstances, the revenue from these software arrangements is recognized as a single performance obligation satisfied over the contract term.
10

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

(a)Disaggregation of Revenue
We disaggregate our revenue into groups of similar products and services that depict the nature, amount, and timing of revenue and cash flows for our various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies differ for each of our product categories, resulting in different economic risk profiles for each category. Effective in the first quarter of fiscal 2024, we began reporting our product and service revenue in the following categories: Networking, Security, Collaboration, Observability, and Services and conformed our product revenue for prior periods to the current period presentation. The following table presents this disaggregation of revenue (in millions):
Three Months EndedNine Months Ended
April 27,
2024
April 29,
2023
April 27,
2024
April 29,
2023
Product revenue:
Networking$6,522 $8,982 $22,425 $25,105 
Security1,304 958 3,288 2,872 
Collaboration987 985 3,093 3,029 
Observability211 167 589 486 
Total Product9,024 11,092 29,395 31,492 
Services3,678 3,479 10,766 10,303 
Total$12,702 $14,571 $40,161 $41,795 
Amounts may not sum due to rounding.
Networking consists of our core networking technologies of switching, routing, wireless, 5G, silicon, optics solutions and compute products. These technologies consist of both hardware and software offerings, including software licenses and SaaS. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Security consists of our Cloud and Application Security, Industrial Security, Network Security, and User and Device Security offerings. This product category includes the Splunk Platform and Splunk Security offerings after our acquisition of Splunk, although the Splunk Platform has use cases that can also be applicable for observability offerings. See Note 4. These products consist of both hardware and software offerings, including software licenses and SaaS. Updates and upgrades for the term software licenses are critical for our software to perform its intended commercial purpose because of the continuous need for our software to secure our customers’ network environments against frequent threats. Therefore, security software licenses are generally represented by a single distinct performance obligation with revenue recognized ratably over the contract term. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Collaboration consists of our Meetings, Collaboration Devices, Calling, Contact Center and Communication Platform as a Service (CPaaS) offerings. These products consist primarily of software offerings, including software licenses and SaaS, as well as hardware. Our perpetual software and hardware in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Observability consists of our full stack observability offerings. This product category includes the Splunk Observability Suite after our acquisition of Splunk. This product category excludes the Splunk Platform which includes use cases that can also be associated with observability offerings. See Note 4. These products consist primarily of software offerings, including software licenses and SaaS. Our perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
11

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

In addition to our product offerings, we provide a broad range of service and support options for our customers, including technical support services and advanced services. Technical support services represent the majority of these offerings which are distinct performance obligations that are satisfied over time with revenue recognized ratably over the contract term. Advanced services are distinct performance obligations that are satisfied over time with revenue recognized as services are delivered.
The sales arrangements as discussed above are typically made pursuant to customer purchase orders based on master purchase or partner agreements. Cash is received based on our standard payment terms which is typically 30 days. We provide financing arrangements to customers for our hardware, software and service offerings. Refer to Note 9 for additional information. For these arrangements, cash is typically received over time.
(b)Contract Balances
Accounts Receivable
Accounts receivable, net was $5.1 billion as of April 27, 2024 compared to $5.9 billion as of July 29, 2023, as reported on the Consolidated Balance Sheets.
The allowances for credit loss for our accounts receivable are summarized as follows (in millions):
Three Months EndedNine Months Ended
April 27, 2024April 29, 2023April 27, 2024April 29, 2023
Allowance for credit loss at beginning of period$79 $86 $85 $83 
Provisions10 9 21 23 
Recoveries (write-offs), net(8)(12)(25)(23)
Allowance for credit loss at end of period$81 $83 $81 $83 
Contract Assets and Liabilities
Gross contract assets by our internal risk ratings are summarized as follows (in millions):
April 27,
2024
July 29,
2023
1 to 4$1,176 $672 
5 to 61,383 954 
7 and Higher70 60 
Total$2,629 $1,686 
Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to software and service arrangements where transfer of control has occurred but we have not yet invoiced. Our contract assets for these unbilled receivables, net of allowances, were $2.6 billion as of April 27, 2024 and $1.6 billion as of July 29, 2023, and were included in other current assets and other assets.
Contract liabilities consist of deferred revenue. Deferred revenue was $27.5 billion as of April 27, 2024 compared to $25.6 billion as of July 29, 2023. We recognized approximately $3.0 billion and $11.5 billion of revenue during the third quarter and first nine months of fiscal 2024 that was included in the deferred revenue balance at July 29, 2023.
(c)Capitalized Contract Acquisition Costs
We capitalize direct and incremental costs incurred to acquire contracts, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. We incur these costs in connection with both initial contracts and renewals. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to the period of benefit. Capitalized contract acquisition costs were $1.3 billion and $1.1 billion as of April 27, 2024 and July 29, 2023, respectively, and were included in other current assets and other assets. The amortization expense associated with these costs was $201 million and $525 million for the third quarter and first nine months fiscal 2024, respectively, and $172 million and $549 million for the corresponding periods of fiscal 2023, respectively, and was included in sales and marketing expenses.

12

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


4.Acquisitions
Acquisition of Splunk Inc.
On March 18, 2024, we completed the acquisition of Splunk Inc. (“Splunk”), a public cybersecurity and observability company. Under the terms of the agreement, we agreed to pay $157 per share in cash, representing approximately $27 billion in merger consideration.
Purchase Consideration
The following table summarizes the purchase consideration for the Splunk acquisition (in millions):
Amount
Cash paid for outstanding Splunk common stock$26,950 
Fair value of converted Splunk equity awards attributable to pre-acquisition services137 
Settlement of pre-existing relationships3 
Total purchase consideration$27,090 
A summary of the preliminary allocation of the total purchase consideration for Splunk is presented as follows (in millions):
Amount
Cash and cash equivalents$2,422 
Investments285 
Accounts receivable, net623 
Goodwill19,301 
Purchased intangible assets10,550 
Deferred tax assets1,308 
Other current and other assets1,176 
Accounts payable(39)
Accrued compensation(337)
Current portion of deferred revenue(1,768)
Splunk convertible notes(3,344)
Deferred tax liabilities(2,572)
Long-term portion of deferred revenue(86)
Other current and other long-term liabilities(429)
Total$27,090 
The purchase price allocation for Splunk is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information that existed as of the acquisition date but is currently unknown to us may become known during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date.
Our Consolidated Statements of Operations for the third quarter and first nine months of fiscal 2024 include revenue of $413 million and a net loss of $212 million attributable to Splunk since the date of acquisition.
We incurred $85 million of transaction costs related to the Splunk acquisition and these costs were expensed as incurred in general and administrative expenses (“G&A”) expenses in the Consolidated Statements of Operations. We incurred $49 million and $84 million of these costs in the third quarter and first nine months of fiscal 2024, respectively.
13

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

In connection with the Splunk acquisition, we assumed $3.1 billion aggregate principal amount of notes consisting of Splunk's 1.125% Convertible Senior Notes due 2025, 0.75% Convertible Senior Notes due 2026 and 1.125% Convertible Senior Notes due 2027 (collectively, the “Splunk Convertible Notes”). The Splunk Convertible Notes had an aggregate fair value of $3.3 billion as of the acquisition date. The Splunk Convertible Notes are convertible and may be settled into cash based on a defined conversion ratio for each note. On the date of the acquisition, we notified holders of their right to convert their notes. In addition, we assumed Splunk’s capped call contracts which were intended to reduce potential dilution or offset any cash payments. The capped calls were settled in full in the third quarter of fiscal 2024, which resulted in receipt of aggregate cash proceeds of $202 million, and were included in other current assets in total purchase consideration noted above. As of April 27, 2024, we have settled $3.1 billion of the Splunk Convertible Notes, net of capped calls.
The goodwill generated from Splunk is primarily related to expected synergies. Goodwill is not deductible for income tax purposes.
Purchased Intangible Assets
The following table presents as of the acquisition date details of the purchased intangible assets acquired (in millions, except years):
Weighted-Average Useful Life (in Years)Amount
Technology6.0$3,900 
Customer related9.16,140 
Trade name12.0510 
Total$10,550 
Technology represents the preliminary estimated fair value of Splunk's security and observability technologies. Customer related represents preliminary estimated fair value of the underlying relationships with Splunk's customers. Trade name represents the preliminary estimated fair value of the Splunk trade name.
Compensation Expense Related to Splunk
In connection with the Splunk acquisition, we have agreed to pay certain additional amounts contingent upon the continued employment with Cisco of certain Splunk employees. For the third quarter and first nine months of fiscal 2024, the compensation expense was $165 million. As of April 27, 2024, we estimated that future cash compensation expense of up to $1.5 billion may be required to be recognized pursuant to acquisition-related agreements.
Pro forma Financial Information
The unaudited pro forma financial information in the table below summarizes the combined results of our operations and Splunk's operations, as though the acquisition of Splunk had been completed as of the beginning of fiscal 2023. The pro forma financial information for the third quarter of fiscal 2024 combines our results for this period with that of Splunk's results for the three month period beginning February 1, 2024 through April 27, 2024. The pro forma financial information for the first nine months of fiscal 2024 combines our results for this period with the results of Splunk for the nine month period beginning August 1, 2023 through April 27, 2024. The pro forma financial information for the third quarter and first nine months of fiscal 2023 combines our historical results for those periods, with the historical results of Splunk for the three and nine months ended April 30, 2023.
The following table summarizes the pro forma financial information (in millions):
Three Months EndedNine Months Ended
April 27, 2024April 29, 2023April 27, 2024April 29, 2023
Total revenue$13,107 $15,323 $43,119 $44,727 
Net income$1,490 $2,423 $7,127 $6,776 
The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition and the cost of financing the acquisition had taken place at the beginning of fiscal 2023. The financial information for the periods presented above includes pro forma adjustments for amortization of purchased intangible assets, costs related to financing the acquisition and transaction costs.
14

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

The above pro forma financial information includes only the impacts of the Splunk acquisition because the effects of the other acquisitions detailed below, individually and in the aggregate, were not material to our financial results.
Other Acquisitions
We completed several additional acquisitions during the first nine months of fiscal 2024 for an aggregate cash consideration of $1.4 billion. A summary of the allocation of the total purchase consideration of these additional acquisitions completed during the first nine months of fiscal 2024 is presented as follows (in millions):
Purchase ConsiderationNet Tangible Assets Acquired (Liabilities Assumed)Purchased Intangible AssetsGoodwill
Total other acquisitions$1,370 $(82)$500 $952 
The total purchase consideration related to these other acquisitions completed during the first nine months of fiscal 2024 consisted primarily of cash consideration. The total cash and cash equivalents acquired from these acquisitions was approximately $24 million. Total transaction costs related to these acquisition activities were $18 million and $6 million for the first nine months of fiscal 2024 and 2023, respectively. These transaction costs were expensed as incurred in G&A in the Consolidated Statements of Operations.
The purchase price allocation for these acquisitions completed during recent periods is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information that existed as of the acquisition date but is currently unknown to us may become known during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date.
The goodwill generated from these acquisitions completed during the first nine months of fiscal 2024 is primarily related to expected synergies. The goodwill is generally not deductible for income tax purposes.
Compensation Expense Related to Acquisitions including Splunk
In connection with our acquisitions, we have agreed to pay certain additional amounts contingent upon the continued employment with Cisco of certain employees of the acquired entities.
The following table summarizes the compensation expense related to acquisitions (in millions):
Three Months EndedNine Months Ended
April 27, 2024April 29, 2023April 27, 2024April 29, 2023
Compensation expense related to acquisitions$216 $53 $310 $176 
As of April 27, 2024, we estimated that future cash compensation expense of up to $2.0 billion may be required to be recognized pursuant to these applicable acquisition agreements, which includes up to $1.5 billion related to the Splunk acquisition. Total compensation for the third quarter and first nine months of fiscal 2024 includes $165 million related to the Splunk acquisition.

15

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

5.Goodwill and Purchased Intangible Assets
(a)Goodwill
The following table presents the goodwill allocated to our reportable segments as of April 27, 2024 and during the first nine months of fiscal 2024 (in millions):
Balance at July 29, 2023SplunkOther AcquisitionsForeign Currency Translation and OtherBalance at April 27, 2024
Americas$24,035 $11,619 $594 $(96)$36,152 
EMEA9,118 4,980 216 (37)14,277 
APJC5,382 2,702 142 (22)8,204 
Total$38,535 $19,301 $952 $(155)$58,633 
(b)Purchased Intangible Assets
The following table presents details of our intangible assets acquired through acquisitions completed during the first nine months of fiscal 2024 (in millions, except years):
 FINITE LIVESINDEFINITE LIVESTOTAL
 TECHNOLOGYCUSTOMER
RELATED
TRADE NAMEIPR&D
Weighted-
Average Useful
Life (in Years)
AmountWeighted-
Average Useful
Life (in Years)
AmountWeighted-
Average Useful
Life (in Years)
AmountAmountAmount
Splunk6.0$3,900 9.1$6,140 12.0$510 $ $10,550 
Others4.8405 4.978 1.33 14 500 
Total$4,305 $6,218 $513 $14 $11,050 
The following tables present details of our purchased intangible assets (in millions): 
April 27, 2024GrossAccumulated AmortizationNet
Purchased intangible assets with finite lives:
Technology$6,946 $(1,948)$4,998 
Customer related6,882 (619)6,263 
Trade name553 (35)518 
Total purchased intangible assets with finite lives14,381 (2,602)11,779 
In-process research and development, with indefinite lives40 — 40 
       Total$14,421 $(2,602)$11,819 
July 29, 2023GrossAccumulated AmortizationNet
Purchased intangible assets with finite lives:
Technology$2,998 $(1,691)$1,307 
Customer related1,228 (905)323 
Other40 (22)18 
Total purchased intangible assets with finite lives4,266 (2,618)1,648 
In-process research and development, with indefinite lives170 — 170 
       Total$4,436 $(2,618)$1,818 
Purchased intangible assets include intangible assets acquired through acquisitions as well as through direct purchases or licenses.
16

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Impairment charges related to purchased intangible assets were $139 million and $145 million for the third quarter and first nine months of fiscal 2024, respectively. Impairment charges were as a result of declines in estimated fair value resulting from the reductions in or the elimination of expected future cash flows associated with certain of our IPR&D intangible assets.
The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):
Three Months EndedNine Months Ended
April 27, 2024April 29, 2023April 27, 2024April 29, 2023
Amortization of purchased intangible assets:
Cost of sales$254 $160 $620 $476 
Operating expenses297 70 430 212 
Total$551 $230 $1,050 $688 
The estimated future amortization expense of purchased intangible assets with finite lives as of April 27, 2024 is as follows (in millions):
Fiscal YearAmount
2024 (remaining three months)$604 
2025$2,133 
2026$1,785 
2027$1,441 
2028$1,361 
Thereafter$4,455 

6.Restructuring and Other Charges
In the third quarter of fiscal 2024, we initiated a restructuring plan (the “Fiscal 2024 Plan”) in order to realign the organization and enable further investment in key priority areas. The Fiscal 2024 Plan will impact approximately 5% of our global workforce, with estimated pretax charges of up to approximately $800 million. These aggregate pretax charges will be primarily cash-based and consist of severance and other one-time termination benefits and other costs. In connection with the Fiscal 2024 Plan, we incurred charges of $542 million for the third quarter and first nine months of fiscal 2024. We expect this plan to be substantially completed during the first half of fiscal 2025.
In the second quarter of fiscal 2023, we announced a restructuring plan (the “Fiscal 2023 Plan”) in order to rebalance the organization and enable further investment in key priority areas. In connection with the Fiscal 2023 Plan, we incurred charges of $135 million for the first nine months of fiscal 2024, and $87 million and $330 million for the third quarter and first nine months of fiscal 2023, respectively. These aggregate pretax charges were primarily cash-based and consist of severance and other one-time termination benefits, real estate-related charges, and other costs. We completed the Fiscal 2023 Plan in the second quarter of fiscal 2024 and incurred cumulative charges of $670 million.
The following table summarizes the activities related to the restructuring and other charges (in millions):
FISCAL 2023 PLANFISCAL 2024 PLAN
Employee SeveranceOtherEmployee SeveranceOtherTotal
Liability as of July 29, 2023$166 $44 $ $ $210 
Charges104 31 526 16 677 
Cash payments(244)(10)(303)(1)(558)
Non-cash items (20)(2)(7)(29)
Liability as of April 27, 2024$26 $45 $221 $8 $300 

17

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

7.Balance Sheet and Other Details
The following tables provide details of selected balance sheet and other items (in millions, except percentages):
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
April 27,
2024
July 29,
2023
Cash and cash equivalents$8,913 $10,123 
Restricted cash and restricted cash equivalents included in other current assets765 191 
Restricted cash and restricted cash equivalents included in other assets761 1,313 
Total$10,439 $11,627 
Our restricted cash and restricted cash equivalents are funds primarily related to contractual obligations with suppliers.
Inventories
April 27,
2024
July 29,
2023
Raw materials$1,789 $1,685 
Work in process111 264 
Finished goods996 1,493 
Service-related spares212 186 
Demonstration systems10 16 
Total$3,118 $3,644 
Property and Equipment, Net
April 27,
2024
July 29,
2023
Gross property and equipment:
Land, buildings, and building and leasehold improvements$4,221 $4,229 
Computer equipment and related software696 744 
Production, engineering, and other equipment4,411 4,611 
Operating lease assets120 135 
Furniture, fixtures and other348 339 
Total gross property and equipment9,796 10,058 
Less: accumulated depreciation and amortization
(7,796)(7,973)
Total$2,000 $2,085 
18

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Remaining Performance Obligations (RPO)
April 27,
2024
July 29,
2023
Product$18,876 $15,802 
Service19,898 19,066 
Total$38,774 $34,868 
Short-term RPO$20,089 $17,910 
Long-term RPO18,685 16,958 
Total$38,774 $34,868 
Amount to be recognized as revenue over the next 12 months
52 %51 %
Deferred revenue$27,475 $25,550 
Unbilled contract revenue11,299 9,318 
Total$38,774 $34,868 
Unbilled contract revenue represents noncancelable contracts for which we have not invoiced, have an obligation to perform, and revenue has not yet been recognized in the financial statements.
Deferred Revenue
April 27,
2024
July 29,
2023
Product$12,856 $11,505 
Service14,619 14,045 
Total$27,475 $25,550 
Reported as:
Current$15,751 $13,908 
Noncurrent11,724 11,642 
Total$27,475 $25,550 
Transition Tax Payable
Our income tax payable associated with the one-time U.S. transition tax on accumulated earnings for foreign subsidiaries as a result of the Tax Cuts and Jobs Act is as follows (in millions):
April 27,
2024
July 29,
2023
Current$1,819 $1,364 
Noncurrent2,273 4,092