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Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
_____________________________________
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 27, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
          
For the transition period from              to             
Commission file number 001-39940 
_____________________________________
imagelogoa.jpg
CISCO SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0059951
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification Number)
170 West Tasman Drive
San Jose, California 95134
(Address of principal executive office and zip code)
(408) 526-4000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and formal fiscal year, if changed since last report.)
_____________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareCSCOThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No    
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No    
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer 
Non-accelerated filerSmaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  No 
Number of shares of the registrant’s common stock outstanding as of February 15, 2024: 4,049,187,080
____________________________________ 
1

Table of Contents
Cisco Systems, Inc.
Form 10-Q for the Quarter Ended January 27, 2024
INDEX
Page
Part I
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

Table of Contents
PART I. FINANCIAL INFORMATION 
Item 1.Financial Statements (Unaudited)
CISCO SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except par value)
(Unaudited)
January 27, 2024July 29, 2023
ASSETS
Current assets:
Cash and cash equivalents$13,715 $10,123 
Investments11,956 16,023 
Accounts receivable, net of allowance of $79 at January 27, 2024 and $85 at July 29, 2023
4,884 5,854 
Inventories3,209 3,644 
Financing receivables, net3,476 3,352 
Other current assets4,887 4,352 
Total current assets42,127 43,348 
Property and equipment, net2,005 2,085 
Financing receivables, net3,364 3,483 
Goodwill39,087 38,535 
Purchased intangible assets, net1,678 1,818 
Deferred tax assets7,338 6,576 
Other assets5,575 6,007 
TOTAL ASSETS$101,174 $101,852 
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt$4,936 $1,733 
Accounts payable1,848 2,313 
Income taxes payable1,876 4,235 
Accrued compensation3,216 3,984 
Deferred revenue14,011 13,908 
Other current liabilities4,964 5,136 
Total current liabilities30,851 31,309 
Long-term debt6,669 6,658 
Income taxes payable3,390 5,756 
Deferred revenue11,760 11,642 
Other long-term liabilities2,253 2,134 
Total liabilities54,923 57,499 
Commitments and contingencies (Note 14)
Equity:
Cisco stockholders’ equity:
Preferred stock, $0.001 par value: 5 shares authorized; none issued and outstanding
  
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 4,050 and 4,066 shares issued and outstanding at January 27, 2024 and July 29, 2023, respectively
45,002 44,289 
Retained earnings2,761 1,639 
Accumulated other comprehensive loss(1,512)(1,575)
Total equity46,251 44,353 
TOTAL LIABILITIES AND EQUITY$101,174 $101,852 
See Notes to Consolidated Financial Statements.
3

Table of Contents
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per-share amounts)
(Unaudited) 
Three Months EndedSix Months Ended
January 27, 2024January 28, 2023January 27, 2024January 28, 2023
REVENUE:
Product$9,232 $10,155 $20,371 $20,400 
Service3,559 3,437 7,088 6,824 
Total revenue12,791 13,592 27,459 27,224 
COST OF SALES:
Product3,443 4,038 7,400 8,217 
Service1,131 1,127 2,285 2,234 
Total cost of sales4,574 5,165 9,685 10,451 
GROSS MARGIN8,217 8,427 17,774 16,773 
OPERATING EXPENSES:
Research and development1,943 1,855 3,856 3,636 
Sales and marketing2,458 2,384 4,964 4,775 
General and administrative642 582 1,314 1,147 
Amortization of purchased intangible assets66 71 133 142 
Restructuring and other charges12 243 135 241 
Total operating expenses5,121 5,135 10,402 9,941 
OPERATING INCOME3,096 3,292 7,372 6,832 
Interest income324 219 684 388 
Interest expense(120)(107)(231)(207)
Other income (loss), net(139)11 (222)(123)
Interest and other income (loss), net65 123 231 58 
INCOME BEFORE PROVISION FOR INCOME TAXES3,161 3,415 7,603 6,890 
Provision for income taxes527 642 1,331 1,447 
NET INCOME$2,634 $2,773 $6,272 $5,443 
Net income per share:
Basic$0.65 $0.68 $1.55 $1.33 
Diluted$0.65 $0.67 $1.54 $1.32 
Shares used in per-share calculation:
Basic4,055 4,103 4,056 4,105 
Diluted4,073 4,116 4,079 4,115 
See Notes to Consolidated Financial Statements.
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CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
Three Months EndedSix Months Ended
January 27, 2024January 28, 2023January 27, 2024January 28, 2023
Net income$2,634 $2,773 $6,272 $5,443 
Available-for-sale investments:
Change in net unrealized gains and losses, net of tax benefit (expense) of $(73) and $(33) for the second quarter and first six months of fiscal 2024, respectively, and $(66) and $12 for the corresponding periods of fiscal 2023, respectively
229 187 99 (64)
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $(5) and $(9) for the second quarter and first six months of fiscal 2024, respectively, and $0 and $(1) for the corresponding periods of fiscal 2023, respectively
18 3 34 8 
247 190 133 (56)
Cash flow hedging instruments:
Change in unrealized gains and losses, net of tax benefit (expense) of $0 and $(9) for the second quarter and first six months of fiscal 2024, respectively, and $11 and $3 for the corresponding periods of fiscal 2023, respectively
1 (33)30 (9)
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $2 and $5 for the second quarter and first six months of fiscal 2024, respectively, and $4 and $9 for the corresponding periods of fiscal 2023, respectively
(9)(14)(18)(28)
(8)(47)12 (37)
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $0 and $1 for the second quarter and first six months of fiscal 2024, respectively, and $2 and $24 for the corresponding periods of fiscal 2023, respectively
274 389 (82)129 
Other comprehensive income513 532 63 36 
Comprehensive income$3,147 $3,305 $6,335 $5,479 
See Notes to Consolidated Financial Statements.


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CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Six Months Ended
January 27, 2024January 28, 2023
Cash flows from operating activities:
Net income$6,272 $5,443 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other823 853 
Share-based compensation expense1,463 1,097 
Provision (benefit) for receivables12 6 
Deferred income taxes(816)(845)
(Gains) losses on divestitures, investments and other, net205 109 
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable941 1,393 
Inventories442 (569)
Financing receivables(33)834 
Other assets(403)(210)
Accounts payable(476)42 
Income taxes, net(4,656)118 
Accrued compensation(763)(146)
Deferred revenue293 633 
Other liabilities(125)(57)
Net cash provided by operating activities3,179 8,701 
Cash flows from investing activities:
Purchases of investments(2,253)(3,797)
Proceeds from sales of investments2,484 587 
Proceeds from maturities of investments4,044 2,316 
Acquisitions, net of cash and cash equivalents acquired(878)(3)
Purchases of investments in privately held companies(50)(70)
Return of investments in privately held companies123 39 
Acquisition of property and equipment(304)(346)
Other(1)(19)
Net cash provided by (used in) investing activities3,165 (1,293)
Cash flows from financing activities:
Issuances of common stock349 316 
Repurchases of common stockrepurchase program
(2,504)(1,760)
Shares repurchased for tax withholdings on vesting of restricted stock units(581)(310)
Short-term borrowings, original maturities of 90 days or less, net1,398 (602)
Issuances of debt2,537  
Repayments of debt(750) 
Dividends paid(3,163)(3,120)
Other(7)(5)
Net cash used in financing activities(2,721)(5,481)
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents(32)3 
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents3,591 1,930 
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period11,627 8,579 
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period$15,218 $10,509 
Supplemental cash flow information:
Cash paid for interest$203 $178 
Cash paid for income taxes, net$6,804 $2,172 


See Notes to Consolidated Financial Statements.
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CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except per-share amounts)
(Unaudited)
Three Months Ended January 27, 2024Shares of
Common
Stock
Common Stock
and
Additional
Paid-In Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
Total
Equity
Balance at October 28, 20234,049 $44,546 $2,689 $(2,025)$45,210 
Net income2,634 2,634 
Other comprehensive income (loss)513 513 
Issuance of common stock34 349 349 
Repurchase of common stock(25)(279)(975)(1,254)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(8)(425)(425)
Cash dividends declared ($0.39 per common share)
(1,583)(1,583)
Share-based compensation802 802 
Other9 (4)5 
Balance at January 27, 20244,050$45,002 $2,761 $(1,512)$46,251 

Six Months Ended January 27, 2024Shares of
Common
Stock
Common Stock
and
Additional
Paid-In Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
Total
Equity
Balance at July 29, 20234,066 $44,289 $1,639 $(1,575)$44,353 
Net income6,272 6,272 
Other comprehensive income (loss)63 63 
Issuance of common stock43 349 349 
Repurchase of common stock(48)(528)(1,978)(2,506)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(11)(581)(581)
Cash dividends declared ($0.78 per common share)
(3,163)(3,163)
Share-based compensation1,463 1,463 
Other10 (9)1 
Balance at January 27, 20244,050 $45,002 $2,761 $(1,512)$46,251 






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CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except per-share amounts)
(Unaudited)

Three Months Ended January 28, 2023Shares of
Common
Stock
Common Stock
and
Additional
Paid-In Capital
Accumulated DeficitAccumulated
Other
Comprehensive Loss
Total
Equity
Balance at October 29, 20224,103 $42,984 $(594)$(2,118)$40,272 
Net income2,773 2,773 
Other comprehensive income (loss)532 532 
Issuance of common stock23 316 316 
Repurchase of common stock(26)(276)(980)(1,256)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(5)(202)(202)
Cash dividends declared ($0.38 per common share)
(1,560)(1,560)
Share-based compensation601 601 
Other1 (3)(2)
Balance at January 28, 20234,095$43,424 $(364)$(1,586)$41,474 

Six Months Ended January 28, 2023Shares of
Common
Stock
Common Stock
and
Additional
Paid-In Capital
Accumulated DeficitAccumulated
Other
Comprehensive Loss
Total
Equity
Balance at July 30, 20224,110 $42,714 $(1,319)$(1,622)$39,773 
Net income5,443 5,443 
Other comprehensive income (loss)36 36 
Issuance of common stock30 316 316 
Repurchase of common stock(38)(394)(1,364)(1,758)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(7)(310)(310)
Cash dividends declared ($0.76 per common share)
(3,120)(3,120)
Share-based compensation1,097 1,097 
Other1 (4)(3)
Balance at January 28, 20234,095$43,424 $(364)$(1,586)$41,474 







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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.Organization and Basis of Presentation
The fiscal year for Cisco Systems, Inc. (the “Company,” “Cisco,” “we,” “us,” or “our”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2024 and fiscal 2023 are each 52-week fiscal years. The Consolidated Financial Statements include our accounts and those of our subsidiaries. All intercompany accounts and transactions have been eliminated. We conduct business globally and are primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).
We have prepared the accompanying financial data as of January 27, 2024 and for the second quarter and first six months of fiscal 2024 and 2023, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. The July 29, 2023 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 29, 2023.
In the opinion of management, all normal recurring adjustments necessary to state fairly the consolidated balance sheet as of January 27, 2024, the results of operations, the statements of comprehensive income and the statements of equity for the second quarter and first six months of fiscal 2024 and 2023, and the statements of cash flows for the first six months of fiscal 2024 and 2023, as applicable, have been made. The results of operations for the second quarter and first six months of fiscal 2024 are not necessarily indicative of the operating results for the full fiscal year or any future periods.
Our consolidated financial statements include our accounts and investments consolidated under the voting interest model. The noncontrolling interests attributed to these investments are not presented as a separate component in the equity section of the Consolidated Balance Sheets as these amounts are not material for any of the fiscal periods presented. The share of earnings attributable to the noncontrolling interests are not presented separately in the Consolidated Statements of Operations as these amounts are not material for any of the fiscal periods presented.
Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation. We have evaluated subsequent events through the date that the financial statements were issued.

2.Recent Accounting Pronouncements
(a)Recent Accounting Standards or Updates Not Yet Effective
Segment Reporting In November 2023, the Financial Accounting Standards Board (FASB) issued an accounting standard update that expands the disclosure requirements for reportable segments, primarily through enhanced disclosures around significant segment expenses. The accounting standard update will be effective for our fiscal 2025 Form 10-K on a retrospective basis, and early adoption is permitted. We are currently evaluating the impact of this accounting standard update on our segment disclosures.
Improvements on Income Tax Disclosures In December 2023, the FASB issued an accounting standard update expanding the requirements for disclosure of disaggregated information about the effective tax rate reconciliation and income taxes paid. The accounting standard update will be effective for our fiscal 2026 Form 10-K. We are currently evaluating the impact of this accounting standard update on our income tax disclosures.

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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

3.Revenue
We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers.
We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment, electronic delivery (or when the software is available for download by the customer), or once title and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements do not include the right for the customer to take possession of the software during the term, and therefore have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes.
An allowance for future sales returns is established based on historical trends in product return rates. The allowance for future sales returns as of January 27, 2024 and July 29, 2023 was $36 million and $39 million, respectively, and was recorded as a reduction of our accounts receivable and revenue.
Significant Judgments
Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.
We assess relevant contractual terms in our customer contracts to determine the transaction price. We apply judgment in identifying contractual terms and determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. 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. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers’ right of return in determining the transaction price, where applicable.
We assess certain software licenses, such as for security software, that contain critical updates or upgrades which customers can download throughout the contract term. Without these updates or upgrades, the functionality of the software would diminish over a relatively short time period. These updates or upgrades provide the customer the full functionality of the purchased security software licenses and are required to maintain the security license’s utility as the risks and threats in the environment are rapidly changing. In these circumstances, the revenue from these software arrangements is recognized as a single performance obligation satisfied over the contract term.
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


(a)Disaggregation of Revenue
We disaggregate our revenue into groups of similar products and services that depict the nature, amount, and timing of revenue and cash flows for our various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies differ for each of our product categories, resulting in different economic risk profiles for each category. Effective in the first quarter of fiscal 2024, we began reporting our product and service revenue in the following categories: Networking, Security, Collaboration, Observability, and Services and conformed our product revenue for prior periods to the current period presentation. The following table presents this disaggregation of revenue (in millions):
Three Months EndedSix Months Ended
January 27,
2024
January 28,
2023
January 27,
2024
January 28,
2023
Product revenue:
Networking$7,081 $8,092 $15,904 $16,123 
Security973 943 1,984 1,914 
Collaboration989 958 2,106 2,044 
Observability188 162 378 319 
Total Product9,232 10,155 20,371 20,400 
Services3,559 3,437 7,088 6,824 
Total$12,791 $13,592 27,459 27,224 
Amounts may not sum due to rounding.
Networking consists of our core networking technologies of switching, routing, wireless, 5G, silicon, optics solutions and compute products. These technologies consist of both hardware and software offerings, including software licenses and SaaS. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Security consists of our Cloud and Application Security, Industrial Security, Network Security, and User and Device Security offerings. These products consist of both hardware and software offerings, including software licenses and SaaS. Updates and upgrades for the term software licenses are critical for our software to perform its intended commercial purpose because of the continuous need for our software to secure our customers’ network environments against frequent threats. Therefore, security software licenses are generally represented by a single distinct performance obligation with revenue recognized ratably over the contract term. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Collaboration consists of our Meetings, Collaboration Devices, Calling, Contact Center and Communication Platform as a Service (CPaaS) offerings. These products consist primarily of software offerings, including software licenses and SaaS, as well as hardware. Our perpetual software and hardware in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Observability consists of our full stack observability offerings. These products consist primarily of software offerings, including software licenses and SaaS. Our perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

In addition to our product offerings, we provide a broad range of service and support options for our customers, including technical support services and advanced services. Technical support services represent the majority of these offerings which are distinct performance obligations that are satisfied over time with revenue recognized ratably over the contract term. Advanced services are distinct performance obligations that are satisfied over time with revenue recognized as services are delivered.
The sales arrangements as discussed above are typically made pursuant to customer purchase orders based on master purchase or partner agreements. Cash is received based on our standard payment terms which is typically 30 days. We provide financing arrangements to customers for all of our hardware, software and service offerings. Refer to Note 9 for additional information. For these arrangements, cash is typically received over time.
(b)Contract Balances
Accounts Receivable
Accounts receivable, net was $4.9 billion as of January 27, 2024 compared to $5.9 billion as of July 29, 2023, as reported on the Consolidated Balance Sheets.
The allowances for credit loss for our accounts receivable are summarized as follows (in millions):
Three Months EndedSix Months Ended
January 27, 2024January 28, 2023January 27, 2024January 28, 2023
Allowance for credit loss at beginning of period$82 $88 $85 $83 
Provisions (benefits)9 3 11 14 
Recoveries (write-offs), net(12)(5)(17)(11)
Allowance for credit loss at end of period$79 $86 $79 $86 
Contract Assets and Liabilities
Gross contract assets by our internal risk ratings are summarized as follows (in millions):
January 27,
2024
July 29,
2023
1 to 4$693 $672 
5 to 61,042 954 
7 and Higher62 60 
Total$1,797 $1,686 
Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to software and service arrangements where transfer of control has occurred but we have not yet invoiced. Our contract assets for these unbilled receivables, net of allowances, were $1.8 billion as of January 27, 2024 and $1.6 billion as of July 29, 2023, and were included in other current assets and other assets.
Contract liabilities consist of deferred revenue. Deferred revenue was $25.8 billion as of January 27, 2024 compared to $25.6 billion as of July 29, 2023. We recognized approximately $3.8 billion and $8.4 billion of revenue during the second quarter and first six months of fiscal 2024 that was included in the deferred revenue balance at July 29, 2023.
(c)Capitalized Contract Acquisition Costs
We capitalize direct and incremental costs incurred to acquire contracts, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. We incur these costs in connection with both initial contracts and renewals. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to the period of benefit. Capitalized contract acquisition costs were $1.2 billion and $1.1 billion as of January 27, 2024 and July 29, 2023, respectively, and were included in other current assets and other assets. The amortization expense associated with these costs was $166 million and $324 million for the second quarter and first six months fiscal 2024, respectively, and $201 million and $377 million for the corresponding periods of fiscal 2023, respectively, and was included in sales and marketing expenses.

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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


4.Acquisitions and Divestitures
A summary of the allocation of the total purchase consideration of our completed acquisitions during the first six months of fiscal 2024 is presented as follows (in millions):
Purchase ConsiderationNet Tangible Assets Acquired (Liabilities Assumed)Purchased Intangible AssetsGoodwill
Total acquisitions$896 $(50)$354 $592 
The total purchase consideration related to our acquisitions completed during the first six months of fiscal 2024 consisted primarily of cash consideration. The total cash and cash equivalents acquired from these acquisitions was approximately $17 million. Total transaction costs related to acquisition and divestiture activities were $51 million and $3 million for the first six months of fiscal 2024 and 2023, respectively. These transaction costs were expensed as incurred in general and administrative expenses (“G&A”) in the Consolidated Statements of Operations.
The purchase price allocation for acquisitions completed during recent periods is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information that existed as of the acquisition date but at that time was unknown to us may become known during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date.
The goodwill generated from acquisitions completed during the first six months of fiscal 2024 is primarily related to expected synergies. The goodwill is generally not deductible for income tax purposes.
The Consolidated Financial Statements include the operating results of each acquisition from the date of acquisition. Pro forma results of operations and the revenue and net income subsequent to the acquisition date for the acquisitions completed during the first six months of fiscal 2024 have not been presented because the effects of the acquisitions were not material to our financial results.
Intent to Acquire Splunk On September 21, 2023, we announced our intent to acquire Splunk Inc. (“Splunk”), a public cybersecurity and observability company. Under the terms of the agreement, we have agreed to pay $157 per share in cash, representing approximately $28 billion in equity value. The acquisition is expected to close late in the first quarter or early in the second quarter of calendar year 2024, subject to regulatory approval and other customary closing conditions. We anticipate this transaction will be financed with a combination of cash and debt.

5.Goodwill and Purchased Intangible Assets
(a)Goodwill
The following table presents the goodwill allocated to our reportable segments as of January 27, 2024 and during the first six months of fiscal 2024 (in millions):
Balance at July 29, 2023AcquisitionsForeign Currency Translation and OtherBalance at January 27, 2024
Americas$24,035 $367 $(25)$24,377 
EMEA9,118 121 (10)9,229 
APJC5,382 104 (5)5,481 
Total$38,535 $592 $(40)$39,087 
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

(b)Purchased Intangible Assets
The following table presents details of our intangible assets acquired through acquisitions completed during the first six months of fiscal 2024 (in millions, except years):
 FINITE LIVESINDEFINITE LIVESTOTAL
 TECHNOLOGYCUSTOMER
RELATIONSHIPS
OTHERIPR&D
Weighted-
Average Useful
Life (in Years)
AmountWeighted-
Average Useful
Life (in Years)
AmountWeighted-
Average Useful
Life (in Years)
AmountAmountAmount
Total acquisitions4.8$280 4.8$58 1.0$2 $14 $354 
The following tables present details of our purchased intangible assets (in millions): 
January 27, 2024GrossAccumulated AmortizationNet
Purchased intangible assets with finite lives:
Technology$3,020 $(1,791)$1,229 
Customer relationships963 (709)254 
Other42 (27)15 
Total purchased intangible assets with finite lives4,025 (2,527)1,498 
In-process research and development, with indefinite lives180 — 180 
       Total$4,205 $(2,527)$1,678 
July 29, 2023GrossAccumulated AmortizationNet
Purchased intangible assets with finite lives:
Technology$2,998 $(1,691)$1,307 
Customer relationships1,228 (905)323 
Other40 (22)18 
Total purchased intangible assets with finite lives4,266 (2,618)1,648 
In-process research and development, with indefinite lives170 — 170 
       Total$4,436 $(2,618)$1,818 
Purchased intangible assets include intangible assets acquired through acquisitions as well as through direct purchases or licenses.
The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):
Three Months EndedSix Months Ended
January 27, 2024January 28, 2023January 27, 2024January 28, 2023
Amortization of purchased intangible assets:
Cost of sales$180 $158 $366 $316 
Operating expenses66 71 133 142 
Total$246 $229 $499 $458 
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

The estimated future amortization expense of purchased intangible assets with finite lives as of January 27, 2024 is as follows (in millions):
Fiscal YearAmount
2024 (remaining six months)$440 
2025$576 
2026$228 
2027$143 
2028$100 
Thereafter$11 

6.Restructuring and Other Charges
In the third quarter of fiscal 2024, we initiated a restructuring plan (the “Fiscal 2024 Plan”) in order to realign the organization and enable further investment in key priority areas. The Fiscal 2024 Plan will impact approximately 5% of our global workforce, with estimated pretax charges of approximately $800 million. These aggregate pretax charges will be primarily cash-based and consist of severance and other one-time termination benefits and other costs. We expect this plan to be substantially completed during the first half of fiscal 2025.
In the second quarter of fiscal 2023, we announced a restructuring plan (the “Fiscal 2023 Plan”) in order to rebalance the organization and enable further investment in key priority areas. In connection with the Fiscal 2023 Plan, we incurred charges of $12 million and $135 million for the second quarter and first six months of fiscal 2024, respectively. We incurred charges of $243 million for the second quarter and first six months of fiscal 2023. Total cumulative charges of $670 million have been recognized to date. These aggregate pretax charges were primarily cash-based and consist of severance and other one-time termination benefits, real estate-related charges, and other costs. We completed the Fiscal 2023 Plan in the second quarter of fiscal 2024.
The following table summarizes the activities related to the Fiscal 2023 Plan (in millions):
FISCAL 2023 PLAN
Employee
Severance
OtherTotal
Liability as of July 29, 2023$166 $44 $210 
Charges104 31 135 
Cash payments(222)(8)(230)
Non-cash items (15)(15)
Liability as of January 27, 2024$48 $52 $100 

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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

7.Balance Sheet and Other Details
The following tables provide details of selected balance sheet and other items (in millions, except percentages):
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
January 27,
2024
July 29,
2023
Cash and cash equivalents$13,715 $10,123 
Restricted cash and restricted cash equivalents included in other current assets565 191 
Restricted cash and restricted cash equivalents included in other assets938 1,313 
Total$15,218 $11,627 
Our restricted cash and restricted cash equivalents are funds primarily related to contractual obligations with suppliers.
Inventories
January 27,
2024
July 29,
2023
Raw materials$1,784 $1,685 
Work in process165 264 
Finished goods1,047 1,493 
Service-related spares200 186 
Demonstration systems13 16 
Total$3,209 $3,644 
Property and Equipment, Net
January 27,
2024
July 29,
2023
Gross property and equipment:
Land, buildings, and building and leasehold improvements$4,214 $4,229 
Computer equipment and related software691 744 
Production, engineering, and other equipment4,466 4,611 
Operating lease assets125 135 
Furniture, fixtures and other339 339 
Total gross property and equipment9,835 10,058 
Less: accumulated depreciation and amortization
(7,830)(7,973)
Total$2,005 $2,085 
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Remaining Performance Obligations (RPO)
January 27,
2024
July 29,
2023
Product$16,249 $15,802 
Service19,407 19,066 
Total$35,656 $34,868 
Short-term RPO$17,930 $17,910 
Long-term RPO17,726 16,958 
Total$35,656 $34,868 
Amount to be recognized as revenue over the next 12 months
50 %51 %
Deferred revenue$25,771 $25,550 
Unbilled contract revenue9,885 9,318 
Total$35,656 $34,868 
Unbilled contract revenue represents noncancelable contracts for which we have not invoiced, have an obligation to perform, and revenue has not yet been recognized in the financial statements.
Deferred Revenue
January 27,
2024
July 29,
2023
Product$11,640 $11,505 
Service14,131 14,045 
Total$25,771 $25,550 
Reported as:
Current$14,011 $13,908 
Noncurrent11,760 11,642 
Total$25,771 $25,550 
Transition Tax Payable
Our income tax payable 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 is as follows (in millions):
January 27,
2024
July 29,
2023
Current$1,819 $1,364 
Noncurrent2,273 4,092 
Total$4,092 $5,456 

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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

8.Leases
(a)Lessee Arrangements
The following table presents our operating lease balances (in millions):
Balance Sheet Line ItemJanuary 27, 2024July 29, 2023
Operating lease right-of-use assetsOther assets$978 $971 
Operating lease liabilitiesOther current liabilities$330 $313 
Operating lease liabilitiesOther long-term liabilities703 707 
Total operating lease liabilities$1,033 $1,020 
The components of our lease expenses were as follows (in millions):
Three Months EndedSix Months Ended
January 27, 2024January 28, 2023January 27, 2024January 28, 2023
Operating lease expense$103 $98 $203 $194 
Short-term lease expense25 17 36 34 
Variable lease expense50 63 106 121 
Total lease expense$178 $178 $345 $349 
Supplemental information related to our operating leases is as follows (in millions):
Six Months Ended
January 27, 2024January 28, 2023
Cash paid for amounts included in the measurement of lease liabilities — operating cash flows $178 $192 
Right-of-use assets obtained in exchange for operating leases liabilities$182 $149 
The weighted-average lease term was 4.6 years as of each of January 27, 2024 and July 29, 2023. The weighted-average discount rate was 3.7% and 3.1% as of January 27, 2024 and July 29, 2023, respectively.
The maturities of our operating leases (undiscounted) as of January 27, 2024 are as follows (in millions):
Fiscal YearAmount
2024 (remaining six months)$183 
2025303 
2026206 
2027129 
202894 
Thereafter231 
Total lease payments1,146 
Less interest(113)
Total$1,033 
(b)Lessor Arrangements
Our leases primarily represent sales-type leases with terms of four years on average. We provide leasing of our equipment and complementary third-party products primarily through our channel partners and distributors, for which the income arising from these leases is recognized through interest income. Interest income was $16 million and $30 million for the second quarter and the first six months of fiscal 2024, respectively, and $12 million and $24 million for the corresponding periods of fiscal 2023, respectively, and was included in interest income in the Consolidated Statement of Operations. The net investment of our lease receivables is measured at the commencement date as the gross lease receivable, residual value less unearned income and allowance for credit loss. For additional information, see Note 9.
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Future minimum lease payments on our lease receivables as of January 27, 2024 are summarized as follows (in millions):
Fiscal YearAmount
2024 (remaining six months)$401 
2025369 
2026125 
202791 
202868 
Thereafter45 
Total1,099 
Less: Present value of lease payments(989)
Unearned income$110 
Actual cash collections may differ from the contractual maturities due to early customer buyouts, refinancings, or defaults.
We provide financing of certain equipment through operating leases, and the amounts are included in property and equipment in the Consolidated Balance Sheets. Amounts relating to equipment on operating lease assets held by us and the associated accumulated depreciation are summarized as follows (in millions):
January 27, 2024July 29, 2023
Operating lease assets$125 $135 
Accumulated depreciation(72)(78)
Operating lease assets, net$53 $57 
Our operating lease income was $15 million and $31 million for the second quarter and first six months of fiscal 2024, respectively, and $18 million and $39 million for the corresponding periods of fiscal 2023, respectively, and was included in product revenue in the Consolidated Statements of Operations.
Minimum future rentals on noncancelable operating leases as of January 27, 2024 are summarized as follows (in millions):
Fiscal YearAmount
2024 (remaining six months)$12 
202516 
20269 
20271 
Total$38 

9.Financing Receivables
(a)Financing Receivables
Financing receivables primarily consist of loan receivables and lease receivables. Loan receivables represent financing arrangements related to the sale of our hardware, software, and services (including technical support and advanced services), and also may include additional funding for other costs associated with network installation and integration of our products and services. Loan receivables have terms of one year to three years on average. 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.
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

A summary of our financing receivables is presented as follows (in millions):
January 27, 2024Loan ReceivablesLease ReceivablesTotal
Gross$5,850 $1,099 $6,949 
Residual value— 70 70 
Unearned income (110)(110)
Allowance for credit loss(53)(16)(69)
Total, net$5,797 $1,043 $6,840 
Reported as:
Current$3,066 $410 $3,476 
Noncurrent2,731 633 3,364 
Total, net$5,797 $1,043 $6,840 
July 29, 2023Loan ReceivablesLease ReceivablesTotal
Gross$5,910 $1,015 $6,925 
Residual value— 70 70 
Unearned income (88)(88)
Allowance for credit loss(53)(19)(72)
Total, net$5,857 $978 $6,835 
Reported as:
Current$2,988 $364 $3,352 
Noncurrent2,869 614 3,483 
Total, net$5,857 $978 $6,835 
(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 27, 2024Fiscal YearSix Months Ended
Internal Credit Risk RatingPriorJuly 25, 2020July 31, 2021July 30, 2022July 29, 2023January 27, 2024Total
Loan Receivables:
1 to 4$24 $164 $552 $783 $1,243 $1,008 $3,774 
5 to 66 67