Financing Receivables

6 Months Ended

Jan. 29, 2022

(a)Financing Receivables

Financing receivables primarily consist of lease receivables, loan receivables, and financed service contracts. Lease receivables represent sales-type leases resulting from the sale of Cisco’s and complementary third-party products and are typically collateralized by a security interest in the underlying assets. Lease receivables consist of arrangements with terms of four years on average. Loan receivables represent financing arrangements related to the sale of our hardware, software, and services, which may include additional funding for other costs associated with network installation and integration of our products and services. Loan receivables have terms of three years on average. Financed service contracts include financing receivables related to technical support and advanced services. Revenue related to the technical support services is typically deferred and included in deferred service revenue and is recognized ratably over the period during which the related services are to be performed, which typically ranges from one year to three years.

A summary of our financing receivables is presented as follows (in millions):


January 29, 2022	Lease Receivables		Loan Receivables		Financed Service Contracts		Total
Gross	$	1,364	$	4,581	$	2,149	$	8,094
Residual value	88		—		—		88
Unearned income	(64)		—		—		(64)
Allowance for credit loss	(27)		(67)		(3)		(97)
Total, net	$	1,361	$	4,514	$	2,146	$	8,021
Reported as:
Current	$	651	$	2,218	$	1,128	$	3,997
Noncurrent	710		2,296		1,018		4,024
Total, net	$	1,361	$	4,514	$	2,146	$	8,021


July 31, 2021	Lease Receivables		Loan Receivables		Financed Service Contracts		Total
Gross	$	1,710	$	5,203	$	2,453	$	9,366
Residual value	103		—		—		103
Unearned income	(78)		—		—		(78)
Allowance for credit loss	(38)		(86)		(3)		(127)
Total, net	$	1,697	$	5,117	$	2,450	$	9,264
Reported as:
Current	$	780	$	2,372	$	1,228	$	4,380
Noncurrent	917		2,745		1,222		4,884
Total, net	$	1,697	$	5,117	$	2,450	$	9,264

(b)Credit Quality of Financing Receivables

The tables below present our gross financing receivables, excluding residual value, less unearned income, categorized by our internal credit risk rating by period of origination (in millions):


January 29, 2022			Fiscal Year								Six Months Ended
Internal Credit Risk Rating	Prior		July 28, 2018		July 27, 2019		July 25, 2020		July 31, 2021		January 29, 2022		Total
Lease Receivables:
1 to 4	$	6	$	51	$	104	$	171	$	209	$	125	$	666
5 to 6	6		28		105		199		200		57		595
7 and Higher	1		2		6		15		4		11		39
Total Lease Receivables	$	13	$	81	$	215	$	385	$	413	$	193	$	1,300
Loan Receivables:
1 to 4	$	16	$	85	$	221	$	665	$	1,182	$	660	$	2,829
5 to 6	5		34		119		359		662		450		1,629
7 and Higher	2		2		36		36		26		21		123
Total Loan Receivables	$	23	$	121	$	376	$	1,060	$	1,870	$	1,131	$	4,581
Financed Service Contracts:
1 to 4	$	2	$	16	$	65	$	169	$	740	$	380	$	1,372
5 to 6	1		15		76		184		337		149		762
7 and Higher	—		—		3		6		3		3		15
Total Financed Service Contracts	$	3	$	31	$	144	$	359	$	1,080	$	532	$	2,149
Total	$	39	$	233	$	735	$	1,804	$	3,363	$	1,856	$	8,030


July 31, 2021			Fiscal Year
Internal Credit Risk Rating	Prior		July 29, 2017		July 28, 2018		July 27, 2019		July 25, 2020		July 31, 2021		Total
Lease Receivables:
1 to 4	$	2	$	20	$	100	$	168	$	282	$	227	$	799
5 to 6	1		17		65		187		285		231		786
7 and Higher	—		2		6		12		23		4		47
Total Lease Receivables	$	3	$	39	$	171	$	367	$	590	$	462	$	1,632
Loan Receivables:
1 to 4	$	4	$	86	$	134	$	577	$	990	$	1,552	$	3,343
5 to 6	—		19		75		202		505		925		1,726
7 and Higher	1		2		4		50		43		34		134
Total Loan Receivables	$	5	$	107	$	213	$	829	$	1,538	$	2,511	$	5,203
Financed Service Contracts:
1 to 4	$	—	$	38	$	26	$	106	$	252	$	1,053	$	1,475
5 to 6	—		6		26		105		302		520		959
7 and Higher	—		—		1		6		7		5		19
Total Financed Service Contracts	$	—	$	44	$	53	$	217	$	561	$	1,578	$	2,453
Total	$	8	$	190	$	437	$	1,413	$	2,689	$	4,551	$	9,288

The following tables present the aging analysis of gross receivables as of January 29, 2022 and July 31, 2021 (in millions):


	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
January 29, 2022	31-60		61-90		91+		Total Past Due		Current		Total		120+ Still Accruing		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	26	$	15	$	26	$	67	$	1,233	$	1,300	$	9	$	19	$	19
Loan receivables	66		12		42		120		4,461		4,581		8		25		25
Financed service contracts	16		6		10		32		2,117		2,149		4		2		2
Total	$	108	$	33	$	78	$	219	$	7,811	$	8,030	$	21	$	46	$	46


	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
July 31, 2021	31-60		61-90		91+		Total Past Due		Current		Total		120+ Still Accruing		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	21	$	17	$	29	$	67	$	1,565	$	1,632	$	1	$	33	$	26
Loan receivables	71		17		35		123		5,080		5,203		4		33		33
Financed service contracts	18		13		18		49		2,404		2,453		3		3		3
Total	$	110	$	47	$	82	$	239	$	9,049	$	9,288	$	8	$	69	$	62

Past due financing receivables are those that are 31 days or more past due according to their contractual payment terms. The data in the preceding tables is presented by contract, and the aging classification of each contract is based on the oldest outstanding receivable, and therefore past due amounts also include unbilled and current receivables within the same contract.

(c)Allowance for Credit Loss Rollforward

The allowances for credit loss and the related financing receivables are summarized as follows (in millions):


Three months ended January 29, 2022	CREDIT LOSS ALLOWANCES
	Lease Receivables		Loan Receivables		Financed Service Contracts		Total
Allowance for credit loss as of October 30, 2021	$	33	$	74	$	2	$	109
Provisions (benefits)	(4)		(7)		1		(10)
Recoveries (write-offs), net	(2)		—		—		(2)
Allowance for credit loss as of January 29, 2022	$	27	$	67	$	3	$	97


Three Months Ended January 23, 2021	CREDIT LOSS ALLOWANCES
	Lease Receivables		Loan Receivables		Financed Service Contracts		Total
Allowance for credit loss as of October 24, 2020	$	46	$	101	$	7	$	154
Provisions (benefits)	(4)		(6)		2		(8)
Other	1		1		—		2
Allowance for credit loss as of January 23, 2021	$	43	$	96	$	9	$	148


Six months ended January 29, 2022	CREDIT LOSS ALLOWANCES
	Lease Receivables		Loan Receivables		Financed Service Contracts		Total
Allowance for credit loss as of July 31, 2021	$	38	$	86	$	3	$	127
Provisions (benefits)	(9)		(19)		—		(28)
Recoveries (write-offs), net	(2)		—		—		(2)
Allowance for credit loss as of January 29, 2022	$	27	$	67	$	3	$	97


Six months ended January 23, 2021	CREDIT LOSS ALLOWANCES
	Lease Receivables		Loan Receivables		Financed Service Contracts		Total
Allowance for credit loss as of July 25, 2020	$	48	$	81	$	9	$	138
Provisions (benefits)	(7)		(3)		1		(9)
Other	2		18		(1)		19
Allowance for credit loss as of January 23, 2021	$	43	$	96	$	9	$	148