Kelly kramer shareholder value draft final

Driving Shareholder Value
Kelly Kramer
Executive Vice President, Chief Financial Officer
June 9, 2015

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 Form 10-K and Form 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.
During this presentation references to historical 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
Non-GAAP measures for future periods would not include, when applicable, share-based compensation expense, amortization of
acquisition-related intangible assets, impact to cost of sales from purchase accounting adjustments to inventory, acquisition-
related/divestiture costs, significant asset impairments and restructurings, significant litigation settlements, the income tax effects of
the foregoing, significant tax matters, and other items that Cisco may exclude from time to time in the future, such as significant
gains or losses from contingencies.
Forward-looking Statements
GAAP Reconciliation
Cisco and/or its affiliates. All rights reserved. Cisco Public 2Investor Day 2015

Cisco and/or its affiliates. All rights reserved. Cisco PublicInvestor Day 2015
Profitable Growth Strategic Investments Capital Return
Core Financial Values

Leading Market Share
#1 = 9 | #2 = 2
50%46%45% 31% 34%
14%
77% 53% 67% 50%39%
#1 ENT
Routing
#1 Wireless
LAN
#1 Switching:
Modular / Fixed
#1 Voice#1 SP
Routing
#2 Storage:
Area Networks
#1
TelePresence
#1 Web
Conferencing
#2 X86
Blade Servers
#1 Network
Security
#1 Cloud
Infrastructure*
Source: Dell’Oro, Synergy, Infonetics, ACG; Q1’CY15 Market share data
Cisco Network Security share DOES include Sourcefire; Web Conferencing is SaaS
* Q4’CY14 Synergy data

Cisco Competitive Advantage
Source: Dell’Oro, Synergy, Infonetics, ACG; Q1’CY15 Market share data
Cisco Network Security share DOES include Sourcefire; Web Conferencing is SaaS
Competitors listed above are not the only competitors in these markets and share shown is relative share versus listed competitors
* Q4’CY14 Synergy data
Cisco
Huawei
HP
Juniper
Brocade
Rest of Market
Cisco
Alcatel-Lucent
Juniper
Ericsson
Huawei
Rest of Market
Cisco
HP
Huawei
Juniper
Arista
Rest of Market
Cisco
Avaya
Mitel
Unify
Microsoft
Rest of Market
Cisco
Aruba
Ruckus
HP
Rest of Market
Cisco
Brocade
HP
Qlogic
Rest of Market
Cisco
Polycom
Huawei
Logitech
Vidyo
Rest of Market
Cisco
Citrix
Microsoft
Adobe
Intercall
Rest of Market
Cisco
Checkpoint
PAN
Fortinet
Dell
Juniper
McAfee
Rest of Market
Cisco
HP
Lenovo
Dell
Hitachi
Rest of Market
Cisco
HP
Microsoft
Dell
IBM
#1 ENT
Routing
#1 Wireless
LAN
#1 Switching:
Modular / Fixed
#1 Voice#1 SP
Routing
#2 Storage:
Area Networks
#1
TelePresence
#1 Web
Conferencing
#2 X86
Blade Servers
#1 Network
Security
#1 Cloud
Infrastructure*

Performance Against Our Financial Strategy
Revenue $B
CAGR = 3%
 Delivering EPS growth
with expanding
Operating Margins
 Executing portfolio
trade-offs to fund growth
areas
 Enhancing software and
service offerings to drive
growth and profitability
$1.62
$1.85
$2.02 $2.06
$2.18
FY11 FY12 FY13 FY14 FY15E
Non-GAAP EPS $
CAGR = 8%
$43
$46
$49
$47
$49
26%
28%
28%
28%
29%
FY11 FY12 FY13 FY14 FY15E
Revenue
Non-GAAP Operating Margin
FY15E assumes mid-point of Q4’15 guidance

Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Product Orders Growth… Tale of Two Cities
 Executing well in
Commercial,
Enterprise and Public
Sector
 Increasing relevance
with SPs driving
wallet share
 When SP and/or EM
return to growth…
~1-3pts on total
product orders
(4%)
1%
1%
1%
5%
2%
0% 6% 9% 9% 10% 8%
(8)% (5)% (9)% (9)% (1)% (5)%
(4%)
3%
(12)%
Total
Product
SP &
Emerging
Markets
Rest of
Business
YoY Growth Rates

Business Becoming More Predictable
 Product Deferred growth driven by subscription
businesses (41% of total, up from 22% in FY11)
- Meraki, Security, Collaboration
- Software, ELAs
 Product Subscription Deferred 4-yr CAGR >25%
 ~20% of NTM secured and ~10% of following year
 Driving more software as well as recurring revenue
FY11 FY15E
$12
$15
4-yr CAGR
5%
9%
4%
Service
Product
Deferred Revenue
The FY15E amount is an estimate. Actual results may differ materially due to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.
$B

Driving Operational Excellence
Incremental
Growth  $0.08 of Opex for every $1.00 of
Incremental Revenue Growth
 Disciplined Opex Management
 Rigorous portfolio management
 Driving efficiencies to create
capacity to invest
 Investing in strategic long-term
growth areas
$43.2
$48.7
$16.0 $16.4
FY11 LTM
Revenue
Non-GAAP Opex
$5.5B
$0.4B
$B

70%
30%
Material Shift of R&D Portfolio to Fuel Profitable Growth
78%
22%
FY14 R&D
$5.4B
FY15E R&D
~$5.5B
Security,
Software,
& Cloud
Security,
Software,
& Cloud
 Disciplined and deliberate
portfolio planning
 Shifting investment to key
growth areas
– Meraki, Security, Collab,
Cloud, Virtualization, SDN
 Within Core – dynamic
shifts… over $1B
– To Web 2.0 accounts
– Packet Optical
Non-GAAP R&D

Strong Cash Flow Generation
FY05 FY07 FY09 FY11 FY13 FY15E
Operating Cash Flow
Acquisitions
10-year CAGR = 5%
$8
~$13
$B
Acquisitions
Capital Expenditures
Share
Repurchase
Dividend
Primary Uses of Cash
FY05-FY15E

Driving Strong Shareholder Returns
$0.24
$0.32
$0.68
$0.76
$0.84
FY11 FY12 FY13 FY14 FY15
Annualized Dividend
per Share
CAGR = 37%
FY02 FY06 FY10 FY14
Reduction in Share Count
Share Repurchase # Shares Outstanding
% FCF Returned ($B)7.4B
Diluted shares outstanding YTD
5.2B
31% reduction; 2.3B shares
FY11 $7 84%
FY12 $6 57%
FY13 $6 52%
FY14 $13 120%
FY15E ~$8 ~72%
Dividends per share is Q4 annualized
Cisco and/or its affiliates. All rights reserved. Cisco PublicInvestor Day 2015 12

FY11 FY12 FY13 FY14 3Q’15YTD
Rev Growth 8% 7% 6% (3)% 4%
GM % 63% 62% 63% 62% 63%
Opex % Rev 37% 35% 34% 34% 34%
Op Margin % 26% 28% 28% 28% 29%
EPS Growth 1% 14% 9% 2% 7%
Div Payout Ratio 15% 17% 34% 37% 39%
Our Scorecard  Strong Execution and Discipline
 Back to growth
 Steady Gross Margins
 Driving efficiencies
 Expanding Margins
 Growing faster than Rev
 Growing with Earnings
Annualized dividend per share divided by Non-GAAP EPS
All numbers Non-GAAP except revenue growth
13

Future Growth and Profitability

$25B
FY15E 3-5 Years
~2-4%
CAGR
Revenue $B Large Market … maintaining leadership position
 Strong track record of managing price / performance
 Continued innovation
 Leading with Solutions… VMS, IOT, Connected Lighting,
IWAN
 Refresh cycle in Campus, WAN, Branch, Wireless Wave 2
 Great traction with Nexus 9K and ACI
 Maximizing 10G / 40G / 100G transition
This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular period may differ materially due
to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.
Switching, Wireless and Routing Driving Solid Growth

$3B
FY15E 3-5 years
~20-25%
CAGR
Accelerating Data Center
 Public, Private, Hybrid Clouds driving opportunity
 Driving Converged Infrastructure for Data Centers
 Delivering solutions: Big Data, Analytics, VDI
 Developing New Technology stacks for the digital world:
OpenStack… Metacloud, Piston
 Innovating portfolio of new offerings with UCS Mini,
modular servers and storage optimized servers
Revenue $B

Enabling Cloud
$5B
FY15E 3-5 years
Cloud
Applications
Security
Collaboration
Video
Cloud
Infrastructure
Networking
Servers
Services
~20-30%
CAGR
Revenue $B
 Industry Leading Cloud Infrastructure Portfolio
 Accelerating our Cloud Based Applications and Services
 Growing Hybrid Cloud Ecosystem and Innovation…
Intercloud
 Secure workload portability across private and public
clouds

~10-15%
CAGR
Revenue $B
FY15E 3-5 years
Differentiating with Security
$2B
 Solving customers #1 challenge… Cybersecurity
 Broad portfolio across the attack continuum – Before, During
and After
 Security Services – Advisory, integration, managed
 Integration across the broader Cisco portfolio – ACI, Routing
/Switching, IoT
 Accelerated Services and AMP growth
 Driving Portfolio to Software and Recurring Revenue

Enhancing Growth and Margins through Software
 Unlocking software value and building a recurring revenue
business
 Higher software mix with shift from a la carte features to full
solution suites (Cisco One)
 Drive strategic multi-year customer relationships via ELAs
 Expanding TAM into adjacent markets such as Data &
Analytics
 Increasing growth via on-prem and cloud subscriptions in
Security, Collaboration, Meraki
 Software offerings drive increased infrastructure spend FY12 FY15E 3-5 years
$6
$9
~10-15%
CAGR
Revenue $B

IoE win… Connected Factory3
Wallet Share Gain in Security, Switching &
Routing2
Enterprise Wide ELA
 Multi-year deal to license Cisco's full
software portfolio
 Selling solutions vs. boxes drives
increased stickiness with customer
 Drove share of wallet and new TAM into
IoE
 Significant ROI generated for
customer… technology protection,
security
 Drives greater speed and flexibility to
drive business value
Use Case… One Year On…
Enterprise Wide ELA
Scope: Software - OS, Application S/W
S/W Upgrades and Maintenance Support
Term: 6 Years
Solving Customers IT problems vs. Vendor
1
20

$11B
FY15E 3-5 years
Services as a Platform for Growth
~4-7%
CAGR
 Expanding our Portfolio of Service Offers
 Enhance and Optimize Customers’ Investments
Through Smart Analytics
 Land, Adopt, Expand, Renew
 Delivering Solutions Linked to Customers’ Business
Outcomes
 IoE drive incremental opportunity
Revenue $B

Acquisitions… Focused on Cloud, Security and
Software
*
*Announced but not closed

Future Long-term Value for Shareholders
 Network at the core of the digital age
 Capture growth opportunities
 Drive recurring revenue model
 Driving value through software, solutions
and services
 Wildcards Service Providers/Emerging
Markets
Growth over 3-5 Years
FY15E 3-5 years
$49B
Total CAGR ~3% - 6%
Growth Drivers (CAGR)
Switching, Wireless, Routing 2% - 4%
Data Center 20% - 25%
Services 4% - 7%
Security 10% - 15%
Collab, SP Video and Other 0% - 3%

Future Growth and Profitability
24

Driving Gross Margin Stability
Levers
 Digitization
 Acceleration of innovation
 Investing for growth
 Integrated architectures
 Software
 Pricing excellence
 Solutions at scale
 Value engineering
 Commodity price
management
 Optimizing variable costs
Sustainable Differentiation Cost Savings
Technology Innovation

FY 14 FY15E 3-5 years
Driving Operating Margin
~ 30%29%
28%
Non-GAAP Operating Margin % of Revenue
34% 34%
FY14 FY15E 3-5 years
Low 30s
Non-GAAP Opex as a % of Revenue
 Securing Profitability Through Portfolio Management & Disciplined Operational Excellence
 Emphasis on Maintaining Profitable Growth
26

Shareholder Value Approach
Shareholder
Value
14%
16%
FY14 FY15E
ROE %
37% 39%
FY14 FY15E
Dividend Payout %Non-GAAP EPS $
$2.06 $2.18
FY14 FY15E
Profitable Growth Driving ROE Ongoing Return of Capital
Based on Non-GAAP EPS and annualized dividend per share
27

In Summary
3-6% Revenue Growth… 5-7% Non-GAAP EPS Growth… >50% FCF Returned to Shareholders
This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular
period may differ materially due to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

These presentation slides and related webcast 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 statements regarding our growth and strategy) 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 Form 10-K and Form 10-Q. The financial
information contained in these presentation slides and related webcast should be read in conjunction with the consolidated financial statements and
notes thereto included in Cisco’s most recent reports on Form 10-K and Form 10-Q, as each may be amended from time to time. Cisco’s results of
operations for prior periods are not necessarily indicative of Cisco’s operating results for any future periods. Any projections in these presentation
slides and related webcast 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 related webcast.
Forward-looking Statements

GAAP Reconciliation Guidance for Q4’FY15
Q4 FY’15
Share-based compensation expense $0.05 – 0.06
Amortization of purchased intangible assets and other acquisition-related/divestiture costs 0.04 – 0.05
Subtotal $0.09 – 0.11
Restructuring and other charges 0.01 – 0.02
Total impact to GAAP EPS $0.10 – 0.13
Share-based compensation expense is expected to be recorded to the various line items of the GAAP income statement in similar proportions as
Q3’FY15.
Amortization of purchased intangible assets, other acquisition/divestiture-related costs, and restructuring and other charges will be reported as GAAP
operating expenses, cost of sales, or other income (loss) as applicable.
Guidance assumes no additional acquisitions, asset impairments, restructurings, tax or other events, which may or may not be significant.

Kelly kramer shareholder value draft final

More Related Content

What's hot (20)

Viewers also liked (9)

Similar to Kelly kramer shareholder value draft final (20)

Recently uploaded (20)

Kelly kramer shareholder value draft final