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Q4 fy15 earnings slides final_no guidance

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Q4 fy15 earnings slides final_no guidance

  1. 1. August 12, 2015 Q4 Fiscal Year 2015 Conference Call
  2. 2. 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
  3. 3.  Business Momentum & Key Trends  Financial Overview  Guidance  Summary and Q&A
  4. 4. • Made strong moves around four focus areas: • Accelerating what’s working and changing what’s not • Simplifying our business • Driving operational rigor • Investing in our talent and culture • Delivered record revenues and record non-GAAP EPS for both Q4 and FY15. • Growing our business and earnings, while driving the evolution of our portfolio… • Continued commitment to shareholder return…FY15 returned $8.3B…through share buybacks and dividends…73% of our free cash flow Q4 & FY’15 Highlights
  5. 5.  Business Momentum & Key Trends  Financial Overview  Guidance  Summary and Q&A
  6. 6. Revenue Total Gross Margin Percentage $M (except percentages) Q4 FY’14 Q3 FY’15 Q4 FY’15 Q4 FY’14 Q3 FY’15 Q4 FY’15 Americas $7,316 $7,252 $7,801 62.3% 62.9% 62.7% EMEA 3,109 3,119 3,110 63.5% 62.5% 62.1% APJC 1,932 1,766 1,932 57.1% 61.2% 59.5% Geographic Total $12,357 $12,137 $12,843 61.8% 62.5% 62.1% Q4 FY’15 Geographic Revenue and Total Gross Margin
  7. 7. $M Y/Y % Change Switching $3,719 2% NGN Routing 1,992 3% Collaboration 1,088 14% Service Provider Video 994 (7%) Data Center 880 14% Wireless 715 7% Security 464 4% Other Products 59 (3%) Service 2,932 4% Total Cisco $12,843 4% Q4 FY’15 – Revenue Highlights Certain reclassifications have been made to the amounts for prior years in order to conform to the current year’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. 29% 16% 8%8% 7% 6% 4% 23% Switching NGN Routing Collaboration SP Video Data Center Wireless Security Other Service Revenue % of Total Percentages may not add up to 100% due to rounding
  8. 8. Q4 FY’15 Product Orders: Geographic Regions & Customer Segments Geographic Region Y/Y % Change Americas 7% EMEA (1%) APJC (1%) Total Cisco 4% Product Book to Bill Comfortably above 1 Customer Segment Y/Y % Change Enterprise (1%) Public Sector 4% Commercial 11% Service Provider 2% Total Cisco 4%
  9. 9. Q4 FY’15 non-GAAP Income Statement Highlights $M (except per-share amounts and percentages) Q4 FY’14 Q3 FY’15 Q4 FY’15 Revenue $12,357 $12,137 $12,843 Year/Year Change Product Service 0% 9,532 2,825 5% 9,326 2,811 4% 9,911 2,932 Gross Margin 61.8% 62.5% 62.1% Product Gross Margin Service Gross Margin 60.3% 66.8% 61.8% 65.0% 61.0% 65.9% Operating Expenses 4,181 4,116 4,216 OPEX (% of Revenue) 33.8% 33.9% 32.8% Operating Income (% of Revenue) 28.0% 28.6% 29.3% Net Income $2,835 $2,795 $3,012 Year/Year Change 0% 6% 6% EPS (diluted) $0.55 $0.54 $0.59 Year/Year Change 6% 6% 7%
  10. 10. Q4 FY’15 GAAP Income Statement Highlights $M (except per-share amounts and percentages) Q4 FY’14 Q3 FY’15 Q4 FY’15 Revenue $12,357 $12,137 $12,843 Product Service 9,532 2,825 9,326 2,811 9,911 2,932 Gross Margin 59.9% 62.0% 60.2% Product Gross Margin Service Gross Margin 58.3% 65.5% 61.6% 63.4% 59.0% 64.5% Operating Expenses 4,724 4,600 4,852 OPEX (% of Revenue) 38.2% 37.9% 37.8% Operating Income (% of Revenue) 21.7% 24.1% 22.4% Net Income $2,247 $2,437 $2,319 Year/Year Change (1%) 12% 3% EPS (diluted) $0.43 $0.47 $0.45 Year/Year Change 2% 12% 5%
  11. 11. Q4 FY’15 Key Financial Measures Q4 FY’14 Q3 FY’15 Q4 FY’15 Cash and Cash Equivalents and Investments ($M) $52,074 $54,419 $60,416 Operating Cash Flow ($M) $3,612 $3,040 $4,138 Accounts Receivables ($M) $5,157 $4,889 $5,344 Days Sales Outstanding 38 37 38 Inventory ($M) $1,591 $1,760 $1,627 Non-GAAP Inventory Turns 12.1 10.0 11.5 Purchase Commitments ($M) $4,169 $4,495 $4,078 Deferred Revenue ($M) $14,142 $14,181 $15,183 Product Deferred Revenue ($M) $4,502 $4,945 $5,426 Service Deferred Revenue ($M) $9,640 $9,236 $9,757 Headcount 74,042 70,951 71,833
  12. 12. Capital Allocation Q1 FY’15 Q2 FY’15 Q3 FY’15 Q4 FY’15 FY’15 Share Repurchases ($M) $1,013 $1,208 $1,008 $1,005 $4,234 Dividends paid ($M) $973 $974 $1,070 $1,069 $4,086 Total ($M) $1,986 $2,182 $2,078 $2,074 $8,320 Share Repurchase Program* Amount Purchased ($M) Number of Shares (M) Avg. Price Per Share Q4 FY’15 Purchases $1,005 35 $28.62 FY’15 Purchases $4,234 155 $27.22 Q1 FY’15 Q2 FY’15 Q3 FY’15 Q4 FY’15 FY’15 Dividends per Share $0.19 $0.19 $0.21 $0.21 $0.80 *Approximately $4.3B remaining authorized funds in repurchase program as of the end of Q4 FY’15.
  13. 13.  Business Momentum & Key Trends  Financial Overview  Guidance  Summary and Q&A
  14. 14.  Business Momentum & Key Trends  Financial Overview  Guidance  Summary and Q&A
  15. 15. Q&A
  16. 16. 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 (such as our digitization strategy and execution, financial strength and financial guidance, our strategy to transition our business to a more software-based business model and recurring revenue streams, and our ability to deliver profitable growth, manage our portfolio and strategic investments, and return shareholder value) 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, including our foundational priorities, and in certain geographical locations; 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; 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; 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 20, 2015 and September 9, 2014, 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 and twelve months ended July 25, 2015 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.
  17. 17. Supplemental Materials
  18. 18. FY’15 non-GAAP Income Statement Highlights $M (except per-share amounts and percentages) FY’14 FY’15 Revenue $47,142 $49,161 Year/Year Change Product Service (3%) 36,172 10,970 4% 37,750 11,411 Gross Margin 62.2% 62.4% Product Gross Margin Service Gross Margin 60.7% 67.3% 61.5% 65.4% Operating Expenses 15,988 16,482 OPEX (% of Revenue) 33.9% 33.5% Operating Income (% of Revenue) 28.3% 28.9% Net Income $10,863 $11,354 Year/Year Change 0% 5% EPS (diluted) $2.06 $2.21 Year/Year Change 2% 7%
  19. 19. FY’15 GAAP Income Statement Highlights $M (except per-share amounts and percentages) FY’14 FY’15 Revenue $47,142 $49,161 Product Service 36,172 10,970 37,750 11,411 Gross Margin 58.9% 60.4% Product Gross Margin Service Gross Margin 56.8% 66.0% 59.3% 64.0% Operating Expenses 18,424 18,911 OPEX (% of Revenue) 39.1% 38.5% Operating Income (% of Revenue) 19.8% 21.9% Net Income $7,853* $8,981 Year/Year Change (21%) 14% EPS (diluted) $1.49* $1.75 Year/Year Change (20%) 17% *Includes a pre-tax charge of $655 million related to the expected cost of remediation of issues with memory components in certain products sold in prior fiscal years.
  20. 20. Q4 FY’15 GAAP to non-GAAP Reconciliation (Operating Income) $M (except percentage) Q4 FY’15 GAAP Operating Income $2,881 Share-based compensation expense Amortization of acquisition-related intangible assets Acquisition-related costs Restructuring and other charges 396 325 79 78 Total adjustments to GAAP operating income $878 Non-GAAP Operating Income % of Revenue $3,759 29.3%

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