CISCO SYSTEMS INC

Previous wording

In the first quarter of fiscal 2025, we saw improvement in product demand across the majority of our geographic segments and customer markets reflecting normalizing demand patterns. We believe our customers have largely completed the installation of products from the elevated level of product shipments seen during fiscal 2024. Total revenue decreased by 6% compared with the first quarter of fiscal 2024. Excluding Splunk, total revenue decreased 14% compared with the first quarter of fiscal 2024. Within total revenue, product revenue decreased by 9% and services revenue increased by 6%. In the first quarter of fiscal 2025, total software revenue was $5.5 billion across all product areas and services, an increase of 24%, primarily driven by the contribution of Splunk. Total subscription revenue increased 21%, primarily driven by the contribution of Splunk.

Current wording

In the second quarter of fiscal 2025, we delivered strong revenue growth across all geographies and solid margins as we saw a positive demand environment. Total revenue increased by 9% compared with the second quarter of fiscal 2024. Excluding Splunk, total revenue decreased 1% compared with the second quarter of fiscal 2024. Within total revenue, product revenue increased by 11% and services revenue increased by 6%. In the second quarter of fiscal 2025, total software revenue was $5.5 billion across all product areas and services, an increase of 33%, primarily driven by the contribution of Splunk. Total subscription revenue increased 23%, primarily driven by the contribution of Splunk.

Previous wording

Total gross margin increased by 0.7 percentage points. Product gross margin increased by 0.6 percentage points, largely driven by benefits from Splunk, favorable product mix and productivity improvements, partially offset by pricing erosion. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, increased by 7.4 percentage points. Operating income as a percentage of revenue decreased by 12.2 percentage points primarily driven by incremental operating expenses from Splunk, higher restructuring and other charges of $665 million and higher amortization of purchased intangible assets in the first quarter of fiscal 2025. Diluted earnings per share decreased 24%, driven by a decrease of 25% in net income, partially offset by a decrease in diluted share count of 74 million shares.

Current wording

Total gross margin increased by 0.9 percentage points. Product gross margin increased by 1.0 percentage points, largely driven by benefits from Splunk and productivity improvements, partially offset by pricing erosion. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, increased by 1.5 percentage points. Operating income as a percentage of revenue decreased by 1.9 percentage points primarily driven by incremental operating expenses from Splunk and higher amortization of purchased intangible assets in the second quarter of fiscal 2025. Diluted earnings per share decreased 6%, driven by a decrease of 8% in net income, partially offset by a decrease in diluted share count of 68 million shares.

Previous wording

In terms of our geographic segments, revenue from the Americas decreased by $0.8 billion, EMEA revenue decreased by $76 million and APJC revenue increased by $19 million. From a customer market standpoint, we experienced product revenue declines across all of our customer markets. From a product category perspective, the product revenue decrease of 9% was driven by a decline in revenue in Networking of 23% and Collaboration of 3%. This decline was partially offset by product revenue growth in Security of 100% and Observability of 36%, each driven in large part by the contribution of Splunk.

Current wording

In terms of our geographic segments, revenue from the Americas increased by $692 million, EMEA revenue increased by $371 million and APJC revenue increased by $136 million. From a customer market standpoint, we experienced product revenue growth across all of our customer markets. From a product category perspective, the product revenue increase of 11% was driven by a growth in Security of 117%, Observability of 47% and Collaboration of 1%. This growth was partially offset by a product revenue decline in Networking of 3%. The product revenue growth in Security and Observability were each driven in large part by the contribution of Splunk.

Previous wording

The following is a summary of our other key financial measures for the first quarter of fiscal 2025 (in millions):

Current wording

The following is a summary of our other key financial measures for the second quarter of fiscal 2025 (in millions):

Previous wording

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. 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.

Current wording

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 end 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. 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.

Previous wording

Our provision for inventory was $207 million and $133 million for the first quarter of fiscal 2025 and 2024, respectively. The provision (benefit) from the liability related to purchase commitments with contract manufacturers and suppliers was a benefit of $6 million and a provision of $43 million for the first quarter of fiscal 2025 and 2024, respectively. 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. We regularly evaluate our exposure for inventory write-downs and the adequacy of our liability for purchase commitments. For further discussion around the supply chain impacts and risks, see “—Results of Operations—Gross Margin—Supply Chain Impacts and Risks” and “—Liquidity and Capital Resources—Inventory Supply Chain.”

Current wording

Our provision for inventory was $381 million and $258 million for the first six months of fiscal 2025 and 2024, respectively. The provision (benefit) from the liability related to purchase commitments with contract manufacturers and suppliers was a benefit of $24 million and a provision of $128 million for the first six months of fiscal 2025 and 2024, respectively. 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. We regularly evaluate our exposure for inventory write-downs and the adequacy of our liability for purchase commitments. For further discussion around the supply chain impacts and risks, see “—Results of Operations—Gross Margin—Supply Chain Impacts and Risks” and “—Liquidity and Capital Resources—Inventory Supply Chain.”

Previous wording

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 each of the first quarter of fiscal 2025 and 2024.

Current wording

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 each of the first six months of fiscal 2025 and 2024.

Previous wording

We are subject to income taxes in the United States and numerous foreign jurisdictions. 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 a benefit of 19.6% and a tax provision of 18.1% in the first quarter of fiscal 2025 and 2024, respectively.

Current wording

We are subject to income taxes in the United States and numerous foreign jurisdictions. 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 15.9% and 16.7% in the second quarter of fiscal 2025 and 2024, respectively and 0.3% and 17.5% in the first six months of fiscal 2025 and 2024, respectively.

Previous wording

Excluding Splunk, total revenue for the first quarter of fiscal 2025 decreased by 14% as compared with the first quarter of fiscal 2024.

Current wording

Excluding Splunk, total revenue for the second quarter and first six months of fiscal 2025 decreased by 1% and 8%, respectively, as compared with the corresponding periods of fiscal 2024.

Previous wording

Total revenue decreased by 6%. Product revenue decreased by 9% and services revenue increased by 6%. Our total revenue reflected declines in the Americas and EMEA segment, partially offset by growth in the APJC segment.

Current wording

Total revenue increased by 1%. Product revenue was flat and services revenue increased by 6%. Our total revenue reflected growth in the EMEA and APJC segments. Total revenue was flat in the Americas segment.

Previous wording

Product revenue in the Americas segment decreased by 12%, with declines across each of our customer markets. In the public sector customer market, we saw a decline in product demand due to delayed spending by our U.S. Federal customers. From a country perspective, product revenue decreased in the United States and Mexico by 13% and 23%, respectively, partially offset by growth in Canada and Brazil of 3% and 17%, respectively.

Current wording

Product revenue in the Americas segment decreased by 2%, with declines in the public sector and service provider and cloud markets, partially offset by growth in the enterprise market. From a country perspective, product revenue decreased in the United States and Mexico by 2% and 21%, respectively, partially offset by growth in product revenue in Canada and Brazil of 6% and 7%, respectively.

Previous wording

Product revenue in the EMEA segment decreased by 5%, with declines across each of our customer markets. From a country perspective, product revenue decreased in the Netherlands and Switzerland by 24% and 20%, respectively, partially offset by growth in the United Kingdom and France of 12% and 6%, respectively. Product revenue in Germany was flat.

Current wording

Product revenue in the EMEA segment increased by 11%, with growth in the public sector and enterprise markets, partially offset by a decline in the service provider and cloud market. From a country perspective, product revenue increased in Germany, the United Kingdom and France by 11%, 8% and 14%, respectively.

Previous wording

The Networking product category consists of our core networking technologies of switching, routing, wireless, and servers. Revenue from the Networking product category decreased by 23%, or $2.1 billion. Revenue declined across the portfolio as a result of product shipments returning to normalized levels during the quarter from the elevated levels of product shipments we experienced in prior quarters. Revenue declined in both campus switching and data center switching, primarily driven by declines in our Catalyst 9000 series and Nexus 9000 series offerings. We experienced a revenue decline in enterprise routing, although we saw revenue growth in our SD-WAN offerings. The decrease in wireless was primarily driven by our WiFi-6 offerings. We also saw a revenue decline in internet infrastructure.

Current wording

Revenue from the Networking product category decreased by 14%, or $2.3 billion. Revenue declined in both campus switching and data center switching, primarily driven by declines in our Catalyst 9000 series and Nexus 9000 series offerings. We experienced a revenue decline in Enterprise Routing, although we saw revenue growth in our SD-WAN offerings. The decrease in Wireless was primarily driven by our WiFi-6 products. We also saw a decline in Internet Infrastructure and Servers.

Previous wording

The Security product category consists of our Network Security, Identity and Access Management, SASE and Threat Intelligence, Detection, and Response offerings. Revenue in our Security product category increased by 100%, or $1.0 billion, primarily driven by Threat Intelligence, Detection, and Response offerings, which includes the offerings from Splunk, growth in our Network Security and SASE offerings. Excluding Splunk, product revenue in the Security product category increased 2%.

Current wording

The Security product category consists of our Network Security, Identity and Access Management, SASE and Threat Intelligence, Detection, and Response offerings. Revenue in our Security product category increased by 117%, or $1.1 billion, primarily driven by Threat Intelligence, Detection, and Response offerings, which includes the offerings from Splunk, and growth in our SASE and Network Security offerings. Excluding Splunk, product revenue in the Security product category increased 4%.

Previous wording

The Collaboration product category consists of our Webex Suite, Collaboration Devices, Contact Center and CPaaS offerings. Revenue in our Collaboration product category decreased by 3%, or $32 million, primarily driven by declines in our On-Prem Webex Suite and Collaboration Devices offerings, partially offset by growth in our Contact Center and CPaaS offerings.

Current wording

The Collaboration product category consists of our Webex Suite, Collaboration Devices, Contact Center and CPaaS offerings. Revenue in our Collaboration product category increased by 1%, or $7 million, primarily driven by growth in our Contact Center, CPaaS and Collaboration Devices offerings, partially offset by declines in our On-Prem Webex Suite offerings.

Previous wording

The Observability product category consists of our network assurance, monitoring and analytics and observability suite offerings. Revenue in our Observability product category increased 36%, or $68 million, driven by our Observability Suite and growth in our Network Assurance offerings. Excluding Splunk, product revenue in the Observability product category increased 1%.

Current wording

The Observability product category consists of our network assurance, monitoring and analytics and observability suite offerings. Revenue in our Observability product category increased 47%, or $89 million, primarily driven by our Observability Suite offerings. Excluding Splunk, revenue in the Observability product category increased 3%.

Previous wording

Services revenue increased 6% in the first quarter of fiscal 2025 compared with the first quarter of fiscal 2024, primarily driven by Splunk and revenue growth in our software support offerings, solution support offerings, and advisory services. Services revenue increased across all of our geographic segments for the first quarter of fiscal 2025.

Current wording

Services revenue increased 6% in the second quarter of fiscal 2025 compared with the second quarter of fiscal 2024, primarily driven by Splunk and advisory services. Services revenue increased across all of our geographic segments for the second quarter of fiscal 2025.

Previous wording

The following table summarizes the key factors that contributed to the change in product gross margin percentage for the first quarter of fiscal 2025, as compared with the corresponding prior year periods:

Current wording

The following table summarizes the key factors that contributed to the change in product gross margin percentage for the second quarter and first six months of fiscal 2025, as compared with the corresponding prior year periods:

Previous wording

Product gross margin increased by 0.6 percentage points primarily driven by benefits from Splunk, favorable product mix and productivity benefits, largely driven by an import duty benefit, partially offset by negative impacts from pricing and the amortization of purchased intangible assets primarily related to Splunk.

Current wording

Product gross margin increased by 0.7 percentage points primarily driven by benefits from Splunk, favorable product mix, and productivity benefits, driven by an import duty benefit, partially offset by negative impacts from pricing and the amortization of purchased intangible assets primarily related to Splunk.

Previous wording

Our services gross margin percentage increased by 0.7 percentage points primarily due to higher sales volume, partially offset by higher headcount-related costs, unfavorable mix of service offerings and to a lesser extent, higher delivery costs.

Current wording

Our services gross margin percentage increased by 0.7 percentage points primarily due to higher sales volume and lower delivery costs, partially offset by higher headcount-related costs and an unfavorable mix of service offerings.

Previous wording

Gross margin percentage in our EMEA segment increased primarily due to favorable product mix and higher services gross margin, partially offset by pricing erosion.

Current wording

Gross margin percentage in our EMEA segment increased primarily due to favorable product mix, productivity improvements and higher services gross margin, partially offset by pricing erosion.

Previous wording

The APJC segment gross margin percentage decrease was primarily due to pricing erosion, and to a lesser extent, unfavorable product mix, partially offset by positive impacts from productivity improvements.

Current wording

The slight increase in the APJC segment gross margin percentage was primarily due to favorable product mix and positive impacts from productivity improvements, partially offset by pricing erosion.

Previous wording

G&A expenses increased due to incremental expenses from Splunk, higher headcount-related expenses and higher acquisition-related costs, partially offset by lower contracted services spending.

Current wording

G&A expenses increased due to incremental expenses from Splunk, higher headcount-related expenses, higher share-based compensation expense and higher acquisition and divestitures related costs, partially offset by lower contracted services spending.

Previous wording

In the first quarter of fiscal 2025, foreign currency fluctuations, net of hedging, increased the combined R&D, sales and marketing, and G&A expenses by approximately $8 million, or 0.2%, compared with the first quarter of fiscal 2024.

Current wording

In the second quarter of fiscal 2025, foreign currency fluctuations, net of hedging, decreased the combined R&D, sales and marketing, and G&A expenses by approximately $20 million, or 0.4%, compared with the second quarter of fiscal 2024.

Previous wording

For the first quarter of fiscal 2025, the increase in amortization of purchased intangible assets was primarily due to amortization of purchased intangibles from our recent acquisitions, including the acquisition of Splunk. The increase was partially offset by certain purchased intangible assets that became fully amortized.

Current wording

For each of the second quarter and first six months of fiscal 2025, the increase in amortization of purchased intangible assets was primarily due to amortization of purchased intangibles from our recent acquisitions, including the acquisition of Splunk, and impairment charges of $19 million. The increase was partially offset by certain purchased intangible assets that became fully amortized. The impairment charges were as a result of declines in estimated fair value resulting from the reductions in or the elimination of expected future cash flows associated with certain technology intangible assets.

Previous wording

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. 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 $665 million in the first quarter of fiscal 2025. We expect this plan to be substantially completed by the end of fiscal 2025.

Current wording

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. 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 $10 million and $675 million in the second quarter and first six months of fiscal 2025. We expect this plan to be substantially completed by the end of fiscal 2025.

Previous wording

Operating income decreased by 45%, and operating income as a percentage of revenue decreased by 12.2 percentage points. These changes were primarily from a revenue decrease, incremental expenses from Splunk, higher restructuring and other charges and higher amortization of purchased intangible assets, partially offset by a gross margin percentage increase (driven by favorable product mix and productivity improvements, partially offset by pricing erosion).

Current wording

Operating income decreased by 26%, and operating income as a percentage of revenue decreased by 7.1 percentage points. These changes resulted primarily from incremental expenses from Splunk, higher restructuring and other charges and higher amortization of purchased intangible assets, partially offset by a revenue increase and gross margin percentage increase (driven by favorable product mix and productivity improvements, partially offset by pricing erosion).

Previous wording

For the first quarter of fiscal 2025, the decrease in interest income was driven by a lower average balance of cash and available-for-sale debt investments. The increase in interest expense was primarily driven by the issuances of senior notes and commercial paper.

Current wording

For each of the second quarter and first six months of fiscal 2025, the decrease in interest income was driven by a lower average balance of cash and available-for-sale debt investments and lower interest rates. The increase in interest expense was primarily driven by the issuances of senior notes and commercial paper.

Previous wording

The change in our other income (loss), net was primarily driven by net gains on our privately held investments and marketable equity investments and unfavorable impacts from foreign exchange.

Current wording

The change in our other income (loss), net was primarily driven by lower impairment charges on our privately held investments, and higher unrealized gains on our privately held investments and marketable equity investments.

Previous wording

The provision for (benefit from) income taxes resulted in an effective tax rate of (19.6)% for the first quarter of fiscal 2025 compared with an effective tax rate of 18.1% for the first quarter of fiscal 2024. The decrease in the effective tax rate was primarily due to a $720 million benefit related to a U.S. Tax Court opinion issued during the quarter regarding the U.S. taxation of deemed foreign dividends in the transition year of the Tax Cuts and Jobs Act (our fiscal 2018).

Current wording

The provision for income taxes resulted in an effective tax rate of 0.3% for the first six months of fiscal 2025 compared with 17.5% for the first six months of fiscal 2024. The decrease in the effective tax rate was primarily due to a $720 million benefit related to a U.S. Tax Court opinion issued during the first quarter of fiscal 2025 regarding the U.S. taxation of deemed foreign dividends in the transition year of the Tax Cuts and Jobs Act (our fiscal 2018) and an increase in the U.S. federal research tax credit benefit.

Previous wording

The net increase in cash and cash equivalents and investments in the first quarter of fiscal 2025 was primarily driven by net cash provided by operating activities of $3.7 billion and net issuances of commercial paper of $1.0 billion. These sources of cash were partially offset by cash returned to stockholders in the form of cash dividends of $1.6 billion and repurchases of common stock of $2.0 billion, net cash paid for acquisitions and divestitures of $0.2 billion and capital expenditures of $0.2 billion.

Current wording

The net decrease in cash and cash equivalents and investments in the first six months of fiscal 2025 was primarily driven by cash returned to stockholders in the form of repurchases of common stock of $3.2 billion and cash dividends of $3.2 billion, capital expenditures of $0.4 billion and net cash paid for acquisitions and divestitures of $0.3 billion. These uses of cash were partially offset by net cash provided by operating activities of $5.9 billion.

Previous wording

On November 13, 2024, our Board of Directors declared a quarterly dividend of $0.40 per common share to be paid on January 22, 2025, to all stockholders of record as of the close of business on January 3, 2025. Future dividends will be subject to the approval of our Board of Directors.

Current wording

On February 12, 2025, our Board of Directors declared a quarterly dividend of $0.41 per common share to be paid on April 23, 2025, to all stockholders of record as of the close of business on April 3, 2025. Future dividends will be subject to the approval of our Board of Directors.

Previous wording

The remaining authorized amount for stock repurchases under this program is approximately $3.2 billion, with no termination date.

Current wording

On February 12, 2025, our Board of Directors authorized a $15 billion increase to the stock repurchase program. The remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $17 billion, with no termination date.

Previous wording

Our accounts receivable net, as of October 26, 2024 decreased by approximately 33%, as compared with the end of fiscal 2024, primarily due to timing and amount of product and service billings in the first quarter of fiscal 2025 compared with the fourth quarter of fiscal 2024.

Current wording

Our accounts receivable net, as of January 25, 2025 decreased by approximately 15%, as compared with the end of fiscal 2024, primarily due to timing and amount of product and service billings in the second quarter of fiscal 2025 compared with the fourth quarter of fiscal 2024.

Previous wording

Inventory as of October 26, 2024 decreased by 7% and inventory purchase commitments with contract manufacturers and suppliers increased by 3% from our balances at the end of fiscal 2024. The combined decrease of 1% in our inventory and inventory purchase commitments as compared with the end of fiscal 2024 was primarily due to our continued efforts to work with contract manufacturers and suppliers to optimize our inventory and purchase commitment levels.

Current wording

Inventory as of January 25, 2025 decreased by 13% and inventory purchase commitments with contract manufacturers and suppliers increased by 13% from our balances at the end of fiscal 2024. The combined increase in our inventory and inventory purchase commitments was 3% as compared with the end of fiscal 2024.

Previous wording

Financing Receivables Our financing arrangements include loans and leases. Our loan receivables include customer financing for purchases of our hardware, software and services (including technical support and advanced services), and also may include additional funds for other costs associated with network installation and integration of our products and services. Lease receivables include sales-type leases. Arrangements related to leases are generally collateralized by a security interest in the underlying assets. Financing receivables decreased by 3% as compared with the end of fiscal 2024.

Current wording

Financing Receivables Our financing arrangements include loans and leases. Our loan receivables include customer financing for purchases of our hardware, software and services (including technical support and advanced services), and also may include additional funds for other costs associated with network installation and integration of our products and services. Lease receivables include sales-type leases. Arrangements related to leases are generally collateralized by a security interest in the underlying assets. Financing receivables decreased by 6% as compared with the end of fiscal 2024.

Previous wording

The volume of channel partner financing was $6.0 billion and $8.2 billion for the first quarter of fiscal 2025 and 2024, 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 $1.1 billion and $1.2 billion as of October 26, 2024 and July 27, 2024, respectively. 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. 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. As of October 26, 2024, the total maximum potential future payments related to these guarantees was approximately $123 million, of which approximately $12 million was recorded as deferred revenue.

Current wording

The volume of channel partner financing was $12.2 billion and $14.8 billion for the first six months of fiscal 2025 and 2024, 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 January 25, 2025 and July 27, 2024, respectively. 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. 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. As of January 25, 2025, the total maximum potential future payments related to these guarantees was approximately $125 million, of which approximately $13 million was recorded as deferred revenue.

Previous wording

Commercial Paper We have a short-term debt financing program in which up to $15.0 billion is available through the issuance of commercial paper notes. We use the proceeds from the issuance of commercial paper notes for general corporate purposes. We had $11.9 billion and $10.9 billion in commercial paper notes outstanding as of October 26, 2024 and July 27, 2024, respectively.

Current wording

Commercial Paper We have a short-term debt financing program in which up to $15.0 billion is available through the issuance of commercial paper notes. We use the proceeds from the issuance of commercial paper notes for general corporate purposes. We had $10.9 billion in commercial paper notes outstanding as of each of January 25, 2025 and July 27, 2024.

Previous wording

Total remaining performance obligations as of October 26, 2024 decreased 3% compared to the end of fiscal 2024. Remaining performance obligations for product decreased by 1% compared to the end of fiscal 2024. Remaining performance obligations for services decreased by 4%. We expect approximately 51% of total remaining performance obligations to be recognized as revenue over the next 12 months.

Current wording

Total remaining performance obligations as of January 25, 2025 increased 1% compared to the end of fiscal 2024. Remaining performance obligations for product increased by 1% compared to the end of fiscal 2024. Remaining performance obligations for services were flat. We expect approximately 51% of total remaining performance obligations to be recognized as revenue over the next 12 months.

Previous wording

Total deferred revenue decreased 3% compared to the end of fiscal 2024. The decrease in deferred product revenue of 2% was primarily due to lower business volume. The decrease in deferred services revenue of 5% was driven by lower business volume and ongoing amortization of deferred services revenue.

Current wording

Total deferred revenue decreased 2% compared to the end of fiscal 2024. The decrease in deferred product revenue of 1% was primarily due to lower business volume. The decrease in deferred services revenue of 3% was driven by lower business volume and ongoing amortization of deferred services revenue.