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What changed in Cisco's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Cisco's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+350 added−369 removedSource: 10-K (2025-09-03) vs 10-K (2024-09-05)

Top changes in Cisco's 2025 10-K

350 paragraphs added · 369 removed · 279 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeObservability Observability consists of our network assurance, monitoring and analytics and observability suite offerings. Our Observability offerings are designed to bring together and provide end-to-end visibility of our customer’s environments across applications, networks, multi-cloud infrastructures and the Internet, to help deliver full stack observability for modern environments and drive relevant real-time insights.
Biggest changeThese offerings are designed to bring together and provide end-to-end visibility of our customers' owned and unowned environments—including applications, networks, multi-cloud infrastructures and the Internet. With AI-driven insights at their core, our observability solutions help organizations see, understand and improve every digital experience, and help to ensure seamless connectivity and proactive issue resolution across complex, modern environments.
Our competitors (in each case relative to only some of our products or services) include: Amazon Web Services LLC; Arista Networks, Inc.; Broadcom Inc.; Ciena Corporation; CrowdStrike Holdings, Inc.; Datadog Inc.; Dell Technologies Inc.; Dynatrace Inc.; Fortinet, Inc.; Hewlett-Packard Enterprise Company; Huawei Technologies Co., Ltd.; Juniper Networks, Inc.; Microsoft Corporation; New Relic, Inc.; Nokia Corporation; Nvidia Corporation; Palo Alto Networks, Inc.; RingCentral, Inc.; Zoom Video Communications, Inc.; and Zscaler, Inc.; among others.
Our competitors (in each case relative to only some of our products or services) include: Amazon Web Services LLC; Arista Networks, Inc.; Broadcom Inc.; Ciena Corporation; CrowdStrike Holdings, Inc.; Datadog Inc.; Dell Technologies Inc.; Dynatrace Inc.; Fortinet, Inc.; Hewlett-Packard Enterprise Company; Huawei Technologies Co., Ltd.; Microsoft Corporation; New Relic, Inc.; Nokia Corporation; Nvidia Corporation; Palo Alto Networks, Inc.; RingCentral, Inc.; Zoom Video Communications, Inc.; and Zscaler, Inc.; among others.
Service Provider and Cloud Service Provider and Cloud includes regional, national, and international wireline carriers and webscale operators, as well as internet, cable, and wireless providers. We also include media, broadcast, and content providers within this customer market, as the lines in the telecommunications industry continue to blur between traditional network-based, content-based and application-based services.
Service Provider and Cloud Service Provider and Cloud includes regional, national, and international wireline carriers and webscale providers, as well as Internet, cable, and wireless providers. We also include media, broadcast, and content providers within this customer market, as the lines in the telecommunications industry continue to blur between traditional network-based, content-based and application-based services.
Employee Engagement We believe that strong communication is key in our Conscious Culture. These communications include the Cisco Beat, which are regular all-hands meetings, and Cisco Check-Ins, which are ad-hoc meetings for important conversations, and weekly team leader check-ins, which we refer to as a “Team Space Check-In.” In fiscal 2024, we have seen a high level of employee engagement.
Employee Engagement We believe that strong communication is key in our Conscious Culture. These communications include the Cisco Beat, which are regular all-hands meetings, and Cisco Check-Ins, which are ad-hoc meetings for important conversations, and weekly team leader check-ins, which we refer to as a “Team Space Check-In.” In fiscal 2025, we have seen a high level of employee engagement.
In fiscal 2024, we continued to offer employees “A Day for Me,” which were paid days off that allowed for each individual to recharge and rest. We employ a hybrid work model in certain countries, giving our employees the flexibility to work offsite or at onsite Cisco locations.
In fiscal 2025, we continued to offer employees “A Day for Me,” which were paid days off that allowed for each individual to recharge and rest. We employ a hybrid work model in certain countries, giving our employees the flexibility to work offsite or at onsite Cisco locations.
Risk Factors,” including the risk factor entitled “We are exposed to fluctuations in the market values of our portfolio investments and in interest rates; impairment of our investments could harm our earnings.” 5 Table of Contents Strategic Alliances We pursue strategic alliances with other companies in areas where collaboration can produce industry advancement and accelerate new markets.
Risk Factors,” including the risk factor entitled “We are exposed to fluctuations in the market values of our portfolio investments and in interest rates; impairment of our investments could harm our earnings.” Strategic Alliances We pursue strategic alliances with other companies in areas where collaboration can produce industry advancement and accelerate new markets.
To achieve these objectives, our management and engineering personnel work with customers to identify and respond to customer needs, as well as with other innovators of internet networking products, including universities, laboratories, and corporations. We also expect to continue to make acquisitions and 6 Table of Contents strategic investments, where appropriate, to provide us with access to new technologies.
To achieve these objectives, our management and engineering personnel work with customers to identify and respond to customer needs, as well as with other innovators of Internet networking products, including universities, laboratories, and corporations. We also expect to continue to make acquisitions and strategic investments, where appropriate, to provide us with access to new technologies.
Any inability to effectively manage these complicated relationships with customers, suppliers, and strategic alliance partners could materially harm our business, operating results, and financial condition and accordingly affect our chances of success. Research and Development We regularly introduce new products and features to address the requirements of our markets.
Any inability to effectively manage these complicated relationships with customers, suppliers, and strategic alliance partners could materially harm our business, operating results, and financial condition and accordingly affect our chances of success. 6 Table of Contents Research and Development We regularly introduce new products and features to address the requirements of our markets.
Our routed optical networking systems and our pluggable optic solutions, allow us to transform the economics of building and operating networks for our service provider customers, including our webscale customers.
Our routed optical networking systems and our pluggable optic solutions allow us to transform the economics of building and operating networks for our service provider customers.
Stahlkopf spent 14 years at Microsoft, where she served most recently as Corporate Vice President, General Counsel and Corporate Secretary, Corporate, External and Legal Affairs from April 2018 to July 2021. Ms.
Prior to joining Cisco, Ms. Stahlkopf spent 14 years at Microsoft, where she served most recently as Corporate Vice President, General Counsel and Corporate Secretary, Corporate, External and Legal Affairs from April 2018 to July 2021. Ms.
Cisco is currently ranked #2 on the Fortune 100 Best Companies to Work For® 2024 in the United States. Fortune and Great Place to Work have published their United States rankings since 1998, and Cisco has been recognized on every annual list.
Cisco is currently ranked #3 on the Fortune 100 Best Companies to Work For® 2025 in the United States. Fortune and Great Place to Work have published their United States rankings since 1998, and Cisco has been recognized on every annual list.
Harness the Power of AI and Data AI represents a generational shift in technology and is driving an order of magnitude higher requirement for network connectivity. We provide network infrastructure to power AI training and inference workloads for both webscalers and enterprises.
AI and Data AI represents a generational shift in technology and the advent of AI agents is driving an order of magnitude higher requirement for network connectivity. We provide network infrastructure to power AI training and inference workloads for both webscale providers and enterprises.
Our strategy is to securely connect everything to make those desired outcomes and experiences possible for our customers. In today’s dynamic environment, our customers have three key priorities: build modern and resilient infrastructure; protect against the cyber threats of today and tomorrow; and harness the power of AI and data.
Our strategy is to securely connect everything to make those desired outcomes possible. Our customers have three key priorities in this dynamic environment: i) to build modern infrastructure; ii) to protect against the cyber threats of today and tomorrow; and iii) to harness the power of AI and data.
As an example, there were approximately 2.3 million Team Space Check-Ins by our employees in fiscal 2024, reflecting approximately 70,300 employees (excludes employees who recently joined Cisco during fiscal 2024 through the Splunk acquisition) submitting Team Space Check-Ins. Employees also participate in our global Engagement Pulse Survey and the Real Deal Survey.
As an example, there were approximately 2 million Team Space Check-Ins by our employees in fiscal 2025, reflecting approximately 65,700 employees (excludes certain of the employees who joined Cisco during fiscal 2024 through the Splunk acquisition) submitting Team Space Check-Ins. Employees also participate in our global Engagement Pulse Survey and the Real Deal Survey.
Risk Factors,” including the risk factor entitled “We depend upon the development of new products and services, and enhancements to existing products and services, and if we fail to predict and respond to emerging technological trends and customers’ changing needs, our operating results and market share may suffer.” For information regarding sales of our major products and services, see Note 19 to the Consolidated Financial Statements. 2 Table of Contents Products and Services Our products and services are grouped into the following categories: Networking Networking consists of our core networking technologies of switching, routing, wireless, and servers.
Risk Factors,” including the risk factor entitled “We depend upon the development of new products and services, and enhancements to existing products and services, and if we fail to predict and respond to emerging technological trends and customers’ changing needs, our operating results and market share may suffer.” For information regarding sales of our major products and services, see Note 19 to the Consolidated Financial Statements. 2 Table of Contents Products and Services Our products and services are grouped into the following categories: Networking Our networking business is built on a foundation of industry-leading technologies, including switching, routing, wireless, and servers, offered through a comprehensive suite of both hardware and software solutions.
Public Sector Public Sector includes federal, state and local governments, as well as educational institution customers. Many public sector customers have unique IT, collaboration, and networking needs within a multi-vendor environment. We sell to public sector customers through a network of third-party application and technology vendors and channel partners, as well as through direct sales.
Many public sector customers have unique IT, collaboration, and networking needs within a multi-vendor environment. We sell to public sector 4 Table of Contents customers through a network of third-party application and technology vendors and channel partners, as well as through direct sales.
(“Salesforce”) where he served in a variety of leadership roles, including most recently as its Chief Operating Officer of Customer Success. Before joining Salesforce, Mr. Subaiya held various leadership roles in business development and global planning and strategy at Oracle Corporation. 11 Table of Contents
(“Salesforce”) where he served in a variety of leadership roles, including most recently as its Chief Operating Officer of Customer Success. Before joining Salesforce, Mr. Subaiya held various leadership roles in business development and global planning and strategy at Oracle Corporation. Mr. Subaiya is a member of the board of directors of Genpact Limited (since 2025). Mr.
We sell our products and services both directly and indirectly through a variety of channels with support from our sales workforce. A substantial portion of our products and services is sold indirectly through channel partners, and the remainder is sold through direct sales. Channel partners include systems integrators, service providers, other third-party resellers, and distributors.
A substantial portion of our products and services is sold indirectly through channel partners, and the remainder is sold through direct sales. Channel partners include systems integrators, service providers, other third-party resellers, and distributors.
Customers and Markets Many factors influence the IT, collaboration, and networking requirements of our customers. These include the size of the organization, number and types of technology systems, geographic location, and business applications deployed throughout the customer’s network. Our customer base is not limited to any specific industry, geography, or market segment.
These include the size of the organization, number and types of technology systems, geographic location, and business applications deployed throughout the customer’s network. Our customer base is not limited to any specific industry, geography, or market segment. Our customers primarily operate in the following markets: enterprise, public sector and service provider and cloud.
In addition to our product offerings, we provide a broad range of services offerings, including technical support services and advanced services, also known as lifecycle services. Our customers include businesses of all sizes, public institutions, governments, and service providers, including large webscale providers.
Our products and technologies are grouped into the following categories: Networking, Security, Collaboration and Observability. In addition to our product offerings, we provide a broad range of services over the lifecycle of our products, including technical support services and advanced services. Our customers include businesses of all sizes, public institutions, governments, and service providers, including large webscale providers.
Our customers primarily operate in the following markets: enterprise, public sector and service provider and cloud. Enterprise Enterprise includes businesses that are large regional, national, or global organizations with multiple locations or branch offices, or mid-market and small businesses. Many enterprise businesses have unique IT, collaboration, and networking needs within a multi-vendor environment.
Enterprise Enterprise includes businesses that are large regional, national, or global organizations with multiple locations or branch offices, or mid-market and small businesses. Many enterprise businesses have unique IT, collaboration, and networking needs within a multi-vendor environment. Our mid-market and small business customers typically require the latest advanced technologies, but with less complexity.
Our Cisco 8000 series routers, which are based on our Silicon One, provide broad capacity in high-density designs, allowing our customers to reduce operational footprints, lower carbon emissions, and transition to more efficient network architectures. Our Enterprise Routing portfolio interconnects public and private wireline and mobile networks, delivering highly secure and reliable connectivity to campus, data center and branch networks.
Our Cisco 8000 series routers, which are based on Cisco Silicon One, provide broad capacity in high-density designs, allowing our customers to reduce operational footprints, lower carbon emissions, and transition to more efficient network architectures.
Our Switching portfolio encompasses campus switching as well as data center switching offerings. Our campus switching offerings provide the foundation for converged data, voice, video, and Internet of Things (IoT) services. These switches offer enhanced security and reliability and are designed to scale efficiently as our customers grow.
Our campus switching offerings provide the foundation for converged data, voice, video, and Internet of Things (IoT) services. These switches offer enhanced security and reliability and are designed to scale efficiently as our customers grow. Within campus switching, our Catalyst 9000 family of switches includes hardware with embedded software, along with a software subscription referred to as Cisco DNA.
Compared with other customers, service providers are more likely to require network design, deployment, and support services because of the greater scale and higher complexity of their networks, whose requirements are addressed, we believe, by our architectural approach. 4 Table of Contents Sales Overview As of the end of fiscal 2024, our worldwide sales and marketing functions consisted of approximately 28,000 employees, including managers, sales representatives, and technical support personnel.
Compared with other customers, service providers are more likely to require network design, deployment, and support services because of the greater scale and higher complexity of their networks, whose requirements are addressed, we believe, by our architectural approach.
Acquisitions We acquire companies in order to gain access to talent, technology, products and features, operational capabilities or new markets. The risks associated with acquisitions are more fully discussed in “Item 1A.
We continue to evaluate opportunities to acquire and invest in businesses and technologies that complement and enable further investment in our key priority areas. 5 Table of Contents Acquisitions We acquire companies in order to gain access to talent, technology, products and features, operational capabilities or new markets. The risks associated with acquisitions are more fully discussed in “Item 1A.
With this breadth and scale of data, we can help deliver differentiated insights and context to customers, leading them to more informed proactive decisions and better business results. For a discussion of the risks associated with our Strategy and Priorities, see “Item 1A.
With this breadth and scale of data, we can help deliver differentiated insights and context to customers, leading them to more informed proactive decisions and better business results. These three customer priorities drive our innovation and technology, making them our priorities as well.
Our mid-market and small business customers typically require the latest advanced technologies, but with less complexity. We offer service and support packages, financing, and managed network services, primarily through our service provider partners. We sell these products through a network of third-party application and technology vendors and channel partners, as well as selling directly to these customers.
We offer service and support packages, financing, and managed network services, primarily through our service provider partners. We sell these products through a network of third-party application and technology vendors and channel partners, as well as selling directly to these customers. Public Sector Public Sector includes federal, state and local governments, as well as educational institution customers.
Collaboration Collaboration consists of our Webex Suite, Collaboration Devices, Contact Center and Communication Platform as a Service (CPaaS) offerings. Our offerings within the Collaboration portfolio consist of software offerings, including perpetual licenses and subscription arrangements, as well as hardware.
Collaboration Our Collaboration portfolio consists of our Webex suite, collaboration devices, Contact Center and Communication Platform as a Service (CPaaS) offerings. These offerings consist of software, including perpetual licenses and subscription arrangements, as well as hardware. Our objective is to create more inclusive and engaging employee and customer experiences by providing technology that enables distributed teams to collaborate effortlessly.
AI and machine learning capabilities are embedded across the Webex portfolio to help improve productivity. Our CPaaS is a cloud 3 Table of Contents communications platform that integrates communication channels and existing back-end business systems together to help enable the orchestration and automation of all customer and employee interactions.
Our CPaaS is a cloud communications platform that integrates communication channels and existing back-end business systems to help enable the orchestration and automation of all customer and employee interactions. Observability Observability consists of our network assurance, monitoring and analytics and observability suite offerings.
Our support and maintenance services help our customers ensure their products operate efficiently, remain available, and benefit from the most up-to-date system and application software. These services help customers protect their network investments, manage risk, and minimize downtime for systems running mission-critical applications.
Cisco Technical Support provides customers with comprehensive assistance, including issue resolution, software support and hardware replacement, to help ensure Cisco products and networks operate efficiently and remain highly available. These services help customers protect their network investments, manage risk, and minimize downtime for systems running mission-critical applications.
Health & Well-being We have an ongoing commitment to focus on the health, safety, and well-being of our employees. We seek to provide our employees and their families with high-quality, flexible, and convenient benefits and resources for their physical, mental, and financial well-being.
We seek to provide our employees and their families with high-quality, flexible, and convenient benefits and resources for their physical, mental, and financial well-being. We strive to support our employees as they balance careers and personal lives, as well as their own physical, emotional, and financial health.
Acquisitions, Investments, and Alliances The markets in which we compete require a wide variety of technologies, products, and capabilities. We continue to evaluate opportunities to acquire and invest in businesses and technologies that complement and enable further investment in our key priority areas.
Acquisitions, Investments, and Alliances The markets in which we compete require a wide variety of technologies, products, and capabilities.
Item 1. Business General Cisco designs and sells a broad range of technologies that help to power, secure, and draw insights from the Internet.
Item 1. Business General Cisco designs and sells a broad range of technologies that help to power, secure, and draw insights from the Internet. We are incorporating artificial intelligence (AI) into our product portfolios across networking, security, collaboration and observability as well as integrating our products more tightly together.
These regulations and laws involve a variety of matters including privacy, data protection and personal information, cybersecurity, operational resilience, artificial intelligence, tax, trade, encryption technology, environmental sustainability (including climate change), human rights, product certification, and national security. 7 Table of Contents A failure, or alleged failure, by us to comply with regulations or laws could materially harm our business, operating results, or financial condition.
Many of these regulations and laws are evolving and their applicability and scope, as interpreted by courts and regulators, remain uncertain. These regulations and laws involve a variety of matters including privacy, data protection and personal information, cybersecurity, operational resilience, AI, tax, trade, encryption technology, environmental sustainability (including climate change), human rights, product certification, and national security.
Also, within campus switching we have a range of Meraki cloud-managed switches for customers who prefer ease of management in lean-IT environments. Our data center switching offerings, led by the Nexus 9000 series, provide the foundation for mission critical data centers with high availability, scalability, and security across traditional data centers and private and public cloud data centers.
Our data center switching offerings, led by the Nexus 9000 series, provide the foundation for mission critical data centers with high availability, scalability, and security across traditional data centers and private and public cloud data centers. We continue to add greater visibility and analytics across our networks and applications, enabling us to deliver better experiences for our customers.
For additional information about government regulation and laws applicable to our business, see “Item 1A.
A failure, or alleged failure, by us to comply with regulations or laws could materially harm our business, operating results, or financial condition. For additional information about government regulation and laws applicable to our business, see “Item 1A.
We continue to add greater visibility and analytics across our networks and applications, enabling us to deliver better experiences for our customers. Internet Infrastructure primarily consists of our routed optical networking solutions. We are focusing on transforming connectivity to the Internet and the cloud environment by efficiently meeting the growing demand for low-latency and higher speeds.
The Internet Infrastructure portion of this portfolio includes AI Infrastructure solutions for service provider customers, including our webscale customers. We are focused on transforming connectivity to the Internet and the cloud environment by efficiently meeting the growing demand for low-latency and higher speeds.
Steele also served in business development, marketing, and engineering roles at Sun Microsystems, Inc. and Hewlett-Packard Company. Mr. Steele is a member of the board of directors of Upwork Inc. (since 2018). Ms. Stahlkopf joined Cisco in August 2021 and serves as our Executive Vice President and Chief Legal Officer. Prior to joining Cisco, Ms.
Patel served as General Manager and Chief Executive of the Syncplicity business unit of EMC Corporation (now part of Dell Technologies Inc.). Mr. Patel is a member of the board of directors of Jones Lang LaSalle Incorporated (since 2019). Ms. Stahlkopf joined Cisco in August 2021 and serves as our Executive Vice President and Chief Legal Officer.
Our business is organized into the following three geographic segments: Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC). Our products and technologies are grouped into the following categories: Networking, Security, Collaboration and Observability.
We are simplifying how our technology is delivered, managed and optimized and helping customers maximize the business value of their technology investments. We conduct our business globally and manage our business by geography. Our business is organized into the following three geographic segments: Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).
All such filings are available free of charge. The information published on our website, or any other website referenced herein, is not incorporated into this report. Strategy and Priorities Across the globe, businesses and organizations of every size are leveraging Cisco technology to transform and drive better outcomes and experiences. We also help customers navigate emerging technological shifts.
All such filings are available free of charge. The information published on our website, or any other website referenced herein, is not incorporated into this report. Strategy and Priorities In today's digital-first world, businesses and organizations globally are deploying technology to pursue their strategic objectives, from accelerating growth to enhancing operational efficiency and fostering innovation.
We strive to support our employees as they balance careers and personal lives, as well as their own physical, emotional, and financial health. We continue to emphasize a focus on both physical and mental health, recognizing the need to create an environment where employees can speak openly about mental health and other matters.
We continue to emphasize a focus on both physical and mental health, recognizing the need to create an environment where employees can speak openly about mental health and other matters. We offer mindfulness courses, employee assistance program offerings, and out-of-network provider benefits for substance abuse and mental health treatment, and more.
In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent as the laws of the United States. The risks associated with patents and intellectual property are more fully discussed in “Item 1A.
The risks associated with patents and intellectual property are more fully discussed in “Item 1A.
Robbins 58 Chair and Chief Executive Officer R. Scott Herren 62 Executive Vice President and Chief Financial Officer Gary Steele 62 President, Go-to-Market Deborah L. Stahlkopf 54 Executive Vice President and Chief Legal Officer Thimaya Subaiya 46 Executive Vice President, Operations Mr.
Robbins 59 Chair and Chief Executive Officer Mark Patterson 55 Executive Vice President and Chief Financial Officer Jeetendra Patel 54 President, Chief Product Officer Deborah L. Stahlkopf 55 Executive Vice President and Chief Legal Officer Thimaya Subaiya 47 Executive Vice President, Operations Oliver Tuszik 57 Executive Vice President, Global Sales Mr.
These technologies consist of both hardware and software offerings, including software licenses and software-as-a-service (SaaS), that help our customers build networks, automate, modernize and transform their infrastructure. We believe it is critical for us to deliver continuous value to our customers. Our objective is to converge our on-premise solutions with our cloud managed solutions across our networking portfolio.
This portfolio, which features software licenses and software-as-a-service (SaaS) offerings, empowers customers to build, automate, modernize, and transform their network infrastructure to meet the demands of a rapidly evolving digital landscape. A central pillar of our networking strategy is the seamless convergence of our on-premise solutions with our cloud-managed offerings.
Steele joined Cisco as Executive Vice President and General Manager, Splunk upon the close of Cisco’s acquisition of Splunk in March 2024, and was promoted to President, Go-to-Market in May 2024. Prior to joining Cisco, Mr. Steele served as President and Chief Executive Officer of Splunk from April 2022 to March 2024. Prior to joining Splunk, Mr.
Patel served as Cisco’s Executive Vice President and Chief Product Officer from August 2024 to May 2025, as Executive Vice President and General Manager, Security and Collaboration from June 2021 to August 2024, and as Senior Vice President and General Manager, Security and Collaboration from July 2020 to June 2021. Prior to joining Cisco, Mr.
Customer Priorities Modernize Infrastructure In an increasingly digital and connected world, where each new connection to the Internet puts more demand on the network, our customers are looking to modernize and transform their infrastructure, including through automation to manage and monitor each connection in real time.
Modern Infrastructure In an increasingly digital and connected world, where each new connection to the Internet puts more demand on the network, our customers are investing in resilient, adaptable infrastructure to quickly respond to market changes and the demands of their own customers. Now more than ever it is crucial for businesses to remain competitive while managing resource constraints.
Herren joined Cisco in December 2020 and serves as our Executive Vice President and Chief Financial Officer. Prior to joining Cisco, Mr. Herren served as Senior Vice President and Chief Financial Officer of Autodesk, Inc. (“Autodesk”) since November 2014. Prior to joining Autodesk, Mr. Herren served as Senior Vice President of Finance at Citrix Systems, Inc.
Patterson joined Cisco in September 2000 and serves as our Executive Vice President and Chief Financial Officer since July 2025. Previously, Mr.
It provides market competitive, performance-based compensation aligned with each employee’s contribution and impact to the value we drive to our customers, partners and stockholders. We reward and recognize our employees for effecting innovation, collaboration, profitability, and growth within our geographies, product lines, and functions. Cisco has always been committed to compensating our employees fairly and equitably.
As of July 26, 2025, we had approximately 86,200 employees and they are categorized as follows: Compensation and Benefits Our total compensation philosophy is designed to attract, reward, and retain talent. It provides market competitive, performance-based compensation aligned with each employee’s contribution and impact to the value we drive to our customers, partners, and stockholders.
Within campus switching are our Catalyst 9000 series of switches that include hardware with embedded software, along with a software subscription referred to as Cisco DNA. Cisco DNA provides automation, analytics and security features and can be centrally monitored, managed, and configured.
Cisco DNA provides automation, analytics and security features which can be centrally monitored, managed, and configured. Also, within campus switching we have a range of Meraki cloud-managed switches for customers who prefer ease of management in lean-IT environments.
With our acquisition of Splunk in the third quarter of fiscal 2024, we have begun to integrate our solutions, starting with Cisco Extended Detection and Response (XDR) and Splunk Enterprise Security. Additionally, we continue to invest in expanding our SASE architecture by delivering combined network and security functionality in a single cloud-native service.
We have been integrating Cisco Extended Detection and Response (XDR) with 3 Table of Contents Splunk Enterprise Security, to create a unified and highly effective solution to help prevent, detect, and respond to sophisticated cyber threats. We are also accelerating the expansion of our SASE architecture, delivering a seamless combination of network and security functionality through a single, cloud-native platform.
The contents of our Purpose Report, our ESG Reporting Hub and related supplemental information are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. 10 Table of Contents Information about our Executive Officers The following table shows the name, age, and position as of August 31, 2024 of each of our executive officers: Name Age Position with the Company Charles H.
These surveys allow our employees to provide confidential feedback on our culture, company strategy and trust in their direct leaders. 9 Table of Contents Information about our Executive Officers The following table shows the name, age, and position as of August 31, 2025 of each of our executive officers: Name Age Position with the Company Charles H.
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We are integrating artificial intelligence (AI) into our product portfolios across networking, security, collaboration and observability to simplify how our technology is delivered, managed and optimized and to help customers maximize the business value of their technology investments and accelerate their digital transformation. We conduct our business globally and manage our business by geography.
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Cisco is at the forefront of this evolution, developing innovative solutions that leverage advanced AI to deliver more valuable outcomes for our customers.
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These customer priorities are central to how we innovate and develop our technology. First, we provide the underlying network connectivity for our customers, whether they are connecting traditional branch offices, data centers, smart grids, video devices, electric vehicles, or other devices. Second, we help protect those network connections and the underlying technology architecture against cyber threats.
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Our customers continue to focus on modernizing their infrastructure with a focus on speed, agility, productivity, innovation and energy efficien cy. 1 Table of Contents Cybersecurity With the rapid growth in AI, modern applications, hyper-distributed architecture and increasingly sophisticated cyberattacks, customers see cybersecurity as a top priority.
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Third, through the visibility we have into data across the network, connected devices and applications, we provide context and insights to our customers about what is happening in their technology architecture, not only in their on-premise infrastructure and private data centers, but also their cloud infrastructure.
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To help deliver on them, we are bringing together the power of our portfolio, which we refer to as One Cisco, which provides three key outcomes to our customers: i) AI-ready data centers, ii) future-proofed workplaces, and iii) digital resilience. AI-Ready Data Centers We are transforming data centers to power AI workloads anywhere.
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Our ongoing innovation is delivered, managed and optimized through a combination of hardware, software and subscriptions, in line with the flexible consumption models our customers request. 1 Table of Contents Cisco can help customers connect, protect and draw actionable insights from their technology.
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Whether customers need to modernize parts of their existing infrastructure or power new, massive AI workloads, Cisco brings together a wide array of infrastructure (across networking, compute, storage, and silicon) with unified management across traditional and AI workloads, and security from on-premise to cloud to power AI-ready data centers.
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We do this in service of delivering the digital resilience our customers need for today’s complex and unpredictable world.
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Future-Proofed Workplaces Cisco helps deliver "future-proofed" workplaces, modernizing how people and technology work and serve their customers. This includes environments ranging from factory floors with plant workers and robots to hospitals with healthcare workers, as well as to social workers and salespeople on the move.
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We continue to transform our enterprise networking portfolio by bringing together several technologies to form an integrated architecture. Our vision is to build a unified management platform experience for on-premise and cloud operating models, that simplifies and helps secure networking for customers at scale.
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For secure campus and branch networking, we offer a flexible range of solutions that help ensure secure, reliable connections for users and devices. Our smart building technology turns network devices into sensors for enhanced intelligence and control of physical spaces. To support productivity, we provide collaboration devices and software to enable collaboration no matter where people work.
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Our Observability offerings collect and process daily measurements from customers’ owned and unowned networks, providing automated insights, proactive recommendations, and closed-loop operations tailored to customers to enable them to reduce mean time to resolution of issues and improve IT productivity and user experience.
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Digital Resilience We help to keep the data center, workplace, and entire IT environment securely up and running in the face of any disruption. Our network assurance capabilities, powered by ThousandEyes, are integrated throughout our portfolio. This technology helps ensure seamless connectivity and optimal digital experiences across cloud, Internet, and enterprise networks, for the delivery of applications and services.
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For the data center, our strategy is to deliver multicloud architectures that bring policy and operational consistency, regardless of where applications or data reside. We continue to make significant investments in the development of software, silicon and optics, which we believe are the building blocks for the internet for the future.
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Our observability solution monitors the entire enterprise to help prevent downtime and improve experiences across networks, infrastructures, and applications. Additionally, Cisco provides robust security measures for threat prevention, detection, investigation, and response for organizations of any size and security maturity. Cisco enables enterprises and service providers to deliver highly secure connectivity from workplaces to data centers worldwide.
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As part of modernizing their infrastructure, customers of every size are also looking for solutions to help them communicate more effectively with their customers and to connect their employees more efficiently for productivity.
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Our strength lies in our ability to deliver unified architecture with integrated, end-to-end solutions to help simplify complex challenges. These capabilities are accelerated with Cisco AI, enhancing outcomes for customers globally. For a discussion of the risks associated with our Strategy and Priorities, see “Item 1A.
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Our collaboration portfolio, which includes interoperable devices and our cloud contact center, provides those solutions, and serves as a key component of smart buildings, powered over ethernet, that we believe will define the workplaces of the future. Improve Cybersecurity With the rapid growth in modern applications, hyper-distributed architecture and increasingly sophisticated cyberattacks, customers see cybersecurity as a top priority.
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By integrating these capabilities across our networking portfolio, we aim to deliver continuous value to our customers through enhanced flexibility, scalability, and operational efficiency. This unified approach positions us to address the diverse needs of businesses as they transition to hybrid and cloud-first environments. Our switching portfolio encompasses campus switching as well as data center switching offerings.
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Cisco Silicon One is our single, unified, and scalable networking silicon architecture which we have expanded from a routing-focused solution to one which addresses the webscale switching market through the combination of its high-performance, feature-rich, and low-power characteristics.
Added
Our switching portfolio now also includes the newly launched Cisco Smart Switches — Cisco 9350 and Cisco 9610— which represent the next generation of enterprise networking. These switches are AI-ready with advanced telemetry and assurance capabilities.
Removed
Our routing solutions are designed to meet the scale, reliability, and security needs of our large to small customers. Our Wireless portfolio provides indoor and outdoor wireless coverage designed for seamless roaming use of voice, video, and data applications.
Added
They are built on Cisco Silicon One (which is our single, unified, and scalable networking silicon architecture) and are equipped with quantum-resistant security and post-quantum cryptography to protect against future threats. They also offer flexibility for one hardware to be managed via either the Cisco Catalyst Center or Meraki Dashboard user interface.
Removed
These products include wireless access points and controllers that are on-premise and cloud managed, and which, combined with our Switching portfolio, delivers a converged access solution that is powerful, yet simple. Security Security consists of our Network Security, Identity and Access Management, Secure Access Service Edge (SASE) and Threat Intelligence, Detection, and Response offerings.
Added
During fiscal 2025, we introduced the Cisco N9300 Series Smart Switches with a new class of intelligent networking silicon alongside embedded Data Processing Units (DPUs), representing our new vision for AI data center designs. Complex data processing tasks can be offloaded to the DPUs on the switch to improve both network architecture and the security posture.
Removed
Security is a leading priority for our customers, regardless of size or industry. We continue to invest in resources across our security portfolio focused on cloud-based offerings, AI-enhanced threat detection and end-to-end security architectures. Our Threat Intelligence, Detection, and Response offerings incorporate the technologies of Splunk to prevent, detect and respond to sophisticated cyber attacks.
Added
Cisco Hypershield, our cloud-native and AI-powered approach to highly distributed security for AI-scale data centers that is built into the fabric of the network, is the first service offering available embedded on these new switches. This helps to narrow the gap between security and networking layers by converging them into a single solution.
Removed
This product category includes the Splunk Platform and Splunk Security offerings after the acquisition of Splunk, although the Splunk Platform has use cases that can also be applicable for Observability offerings.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA reduction or interruption in supply, including disruptions on our global supply chain, caused in part by public health emergencies, geopolitical tensions (including as a result of China-Taiwan relations) or a significant natural disaster (including as a result of climate change); a significant increase in the price of one or more components (including as a result of inflation); a failure to adequately authorize procurement of inventory by our contract manufacturers; a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs; or a decrease in demand for our products could materially harm our business, operating results, and financial condition and could materially damage customer relationships.
Biggest changeFinancial problems of either contract manufacturers or component suppliers, reservation of manufacturing capacity at our contract manufacturers by other companies, and industry consolidation occurring within one or more component supplier markets, such as the semiconductor market, in each case, could either limit supply or increase costs. 12 Table of Contents A reduction or interruption in supply, including disruptions on our global supply chain, caused in part by public health emergencies, geopolitical tensions (including as a result of China-Taiwan relations, increasing tariffs or any other trade tensions) or a significant natural disaster (including as a result of climate change); a significant increase in the price of one or more components (including as a result of inflation); a failure to adequately authorize procurement of inventory by our contract manufacturers; a failure by suppliers to deliver on our contracts; a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs; or a decrease in demand for our products could materially harm our business, operating results, and financial condition and could materially damage customer relationships.
For additional information and a further discussion of impacts and risks related to our inventory commitments and our purchase commitments with contract manufacturers and suppliers, see “Results of Operations—Product Gross Margin—Supply Chain Impacts and Risks” and, “Liquidity and Capital Resources—Inventory Supply Chain” under Item 7 and Note 14 to the Consolidated Financial Statements of this report.
For additional information and a further discussion of impacts and risks related to our inventory commitments and our purchase commitments with contract manufacturers and suppliers, see “Results of Operations—Product Gross Margin—Supply Chain Impacts and Risks”, “Liquidity and Capital Resources—Inventory Supply Chain” under Item 7 and Note 14 to the Consolidated Financial Statements of this report.
In addition, companies in our industry whose employees accept positions with competitors frequently claim that competitors have engaged in improper hiring practices. We have received these claims in the past and may receive additional claims in the future. Adverse resolution of litigation or governmental investigations may harm our operating results or financial condition.
In addition, companies in our industry whose employees accept positions with competitors frequently claim that competitors have engaged in improper hiring practices. We have received these claims in the past and may receive additional claims in the future. Adverse resolution of claims, litigation or governmental investigations may harm our operating results or financial condition.
Although we are not dependent on any individual patents or group of patents for particular segments of the business for which we compete, if we are unable to protect our proprietary rights to the totality of the features (including aspects of products protected other than by patent rights) in a market, we may find ourselves at a competitive disadvantage to others who need not incur the substantial expense, time, and effort required to create innovative products that have enabled us to be successful.
Although we are not dependent on any individual patents or group of patents for particular segments of the business in which we compete, if we are unable to protect our proprietary rights to the totality of the features (including aspects of products protected other than by patent rights) in a market, we may find ourselves at a competitive disadvantage to others who need not incur the substantial expense, time, and effort required to create innovative products that have enabled us to be successful.
The products and services (together, our “solutions”) we sell to customers, and the cloud-based services operated or enabled by us, or by third parties upon which we rely, inevitably contain vulnerabilities or security defects (despite our efforts to prevent and detect them through secure development lifecycle practices, testing, and other means), which have not been remedied or cannot be disclosed without compromising security.
The products and services (together, our “solutions”) we sell to customers, and the cloud-based services operated or enabled by us, or by third parties upon which we rely, inevitably contain vulnerabilities or security defects (despite our efforts to prevent and detect them through secure development lifecycle practices, testing, or other means), which have not been remedied or cannot be disclosed without compromising security.
Acquisitions involve numerous risks, including the following: • Difficulties or delays in integrating the operations (including IT security), systems, technologies, products, and personnel of the acquired companies, particularly with companies that have large and widespread operations and/or complex products (such as Splunk) • Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions • Potential difficulties in completing projects associated with in-process research and development intangibles • Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions • Initial dependence on unfamiliar supply chains or relatively small supply partners • Insufficient revenue to offset increased expenses associated with acquisitions • The potential loss of key employees, customers, distributors, vendors and other business partners of the companies we acquire following and continuing after announcement of acquisition plans 19 Table of Contents Acquisitions have in the past and may in the future also cause us to: • Issue common stock that would dilute our current stockholders’ percentage ownership • Use a substantial portion of our cash resources, or incur debt • Significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition • Assume liabilities • Record goodwill and intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges • Incur amortization expenses related to certain intangible assets • Incur tax expenses related to the effect of acquisitions on our legal structure • Incur large write-offs and restructuring and other related expenses • Become subject to intellectual property or other litigation Mergers and acquisitions of high-technology companies are inherently risky and subject to many factors outside of our control, and no assurance can be given that our previous or future acquisitions will be successful and will not materially harm our business, operating results, or financial condition.
Acquisitions involve numerous risks, including the following: • Difficulties or delays in integrating the operations (including IT security), systems, technologies, products, and personnel of the acquired companies, particularly with companies that have large and widespread operations and/or complex products (such as Splunk) • Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions • Potential difficulties in completing projects associated with in-process research and development intangibles • Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions • Initial dependence on unfamiliar supply chains or relatively small supply partners • Insufficient revenue to offset increased expenses associated with acquisitions • The potential loss of key employees, customers, distributors, vendors and other business partners of the companies we acquire following and continuing after announcement of acquisition plans Acquisitions have in the past and may in the future also cause us to: • Issue common stock that would dilute our current stockholders’ percentage ownership • Use a substantial portion of our cash resources, or incur debt • Significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition • Assume liabilities 18 Table of Contents • Record goodwill and intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges • Incur amortization expenses related to certain intangible assets • Incur tax expenses related to the effect of acquisitions on our legal structure • Incur large write-offs and restructuring and other related expenses • Become subject to intellectual property or other litigation Mergers and acquisitions of high-technology companies are inherently risky and subject to many factors outside of our control, and no assurance can be given that our previous or future acquisitions will be successful and will not materially harm our business, operating results, or financial condition.
Although our product gross margin increased in fiscal 2024, our level of product gross margins have declined in certain prior periods, and could decline in future periods due to adverse impacts from various factors, including: • Changes in customer, geographic, or product mix, including the mix of hardware and software • Introduction of new products, including products with price-performance advantages, and new business models (including continuing to increase the use of business models where revenue is recognized over multiple periods) • Our ability to reduce production costs • Entry into new markets or growth in lower margin markets, including markets with different pricing and cost structures, through acquisitions or internal development • Sales discounts • Increases in material, labor or other manufacturing-related costs (i.e. component costs, broker fees, expedited freight and overtime) or higher supply chain logistics costs, any of which could be significant, especially during periods of supply constraints for certain costs, such as those that have impacted the market for components, including semiconductors and memory in past periods, and which costs have in the past and may continue to be exacerbated by inflation • Excess inventory, inventory holding charges, and obsolescence charges • Changes in shipment volume • The timing of revenue recognition and revenue deferrals • Increased costs (including those caused by tariffs or economic conditions, including inflation), loss of cost savings or dilution of savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand or if the financial health of either contract manufacturers or suppliers deteriorates • Lower than expected benefits from value engineering • Increased price competition, including competitors from Asia, especially from China • Changes in distribution channels • Increased warranty or royalty costs • Increased amortization of purchased intangible assets, especially from acquisitions • How well we execute on our strategy and operating plans Changes in service gross margin may result from various factors such as changes in the mix between technical support services and advanced services, as well as the timing of technical support service contract initiations and renewals, the addition of personnel and other related costs, and other resources to support higher levels of service business in future periods.
Although our product gross margin increased in fiscal 2025, our level of product gross margins has declined in certain prior periods, and could decline in future periods due to adverse impacts from various factors, including: • Changes in customer, geographic, or product mix, including the mix of hardware and software • Introduction of new products, including products with price-performance advantages, and new business models (including continuing to increase the use of business models where revenue is recognized over multiple periods) • Our ability to reduce production costs • Entry into new markets or growth in lower margin markets, including markets with different pricing and cost structures, through acquisitions or internal development • Sales discounts • Increases in material, labor or other manufacturing-related costs (i.e. component costs, broker fees, expedited freight and overtime) or higher supply chain logistics costs, any of which could be significant, especially during periods of supply constraints for certain costs, such as those that have impacted the market for components, including semiconductors and memory in past periods, and which costs have in the past and may continue to be exacerbated by inflation • Excess inventory, inventory holding charges, and obsolescence charges • Changes in shipment volume • The timing of revenue recognition and revenue deferrals • Increased costs (including those caused by tariffs or economic conditions, including inflation), loss of cost savings or dilution of savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand or if the financial health of either contract manufacturers or suppliers deteriorates • Lower than expected benefits from value engineering • Increased price competition, including competitors from Asia, especially from China • Changes in distribution channels • Increased warranty or royalty costs • Increased amortization of purchased intangible assets, especially from acquisitions • How well we execute on our strategy and operating plans Changes in service gross margin may result from various factors such as changes in the mix between technical support services and advanced services, as well as the timing of technical support service contract initiations and renewals, the addition of personnel and other related costs, and other resources to support higher levels of service business in future periods.
AI-related issues, deficiencies and/or failures could also give rise to legal and/or regulatory action, including with respect to proposed legislation regulating AI in jurisdictions such as the European Union and others, and as a result of new applications of existing data protection, privacy, intellectual property, and other laws; damage our reputation; or otherwise materially harm our business.
AI-related issues, deficiencies and/or failures could also give rise to legal and/or regulatory action (including with respect to proposed legislation regulating AI in jurisdictions such as the European Union and others, and as a result of new and different applications of existing and new data protection, privacy, intellectual property, and other laws); damage our reputation; or otherwise materially harm our business.
Cyber-related events have caused, and in the future could result in, compromise to, the disruption of access to, or the operation of our solutions and IT environment or those of our customers or third-party providers upon which we rely, or result in confidential information stored on our systems or our customers’ or other third-party systems being improperly accessed, processed, disclosed now (or in the future), or be lost or stolen.
Cyber-related events have caused, and in the future could result in, compromise to, or the disruption of access to, the operation of our solutions and IT environment or those of our customers or third-party providers upon which we rely, or result in confidential information stored on our systems or our customers’ or other third-party systems being improperly accessed, processed, disclosed now (or in the future), or being lost or stolen.
Our future results could be negatively impacted by a variety of political, economic or other factors relating to our operations inside and outside the United States, any or all of which could materially harm our operating results and financial condition, including the following: impacts from 20 Table of Contents global central bank monetary policy; issues related to the political relationship between the United States and other countries that can affect regulatory matters, affect the willingness of customers in those countries to purchase products from companies headquartered in the United States or affect our ability to procure components if a government body were to deny us access to those components; government-related disruptions or shutdowns; the challenging and inconsistent global macroeconomic environment; foreign currency exchange rates; geopolitical tensions (including China-Taiwan relations); political or social unrest; economic instability or weakness or natural disasters in a specific country or region, including economic challenges in China and global economic ramifications of Chinese economic difficulties; environmental protection regulations (including new laws and regulations related to climate change); trade protection measures, such as tariffs; other legal and regulatory requirements, some of which may affect our ability to import our products to, export our products from, or sell our products in various countries or affect our ability to procure components; political considerations that affect service provider and government spending patterns; health or similar issues, including pandemics or epidemics; difficulties in staffing and managing international operations; and adverse tax consequences, including imposition of withholding or other taxes on our global operations.
Our future results could be negatively impacted by a variety of political, economic or other factors relating to our operations inside and outside the United States, any or all of which could materially harm our operating results and financial condition, including the following: impacts from global central bank monetary policy; issues related to the political relationship between the United States and other countries that can affect regulatory matters, affect the willingness of customers in those countries to purchase products from companies headquartered in the United States or affect our ability to procure components if a government body were to deny us access to those components; government-related disruptions or shutdowns; the challenging and inconsistent global macroeconomic environment; foreign currency exchange rates; geopolitical tensions (including China-Taiwan relations); political or social unrest; economic instability or weakness or natural disasters in a specific country or region, including economic challenges in China and global economic ramifications of Chinese economic difficulties; environmental protection regulations (including new laws and regulations related to climate change); trade protection measures, such as tariffs; other legal and regulatory requirements, some of which may affect our ability to import our products to, export our products from, or sell our products in various countries or affect our ability to procure components; political considerations that affect service provider and government spending patterns; health or similar issues, including pandemics or epidemics; difficulties in staffing and managing international operations; and adverse tax consequences, including imposition of withholding or other taxes on our global operations.
Furthermore, many key aspects of networking technology are governed by industry-wide standards, which are usable by all market entrants. In addition, there can be no assurance that patents will be issued from pending applications or that claims allowed on any patents will be sufficiently broad to protect our technology.
Furthermore, many key aspects of our technology are governed by industry-wide standards, which are usable by all market entrants. In addition, there can be no assurance that patents will be issued from pending applications or that claims allowed on any patents will be sufficiently broad to protect our technology.
If global economic and market conditions, or economic conditions in key markets, were to deteriorate, we may experience material harm to our business, operating results, and financial condition. Our operating results in one or more segments may also be affected by uncertain or changing economic conditions particularly germane to that segment or to particular customer markets within that segment.
If global economic and market conditions were to deteriorate, we may experience material harm to our business, operating results, and financial condition. Our operating results in one or more segments may also be affected by uncertain or changing economic conditions particularly germane to that segment or to particular customer markets within that segment.
These factors include: • Fluctuations in demand for our products and services, especially with respect to service providers and internet businesses, in part due to changes in the global economic environment • Changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue • Our ability to maintain appropriate inventory levels and purchase commitments • Price and product competition in the communications and networking industries, which can change rapidly due to technological innovation and different business models from various geographic regions • The overall movement toward industry consolidation among both our competitors and our customers • The introduction and market acceptance of new technologies and products, and our success in new and evolving markets, and in emerging technologies, as well as the adoption of new standards • Variations in sales channels, product costs, mix of products sold, or mix of direct sales and indirect sales • The timing, size, and mix of orders from customers • Manufacturing and customer lead times • Fluctuations in our gross margins, and the factors that contribute to such fluctuations • The ability of our customers, channel partners, contract manufacturers and suppliers to obtain financing or to fund capital expenditures, especially during a period of global credit market disruption or in the event of customer, channel partner, contract manufacturer or supplier financial problems • Actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities, and other items reflected in our Consolidated Financial Statements • How well we execute on our strategy and operating plans and the impact of changes in our business model that could result in significant restructuring charges • Our ability to achieve targeted cost reductions • Benefits anticipated from our investments • Changes in tax laws or accounting rules, or interpretations thereof As a consequence, operating results for a particular future period are difficult to predict, and, therefore, prior results are not necessarily indicative of results to be expected in future periods.
These factors include: • Fluctuations in demand for our products and services, especially with respect to service providers and Internet businesses, in part due to changes in the global economic environment • Changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue • Our ability to maintain appropriate inventory levels and purchase commitments • Price and product competition in the communications and networking industries, which can change rapidly due to technological innovation and different business models from various geographic regions • The overall movement toward industry consolidation among both our competitors and our customers • The introduction and market acceptance of new technologies and products, and our success in new and evolving markets, and in emerging technologies, including AI, as well as the adoption of new standards • Variations in sales channels, product costs, mix of products sold, or mix of direct sales and indirect sales • The timing, size, and mix of orders from customers • Manufacturing and customer lead times • Fluctuations in our gross margins, and the factors that contribute to such fluctuations • The ability of our direct sale customers, channel partners, contract manufacturers and suppliers to obtain financing or to fund capital expenditures, especially in the event of direct sale customers, channel partner, contract manufacturer or supplier financial problems • Actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities, and other items reflected in our Consolidated Financial Statements • How well we execute on our strategy and operating plans and the impact of changes in our business model that could result in significant restructuring charges • Our ability to achieve targeted cost reductions • Benefits anticipated from our investments • Changes in tax laws or accounting rules, or interpretations thereof As a consequence, operating results for a particular future period are difficult to predict, and, therefore, prior results are not necessarily indicative of results to be expected in future periods.
As a result of a variety of factors discussed in this report, our revenue for a particular quarter is difficult to predict, which can be exacerbated during periods when the global macroenvironment is challenging and inconsistent and can result in market uncertainty.
As a result of a variety of factors discussed in this report, our revenue for a particular quarter is difficult to predict, which can be exacerbated during periods when the global macroenvironment is challenging and can result in market uncertainty.
The occurrence of a cyber attack, data breach or other incident could subject us to liability to our customers, data subjects, suppliers, business partners, employees, and others, give rise to legal and/or regulatory action, could damage our reputation or could otherwise negatively impact our business, any of which could materially harm our business, operating results, and financial condition.
The occurrence of a cyber attack, data breach or other incident could subject us to direct or indirect liability to our customers, data subjects, suppliers, business partners, employees, and others, give rise to legal and/or regulatory action, could damage our reputation or could otherwise negatively impact our business, any of which could materially harm our business, operating results, and financial condition.
Challenging economic conditions, including rising inflation, or other changes, worldwide have from time to time contributed, and may continue to contribute, to slowdowns in the communications and networking industries at large, as well as in specific segments and markets in which we operate, resulting in: reduced demand for our products as a result of continued constraints on IT-related capital spending by our customers, particularly service provider and cloud as well as enterprise and other customer markets; increased price competition for our products, not only from our competitors but also as a consequence of customers disposing of unutilized products; risk of excess and obsolete inventories; risk of supply constraints; risk of excess facilities and manufacturing capacity; and higher overhead costs as a percentage of revenue and higher interest expense.
Challenging global economic conditions, including tariffs or other trade barriers, rising inflation, or other changes, have from time to time contributed, and may continue to contribute, to slowdowns in the communications and networking industries at large, as well as in specific segments and markets in which we operate, resulting in: reduced demand for our products as a result of continued constraints on IT-related capital spending by our customers, particularly service provider and cloud as well as enterprise and other customer markets; increased price competition for our products, not only from our competitors but also as a consequence of customers disposing of unutilized products; risk of excess and obsolete inventories; risk of supply constraints; risk of excess facilities and manufacturing capacity; and higher overhead costs as a percentage of revenue and higher interest expense.
To generate sales growth for our software subscription offerings, we need to convince potential customers to purchase new licenses or subscriptions and generate timely renewals and additional purchases from existing customers. Any failure to do so could result in decreased revenue, reduced sales, increased churn or otherwise negatively impact our results of 17 Table of Contents operations and financial condition.
To generate sales growth for our software subscription offerings, we need to convince potential customers to purchase new licenses or subscriptions and generate timely renewals and additional purchases from existing customers. Any failure to do so could result in decreased revenue, reduced sales, increased churn or otherwise negatively impact our results of operations and financial condition.
There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on our operating results and financial condition. Our business and operations are especially subject to the risks of earthquakes, floods, and other natural catastrophic events (including as a result of global climate change).
There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on our operating results and financial condition. 21 Table of Contents Our business and operations are especially subject to the risks of earthquakes, floods, and other natural catastrophic events (including as a result of global climate change).
Market acceptance of our software subscription offerings, which includes our as-a-service solutions, can be affected by a variety of factors, including: security, reliability, performance, terms of service, support terms, customer preference, community engagement, concerns regarding data privacy or data protection, and the enactment of laws or regulations in jurisdictions in which we operate.
Mark et acceptance of our software subscription offerings, which includes our as-a-service solutions, can be affected by a variety of factors, including: security, reliability, performance, terms of service, support terms, customer preference, community engagement, concerns regarding data privacy or data protection, and the enactment of laws or regulations in jurisdictions in which we operate.
The process of developing new technology, including more programmable, flexible and virtual networks, and technology related to other market transitions— such as artificial intelligence, security, observability, and cloud— is complex and uncertain, and if we fail to accurately predict customers’ changing needs and emerging technological trends our business could be harmed.
The process of developing new technology, including more programmable, flexible and virtual networks, and technology related to other market transitions— such as AI, security, observability, and cloud— is complex and uncertain, and if we fail to accurately predict customers’ changing needs and emerging technological trends our business could be harmed.
For information regarding the market risks associated with the fair value of portfolio investments and interest rates, refer to the section titled “Quantitative and Qualitative Disclosures About Market Risk.” 21 Table of Contents We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.
For information regarding the market risks associated with the fair value of portfolio investments and interest rates, refer to the section titled “Quantitative and Qualitative Disclosures About Market Risk.” We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.
Further, in the past, third parties have made infringement and similar claims after we have acquired technology that had not been asserted prior to our acquisition. We rely on the availability of third-party licenses. Many of our products are designed to include software or other intellectual property licensed from third parties.
Further, in the past, third parties have made infringement and similar claims after we have acquired technology that had not been asserted prior to our acquisition. We rely on the availability of third-party licenses. Many of our commercial offerings are designed to include software or other intellectual property licensed from third parties.
Because of the existence of a large number of patents in the networking field, the secrecy of some pending patents, and the rapid rate of issuance of new patents, it is not economically practical or even possible to determine in advance whether a product or any of its components infringes or will infringe on the patent rights of others.
Because of the existence of a large number of patents in the information technology field, the secrecy of some pending patents, and the rapid rate of issuance of new patents, it is not economically practical or even possible to determine in advance whether a product or any of its components infringes or will infringe on the patent rights of others.
Distributors stock inventory and typically sell to systems integrators, service providers, and other third-party resellers. We refer to sales through distributors as our two-tier system of sales to the end customer.
Distributors stock inventory and typically sell to systems integrators, service providers, and other third-party resellers. We refer to sales through distributors as our two-tier system of sales to the end user.
Additionally, nation-state actors or their agents have in the past successfully attacked our IT environment and have also exploited vulnerabilities in our solutions to carry out attacks, and we anticipate that these attacks and the exploitation of vulnerabilities in our solutions will continue and may intensify during periods of diplomatic or armed conflict.
Additionally, nation-state actors or their agents have in the past successfully attacked our IT environment and have also exploited vulnerabilities in our solutions to carry out attacks, and we anticipate that these attacks and the exploitation of vulnerabilities in our solutions will continue and may intensify during periods of diplomatic or armed conflict or other geopolitical tensions.
Competition for such personnel is intense, especially in the Silicon Valley area of Northern California and other major United States locations. Stock incentive plans are designed to reward employees for their long-term contributions and provide incentives for them to remain with us.
Competition for such personnel is intense, especially in the Silicon Valley area of Northern California and 20 Table of Contents other major United States locations. Stock incentive plans are designed to reward employees for their long-term contributions and provide incentives for them to remain with us.
Although we have been issued numerous patents and other patent applications are currently pending, there can be no assurance that any of these patents or other proprietary rights will not be challenged, invalidated, or circumvented or that our rights will, in fact, provide competitive advantages to us.
Although we have been issued numerous patents and other patent applications are currently pending, there can be no assurance that any of these patents or other proprietary rights will not be challenged, invalidated, or 22 Table of Contents circumvented or that our rights will, in fact, provide competitive advantages to us.
We experience cyber attacks and other attempts to gain unauthorized access on a regular basis to (i) our products and services (together, our “solutions”) and (ii) the servers, data centers, networks, systems, and cloud-based services operated or enabled by us, or by third parties upon which we rely, on or through which our and third-party data are stored, processed, or can be accessed (collectively, our “IT environment”).
We experience cyber attacks and other attempts to gain unauthorized access on a regular basis to (i) our products and services (together, our “solutions”) and (ii) the servers, data centers, networks, systems, and cloud-based services operated or enabled by us, or by third parties upon which we rely, on or through which our and third-party data are stored, processed, or can be 23 Table of Contents accessed (collectively, our “IT environment”).
We have experienced, and may in the future experience, interruptions in service, storage failures, and other performance-related problems due to a variety of factors, such as infrastructure and software changes, human or software errors, capacity constraints, unauthorized access, denial of service or other cyber attacks.
We have experienced, and may in the future experience, interruptions in service, storage failures, and other performance-related problems due to a variety of factors, such as infrastructure and software 16 Table of Contents changes, human or software errors, capacity constraints, unauthorized access, denial of service or other cyber attacks.
Vulnerabilities can persist even after we have issued security updates if we have not identified and addressed the root cause of a particular vulnerability, if customers have not installed the most recent updates, if the attackers exploited the vulnerabilities before a security update is applied to install additional malware to further compromise customers’ systems, or if a previously patched vulnerability is inadvertently reintroduced due to a security regression during future development.
Vulnerabilities can persist even after we have issued security updates if we have not identified and addressed the root cause of a particular vulnerability, if customers have not installed the most recent updates, if the attackers exploited the vulnerabilities before a security update is applied (such as to install additional malware to further compromise customers’ systems), or if a previously patched vulnerability is inadvertently reintroduced due to a security regression during future development or a changed deployment.
For example, the European Union’s (“EU”) General Data Protection Regulation (“GDPR”) applies to our activities conducted from an establishment in the EU or related to products and services offered in the EU and imposes a range of compliance obligations regarding the handling of personal data.
For example, the European Union’s (“EU”) General Data Protection Regulation (“GDPR”) applies to our activities conducted from an establishment in the EU or related to products and services offered in the EU and imposes a range of compliance obligations regarding the handling of personal data for both ourselves and our customers.
As we expand into new markets, we will face competition not only from our existing competitors but 16 Table of Contents also from other competitors, including existing companies with strong technological, marketing, and sales positions in those markets. We also sometimes face competition from resellers and distributors of our products.
As we expand into new markets, we will face competition not only from our existing competitors but also from other competitors, including existing companies with strong technological, marketing, and sales positions in those markets. We also sometimes face competition from resellers and distributors of our products.
Sales activity in this industry depends upon the stage of completion of expanding network infrastructures; the availability of 15 Table of Contents funding; and the extent to which service provider and cloud customers are affected by regulatory, economic, and business conditions in the country of operations.
Sales activity in this industry depends upon the stage of completion of expanding network infrastructures; the availability of funding; and the extent to which service provider and cloud customers are affected by regulatory, economic, and business conditions in the country of operations.
In addition, we rely on third-party providers of software and cloud-based services on which our and third-party data is stored or processed, and we cannot control the timing at which third-party providers remedy vulnerabilities, which could leave us vulnerable.
In addition, we rely on third-party providers of software (including open source) and cloud-based services on which our and third-party data is stored or processed, and we cannot control the timing at which third-party providers remedy vulnerabilities, which could leave us vulnerable.
Vulnerabilities and critical security defects, prioritization decisions regarding remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security updates in a timely manner or deciding not to upgrade our solutions could result in claims of liability against us, damage our reputation, or otherwise materially harm our business.
Vulnerabilities and critical security defects, prioritization decisions regarding remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security updates in a timely manner or deciding not to upgrade our solutions to those with security updates or security enhancements applied could result in claims of liability against us, damage our reputation, or otherwise materially harm our business.
We also depend on non-U.S. operations of our contract manufacturers, component suppliers and distribution partners. Our business in emerging countries in the aggregate experienced a decline in orders in certain prior periods.
We also depend on non-U.S. operations of our contract manufacturers, 19 Table of Contents component suppliers and distribution partners. Our business in emerging countries in the aggregate experienced a decline in orders in certain prior periods.
The continued threat of terrorism and heightened security and military action in response thereto, or any other current or future acts of terrorism, war (such as the on-going Russia-Ukraine war and the Israel-Hamas war), and other events (such as economic sanctions, trade restrictions and reactions of the governments, markets and the general public, including the sanctions and restrictions related to the on-going Russia-Ukraine war) may cause further disruptions to the economies of the United States and other countries and create further uncertainties or could otherwise negatively impact our business, operating results, and financial condition.
The continued threat of terrorism and heightened security and military action in response thereto, or any other current or future acts of terrorism, war (such as the on-going Russia-Ukraine war and Middle East conflicts and wars), and other events (such as economic sanctions, trade restrictions and reactions of the governments, markets and the general public, including the sanctions and restrictions related to the on-going Russia-Ukraine war) may cause further disruptions to the economies of the United States and other countries and create further uncertainties or could otherwise negatively impact our business, operating results, and financial condition.
The success of new products and services depends on several factors, including proper new product and service definition, component costs, timely completion and introduction of these products and services, differentiation of new products and services from those of our competitors, and market acceptance of these products and 18 Table of Contents services.
The success of new products and services depends on several factors, including proper new product and service definition, component costs, timely completion and introduction of these products and services, differentiation of new products and services from those of our competitors, and market acceptance of these products and services.
Product orders from the service provider and cloud market could continue to decline and, as has been the case in the past, such weakness could persist over extended periods of time given fluctuating market conditions.
Product orders from the service provider and cloud market could decline in the future and, as has been the case in the past, such weakness could persist over extended periods of time given fluctuating market conditions.
Failure to comply with internal security policies and standards, including secure development lifecycle practices, failure to prevent or promptly mitigate vulnerabilities and security defects, prioritization errors in remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying 25 Table of Contents security updates in a timely manner or deciding not to upgrade solutions could, in each case, result in claims of legal and/or regulatory action against us, damage our reputation, or otherwise materially harm our business.
Failure to comply with internal security policies and standards, including secure development lifecycle practices, failure to prevent or promptly mitigate vulnerabilities and security defects, prioritization errors in remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security updates in a timely manner, deciding not to upgrade solutions, or configuring our solutions in insecure ways could, in each case, result in claims of legal and/or regulatory action against us, damage our reputation, or otherwise materially harm our business.
Our revenue may grow at a slower rate than in past periods, or decline as it did in fiscal 2024 and certain prior periods on a year-over-year basis. Our ability to meet financial expectations could also be negatively impacted if the nonlinear sales pattern seen in some of our past quarters recurs in future periods.
Our revenue may grow at a slower rate than in past peri ods, or decline as it did in certain prior periods on a year-over-year basis. Our ability to meet financial expectations could also be negatively impacted if the nonlinear sales pattern seen in some of our past quarters recurs in future periods.
Furthermore, because of the potential for high court awards that are not necessarily predictable, it is not unusual to find even arguably unmeritorious claims settled for significant amounts.
Furthermore, because of the potential for high court awards, including injunctive relief, that are not necessarily predictable, it is not unusual to find even arguably unmeritorious claims settled for significant amounts.
Our actual or perceived failure to adequately protect personal data could result in claims of legal and/or regulatory action against us, damage our reputation or otherwise materially harm our business. Global privacy and data protection-related laws and regulations are evolving, extensive, and complex. Compliance with these laws and regulations is difficult and costly.
Our actual or perceived failure to adequately protect and appropriately use data could result in claims of legal and/or regulatory action against us, damage our reputation, or otherwise materially harm our business. Global privacy and data protection-related laws and regulations, including cybersecurity laws, are evolving, extensive, and complex. Compliance with these laws and regulations is difficult and costly.
Additionally, customers may also need to test security updates before they can be deployed which can delay implementation.
Additionally, customers may also desire to test security updates before they can be deployed which can delay implementation.
In addition, evolving legal requirements restricting or controlling the collection, processing, or cross-border transmission of data, including for regulation of cloud-based services, could materially affect our customers’ ability to use, and our ability to sell, our products and services.
In addition, evolving legal requirements restricting 24 Table of Contents or controlling the collection, processing, use or cross-border transmission of data, including regulation of cloud-based services, could materially affect our customers’ ability to use, and our ability to sell, our products and services.
There can be no assurance that our operating results and financial condition will not be negatively impacted by our incurrence of debt. As of the end of fiscal 2024, we have senior unsecured notes outstanding in an aggregate principal amount of $20.3 billion that mature at specific dates from calendar year 2025 through 2064.
There can be no assurance that our operating results and financial condition will not be negatively impacted by our incurrence of debt. As of the end of fiscal 2025, we have senior unsecured notes outstanding in an aggregate principal amount of $24.8 billion that mature at specific dates from calendar year 2026 through 2064.
Additional areas of uncertainty that could impact sales of our products and services include laws, regulations, or customer procurement requirements related to encryption technology, data, artificial intelligence, privacy, cybersecurity, operational resilience, environmental sustainability (including climate change), human rights, product certification, product accessibility, country of origin, and national security controls applicable to our supply chain.
Additional areas of uncertainty that could impact sales of our products and services include laws, regulations, or customer procurement requirements related to encryption technology, data, AI, privacy, cybersecurity, operational resilience, environmental sustainability (including climate change), human rights, product certification, product and digital accessibility, country of origin, and national security and other security controls applicable to our offerings and supply chain.
Due to several factors, including the availability of highly scalable and general purpose microprocessors, ASICs offering advanced services, standards based protocols, cloud computing and virtualization, the convergence of technologies within the enterprise data center is spanning multiple, previously independent, technology segments.
Due to several factors, including the availability of highly scalable and general purpose microprocessors, application specific integrated circuits offering advanced services, standards based protocols, cloud computing and virtualization, the convergence of technologies within the enterprise data center is spanning multiple, previously independent, technology segments.
Growth in the economy is likely to create greater pressures on us and our suppliers to accurately project overall component demand and component demands within specific product categories and to establish optimal component levels and manufacturing capacity, especially for labor-intensive components, components for which we purchase a substantial portion of the supply, or the re-ramping of manufacturing capacity for highly complex products.
Growth in the economy is likely to create greater pressures on us and our suppliers to accurately project component demand and to establish optimal component levels and manufacturing capacity, especially for labor-intensive components, components for which we purchase a substantial portion of the supply, or the re-ramping of manufacturing capacity for highly complex products.
Changes in regulatory requirements or our actual or perceived failure to comply with applicable laws and regulations or other obligations could materially harm our business, operating results, and financial condition. Risks Related to Ownership of Our Stock Our stock price may be volatile.
Changes in regulatory requirements or our actual or perceived failure to comply (or to enable our customers to comply when using our offerings) with applicable laws, regulations, or other obligations could materially harm our business, operating results, and financial condition. Risks Related to Ownership of Our Stock Our stock price may be volatile.
For example, if we do not introduce products related to these markets in a timely fashion, or if product offerings in this market that ultimately succeed are based on technology, or an approach to technology, that differs from ours, our business could be harmed.
For example, if we do not timely introduce products related to these markets, or if such products or offerings that ultimately succeed in these markets are based on technology, or an approach to technology, that differs from ours, our business could be harmed.
Additionally, we are subject to California’s Consumer Privacy Act, Singapore’s Personal Data Protection Act, and other laws, regulations and obligations that relate to the handling of personal data.
Additionally, we are subject to California’s Consumer Privacy Act, Singapore’s Personal Data Protection Act, and other laws, regulations, and obligations around the world that govern the handling of personal data.
In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service (IRS) and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.
Our failure to meet these commitments could adversely impact our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.
These conditions have negatively impacted our business and operating results in the past, and could materially harm our business and operating results in any future period.
These conditions have negatively impacted our business and operating results in the past, and could materially harm our business and operating 14 Table of Contents results in any future period.
Government procurement policies, priorities, regulations, technology initiatives and/or other obligations often give rise to evolving privacy, cybersecurity, operational resilience, or other requirements, and the failure or delay to meet and maintain such requirements could negatively impact our business, including by limiting our ability to sell products and services, directly or indirectly, to public sector, critical infrastructure and other customers.
Government and other customers' procurement policies, priorities, regulations, technology initiatives and/or other obligations often give rise to evolving privacy, cybersecurity, operational resilience, data governance, or other requirements; the failure or delay in meeting and maintaining compliance with such requirements could negatively impact our business, including by limiting our ability to sell products and services, directly or indirectly, to public sector, critical infrastructure, and other customers.
We have also established a commercial paper program under which we may issue short-term, unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $15.0 billion. We had $10.9 billion in commercial paper notes outstanding under this program as of July 27, 2024.
We have also established a commercial paper program under which we may issue short-term, unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $15.0 billion, and we had $3.5 billion in commercial paper notes outstanding under this program as of July 26, 2025.
Our actual or perceived failure to comply with applicable laws and regulations or other obligations relating to personal data, or to protect personal data from unauthorized access, use, or other processing, could subject us to liability to our customers, data subjects, suppliers, business partners, employees, and others, give rise to legal and/or regulatory action, could damage our reputation or could otherwise negatively impact our business, any of which could materially harm our operating results and financial condition.
Our actual or perceived failure to comply with applicable laws and regulations or other obligations relating to the use of data and protecting data from unauthorized access, use, or other processing, could subject us to claims of liability, or give rise to legal and/or regulatory action, damage our reputation, and/ or otherwise negatively impact our business, any of which could materially harm our operating results and financial condition.
Also, if these companies fail to perform or if these relationships fail to materialize as expected, we could suffer delays in product development or other operational difficulties. Joint ventures can be difficult to manage, given the potentially different interests of joint venture partners.
Also, if these companies fail to perform or if these relationships fail to materialize as expected, we could suffer delays in product development or other operational difficulties. Joint ventures can be difficult to manage, given the potentially different interests of joint venture partners. Product quality problems could lead to reduced revenue, gross margins, and net income.
Manufacturing capacity and component supply constraints could continue to be significant issues for us. We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products.
Manufacturing capacity and component supply constraints could be significant issues for us as they have been in certain prior periods. We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products.
When customers do not deploy security updates in a timely manner, use solutions that are end of life and no longer receive security updates, or decide not to upgrade to the latest versions of our solutions containing the security update, they are left vulnerable.
When customers do not deploy security updates in a timely manner, use solutions that are end of life and no longer receive security updates, decide not to upgrade to the latest versions of our solutions containing security updates or security enhancements, configure our solutions in insecure ways, or fail to sufficiently monitor activity on those solutions, they are left vulnerable.
The AI-related legal and regulatory landscape remains uncertain and may be inconsistent from jurisdiction to jurisdiction. Our obligations to comply with the evolving legal and regulatory landscape could entail significant costs or limit our ability to incorporate certain AI capabilities into our offerings.
Our obligations to comply with the evolving legal and regulatory landscape could entail significant costs or limit our ability to incorporate certain AI capabilities into our offerings.
Moreover, the inclusion in our products of software or other intellectual property licensed from third parties on a nonexclusive basis could limit our ability to protect our proprietary rights in our products. 24 Table of Contents Risks Related to Cybersecurity, Privacy, and Regulatory Requirements Cyber attacks, data breaches or other incidents impacting our solutions and IT environment may disrupt our operations, harm our operating results and financial condition, and damage our reputation or otherwise materially harm our business; and cyber attacks, data breaches or other incidents on our customers’ or third-party providers’ networks, or in third-party products we use, could result in claims of liability against us, give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our business.
Risks Related to Cybersecurity, Privacy, and Regulatory Requirements Cyber attacks, data breaches or other incidents impacting our solutions and IT environment may disrupt our operations, harm our operating results and financial condition, and damage our reputation or otherwise materially harm our business; and cyber attacks, data breaches or other incidents on our customers’ or third-party providers’ networks, or in third-party products we use, could result in claims of liability against us, give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our business.
When facing component supply-related challenges we have increased our efforts in procuring components in order to meet customer expectations, which in turn contributes to an increase in inventory and purchase 14 Table of Contents commitments. In past periods, we increased our inventory and purchase commitments in light of the supply constraints seen industry-wide due to component shortages.
When facing component supply-related challenges, we have increased our efforts in procuring components in order to meet customer expectations, such as we have done in past periods due to supply constraints, which in turn contributes to an increase in inventory and purchase commitments.
Any inability to effectively manage these complicated relationships with customers, suppliers, and strategic alliance partners could materially harm our business, operating results, and financial condition and accordingly affect our chances of success.
As such, we must cooperate and at the same time compete with many companies. Any inability to effectively manage these complicated relationships with customers, suppliers, and strategic alliance partners could materially harm our business, operating results, and financial condition and accordingly affect our chances of success.
Additionally, instability in the global credit markets, the impact of uncertainty regarding global central bank monetary 12 Table of Contents policy, the instability in the geopolitical environment in many parts of the world (including as a result of the on-going Russia and Ukraine war, the Israel-Hamas war, and China-Taiwan relations), the current economic challenges in China, including global economic ramifications of Chinese economic difficulties, and other disruptions may continue to put pressure on global economic conditions.
For example, the impact of uncertainty regarding global central bank monetary policy, the instability in the geopolitical environment in many parts of the world (including as a 11 Table of Contents result of the on-going Russia and Ukraine war, Middle East conflicts and wars, and China-Taiwan relations), and other disruptions may continue to put pressure on global economic conditions.
Sales to the service provider and cloud market have been characterized by large and sporadic purchases, especially relating to our router sales and sales of certain other Networking and Collaboration products, in addition to longer sales cycles. Service provider and cloud product orders significantly decreased during fiscal 2024 and we have experienced similar declines in certain prior periods.
Sales to the service provider and cloud market have been characterized by large and sporadic purchases, especially relating to our router sales and sales of certain other Networking and Collaboration products, in addition to longer sales cycles.
Software typically contains bugs or other quality or reliability problems that can unexpectedly interfere with its intended operations or the intended operation of the systems in which our software is installed.
We produce highly complex products that incorporate leading-edge technology, including both hardware and software. Software typically contains bugs or other quality or reliability problems that can unexpectedly interfere with its intended operations or the intended operation of the systems in which our software is installed.
We also make prioritization decisions in determining which vulnerabilities or security defects to fix and the timing of these fixes. Even when we prioritize a vulnerability or security defect, in certain instances it has taken, and in the future could take, time for us to develop a remedy and the remedy may ultimately be insufficient to fully fix the issue.
Even when we prioritize a vulnerability or security defect, in certain instances it has taken, and in the future could take, time for us to develop and test a remedy and the remedy may ultimately be insufficient to fully fix the issue or may be found to create other issues.
Inventory management remains an area of focus as we balance the need to maintain strategic inventory levels to ensure competitive lead times against the risk of inventory obsolescence because of rapidly changing technology and customer requirements. When facing component supply-related challenges, we have increased our efforts in procuring components in order to meet customer expectations.
Inventory management remains an area of focus as we balance the need to maintain strategic inventory levels to ensure competitive lead times against the risk of inventory obsolescence because of rapidly changing technology and customer requirements.
Changes in industry structure and market conditions could lead to charges related to discontinuances of certain of our products or businesses, asset impairments and workforce reductions or restructurings. In response to changes in industry and market conditions, we may be required to strategically realign our resources and to consider restructuring, disposing of, or otherwise exiting businesses.
In response to changes in industry and market conditions, we may be required to strategically realign our resources and to consider restructuring, disposing of, or otherwise exiting businesses.
These arrangements are generally limited to specific projects, the goal of which is generally to facilitate product compatibility and adoption of industry standards. There can be no assurance we will realize the expected benefits from these strategic alliances or from joint ventures. If successful, these relationships may be mutually beneficial and result in industry growth.
There can be no assurance we will realize the expected benefits from these strategic alliances or from joint ventures. If successful, these relationships may be mutually beneficial and result in industry growth.
Our actual or perceived failure to achieve our ESG-related initiatives, goals, or commitments could negatively impact our reputation or otherwise materially harm our business. 23 Table of Contents Risks Related to Intellectual Property Our proprietary rights may prove difficult to enforce.
Our actual or perceived failure to achieve our initiatives, goals, or commitments, or otherwise successfully manage investor or other stakeholder expectations on these matters, could negatively impact our reputation or otherwise harm our business. Risks Related to Intellectual Property Our proprietary rights may prove difficult to enforce.
As a result of all of these developments, we face greater competition in the development and sale of enterprise data center technologies, including competition from entities that are among our long-term strategic alliance partners. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us.
As a result of all of these developments, we face greater 15 Table of Contents competition in the development and sale of enterprise data center technologies, including competition from entities that are among our long-term strategic alliance partners.
We anticipate continuing to be increasingly subject to such attempts as cyber attacks become more sophisticated and difficult to predict and protect against.
We anticipate continuing to be increasingly subject to such attempts as cyber attacks become more sophisticated and difficult to predict and protect against. Furthermore, the emergence and maturation of AI capabilities has led to new and/or more effective methods of cyber attacks.
There can be no assurance that these changes and any contemplated changes if finalized, once adopted by countries, will not have an adverse impact on our provision for income taxes.
There can be no assurance that these changes and any contemplated changes if finalized, once adopted by countries, will not have an adverse impact on our provision for income taxes. Further, as a result of certain of our ongoing employment and capital investment actions and commitments, our income in certain countries was subject to reduced tax rates.
Further, a cyber attack or other incident could go undetected and persist in our environments for extended periods.
Further, a cyber attack, vulnerability exploitation, or other incident could go undetected and persist in our environments, or those of our customers or third-party providers upon which we rely, for extended periods.
For additional information and a further discussion of impacts and risks related to our inventory commitments and our purchase commitments with contract manufacturers and suppliers, see “Results of Operations—Product Gross Margin—Supply Chain Impacts and Risks”, “Liquidity and Capital Resources—Inventory Supply Chain” under Item 7 and Note 14 to the Consolidated Financial Statements of this report. 13 Table of Contents Supply chain issues, including financial problems of contract manufacturers or component suppliers, or a shortage of adequate component supply or manufacturing capacity that increase our costs or cause a delay in our ability to fulfill orders, could have an adverse impact on our business and operating results, and our failure to estimate customer demand properly may result in excess or obsolete component supply, which could negatively impact our gross margins.
Supply chain issues, including financial problems of contract manufacturers or component suppliers, or a shortage of adequate component supply or manufacturing capacity that increase our costs or cause a delay in our ability to fulfill orders, could have an adverse impact on our business and operating results, and our failure to estimate customer demand properly may result in excess or obsolete component supply, which could negatively impact our gross margins.
The products and technologies in our other product categories and key priority areas may not prove to have the market success we anticipate, and we may not successfully identify and invest in other emerging or new products and services.
The products and technologies in our other product categories and key priority areas may not prove to have the market success we anticipate, and we may not successfully identify and invest in other emerging or new products and services. 17 Table of Contents Changes in industry structure and market conditions could lead to charges related to discontinuances of certain of our products or businesses, asset impairments and workforce reductions or restructurings.
We are a party to lawsuits in the normal course of our business. Any litigation can be costly, lengthy, and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. An unfavorable resolution of lawsuits or governmental investigations could materially harm our business, operating results, or financial condition.
Moreover, the results of complex legal proceedings are difficult to predict, and management's view of these matters may change in the future. An unfavorable resolution of claims, litigation or governmental investigations could materially harm our business, operating results, or financial condition.
These increases in our inventory and purchase commitments to shorten lead times could also lead to potential material excess and obsolete inventory charges or other negative impacts to our product gross margin in future periods if we fail to anticipate customer demand properly and product demand significantly decreases for a sustained duration, we are unable to generate demand for certain products planned for development, or we are unable to continue to mitigate the remaining supply chain exposures.
The remaining and new supply chain exposures include potential material excess and obsolete or other charges if product demand significantly decreases for a sustained duration, we are unable to generate demand for certain products planned for development, or we are otherwise unable to mitigate these supply chain exposures.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed15 unchanged
Biggest changeRisk Factors” of this Annual Report on Form 10-K. 27 Table of Contents
Biggest changeRisk Factors” of this Annual Report on Form 10-K. 26 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed2 unchanged
Biggest change(c) Issuer purchases of equity securities (in millions, except per-share amounts): Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs April 28, 2024 to May 25, 2024 12 $ 47.44 12 $ 6,585 May 26, 2024 to June 22, 2024 18 $ 46.08 18 $ 5,770 June 23, 2024 to July 27, 2024 13 $ 47.19 13 $ 5,170 Total 43 $ 46.80 43 On September 13, 2001, we announced that our Board of Directors had authorized a stock repurchase program.
Biggest change(c) Issuer purchases of equity securities (in millions, except per-share amounts): Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs April 27, 2025 to May 24, 2025 7 $ 60.71 7 $ 15,023 May 25, 2025 to June 21, 2025 5 $ 64.63 5 $ 14,659 June 22, 2025 to July 26, 2025 7 $ 68.36 7 $ 14,174 Total 19 $ 64.65 19 On September 13, 2001, we announced that our Board of Directors had authorized a stock repurchase program.
Although these withheld shares are not issued or considered common stock repurchases under our stock repurchase program and therefore are not included in the preceding table, they are treated as common stock repurchases in our financial statements as they reduce the number of shares that would have been issued upon vesting (see Note 15 to the Consolidated Financial Statements). 29 Table of Contents Stock Performance Graph The information contained in this Stock Performance Graph section shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that Cisco specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act.
Although these withheld shares are not issued or considered common stock repurchases under our stock repurchase program and therefore are not included in the preceding table, they are treated as common stock repurchases in our financial statements as they reduce the number of shares that would have been issued upon vesting (see Note 15 to the Consolidated Financial Statements). 28 Table of Contents Stock Performance Graph The information contained in this Stock Performance Graph section shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that Cisco specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act.
As of July 27, 2024, the remaining authorized amount for stock repurchases under this program is approximately $5.2 billion with no termination date. For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net of shares withheld to meet applicable tax withholding requirements.
As of July 26, 2025, the remaining authorized amount for stock repurchases under this program is approximately $14.2 billion with no termination date. For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net of shares withheld to meet applicable tax withholding requirements.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities (a) Cisco common stock is traded on the Nasdaq Global Select Market under the symbol CSCO. There were 32,405 registered stockholders as of August 30, 2024. (b) None.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities (a) Cisco common stock is traded on the Nasdaq Global Select Market under the symbol CSCO. There were 30,790 registered stockholders as of August 28, 2025. (b) None.
Comparison of 5-Year Cumulative Total Return Among Cisco Systems, Inc., the S&P 500 Index, and the S&P Information Technology Index July 2019 July 2020 July 2021 July 2022 July 2023 July 2024 Cisco Systems, Inc. $ 100.00 $ 84.70 $ 104.30 $ 87.95 $ 104.27 $ 98.92 S&P 500 $ 100.00 $ 108.39 $ 150.48 $ 143.50 $ 161.94 $ 195.82 S&P Information Technology $ 100.00 $ 129.40 $ 190.26 $ 179.77 $ 227.74 $ 304.23
Comparison of 5-Year Cumulative Total Return Among Cisco Systems, Inc., the S&P 500 Index, and the S&P Information Technology Index July 2020 July 2021 July 2022 July 2023 July 2024 July 2025 Cisco Systems, Inc. $ 100.00 $ 123.13 $ 103.83 $ 123.09 $ 116.78 $ 172.19 S&P 500 $ 100.00 $ 108.39 $ 150.48 $ 143.50 $ 161.94 $ 232.22 S&P Information Technology $ 100.00 $ 147.03 $ 138.92 $ 176.00 $ 235.11 $ 292.59

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

120 edited+19 added−28 removed66 unchanged
Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Product Gross Margin The following table summarizes the key factors that contributed to the change in product gross margin percentage from fiscal 2023 to fiscal 2024: Product Gross Margin Percentage Fiscal 2023 61.5 % Productivity (1) 1.7 % Product pricing (0.6) % Mix of products sold 2.0 % Amortization of purchased intangible assets (0.9) % Others (0.2) % Fiscal 2024 63.5 % (1) Productivity includes overall manufacturing-related costs, such as component costs, warranty expense, provision for inventory, freight, logistics, shipment volume, and other items not categorized elsewhere.
Biggest changeGross Margin The following table presents the gross margin for products and services (in millions, except percentages): AMOUNT PERCENTAGE Years Ended July 26, 2025 July 27, 2024 July 29, 2023 July 26, 2025 July 27, 2024 July 29, 2023 Gross margin: Product $ 26,487 $ 24,914 $ 26,552 63.7 % 63.5 % 61.5 % Services 10,303 9,914 9,201 68.5 % 68.1 % 66.4 % Total $ 36,790 $ 34,828 $ 35,753 64.9 % 64.7 % 62.7 % Product Gross Margin The following table summarizes the key factors that contributed to the change in product gross margin percentage from fiscal 2024 to fiscal 2025: Product Gross Margin Percentage Fiscal 2024 63.5 % Productivity (1) 2.0 % Product pricing (1.6) % Mix of products sold 1.1 % Legal dispute with supplier (0.8) % Amortization of purchased intangible assets (0.4) % Others (0.1) % Fiscal 2025 63.7 % (1) Productivity includes overall manufacturing-related costs, such as component costs, warranty expense, provisions for inventory and the liability related to purchase commitments with contract manufacturers and suppliers, freight, logistics, shipment volume, and other items not categorized elsewhere.
We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.
We adjust these reserves due to changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.
During the fourth quarter of fiscal 2024, we performed a sensitivity analysis for goodwill impairment with respect to each of our respective reporting units and determined that a hypothetical 10% decline in the fair value of each reporting unit would not result in an impairment of goodwill for any reporting unit.
During the fourth quarter of fiscal 2025, we performed a sensitivity analysis for goodwill impairment with respect to each of our respective reporting units and determined that a hypothetical 10% decline in the fair value of each reporting unit would not result in an impairment of goodwill for any reporting unit.
The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties. Significant judgment is also required in determining any valuation allowance recorded against deferred tax assets.
The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, and the related net interest and penalties. Significant judgment is also required in determining any valuation allowance recorded against deferred tax assets.
If actual credits received by distributors under these programs were to deviate significantly from our estimates, which are based on historical experience, our revenue could be adversely affected. See Note 3 to the Consolidated Financial Statements for more details.
If actual credits received by customers under these programs were to deviate significantly from our estimates, which are based on historical experience, our revenue could be adversely affected. See Note 3 to the Consolidated Financial Statements for more details.
In response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairment of goodwill. There was no impairment of goodwill in fiscal 2024, 2023, and 2022.
In response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairment of goodwill. There was no impairment of goodwill in fiscal 2025, 2024, and 2023.
In addition, certain customers tend to make large and sporadic purchases, and the revenue related to these transactions may also be affected by the timing of revenue recognition, which in turn would impact the revenue of the relevant segment. 37 Table of Contents CISCO SYSTEMS, INC.
In addition, certain customers tend to make large and sporadic purchases, and the revenue related to these transactions may also be affected by the timing of revenue recognition, which in turn would impact the revenue of the relevant segment. 36 Table of Contents CISCO SYSTEMS, INC.
For a full reconciliation of our effective tax rate to the U.S. federal statutory rate of 21% and for further explanation of our provision for income taxes, see Note 18 to the Consolidated Financial Statements. 44 Table of Contents CISCO SYSTEMS, INC.
For a full reconciliation of our effective tax rate to the U.S. federal statutory rate of 21% and for further explanation of our provision for income taxes, see Note 18 to the Consolidated Financial Statements. 43 Table of Contents CISCO SYSTEMS, INC.
There are no other transactions, arrangements, or relationships with unconsolidated entities or other persons that are reasonably likely to materially affect the liquidity and the availability of, as well as our requirements for, capital resources. 50 Table of Contents
There are no other transactions, arrangements, or relationships with unconsolidated entities or other persons that are reasonably likely to materially affect the liquidity and the availability of, as well as our requirements for, capital resources. 49 Table of Contents
There can be no assurance that the outcomes from these continuous examinations will not have an adverse impact on our operating results and financial condition. 36 Table of Contents CISCO SYSTEMS, INC.
There can be no assurance that the outcomes from these continuous examinations will not have an adverse impact on our operating results and financial condition. 35 Table of Contents CISCO SYSTEMS, INC.
Future dividends will be subject to the approval of our Board of Directors. The remaining authorized amount for stock repurchases under this program is approximately $5.2 billion, with no termination date.
Future dividends will be subject to the approval of our Board of Directors. The remaining authorized amount for stock repurchases under this program is approximately $14.2 billion, with no termination date.
The receivables are derecognized upon transfer, as these transfers qualify as true sales, and we receive payments for the receivables from the third party based on our standard payment terms. The volume of channel partner financing was $27.1 billion, $32.1 billion, and $27.9 billion in fiscal 2024, 2023, and 2022, respectively.
The receivables are derecognized upon transfer, as these transfers qualify as true sales, and we receive payments for the receivables from the third party based on our standard payment terms. The volume of channel partner financing was $24.9 billion, $27.1 billion, and $32.1 billion in fiscal 2025, 2024, and 2023, respectively.
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.
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 that we sell to directly.
If there were to be a sudden and significant decrease in demand for our products, if there were a higher incidence of inventory obsolescence because of rapidly changing technology or customer requirements, or if supply constraints were to continue, we could be required to increase our inventory write-downs, and our liability for purchase commitments with contract manufacturers and suppliers, and accordingly our profitability, could be adversely affected.
If there were to be a sudden and significant decrease in demand for our products, or a higher incidence of inventory obsolescence because of rapidly changing technology or customer requirements, then we could be required to increase our inventory write-downs and our liability for purchase commitments with contract manufacturers and suppliers, and accordingly our profitability, could be adversely affected.
Supply Chain Impacts and Risks In past periods, we took multiple actions in order to mitigate component shortages and address significant supply constraints. These supply constraints resulted in the need to secure long-term supply and increased inventory supply chain balances compared to historical levels.
Supply Chain Impacts and Risks In past periods, we took multiple actions in order to mitigate component shortages and address significant supply constraints, which resulted in the need to secure long-term supply and increased our inventory supply chain balances compared to historical levels.
Financing receivables decreased by 2% as compared with the end of fiscal 2023. Financing Guarantees In the normal course of business, third parties may provide financing arrangements to our customers and channel partners under financing programs. The financing arrangements provided by third parties are related to leases and loans and typically have terms of up to three years.
Financing receivables decreased by 3% as compared with the end of fiscal 2024. Financing Guarantees In the normal course of business, third parties may provide financing arrangements to our customers and channel partners under financing programs. The financing arrangements provided by third parties are related to leases and loans and typically have terms of up to three years.
Interest is payable semiannually on each class of the senior fixed-rate notes, each of which is redeemable by us at any time, subject to a make-whole premium. We were in compliance with all debt covenants as of July 27, 2024.
Interest is payable semiannually on each class of the senior fixed-rate notes, each of which is redeemable by us at any time, subject to a make-whole premium. We were in compliance with all debt covenants as of July 26, 2025.
Due to the uncertainty in the timing of future payments, our noncurrent income taxes payable of approximately $1.7 billion and deferred tax liabilities of $76 million were presented as one aggregated amount in the total column on a separate line in the preceding table. Noncurrent income taxes payable include uncertain tax positions. See Note 18 to the Consolidated Financial Statements.
Due to the uncertainty in the timing of future payments, our noncurrent income taxes payable of approximately $2.2 billion and deferred tax liabilities of $75 million were presented as one aggregated amount in the total column on a separate line in the preceding table. Noncurrent income taxes payable include uncertain tax positions. See Note 18 to the Consolidated Financial Statements.
Our effective tax rates differ from the statutory rate, primarily due to the tax impact of state taxes, foreign operations, R&D tax credits, foreign-derived intangible income deductions, global intangible low-taxed income, tax audit settlements, nondeductible compensation, and international realignments. Our effective tax rate was 15.6%, 17.7%, and 18.4% in fiscal 2024, 2023, and 2022, respectively.
Our effective tax rates differ from the statutory rate, primarily due to the tax impact of state taxes, foreign operations, R&D tax credits, foreign-derived intangible income deductions, global intangible low-taxed income, tax audit settlements, nondeductible compensation, and international realignments. Our effective tax rate was 8.3%, 15.6%, and 17.7% in fiscal 2025, 2024, and 2023, respectively.
We did not experience any losses in connection with the secured lending of securities during the periods presented. As of July 27, 2024 and July 29, 2023, we had no outstanding securities lending transactions.
We did not experience any losses in connection with the secured lending of securities during the periods presented. As of July 26, 2025 and July 27, 2024, we had no outstanding securities lending transactions.
Inventory Supply Chain The following table summarizes our inventories and inventory purchase commitments with contract manufacturers and suppliers (in millions): July 27, 2024 July 29, 2023 July 30, 2022 Variance vs. July 29, 2023 Variance vs.
Inventory Supply Chain The following table summarizes our inventories and inventory purchase commitments with contract manufacturers and suppliers (in millions): July 26, 2025 July 27, 2024 July 29, 2023 Variance vs. July 27, 2024 Variance vs.
These financing arrangements facilitate the working capital requirements of the channel partners, and in some cases, we guarantee a portion of these arrangements. The balance of the channel partner financing subject to guarantees was $1.2 billion and $1.7 billion as of July 27, 2024 and July 29, 2023, respectively.
These financing arrangements facilitate the working capital requirements of the channel partners, and in some cases, we guarantee a portion of these arrangements. The balance of the channel partner financing subject to guarantees was $1.3 billion and $1.2 billion as of July 26, 2025 and July 27, 2024, respectively.
G&A Expenses G&A expenses increased due to higher acquisition-related costs, incremental expenses from Splunk, higher share-based compensation expense, higher discretionary spending and higher headcount-related expenses, partially offset by lower contracted services spending and lower variable compensation expense.
G&A Expenses G&A expenses increased primarily due to higher headcount-related expenses, share-based compensation expense, and discretionary spending, partially offset by lower acquisition-related costs and lower contracted services spending.
This exposure includes potential material excess and obsolete or other charges if product demand significantly decreases for a sustained duration, we are unable to generate demand for certain products planned for development, or we are unable to mitigate the remaining supply chain exposures.
The remaining and new supply chain exposures include potential material excess and obsolete or other charges if product demand significantly decreases for a sustained duration, we are unable to generate demand for certain products planned for development, or we are otherwise unable to mitigate these supply chain exposures.
Other Commitments In connection with our acquisitions, we have agreed to pay certain additional amounts contingent upon the continued employment with us of certain employees of the acquired entities. See Note 4 to the Consolidated Financial Statements. We also have certain funding commitments primarily related to our privately held investments.
Other Commitments In connection with our acquisitions, we have agreed to pay certain additional amounts contingent upon the continued employment with us of certain employees of the acquired entities. See Note 4 to the Consolidated Financial Statements.
Borrowings Senior Notes The following table summarizes the principal amount of our senior notes (in millions): Maturity Date July 27, 2024 July 29, 2023 Senior notes: Fixed-rate notes: 2.20% September 20, 2023 $ — $ 750 3.625% March 4, 2024 — 1,000 3.50% June 15, 2025 500 500 4.90% February 26, 2026 1,000 — 2.95% February 28, 2026 750 750 2.50% September 20, 2026 1,500 1,500 4.80% February 26, 2027 2,000 — 4.85% February 26, 2029 2,500 — 4.95% February 26, 2031 2,500 — 5.05% February 26, 2034 2,500 — 5.90% February 15, 2039 2,000 2,000 5.50% January 15, 2040 2,000 2,000 5.30% February 26, 2054 2,000 — 5.35% February 26, 2064 1,000 — Total $ 20,250 $ 8,500 In February 2024, we issued senior notes for an aggregate principal amount of $13.5 billion.
Borrowings Senior Notes The following table summarizes the principal amount of our senior notes (in millions): Maturity Date July 26, 2025 July 27, 2024 Senior notes: Fixed-rate notes: 3.50% June 15, 2025 $ — $ 500 4.90% February 26, 2026 1,000 1,000 2.95% February 28, 2026 750 750 2.50% September 20, 2026 1,500 1,500 4.80% February 26, 2027 2,000 2,000 4.55% February 24, 2028 1,000 — 4.85% February 26, 2029 2,500 2,500 4.75% February 24, 2030 1,000 — 4.95% February 26, 2031 2,500 2,500 4.95% February 24, 2032 1,000 — 5.05% February 26, 2034 2,500 2,500 5.10% February 24, 2035 1,250 — 5.90% February 15, 2039 2,000 2,000 5.50% January 15, 2040 2,000 2,000 5.30% February 26, 2054 2,000 2,000 5.50% February 24, 2055 750 — 5.35% February 26, 2064 1,000 1,000 Total $ 24,750 $ 20,250 In February 2025, we issued senior notes for an aggregate principal amount of $5.0 billion.
We further regard free cash flow as a useful measure because it reflects cash that can be used to, among other things, invest in our business, make strategic acquisitions, repurchase common stock, and pay dividends on our common stock, after deducting capital investments.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) further regard free cash flow as a useful measure because it reflects cash that can be used to, among other things, invest in our business, make strategic acquisitions, repurchase common stock, and pay dividends on our common stock, after deducting capital investments.
Other factors include the mix of service offerings, as the gross margin from our advanced services is typically lower than the gross margin from technical support services. 41 Table of Contents CISCO SYSTEMS, INC.
Other factors include the mix of service offerings, as the gross margin from our advanced services is typically lower than the gross margin from technical support services.
This in turn has significantly increased our supply chain exposure, which has resulted in negative impacts to our product gross margin in recent periods and may result in further negative impacts in future periods.
These actions and additional purchase commitments have in turn significantly increased our supply chain exposure, which has resulted in negative impacts to our product gross margin in recent periods and may result in further negative impacts in future periods.
Effect of Foreign Currency In fiscal 2024, foreign currency fluctuations, net of hedging, increased the combined R&D, sales and marketing, and G&A expenses by approximately $30 million, or 0.2%, compared with fiscal 2023.
Effect of Foreign Currency In fiscal 2025, foreign currency fluctuations, net of hedging, decreased the combined R&D, sales and marketing, and G&A expenses by approximately $16 million, or 0.1%, compared with fiscal 2024.
In the third quarter of fiscal 2024, we initiated a restructuring plan in order to realign the organization and enable further investment in key priority areas, of which approximately 5% of our global workforce would be impacted. In connection with this plan, we incurred charges of $654 million for fiscal 2024 and the plan is substantially complete.
In the third quarter of fiscal 2024, we initiated a restructuring plan in order to realign the organization and enable further investment in key priority areas. In connection with this plan, we incurred charges of $654 million for fiscal 2024 and the plan is complete.
The following table reconciles our net cash provided by operating activities to free cash flow (in millions): Years Ended July 27, 2024 July 29, 2023 July 30, 2022 Net cash provided by operating activities $ 10,880 $ 19,886 $ 13,226 Acquisition of property and equipment (670) (849) (477) Free cash flow $ 10,210 $ 19,037 $ 12,749 We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, the rate at which products are shipped during the quarter (which we refer to as shipment linearity), the timing and collection of accounts receivable and financing receivables, inventory and supply chain management, 45 Table of Contents CISCO SYSTEMS, INC.
The following table reconciles our net cash provided by operating activities to free cash flow (in millions): Years Ended July 26, 2025 July 27, 2024 July 29, 2023 Net cash provided by operating activities $ 14,193 $ 10,880 $ 19,886 Acquisition of property and equipment (905) (670) (849) Free cash flow $ 13,288 $ 10,210 $ 19,037 We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, the rate at which products are shipped during the quarter (which we refer to as shipment linearity), the timing and collection of accounts receivable and financing receivables, inventory and supply chain management, deferred revenue and the timing and amount of tax and other payments.
We could be called upon to make payments under these guarantees in the event of nonpayment by the channel partners. Historically, our payments under these arrangements have been immaterial.
We could be called upon to make payments under these guarantees in the event of nonpayment by the channel partners.
Total revenue in fiscal 2024 decreased by 6% compared with fiscal 2023. Product revenue decreased by 9% and services revenue increased by 5%. Our total revenue reflected declines across each of our geographic segments.
Total revenue in fiscal 2025 increased by 5% compared with fiscal 2024. Product revenue increased by 6% and services revenue increased by 3%. Our total revenue reflected growth across each of our geographic segments.
Our revenue, which includes product and services for each segment, is summarized in the following table (in millions, except percentages): Years Ended 2024 vs. 2023 July 27, 2024 July 29, 2023 July 30, 2022 Variance in Dollars Variance in Percent Revenue: Americas $ 31,971 $ 33,447 $ 29,814 $ (1,476) (4) % Percentage of revenue 59.4 % 58.7 % 57.8 % EMEA 14,117 15,135 13,715 (1,018) (7) % Percentage of revenue 26.2 % 26.6 % 26.6 % APJC 7,716 8,417 8,027 (701) (8) % Percentage of revenue 14.3 % 14.8 % 15.6 % Total $ 53,803 $ 56,998 $ 51,557 $ (3,195) (6) % Amounts may not sum and percentages may not recalculate due to rounding.
Our revenue, which includes product and services for each segment, is summarized in the following table (in millions, except percentages): Years Ended 2025 vs. 2024 July 26, 2025 July 27, 2024 July 29, 2023 Variance in Dollars Variance in Percent Revenue: Americas $ 33,656 $ 31,971 $ 33,447 $ 1,685 5 % Percentage of revenue 59.4 % 59.4 % 58.7 % EMEA 14,824 14,117 15,135 707 5 % Percentage of revenue 26.2 % 26.2 % 26.6 % APJC 8,174 7,716 8,417 458 6 % Percentage of revenue 14.4 % 14.3 % 14.8 % Total $ 56,654 $ 53,803 $ 56,998 $ 2,851 5 % Amounts may not sum and percentages may not recalculate due to rounding.
The following table summarizes the dividends paid and stock repurchases (in millions, except per-share amounts): DIVIDENDS STOCK REPURCHASE PROGRAM TOTAL Years Ended Per Share Amount Shares Weighted-Average Price per Share Amount Amount July 27, 2024 $ 1.58 $ 6,384 117 $ 49.45 $ 5,764 $ 12,148 July 29, 2023 $ 1.54 $ 6,302 88 $ 48.49 $ 4,271 $ 10,573 July 30, 2022 $ 1.50 $ 6,224 146 $ 52.82 $ 7,734 $ 13,958 On August 14, 2024, our Board of Directors declared a quarterly dividend of $0.40 per common share to be paid on October 23, 2024, to all stockholders of record as of the close of business on October 2, 2024.
The following table summarizes the dividends paid and stock repurchases (in millions, except per-share amounts): DIVIDENDS STOCK REPURCHASE PROGRAM TOTAL Years Ended Per Share Amount Shares Weighted-Average Price per Share Amount Amount July 26, 2025 $ 1.62 $ 6,437 105 $ 56.53 $ 5,995 $ 12,432 July 27, 2024 $ 1.58 $ 6,384 117 $ 49.45 $ 5,764 $ 12,148 July 29, 2023 1.54 6,302 88 48.49 $ 4,271 $ 10,573 On August 13, 2025, our Board of Directors declared a quarterly dividend of $0.41 per common share to be paid on October 22, 2025, to all stockholders of record as of the close of business on October 3, 2025.
The interest rate for the credit agreement is determined based on a formula using certain market rates. The credit agreement requires that we comply with certain covenants, including that we maintain an interest coverage ratio (defined in the agreement as the ratio of consolidated EBITDA to consolidated interest expense) of not less than 3.0 to 1.0.
The credit agreement requires that we comply with certain covenants, including that we maintain an interest coverage ratio (defined in the agreement as the ratio of consolidated EBITDA to consolidated interest expense) of not less than 3.0 to 1.0.
Revenue The following table presents the breakdown of revenue between product and services (in millions, except percentages): Years Ended 2024 vs. 2023 July 27, 2024 July 29, 2023 July 30, 2022 Variance in Dollars Variance in Percent Revenue: Product $ 39,253 $ 43,142 $ 38,018 $ (3,889) (9) % Percentage of revenue 73.0 % 75.7 % 73.7 % Services 14,550 13,856 13,539 694 5 % Percentage of revenue 27.0 % 24.3 % 26.3 % Total $ 53,803 $ 56,998 $ 51,557 $ (3,195) (6) % Amounts may not sum and percentages may not recalculate due to rounding.
Revenue The following table presents the breakdown of revenue between product and services (in millions, except percentages): Years Ended 2025 vs. 2024 July 26, 2025 July 27, 2024 July 29, 2023 Variance in Dollars Variance in Percent Revenue: Product $ 41,608 $ 39,253 $ 43,142 $ 2,355 6 % Percentage of revenue 73.4 % 73.0 % 75.7 % Services 15,046 14,550 13,856 496 3 % Percentage of revenue 26.6 % 27.0 % 24.3 % Total $ 56,654 $ 53,803 $ 56,998 $ 2,851 5 % Amounts may not sum and percentages may not recalculate due to rounding.
We consider free cash flow to be a liquidity measure that provides useful information to management and investors because of our intent to return a stated percentage of free cash flow to stockholders in the form of dividends and stock repurchases.
For additional discussion, see “Part I, Item 1A. Risk Factors” in this report. We consider free cash flow to be a liquidity measure that provides useful information to management and investors because of our intent to return a stated percentage of free cash flow to stockholders in the form of dividends and stock repurchases.
A discussion regarding our financial condition and results of operations for fiscal 2023 compared to fiscal 2022, with the exception of Product Revenue by Category, which is discussed herein, can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended July 29, 2023, filed with the SEC on September 7, 2023.
A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended July 27, 2024, filed with the SEC on September 5, 2024.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Other Purchase Obligations Other purchase obligations represent an estimate of all contractual obligations in the ordinary course of business, other than operating leases and commitments with contract manufacturers and suppliers, for which we have not received the goods or services.
See further discussion in “Inventory Supply Chain.” Other Purchase Obligations Other purchase obligations represent an estimate of all contractual obligations in the ordinary course of business, other than operating leases and commitments with contract manufacturers and suppliers, for which we have not received the goods or services.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Product Revenue by Segment The following table presents the breakdown of product revenue by segment (in millions, except percentages): Years Ended 2024 vs. 2023 July 27, 2024 July 29, 2023 July 30, 2022 Variance in Dollars Variance in Percent Product revenue: Americas $ 23,142 $ 25,019 $ 21,620 $ (1,877) (8) % Percentage of product revenue 59.0 % 58.0 % 56.9 % EMEA 10,645 11,866 10,545 (1,221) (10) % Percentage of product revenue 27.1 % 27.5 % 27.7 % APJC 5,466 6,257 5,854 (791) (13) % Percentage of product revenue 13.9 % 14.5 % 15.4 % Total $ 39,253 $ 43,142 $ 38,018 $ (3,889) (9) % Amounts may not sum and percentages may not recalculate due to rounding.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Product Revenue by Segment The following table presents the breakdown of product revenue by segment (in millions, except percentages): Years Ended 2025 vs. 2024 July 26, 2025 July 27, 2024 July 29, 2023 Variance in Dollars Variance in Percent Product revenue: Americas $ 24,637 $ 23,142 $ 25,019 $ 1,495 6 % Percentage of product revenue 59.2 % 59.0 % 58.0 % EMEA 11,122 10,645 11,866 477 4 % Percentage of product revenue 26.7 % 27.1 % 27.5 % APJC 5,849 5,466 6,257 383 7 % Percentage of product revenue 14.1 % 13.9 % 14.5 % Total $ 41,608 $ 39,253 $ 43,142 $ 2,355 6 % Amounts may not sum and percentages may not recalculate due to rounding.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Operating Income The following table presents our operating income and our operating income as a percentage of revenue (in millions, except percentages): Years Ended July 27, 2024 July 29, 2023 July 30, 2022 Operating income $ 12,181 $ 15,031 $ 13,969 Operating income as a percentage of revenue 22.6 % 26.4 % 27.1 % Operating income decreased by 19%, and as a percentage of revenue operating income decreased by 3.8 percentage points.
Operating Income The following table presents our operating income and our operating income as a percentage of revenue (in millions, except percentages): Years Ended July 26, 2025 July 27, 2024 July 29, 2023 Operating income $ 11,760 $ 12,181 $ 15,031 Operating income as a percentage of revenue 20.8 % 22.6 % 26.4 % Operating income decreased by 3%, and as a percentage of revenue operating income decreased by 1.8 percentage points.
This restructuring plan is expected to impact approximately 7% of our global workforce. The total pre-tax charges are estimated to be up to $1 billion. We expect this plan to be substantially completed by the end of fiscal 2025.
This restructuring plan is expected to impact approximately 7% of our global workforce with estimated pre-tax charges of approximately $1 billion. In connection with this restructuring plan, we incurred charges of $744 million during fiscal 2025. We expect this plan to be substantially completed by the end of the second quarter of fiscal 2026.
Business.” Other Key Financial Measures The following is a summary of our other key financial measures for fiscal 2024 compared with fiscal 2023 (in millions): Fiscal 2024 Fiscal 2023 Cash and cash equivalents and investments $17,854 $26,146 Cash provided by operating activities $10,880 $19,886 Remaining performance obligations $41,048 $34,868 Repurchases of common stock—stock repurchase program $5,764 $4,271 Dividends paid $6,384 $6,302 Inventories $3,373 $3,644 Total debt $30,962 $8,391 33 Table of Contents CISCO SYSTEMS, INC.
Business.” Other Key Financial Measures The following is a summary of our other key financial measures for fiscal 2025 compared with fiscal 2024 (in millions): Fiscal 2025 Fiscal 2024 Cash and cash equivalents and investments $16,110 $17,854 Cash provided by operating activities $14,193 $10,880 Remaining performance obligations $43,533 $41,048 Repurchases of common stock—stock repurchase program $5,995 $5,764 Dividends paid $6,437 $6,384 Inventories $3,164 $3,373 Total debt $28,093 $30,962 32 Table of Contents CISCO SYSTEMS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Sales and Marketing Expenses Sales and marketing expenses increased primarily due to incremental expenses from Splunk, higher share-based compensation expense, higher discretionary spending, higher headcount-related expenses and higher cash compensation from acquisitions, partially offset by lower contracted services spending and lower variable compensation expense.
Sales and Marketing Expenses Sales and marketing expenses increased primarily due to higher headcount-related expenses, cash compensation expenses from acquisitions, share-based compensation expense, and discretionary spending, partially offset by lower contracted services spending.
As of July 27, 2024, we were in compliance with all associated covenants and we had not borrowed any funds under our credit agreement.
As of July 26, 2025, we were in compliance with all associated covenants and we had not borrowed any funds under our credit agreement. 47 Table of Contents CISCO SYSTEMS, INC.
Interest and Other Income (Loss), Net Interest Income (Expense), Net The following table summarizes interest income and interest expense (in millions): Years Ended 2024 vs. 2023 July 27, 2024 July 29, 2023 July 30, 2022 Variance in Dollars Interest income $ 1,365 $ 962 $ 476 $ 403 Interest expense (1,006) (427) (360) (579) Interest income (expense), net $ 359 $ 535 $ 116 $ (176) Interest income increased driven by a higher average balance of cash and available-for-sale debt investments and higher interest rates.
Interest and Other Income (Loss), Net Interest Income (Expense), Net The following table summarizes interest income and interest expense (in millions): Years Ended 2025 vs. 2024 July 26, 2025 July 27, 2024 July 29, 2023 Variance in Dollars Interest income $ 1,001 $ 1,365 $ 962 $ (364) Interest expense (1,593) (1,006) (427) (587) Interest income (expense), net $ (592) $ 359 $ 535 $ (951) The decrease in interest income was driven by a lower average balance of cash and available-for-sale debt investments and lower interest rates.
For the annual impairment testing in fiscal 2024, the excess of the fair value over the carrying value for each of our reporting units was $47.0 billion for the Americas, $65.9 billion for EMEA, and $25.3 billion for APJC.
For the annual impairment testing in fiscal 2025, the excess of the fair value over the carrying value for each of our reporting units was $56.5 billion for the Americas, $80.1 billion for EMEA, and $32.9 billion for APJC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Gross Margin by Segment The following table presents the total gross margin for each segment (in millions, except percentages): AMOUNT PERCENTAGE Years Ended July 27, 2024 July 29, 2023 July 30, 2022 July 27, 2024 July 29, 2023 July 30, 2022 Gross margin: Americas $ 21,372 $ 21,350 $ 19,117 66.8 % 63.8 % 64.1 % EMEA 9,755 10,016 8,969 69.1 % 66.2 % 65.4 % APJC 5,187 5,424 5,241 67.2 % 64.4 % 65.3 % Segment total 36,312 36,788 33,326 67.5 % 64.5 % 64.6 % Unallocated corporate items (1) (1,484) (1,035) (1,078) Total $ 34,828 $ 35,753 $ 32,248 64.7 % 62.7 % 62.5 % (1) The unallocated corporate items include the effects of amortization and impairments of acquisition-related intangible assets, share-based compensation expense, significant litigation settlements and other contingencies, charges related to asset impairments and restructurings, and certain other charges.
Gross Margin by Segment The following table presents the total gross margin for each segment (in millions, except percentages): AMOUNT PERCENTAGE Years Ended July 26, 2025 July 27, 2024 July 29, 2023 July 26, 2025 July 27, 2024 July 29, 2023 Gross margin: Americas $ 22,962 $ 21,372 $ 21,350 68.2 % 66.8 % 63.8 % EMEA 10,545 9,755 10,016 71.1 % 69.1 % 66.2 % APJC 5,431 5,187 5,424 66.4 % 67.2 % 64.4 % Segment total 38,938 36,312 36,788 68.7 % 67.5 % 64.5 % Unallocated corporate items (1) (2,148) (1,484) (1,035) Total $ 36,790 $ 34,828 $ 35,753 64.9 % 64.7 % 62.7 % (1) The unallocated corporate items include the effects of amortization and impairments of acquisition-related intangible assets, share-based compensation expense, significant litigation settlements (which includes the supplier-related legal settlement as described in Note 21 to the Consolidated Financial Statements) and other contingencies, charges related to asset impairments and restructurings, and certain other charges.
A summary of our results is as follows (in millions, except percentages and per-share amounts): Three Months Ended Years Ended July 27, 2024 July 29, 2023 Variance July 27, 2024 July 29, 2023 Variance Revenue $ 13,642 $ 15,203 (10) % $ 53,803 $ 56,998 (6) % Gross margin percentage 64.4 % 64.1 % 0.3 pts 64.7 % 62.7 % 2.0 pts Research and development $ 2,179 $ 1,953 12 % $ 7,983 $ 7,551 6 % Sales and marketing $ 2,841 $ 2,579 10 % $ 10,364 $ 9,880 5 % General and administrative $ 763 $ 690 11 % $ 2,813 $ 2,478 14 % Total R&D, sales and marketing, general and administrative $ 5,783 $ 5,222 11 % $ 21,160 $ 19,909 6 % Total as a percentage of revenue 42.4 % 34.3 % 8.1 pts 39.3 % 34.9 % 4.4 pts Restructuring and other charges included in operating expenses $ 112 $ 203 (45) % $ 789 $ 531 49 % Operating income as a percentage of revenue 19.2 % 28.0 % (8.8) pts 22.6 % 26.4 % (3.8) pts Interest and other income (loss), net $ (222) $ 218 NM $ 53 $ 287 (82) % Income tax percentage 9.8 % 11.5 % (1.7) pts 15.6 % 17.7 % (2.1) pts Net income $ 2,162 $ 3,958 (45) % $ 10,320 $ 12,613 (18) % Net income as a percentage of revenue 15.8 % 26.0 % (10.2) pts 19.2 % 22.1 % (2.9) pts Earnings per share—diluted $ 0.54 $ 0.97 (44) % $ 2.54 $ 3.07 (17) % Percentages may not recalculate due to rounding.
A summary of our results is as follows (in millions, except percentages and per-share amounts): Three Months Ended Years Ended July 26, 2025 July 27, 2024 Variance July 26, 2025 July 27, 2024 Variance Revenue $ 14,673 $ 13,642 8 % $ 56,654 $ 53,803 5 % Gross margin percentage 63.2 % 64.4 % (1.2) pts 64.9 % 64.7 % 0.2 pts Research and development $ 2,380 $ 2,179 9 % $ 9,300 $ 7,983 16 % Sales and marketing $ 2,818 $ 2,841 (1) % $ 10,966 $ 10,364 6 % General and administrative $ 706 $ 763 (8) % $ 2,992 $ 2,813 6 % Total R&D, sales and marketing, general and administrative $ 5,904 $ 5,783 2 % $ 23,258 $ 21,160 10 % Total as a percentage of revenue 40.2 % 42.4 % (2.2) pts 41.1 % 39.3 % 1.8 pts Restructuring and other charges included in operating expenses $ 35 $ 112 (69) % $ 744 $ 789 (6) % Operating income as a percentage of revenue 21.0 % 19.2 % 1.8 pts 20.8 % 22.6 % (1.8) pts Interest and other income (loss), net $ (88) $ (222) (60) % $ (660) $ 53 NM Income tax percentage 15.0 % 9.8 % 5.2 pts 8.3 % 15.6 % (7.3) pts Net income $ 2,550 $ 2,162 18 % $ 10,180 $ 10,320 (1) % Net income as a percentage of revenue 17.4 % 15.8 % 1.6 pts 18.0 % 19.2 % (1.2) pts Earnings per share—diluted $ 0.64 $ 0.54 19 % $ 2.55 $ 2.54 — % Percentages may not recalculate due to rounding.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. 33 Table of Contents CISCO SYSTEMS, INC.
Where we provide a guarantee, we defer the revenue associated with the channel partner financing arrangement in accordance with revenue recognition policies, or we record a liability for the fair value of the guarantees. In either case, the deferred revenue is recognized as revenue when the guarantee is removed.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) financing arrangement in accordance with revenue recognition policies, or we record a liability for the fair value of the guarantees. In either case, the deferred revenue is recognized as revenue when the guarantee is removed.
Research and Development (“R&D”), Sales and Marketing, and General and Administrative (“G&A”) Expenses R&D, sales and marketing, and G&A expenses are summarized in the following table (in millions, except percentages): Years Ended 2024 vs. 2023 July 27, 2024 July 29, 2023 July 30, 2022 Variance in Dollars Variance in Percent Research and development $ 7,983 $ 7,551 $ 6,774 $ 432 6 % Percentage of revenue 14.8 % 13.2 % 13.1 % Sales and marketing 10,364 9,880 9,085 484 5 % Percentage of revenue 19.3 % 17.3 % 17.6 % General and administrative 2,813 2,478 2,101 335 14 % Percentage of revenue 5.2 % 4.3 % 4.1 % Total $ 21,160 $ 19,909 $ 17,960 $ 1,251 6 % Percentage of revenue 39.3 % 34.9 % 34.8 % R&D Expenses R&D expenses increased due to higher share-based compensation expense, incremental expenses from Splunk, higher cash compensation from acquisitions and higher discretionary spending, partially offset by lower headcount-related expenses and lower variable compensation expense.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Research and Development (“R&D”), Sales and Marketing, and General and Administrative (“G&A”) Expenses R&D, sales and marketing, and G&A expenses are summarized in the following table (in millions, except percentages): Years Ended 2025 vs. 2024 July 26, 2025 July 27, 2024 July 29, 2023 Variance in Dollars Variance in Percent Research and development $ 9,300 $ 7,983 $ 7,551 $ 1,317 16 % Percentage of revenue 16.4 % 14.8 % 13.2 % Sales and marketing 10,966 10,364 9,880 602 6 % Percentage of revenue 19.4 % 19.3 % 17.3 % General and administrative 2,992 2,813 2,478 179 6 % Percentage of revenue 5.3 % 5.2 % 4.3 % Total $ 23,258 $ 21,160 $ 19,909 $ 2,098 10 % Percentage of revenue 41.1 % 39.3 % 34.9 % R&D Expenses R&D expenses increased primarily due to higher headcount-related expenses reflecting our investments in AI, share-based compensation expense, cash compensation expenses from acquisitions, and discretionary spending.
Services Revenue by Segment The following table presents the breakdown of services revenue by segment (in millions, except percentages): Years Ended 2024 vs. 2023 July 27, 2024 July 29, 2023 July 30, 2022 Variance in Dollars Variance in Percent Services revenue: Americas $ 8,829 $ 8,427 $ 8,194 $ 402 5 % Percentage of service revenue 60.7 % 60.8 % 60.5 % EMEA 3,472 3,269 3,171 203 6 % Percentage of service revenue 23.9 % 23.6 % 23.4 % APJC 2,249 2,160 2,173 89 4 % Percentage of service revenue 15.5 % 15.6 % 16.0 % Total $ 14,550 $ 13,856 $ 13,539 $ 694 5 % Amounts may not sum and percentages may not recalculate due to rounding.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Services Revenue by Segment The following table presents the breakdown of services revenue by segment (in millions, except percentages): Years Ended 2025 vs. 2024 July 26, 2025 July 27, 2024 July 29, 2023 Variance in Dollars Variance in Percent Services revenue: Americas $ 9,019 $ 8,829 $ 8,427 $ 190 2 % Percentage of service revenue 59.9 % 60.7 % 60.8 % EMEA 3,702 3,472 3,269 230 7 % Percentage of service revenue 24.6 % 23.9 % 23.6 % APJC 2,325 2,249 2,160 76 3 % Percentage of service revenue 15.5 % 15.5 % 15.6 % Total $ 15,046 $ 14,550 $ 13,856 $ 496 3 % Amounts may not sum and percentages may not recalculate due to rounding.
Financing Receivables and Guarantees The following table summarizes our financing receivables (in millions): July 27, 2024 July 29, 2023 Increase (Decrease) Loan receivables, net $ 5,808 $ 5,857 $ (49) Lease receivables, net 906 978 (72) Total, net $ 6,714 $ 6,835 $ (121) Financing Receivables Our financing arrangements include loans and leases.
Financing Receivables and Guarantees The following table summarizes our financing receivables (in millions): July 26, 2025 July 27, 2024 Increase (Decrease) Loan receivables, net $ 5,591 $ 5,808 $ (217) Lease receivables, net 936 906 30 Total, net $ 6,527 $ 6,714 $ (187) Financing Receivables Our financing arrangements include loans and leases.
July 30, 2022 Inventories $ 3,373 $ 3,644 $ 2,568 $ (271) $ 805 Inventory purchase commitments $ 5,158 $ 7,253 $ 12,964 $ (2,095) $ (7,806) Inventory deposits and prepayments $ 973 $ 1,109 $ 1,484 $ (136) $ (511) The following table summarizes our inventory purchase commitments with contract manufacturers and suppliers by period (in millions): July 27, 2024 July 29, 2023 July 30, 2022 Variance vs.
July 29, 2023 Inventories $ 3,164 $ 3,373 $ 3,644 $ (209) $ (480) Inventory purchase commitments $ 7,599 $ 5,158 $ 7,253 $ 2,441 $ 346 Inventory deposits and prepayments $ 825 $ 973 $ 1,109 $ (148) $ (284) The following table summarizes our inventory purchase commitments with contract manufacturers and suppliers by period (in millions): July 26, 2025 July 27, 2024 July 29, 2023 Variance vs.
Balance Sheet and Cash Flows Cash and Cash Equivalents and Investments The following table summarizes our cash and cash equivalents and investments (in millions): July 27, 2024 July 29, 2023 Increase (Decrease) Cash and cash equivalents $ 7,508 $ 10,123 $ (2,615) Available-for-sale debt investments 9,865 15,592 (5,727) Marketable equity securities 481 431 50 Total $ 17,854 $ 26,146 $ (8,292) The net decrease in cash and cash equivalents and investments from fiscal 2023 to fiscal 2024 was primarily driven by a net outflow for the acquisition of Splunk of $27.5 billion, cash returned to stockholders in the form of cash dividends of $6.4 billion and repurchases of common stock of $5.8 billion, repayment of debt of $1.8 billion, net cash paid for our other acquisitions, excluding Splunk, of $1.3 billion and capital expenditures of $0.7 billion.
Balance Sheet and Cash Flows Cash and Cash Equivalents and Investments The following table summarizes our cash and cash equivalents and investments (in millions): July 26, 2025 July 27, 2024 Increase (Decrease) Cash and cash equivalents $ 8,346 $ 7,508 $ 838 Available-for-sale debt investments 7,381 9,865 (2,484) Marketable equity securities 383 481 (98) Total $ 16,110 $ 17,854 $ (1,744) The net decrease in cash and cash equivalents and investments from fiscal 2024 to fiscal 2025 was primarily driven by cash returned to stockholders in the form of cash dividends of $6.4 billion and repurchases of common stock of $6.0 billion, net repayments of debt and short-term borrowing of $2.8 billion, and capital expenditures of $0.9 billion.
Product gross margin increased by 2.0 percentage points primarily driven by favorable product mix, productivity benefits, largely driven by lower freight and other costs, and benefits from Splunk. This was partially offset by the amortization of purchased intangible assets primarily related to Splunk, and negative impacts from pricing.
Product gross margin increased by 0.2 percentage points, driven by benefits from Splunk and productivity improvements, partially offset by negative impacts from pricing, a charge as a result of a legal dispute with a supplier, and the amortization of purchased intangible assets primarily related to Splunk.
We had $10.9 billion in commercial paper notes outstanding as of July 27, 2024, and no commercial paper notes outstanding as of July 29, 2023. Credit Facility On February 2, 2024, we entered into an amended and restated 5-year $5.0 billion unsecured revolving credit agreement.
We had $3.5 billion and $10.9 billion in commercial paper notes outstanding as of July 26, 2025, and July 27, 2024, respectively. Credit Facility On February 2, 2024, we entered into an amended and restated 5-year $5.0 billion unsecured revolving credit agreement. The interest rate for the credit agreement is determined based on a formula using certain market rates.
Amortization of Purchased Intangible Assets The following table presents the amortization of purchased intangible assets including impairment charges (in millions): Years Ended July 27, 2024 July 29, 2023 July 30, 2022 Amortization of purchased intangible assets: Cost of sales $ 955 $ 649 $ 749 Operating expenses 698 282 328 Total $ 1,653 $ 931 $ 1,077 The increase in amortization of purchased intangible assets was primarily due to amortization of purchased intangibles from our recent acquisitions, including $569 million due to the acquisition of Splunk, and impairment charges of $145 million in fiscal 2024.
Amortization of Purchased Intangible Assets The following table presents the amortization of purchased intangible assets including impairment charges (in millions): Years Ended July 26, 2025 July 27, 2024 July 29, 2023 Amortization of purchased intangible assets: Cost of sales $ 1,174 $ 955 $ 649 Operating expenses 1,028 698 282 Total $ 2,202 $ 1,653 $ 931 The increase in amortization of purchased intangible assets was primarily due to the acquisition of Splunk and other recent acquisitions, partially offset by certain purchased intangible assets that became fully amortized in larger part from our fiscal 2021 acquisition of Acacia, and lower impairment charges in fiscal 2025.
We undertake no obligation to revise or update any forward-looking statements for any reason. OVERVIEW Cisco designs and sells a broad range of technologies that help to power, secure, and draw insights from the Internet.
We undertake no obligation to revise or update any forward-looking statements for any reason. OVERVIEW Cisco designs and sells a broad range of technologies that help to power, secure, and draw insights from the Internet. We are incorporating artificial intelligence (AI) into our product portfolios across networking, security, collaboration and observability as well as integrating our products more tightly together.
We experienced a gross margin percentage increase in our Americas segment due to productivity benefits, favorable product mix and higher services gross margin, partially offset by negative impacts from pricing. Gross margin in our EMEA segment increased due to favorable product mix, productivity benefits and higher services gross margin, partially offset by negative impacts from pricing.
The Americas segment had a gross margin percentage increase driven by positive impacts from productivity improvements and favorable product mix, partially offset by pricing erosion. The gross margin percentage increase in our EMEA segment was primarily due to positive impacts from productivity improvements and favorable product mix, partially offset by pricing erosion.
Transition Tax Payable Transition tax payable represents future cash tax payments 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 (“the Tax Act”).
Transition Tax Payable Transition tax payable represents future cash tax payments associated with the one-time U.S. transition tax on accumulated earnings for foreign subsidiaries as a result of the Tax Act. Other Long-Term Liabilities Other long-term liabilities primarily include noncurrent income taxes payable, accrued liabilities for deferred compensation, deferred tax liabilities, and certain other long-term liabilities.
We expect approximately 51% of total remaining performance obligations to be recognized as revenue over the next 12 months.
Remaining performance obligations for product increased 8% and remaining performance obligations for services increased 5%, compared to fiscal 2024. We expect approximately 50% of total remaining performance obligations to be recognized as revenue over the next 12 months.
We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. See further discussion in “Inventory Supply Chain.” 49 Table of Contents CISCO SYSTEMS, INC.
See Note 21 to the Consolidated Financial Statements. We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory.
Services Gross Margin Our services gross margin percentage increased by 1.7 percentage points primarily due to higher sales volume, lower headcount-related and delivery costs, lower variable compensation expense and favorable mix of service offerings.
Services Gross Margin Our services gross margin percentage increased by 0.4 percentage points primarily due to higher sales volume and lower delivery costs, partially offset by higher headcount-related costs.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Inventory as of July 27, 2024 decreased by 7% and inventory purchase commitments with contract manufacturers and suppliers decreased by 29% from our balances at the end of fiscal 2023.
See Note 21 to the Consolidated Financial Statements. 45 Table of Contents CISCO SYSTEMS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Inventory as of July 26, 2025 decreased by 6% and inventory purchase commitments with contract manufacturers and suppliers increased by 47% from our balances at the end of fiscal 2024.
The following table presents product revenue by category (in millions, except percentages): Years Ended 2024 vs. 2023 2023 vs. 2022 July 27, 2024 July 29, 2023 July 30, 2022 Variance in Dollars Variance in Percent Variance in Dollars Variance in Percent Product revenue: Networking $ 29,229 $ 34,570 $ 29,265 $ (5,341) (15) % $ 5,305 18 % Security 5,075 3,859 3,699 1,216 32 % 160 4 % Collaboration 4,113 4,052 4,472 61 2 % (420) (9) % Observability 837 661 581 176 27 % 80 14 % Total $ 39,253 $ 43,142 $ 38,018 $ (3,889) (9) % $ 5,124 13 % Amounts may not sum and percentages may not recalculate due to rounding.
The following table presents product revenue by category (in millions, except percentages): Years Ended 2025 vs. 2024 July 26, 2025 July 27, 2024 July 29, 2023 Variance in Dollars Variance in Percent Product revenue: Networking $ 28,304 $ 29,229 $ 34,570 $ (925) (3) % Security 8,094 5,075 3,859 3,019 59 % Collaboration 4,154 4,113 4,052 41 1 % Observability 1,055 837 661 218 26 % Total $ 41,608 $ 39,253 $ 43,142 $ 2,355 6 % Amounts may not sum and percentages may not recalculate due to rounding.
Other Income (Loss), Net The components of other income (loss), net, are summarized as follows (in millions): Years Ended 2024 vs. 2023 July 27, 2024 July 29, 2023 July 30, 2022 Variance in Dollars Gains (losses) on investments, net: Available-for-sale debt investments $ (67) $ (21) $ 9 $ (46) Marketable equity investments 65 37 (38) 28 Privately held investments (164) (193) 486 29 Net gains (losses) on investments (166) (177) 457 11 Other gains (losses), net (140) (71) (65) (69) Other income (loss), net $ (306) $ (248) $ 392 $ (58) The change in our other income (loss), net was primarily driven by higher losses in our available-for-sale debt investments and unfavorable impacts from foreign exchange, partially offset by higher gains on our marketable equity investments and lower net losses on our privately held investments.
Other Income (Loss), Net The components of other income (loss), net, are summarized as follows (in millions): Years Ended 2025 vs. 2024 July 26, 2025 July 27, 2024 July 29, 2023 Variance in Dollars Gains (losses) on investments, net: Available-for-sale debt investments $ (100) $ (67) $ (21) $ (33) Marketable equity investments 126 65 37 61 Privately held investments 56 (164) (193) 220 Net gains (losses) on investments 82 (166) (177) 248 Other gains (losses), net (150) (140) (71) (10) Other income (loss), net $ (68) $ (306) $ (248) $ 238 The change in our other income (loss), net was primarily driven by lower impairment charges, higher unrealized gains on our privately held investments, and higher gains on our marketable equity investments. 42 Table of Contents CISCO SYSTEMS, INC.
We also began increasing our inventory supply chain balances starting in fiscal 2021 in order to address significant supply constraints seen industry-wide.
In addition, we have increased our levels of inventory in recent years in order to help mitigate risks in our supply chain, and began increasing our inventory supply chain balances starting in fiscal 2021 in order to address significant supply constraints seen industry-wide at the time.
Certain of our inventory purchase commitments are directly with suppliers and relate to fixed-dollar commitments to secure supply and pricing for certain product components for multi-year periods. A significant portion of our reported purchase commitments arising from these agreements are firm, noncancelable, and unconditional commitments.
Our inventory purchase commitments are for short-term product manufacturing requirements as well as for commitments to suppliers to secure manufacturing capacity. Certain of our inventory purchase commitments are directly with suppliers and relate to fixed-dollar commitments to secure supply and pricing for certain product components for multi-year periods.
Inventory Valuation and Liability for Purchase Commitments with Contract Manufacturers and Suppliers Inventory is written down based on excess and obsolete inventories, determined primarily by future demand forecasts.
Inventory Valuation and Liability for Purchase Commitments with Contract Manufacturers and Suppliers Inventory is written down based on excess and obsolete inventories, determined primarily by future demand forecasts. Inventory write-downs are measured as the difference between the cost of the inventory and net realizable value, based upon assumptions about future demand, and are charged to the provision for inventory.
The increase in deferred product revenue of 15% was primarily due to the contribution from the Splunk acquisition of $1.7 billion and increased deferrals related to our recurring software offerings.
The increase in deferred product revenue of 2% was primarily due to increased deferrals related to our recurring software offerings. Deferred service revenue was flat year over year.
Deferred Revenue The following table presents the breakdown of deferred revenue (in millions): July 27, 2024 July 29, 2023 Increase (Decrease) Product $ 13,219 $ 11,505 $ 1,714 Services 15,256 14,045 1,211 Total $ 28,475 $ 25,550 $ 2,925 Reported as: Current $ 16,249 $ 13,908 $ 2,341 Noncurrent 12,226 11,642 584 Total $ 28,475 $ 25,550 $ 2,925 Total deferred revenue increased 11% in fiscal 2024.
Deferred Revenue The following table presents the breakdown of deferred revenue (in millions): July 26, 2025 July 27, 2024 Increase (Decrease) Product $ 13,490 $ 13,219 $ 271 Services 15,289 15,256 33 Total $ 28,779 $ 28,475 $ 304 Reported as: Current $ 16,416 $ 16,249 $ 167 Noncurrent 12,363 12,226 137 Total $ 28,779 $ 28,475 $ 304 Total deferred revenue increased 1% in fiscal 2025.
Restructuring and Other Charges We recognized total restructuring and other charges, included in operating expenses, of $789 million and $531 million in fiscal 2024 and 2023, respectively. In the first quarter of fiscal 2025, we announced a restructuring plan in order to allow us to invest in key growth opportunities and drive more efficiencies in our business.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In the first quarter of fiscal 2025, we announced a restructuring plan in order to allow us to invest in key growth opportunities and drive more efficiencies in our business.
With regard to our geographic segment performance, on a year-over-year basis, revenue in Americas decreased by 11%, EMEA decreased by 11% and APJC decreased by 6%. From a product category perspective, we experienced a product revenue decline in Networking, partially offset by growth in Security and Observability, driven in large part by the contribution of Splunk.
Within total revenue, product revenue increased by 10% and services revenue was flat. With regard to our geographic segment performance, on a year-over-year basis, revenue in Americas increased by 9%, EMEA increased by 4% and APJC increased by 7%. From a product category perspective, we experienced product revenue growth in Networking, Security, Observability, and Collaboration .
For a full discussion of our strategy and priorities, see “Item 1.
Our strategy is to securely connect everything to make those desired outcomes possible. For a full discussion of our strategy and priorities, see “Item 1.
The provision for the liability related to purchase commitments with contract manufacturers and suppliers was $243 million, $423 million, and $227 million in fiscal 2024, 2023, and 2022, respectively.
Our total provisions for inventory and the liability related to purchase commitments with contract manufacturers and suppliers were $493 million, $819 million, and $730 million in fiscal 2025, 2024, and 2023, respectively.
Provision for Income Taxes The provision for income taxes resulted in an effective tax rate of 15.6% for fiscal 2024, compared with 17.7% for fiscal 2023.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Provision for Income Taxes The provision for income taxes resulted in an effective tax rate of 8.3% for fiscal 2025, compared with 15.6% for fiscal 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+0 added−1 removed10 unchanged
Biggest changeAs of July 27, 2024, a hypothetical 50 BPS increase or decrease in market interest rates would change the fair value of the fixed-rate debt, excluding the $0.5 billion of hedged debt, by a decrease or increase of approximately $0.7 billion, respectively.
Biggest changeThe carrying amount of the senior notes was $24.6 billion, and the related fair value based on market prices was $25.0 billion. As of July 26, 2025, a hypothetical 50 BPS increase or decrease in market interest rates would change the fair value of the fixed-rate debt, by a decrease or increase of approximately $0.8 billion, respectively.
A weaker U.S. dollar could have the opposite effect. However, the precise indirect effect of currency fluctuations is difficult to measure or predict because our revenue is influenced by many factors in addition to the impact of such currency fluctuations. Approximately 70% of our operating expenses are U.S.-dollar denominated.
A weaker U.S. dollar could have the opposite effect. However, the precise indirect effect of currency fluctuations is difficult to measure or predict because our revenue is influenced by many factors in addition to the impact of such currency fluctuations. Approximately 75% of our operating expenses are U.S.-dollar denominated.
However, this hypothetical change in interest rates would not impact the interest expense on the fixed-rate debt that is not hedged. At any time, a sharp rise in market interest rates could cause us to incur additional interest expense to the extent we issue additional commercial paper or other debt.
However, this hypothetical change in interest rates would not impact the interest expense on the fixed-rate debt. At any time, a sharp rise in market interest rates could cause us to incur additional interest expense to the extent we issue additional commercial paper or other debt.
Conversely, declines in interest rates, including the impact from lower credit spreads, could have a material adverse impact on interest income for our investment portfolio. Our available-for-sale debt investments are held for purposes other than trading. Our available-for-sale debt investments are not leveraged as of July 27, 2024.
Conversely, declines in interest rates, including the impact from lower credit spreads, could have a material adverse impact on interest income for our investment portfolio. Our available-for-sale debt investments are held for purposes other than trading. Our available-for-sale debt investments are not leveraged as of July 26, 2025.
We do not enter into foreign exchange forward or option contracts for speculative purposes. 52 Table of Contents
We do not enter into foreign exchange forward or option contracts for speculative purposes. 51 Table of Contents
The total fair value of our marketable equity securities was $481 million and $431 million as of July 27, 2024 and July 29, 2023, respectively. Privately Held Investments These investments are recorded in other assets in our Consolidated Balance Sheets.
The total fair value of our marketable equity securities was $383 million and $481 million as of July 26, 2025 and July 27, 2024, respectively. Privately Held Investments These investments are recorded in other assets in our Consolidated Balance Sheets.
As of July 27, 2024, a hypothetical 50 BPS increase or decrease in market interest rates would change the fair value of our financing receivables by a decrease or increase of approximately $0.1 billion, respectively. Debt As of July 27, 2024, we had $20.3 billion in principal amount of senior fixed-rate notes outstanding.
As of July 26, 2025, a hypothetical 50 BPS increase or decrease in market interest rates would change the fair value of our financing receivables by a decrease or increase of approximately $0.1 billion, respectively. Debt As of July 26, 2025, we had $24.8 billion in principal amount of senior fixed-rate notes outstanding.
Our evaluation of privately held investments is based on the fundamentals of the businesses invested in, including, among other factors, the nature of their technologies and potential for financial return. 51 Table of Contents Foreign Currency Exchange Risk Our foreign exchange forward contracts outstanding at fiscal year-end are summarized in U.S. dollar equivalents as follows (in millions): July 27, 2024 July 29, 2023 Notional Amount Fair Value Notional Amount Fair Value Forward contracts: Purchased $ 3,586 $ (59) $ 3,014 $ (33) Sold $ 3,848 $ 60 $ 2,406 $ 31 We conduct business globally in numerous currencies.
Our evaluation of privately held investments is based on the fundamentals of the businesses invested in, including, among other factors, the nature of their technologies and potential for financial return. 50 Table of Contents Foreign Currency Exchange Risk Our foreign exchange forward contracts outstanding at fiscal year-end are summarized in U.S. dollar equivalents as follows (in millions): July 26, 2025 July 27, 2024 Notional Amount Fair Value Notional Amount Fair Value Forward contracts: Purchased $ 4,498 $ (21) $ 3,586 $ (59) Sold $ 4,480 $ 22 $ 3,848 $ 60 We conduct business globally in numerous currencies.
In fiscal 2024, foreign currency fluctuations, net of hedging, increased our combined R&D, sales and marketing, and G&A expenses by approximately $30 million, or 0.2%, as compared with fiscal 2023.
In fiscal 2025, foreign currency fluctuations, net of hedging, decreased our combined R&D, sales and marketing, and G&A expenses by approximately $16 million, or 0.1%, as compared with fiscal 2024.
As of July 27, 2024, the total carrying amount of our investments in privately held investments were each $1.8 billion at July 27, 2024 and July 29, 2023. Some of these companies in which we invested are in the startup or development stages.
As of July 26, 2025, the total carrying amount of our investments in privately held investments was $1.9 billion and $1.8 billion as of July 26, 2025 and July 27, 2024, respectively. Some of these companies in which we invested are in the startup or development stages.
The hypothetical fair values as of July 27, 2024 and July 29, 2023 are as follows (in millions): VALUATION OF SECURITIES GIVEN AN INTEREST RATE DECREASE OF X BASIS POINTS FAIR VALUE AS OF JULY 27, 2024 VALUATION OF SECURITIES GIVEN AN INTEREST RATE INCREASE OF X BASIS POINTS (150 BPS) (100 BPS) (50 BPS) 50 BPS 100 BPS 150 BPS Available-for-sale debt investments $10,057 $9,993 $9,929 $9,865 $9,800 $9,736 $9,672 VALUATION OF SECURITIES GIVEN AN INTEREST RATE DECREASE OF X BASIS POINTS FAIR VALUE AS OF JULY 29, 2023 VALUATION OF SECURITIES GIVEN AN INTEREST RATE INCREASE OF X BASIS POINTS (150 BPS) (100 BPS) (50 BPS) 50 BPS 100 BPS 150 BPS Available-for-sale debt investments $15,901 $15,798 $15,695 $15,592 $15,489 $15,386 $15,284 Financing Receivables As of July 27, 2024, our financing receivables had a carrying value of $6.7 billion, compared with $6.8 billion as of July 29, 2023.
The hypothetical fair values as of July 26, 2025 and July 27, 2024 are as follows (in millions): VALUATION OF SECURITIES GIVEN AN INTEREST RATE DECREASE OF X BASIS POINTS FAIR VALUE AS OF JULY 26, 2025 VALUATION OF SECURITIES GIVEN AN INTEREST RATE INCREASE OF X BASIS POINTS (150 BPS) (100 BPS) (50 BPS) 50 BPS 100 BPS 150 BPS Available-for-sale debt investments $7,454 $7,430 $7,405 $7,381 $7,356 $7,332 $7,307 VALUATION OF SECURITIES GIVEN AN INTEREST RATE DECREASE OF X BASIS POINTS FAIR VALUE AS OF JULY 27, 2024 VALUATION OF SECURITIES GIVEN AN INTEREST RATE INCREASE OF X BASIS POINTS (150 BPS) (100 BPS) (50 BPS) 50 BPS 100 BPS 150 BPS Available-for-sale debt investments $10,057 $9,993 $9,929 $9,865 $9,800 $9,736 $9,672 Financing Receivables As of July 26, 2025, our financing receivables had a carrying value of $6.5 billion, compared with $6.7 billion as of July 27, 2024.
Removed
The carrying amount of the senior notes was $20.1 billion, and the related fair value based on market prices was $20.4 billion.