Financing Receivables

9 Months Ended

Apr. 30, 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):


April 30, 2022	Lease Receivables		Loan Receivables		Financed Service Contracts		Total
Gross	$	1,304	$	4,509	$	2,051	$	7,864
Residual value	82		—		—		82
Unearned income	(59)		—		—		(59)
Allowance for credit loss	(25)		(97)		(2)		(124)
Total, net	$	1,302	$	4,412	$	2,049	$	7,763
Reported as:
Current	$	623	$	2,144	$	1,037	$	3,804
Noncurrent	679		2,268		1,012		3,959
Total, net	$	1,302	$	4,412	$	2,049	$	7,763


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):


April 30, 2022			Fiscal Year								Nine Months Ended
Internal Credit Risk Rating	Prior		July 28, 2018		July 27, 2019		July 25, 2020		July 31, 2021		April 30, 2022		Total
Lease Receivables:
1 to 4	$	3	$	38	$	90	$	144	$	192	$	152	$	619
5 to 6	3		18		83		176		183		129		592
7 and Higher	1		1		5		13		3		11		34
Total Lease Receivables	$	7	$	57	$	178	$	333	$	378	$	292	$	1,245
Loan Receivables:
1 to 4	$	6	$	63	$	173	$	565	$	1,018	$	979	$	2,804
5 to 6	2		22		94		289		547		637		1,591
7 and Higher	1		1		26		40		36		10		114
Total Loan Receivables	$	9	$	86	$	293	$	894	$	1,601	$	1,626	$	4,509
Financed Service Contracts:
1 to 4	$	1	$	5	$	52	$	99	$	624	$	567	$	1,348
5 to 6	1		12		47		135		292		202		689
7 and Higher	—		—		3		5		3		3		14
Total Financed Service Contracts	$	2	$	17	$	102	$	239	$	919	$	772	$	2,051
Total	$	18	$	160	$	573	$	1,466	$	2,898	$	2,690	$	7,805


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 April 30, 2022 and July 31, 2021 (in millions):


	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
April 30, 2022	31-60		61-90		91+		Total Past Due		Current		Total		120+ Still Accruing		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	26	$	10	$	24	$	60	$	1,185	$	1,245	$	7	$	14	$	14
Loan receivables	87		38		25		150		4,359		4,509		6		53		53
Financed service contracts	45		16		23		84		1,967		2,051		5		2		2
Total	$	158	$	64	$	72	$	294	$	7,511	$	7,805	$	18	$	69	$	69


	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 April 30, 2022	CREDIT LOSS ALLOWANCES
	Lease Receivables		Loan Receivables		Financed Service Contracts		Total
Allowance for credit loss as of January 29, 2022	$	27	$	67	$	3	$	97
Provisions (benefits)	(2)		27		(1)		24
Other	—		3		—		3
Allowance for credit loss as of April 30, 2022	$	25	$	97	$	2	$	124


Three Months Ended May 1, 2021	CREDIT LOSS ALLOWANCES
	Lease Receivables		Loan Receivables		Financed Service Contracts		Total
Allowance for credit loss as of January 23, 2021	$	43	$	96	$	9	$	148
Provisions (benefits)	(2)		(4)		(4)		(10)
Recoveries (write-offs), net	(1)		(1)		—		(2)
Allowance for credit loss as of May 1, 2021	$	40	$	91	$	5	$	136


Nine months ended April 30, 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)	(11)		8		(1)		(4)
Recoveries (write-offs), net	(2)		—		—		(2)
Other	—		3		—		3
Allowance for credit loss as of April 30, 2022	$	25	$	97	$	2	$	124


Nine months ended May 1, 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)	(9)		(7)		(3)		(19)
Recoveries (write-offs), net	(1)		(1)		—		(2)
Other	2		18		(1)		19
Allowance for credit loss as of May 1, 2021	$	40	$	91	$	5	$	136