Cisco Systems

Cisco Systems F1Q23 Earnings Results – First Blush CSCO Target price (12M, US$) 65.00 Outperform Networking Equipment | Comment Conference call today at 4:30PM EST at 888-848-6507. F1Q23 Results Summary: Revenue well above expectations, predominantly driven by better-than-expected performance in Secure, Agile Networks (indication supply chain issues have begun subsiding versus prior quarters). GMs and OMs came in lighter than expectations while EPS beat. F2Q23 guidance for top-line growth is above CS/Street expectations while margins/EPS are lower/in line with expectations. Mgmt. raised the FY23 guidance on both revs and EPS, another positive. With solid top-line growth, and F2Q23 guidance focus now shifts to profitability and key qualitative comments; exit backlog levels by end of FY23 and order cancellation dynamics). Awaiting more color on the call. 1. Revenue: $13.633B (+5.7% y/y) ABOVE CS/Street estimate of $13.289B (+3.0% y/y)/ $13.312B (+3.2% y/y) o Total Products: $10,246B (+7.5% y/y) WELL ABOVE CS/Street estimate of $9.986B (+4.8% y/y) / $9.880B (+3.7% y/y)  Secure, Agile Networks: $6.684B (+12.0% y/y) WELL ABOVE CS/Street estimates of $6.265B / $6.179B  Hybrid Work: $1.086B (-2.1% y/y) BELOW CS/Street estimates of $1.187B/$1.145B  End-to-End Security: $971M (+8.5% y/y) ABOVE/BELOW CS/Street estimates of $967M/$1,014M  Internet for the Future: $1.310B (-4.7% y/y) BELOW CS/Street estimates of $1.374B/$1.360B  Optimized Application Experiences: $193M (+6.6% y/y) ABOVE CS/Street estimates of $190M/ $191M  Other Product: $2.0M (-33.3% y/y) BELOW CS/Street estimates of $3.0M/$2.7M 16 November 2022 Equity Research Americas | United States DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Price (15 Nov 22, US$) 44.90 52-week price range 63.96 - 39.27 Enterprise value (US$ m) 169,937 Research Analysts Sami Badri 212 538 1727 ahmedsami.badri@credit-suisse.com George Engroff 212 325 2289 george.engroff@credit-suisse.com Ryan Cui, CFA 212 325 8925 ryan.cui@credit-suisse.com Financial and valuation metrics Year 7/22A 7/23E 7/24E 7/25E EPS (Excl. ESO) (US$) 3.42 3.48 3.72 3.94 EPS (CS adj., ) 3.37 3.51 3.73 3.94 Prev. EPS (CS adj., US$) - - - - P/E (CS adj.) (x) 13.3 12.8 12.0 11.4 P/E rel. (CS adj., %) 73.1 76.0 76.2 78.6 Revenue (US$ m) 51,557.0 54,142.9 57,268.6 60,407.0 Net debt (US$ m) -9,752 -14,421 -21,646 -28,981 OCFPS (US$) 3.21 3.89 4.30 4.52 P/OCF (x) 14.0 11.5 10.4 9.9 Number of shares (m) 4,105.97 Price/Sales (x) 3.54 BV/share (Next Qtr., US$) 10.0 P/BVPS