CISCO SYSTEMS INC
For the period ended Apr 26, 2025. Filed May 20, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Apr 26, 2025 · Filed May 20, 2025
CSCO$93.85-2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-01-25; filed 2025-02-18.
0000858877-25-000007
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-04-26; filed 2025-05-20.
0000858877-25-000033
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 185 previous paragraphs and 185 current paragraphs.
114 unchanged; 59 reworded; 11 added; 11 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 27 previous and 27 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Total revenue increased by 5%, with product and services revenue each increasing by 5%, driven by Splunk. Our total revenue reflected growth across each of our geographic segments.
Current report
Product revenue in the Americas segment increased by 19%, with growth across each of our customer markets. From a country perspective, product revenue increased in the United States, Brazil, and Canada by 21%, 13%, and 1%, respectively, partially offset by a decline in Mexico of 7%.
Current report
The APJC segment had a slight gross margin percentage decrease driven primarily by pricing erosion and lower services gross margin, partially offset by positive impacts from productivity improvements and favorable product mix.
Current report
R&D expenses increased primarily due to higher headcount-related expenses, higher share-based compensation expense, and higher cash compensation expenses from acquisitions.
Current report
Sales and marketing expenses increased primarily due to higher headcount-related expenses, higher discretionary spending, and higher cash compensation expenses from acquisitions, partially offset by lower contracted services spending.
Current report
G&A expenses were flat primarily due to higher headcount-related expenses, higher discretionary spending, and higher share-based compensation expense, offset by lower acquisition-related costs and lower contracted services spending.
Current report
The decrease in amortization of purchased intangible assets was primarily due to lower impairment charges related to purchased intangible assets for the current period. Impairment charges related to purchased intangible assets were $139 million for the third quarter of fiscal 2024.
Current report
In the third quarter of fiscal 2024, we initiated a restructuring plan in order to realign the organization and enable further investment in key priority areas. In connection with this restructuring plan, we incurred charges of $542 million in the third quarter and the first nine months of fiscal 2024. This plan was completed in fiscal 2024.
Current report
Operating income increased by 46%, and operating income as a percentage of revenue increased by 5.4 percentage points. These changes primarily resulted from a revenue increase, a higher gross margin percentage, and lower restructuring and other charges.
Current report
Operating income decreased by 9%, and operating income as a percentage of revenue decreased by 3.1 percentage points. These changes resulted primarily from higher cash compensation expenses from acquisitions, higher amortization of purchased intangible assets, and higher share-based compensation expense in the first nine months of fiscal 2025.
Current report
In February 2025, we issued senior notes for an aggregate principal amount of $5.0 billion.
Removed paragraphs (11)
Previous report
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 report
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 report
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 report
The APJC segment gross margin percentage decrease was primarily driven by pricing erosion, partially offset by favorable product mix.
Previous report
R&D expenses increased due to incremental expenses from Splunk, higher headcount-related expenses, higher cash compensation from acquisitions, higher share-based compensation expense and higher discretionary spending.
Previous report
Sales and marketing expenses increased primarily due to incremental expenses from Splunk, higher headcount-related expenses, higher cash compensation from acquisitions and higher discretionary spending, partially offset by lower contracted services spending.
Previous report
G&A expenses increased primarily due to incremental expenses from Splunk, higher headcount-related expenses and higher share-based compensation expense.
Previous report
Operating income increased by 1%, and operating income as a percentage of revenue decreased by 1.9 percentage points. The increase in operating income was primarily due to a revenue increase partially offset by higher operating expenses, including incremental expenses from Splunk, and higher amortization of purchased intangible assets. The decrease in operating income as a percentage of revenue was primarily due to an operating expenses percentage increase.
Previous report
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 report
Transition Tax Payable
Previous report
The income tax payable outstanding as of January 25, 2025 for the U.S. transition tax on accumulated earnings for foreign subsidiaries was $1.6 billion, which is payable in the second quarter of fiscal 2026.
Reworded paragraphs (59)
Previous 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.
Current wording
In the third 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 11% compared with the third quarter of fiscal 2024. Our results for the third quarter of fiscal 2025 include a full quarter of Splunk's results compared to six weeks for the third quarter of fiscal 2024. Within total revenue, product revenue increased by 15% and services revenue increased by 3%. In the third quarter of fiscal 2025, total software revenue was $5.6 billion across all product areas and services, an increase of 25%, primarily driven by the contribution of Splunk. Total subscription revenue increased 15%, primarily driven by the contribution of Splunk.
Previous 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.
Current wording
Total gross margin increased by 0.5 percentage points. Product gross margin increased by 0.9 percentage points, primarily driven by benefits from productivity improvements and Splunk, partially offset by pricing erosion. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, decreased by 0.3 percentage points. Operating income as a percentage of revenue increased by 5.4 percentage points primarily driven by lower restructuring and other charges and the gross margin improvement in the third quarter of fiscal 2025. Diluted earnings per share increased 35%, driven by an increase of 32% in net income and a decrease in diluted share count of 58 million shares.
Previous 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.
Current wording
In terms of our geographic segments, revenue from the Americas increased by $1.0 billion, EMEA revenue increased by $278 million and APJC revenue increased by $161 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 15% was driven by growth in Networking of 8%, Security of 54%, Observability of 24% and Collaboration of 4%. The product revenue growth in Security and Observability were each driven in large part by the contribution of Splunk.
Previous wording
While we continue to operate in a highly competitive environment and the overall macroeconomic environment remains challenging and uncertain, we plan to continue to invest in key priority areas with the objective of driving profitable growth over the long term. We remain focused on delivering innovation across our technologies to assist our customers in executing on their digital transformations and on accelerating innovation across our portfolio. We believe that we are making progress on our strategic priorities.
Current wording
We continue to operate in a highly competitive environment and the overall macroeconomic environment remains challenging and uncertain, especially with respect to tariffs and trade policy. Despite this uncertainty, we plan to continue to invest in key priority areas with the objective of driving profitable growth over the long term. We remain focused on delivering innovation across our technologies to assist our customers in executing on their digital transformations and on accelerating innovation across our portfolio. We believe that we are making progress on our strategic priorities.
Previous wording
Total revenue increased 1%, with product revenue flat and service revenue increasing 6%. Total gross margin increased 0.8 percentage points due to benefits from Splunk, productivity improvements and favorable product mix, partially offset by pricing erosion. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, increased by 4.6 percentage points. Operating income as a percentage of revenue decreased by 7.1 percentage points primarily due to incremental operating expenses from Splunk, restructuring and other charges of $675 million and higher amortization of purchased intangibles in the first six months of fiscal 2025. Diluted earnings per share decreased 17%, driven by a decrease of 18% in net income, partially offset by a decrease in diluted share count of 71 million shares.
Current wording
Total revenue increased 5%, with product revenue and service revenue each increasing by 5%, driven by Splunk. Total gross margin increased 0.6 percentage points due to benefits from Splunk, productivity improvements, and favorable product mix, partially offset by pricing erosion. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, increased by 3.0 percentage points. Operating income as a percentage of revenue decreased by 3.1 percentage points primarily due to increases in cash compensation expenses from acquisitions, amortization of purchased intangible assets, and share-based compensation expense in the first nine months of fiscal 2025. Diluted earnings per share decreased 5%, driven by a decrease of 6% in net income, partially offset by a decrease in diluted share count of 67 million shares.
Previous wording
The following is a summary of our other key financial measures for the second quarter of fiscal 2025 (in millions):
Current wording
The following is a summary of our other key financial measures for the third quarter of fiscal 2025 (in millions):
Previous 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.”
Current wording
Our provision for inventory was $593 million and $348 million for the first nine 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 $134 million and a provision of $213 million for the first nine 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 six months 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 nine 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 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.
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 15.5% and 15.6% in the third quarter of fiscal 2025 and 2024, respectively and 5.8% and 17.1% in the first nine months of fiscal 2025 and 2024, respectively.
Previous wording
Total revenue increased by 9%. Product revenue increased by 11% and services revenue increased by 6%. Our total revenue reflected growth across each of our geographic segments.
Current wording
Total revenue increased by 11%. Product revenue increased by 15% and services revenue increased by 3%. Our total revenue reflected growth across each of our geographic segments.
Previous wording
Product revenue in the Americas segment increased by 11%, with growth in the enterprise and service provider and cloud markets, partially offset by a decline in the public sector market. From a country perspective, product revenue increased in the United States and Canada by 12% and 9%, respectively, partially offset by declines in Brazil and Mexico of 3% and 19%, respectively.
Current wording
Product revenue in the Americas segment increased by 4%, with growth in the enterprise market, partially offset by declines in the public sector and service provider and cloud markets. From a country perspective, product revenue increased in the United States, Canada, and Brazil by 5%, 4%, and 9%, respectively, partially offset by a decline in product revenue in Mexico of 17%.
Previous 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.
Current wording
Product revenue in the EMEA segment increased by 9%, with growth in the enterprise and public sector markets, partially offset by a decline in the service provider and cloud market. From a country perspective, product revenue increased in Saudi Arabia, the United Kingdom and Germany by 20%, 9% and 5%, respectively.
Previous wording
Product revenue in the EMEA segment increased by 2%, driven by 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 by 5%, and by 10% in each of the United Kingdom and France.
Current wording
Product revenue in the EMEA segment increased by 4%, driven by 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 the United Kingdom, France, and Germany by 10%, 7%, and 5%, respectively.
Previous wording
Product revenue in the APJC segment increased by 3%, with growth in the public sector and service provider and cloud markets. Product revenue in the enterprise market was flat. From a country perspective, product revenue increased in Japan, Australia, India and China by 14%, 17%, 5% and 8%, respectively.
Current wording
Product revenue in the APJC segment increased by 12%, with growth in the enterprise and service provider and cloud markets, partially offset by a slight decline in the public sector market. From a country perspective, product revenue increased in Japan, Australia, India and China by 9%, 24%, 2%, and 9%, respectively.
Previous wording
Product revenue in the APJC segment increased by 9%, with growth across each of our customer markets. From a country perspective, product revenue increased in Japan, Australia, India and China by 10%, 16%, 23% and 23%, respectively.
Current wording
Product revenue in the APJC segment increased by 6%, with growth across each of our customer markets. From a country perspective, product revenue increased in Japan, Australia, India and China by 12%, 19%, 4%, and 8%, 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 3%, or $231 million, as the second quarter of fiscal 2024 included the remaining elevated levels of product shipments. We experienced a revenue decline in Servers, partially offset by growth in Wireless and Switching.
Current wording
The Networking product category consists of our core networking technologies of switching, routing, wireless, and servers. Revenue from the Networking product category increased by 8%, or $546 million. We experienced double digit revenue growth in Switching and Enterprise Routing. We also experienced revenue growth in Internet Infrastructure and Wireless, partially offset by a revenue decline in Servers.
Previous 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.
Current wording
Revenue from the Networking product category decreased by 8%, or $1.8 billion. Revenue declined in Switching, as a result of a decline in campus switching, primarily driven by a decline in our Catalyst 9000 series offerings. We also experienced revenue declines in Servers, Internet Infrastructure, Enterprise Routing, and Wireless.
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 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%.
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 54%, or $709 million, primarily driven by Threat Intelligence, Detection, and Response offerings, which includes the offerings from Splunk, and growth in our SASE offerings.
Previous wording
Revenue from the Security product category increased by 108%, or $2.1 billion, primarily driven by Threat Intelligence, Detection, and Response offerings, which includes the offerings from Splunk, and to a lesser extent, growth in our SASE and Network Security offerings. Excluding Splunk, product revenue in the Security product category increased 3%.
Current wording
Revenue from the Security product category increased by 87%, or $2.9 billion, primarily driven by Threat Intelligence, Detection, and Response offerings, which includes the offerings from Splunk, and to a lesser extent, growth in our SASE and Network Security offerings.
Previous 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.
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 4%, or $44 million, primarily driven by growth in our Collaboration Devices, CPaaS, and Webex Suite offerings.
Previous wording
Revenue from our Collaboration product category decreased by 1%, or $25 million, primarily driven by declines in our On-Prem Webex Suite offerings, partially offset by growth in our Contact Center and CPaaS offerings.
Current wording
Revenue from our Collaboration product category increased by 1%, or $19 million, primarily driven by revenue growth in our Collaboration Devices, CPaaS and Contact Center offerings, partially offset by a decline in our 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 47%, or $89 million, primarily driven by our Observability Suite offerings. Excluding Splunk, revenue in the Observability product category increased 3%.
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 24%, or $50 million, primarily driven by our Observability Suite offerings from Splunk and growth in our ThousandEyes network services offerings, partially offset by a decline in monitoring and analytics.
Previous wording
Revenue from the Observability product category increased by 42%, or $157 million, driven by primarily by our Observability Suite offerings. Excluding Splunk, revenue in the Observability product category increased 2%.
Current wording
Revenue from the Observability product category increased by 35%, or $207 million, driven by primarily by our Observability Suite offerings from Splunk and growth in our ThousandEyes network services offerings, partially offset by a decline in monitoring and analytics.
Previous 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.
Current wording
Services revenue increased 3% in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024, primarily driven by Splunk. Services revenue increased across all of our geographic segments for the third quarter of fiscal 2025.
Previous wording
Services revenue increased 6% in the first six months of fiscal 2025 compared to the first six months of fiscal 2024, primarily driven by Splunk and revenue growth in our solution support offerings, network support offerings and advisory services. Services revenue increased across each of our geographic segments.
Current wording
Services revenue increased 5% in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024, primarily driven by Splunk and revenue growth in our solution support offerings, network support offerings and advisory services. Services revenue increased across each of our geographic segments.
Previous 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:
Current wording
The following table summarizes the key factors that contributed to the change in product gross margin percentage for the third quarter and first nine months of fiscal 2025, as compared with the corresponding prior year periods:
Previous 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.
Current wording
Product gross margin increased by 0.9 percentage points primarily driven by benefits from productivity improvements and Splunk, partially offset by negative impacts from pricing.
Previous wording
Product gross margin increased by 1.0 percentage points primarily driven by favorable product mix largely due to benefits from Splunk and productivity benefits, 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 0.8 percentage points primarily driven by benefits from Splunk, productivity improvements, and favorable product mix, partially offset by negative impacts from pricing and the amortization of purchased intangible assets primarily related to Splunk.
Previous wording
In past periods, we took multiple actions in order to mitigate component shortages and address significant supply constraints. These supply constraints resulted in the need to secure long-term supply and increased inventory supply chain balances compared to historical levels. This in turn has significantly increased our supply chain exposure, which has resulted in negative impacts to our product gross margin in recent periods and may result in further negative impacts in future periods. This exposure includes potential material excess and obsolete or other charges if product demand significantly decreases for a sustained duration, we are unable to generate demand for certain products planned for development, or we are unable to mitigate the remaining supply chain exposures.
Current wording
In past periods, we took multiple actions in order to mitigate component shortages and address significant supply constraints. These supply constraints resulted in the need to secure long-term supply and increased inventory supply chain balances compared to historical levels. This in turn has significantly increased our supply chain exposure, which has resulted in negative impacts to our product gross margin in recent periods and may result in further negative impacts in future periods. This exposure includes potential material excess and obsolete or other charges if product demand significantly decreases for a sustained duration, we are unable to generate demand for certain products planned for development, or we are unable to mitigate the remaining supply chain exposures. Additionally, while we are exposed to new and proposed tariffs and other trade policies, the extent of such exposure is uncertain but could be significant if the exposure remains and we are unable to mitigate it.
Previous 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.
Current wording
Our services gross margin percentage decreased by 0.5 percentage points primarily due to higher headcount-related costs, partially offset by increased volume and lower delivery costs.
Previous wording
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.
Current wording
Services gross margin percentage increased by 0.3 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
We experienced a gross margin percentage increase in our Americas segment due to favorable product mix, positive impacts from productivity improvements and higher services gross margin, partially offset by pricing erosion.
Current wording
We experienced a slight gross margin percentage decrease in our Americas segment due to pricing erosion and unfavorable product mix, partially offset by positive impacts from productivity improvements.
Previous 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.
Current wording
Gross margin percentage in our EMEA segment increased primarily due to productivity improvements and favorable product mix, partially offset by pricing erosion.
Previous 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.
Current wording
The slight decrease in the APJC segment gross margin percentage was primarily due to pricing erosion and lower services gross margin, partially offset by positive impacts from favorable product mix and productivity improvements.
Previous wording
The Americas segment had a gross margin percentage increase driven by favorable product mix, and to a lesser extent, positive impacts from productivity improvements, partially offset by pricing erosion.
Current wording
The Americas segment had a gross margin percentage increase driven by positive impacts from productivity improvements and favorable product mix, partially offset by pricing erosion.
Previous wording
The gross margin percentage increase in our EMEA segment was primarily due to favorable product mix and positive impacts from productivity improvements, partially offset by pricing erosion.
Current wording
The gross margin percentage increase in our EMEA segment was primarily due to positive impacts from favorable product mix and productivity improvements, partially offset by pricing erosion.
Previous wording
R&D expenses increased due to incremental expenses from Splunk, higher headcount-related expenses, higher cash compensation from acquisitions, higher share-based compensation expense, and higher discretionary spending.
Current wording
R&D expenses increased primarily due to higher headcount-related expenses, higher cash compensation expenses from acquisitions, higher share-based compensation expense and higher discretionary spending.
Previous wording
Sales and marketing expenses increased primarily due to incremental expenses from Splunk, higher headcount-related expenses, higher cash compensation from acquisitions, higher discretionary spending and higher share-based compensation expense, partially offset by lower contracted services spending.
Current wording
Sales and marketing expenses increased primarily due to higher headcount-related expenses, higher cash compensation expenses from acquisitions, higher discretionary spending, and higher share-based compensation expense, partially offset by lower contracted services spending.
Previous 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.
Current wording
G&A expenses increased primarily due to higher headcount-related expenses, higher share-based compensation expense, and higher discretionary spending, partially offset by lower acquisition-related costs and lower contracted services spending.
Previous 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.
Current wording
In the third quarter of fiscal 2025, foreign currency fluctuations, net of hedging, decreased the combined R&D, sales and marketing, and G&A expenses by approximately $39 million, or 0.7%, compared with the third quarter of fiscal 2024.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
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 driven by higher interest expense from issuances of senior notes, partially offset by lower interest expense on commercial paper.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
We expect to reinvest substantially all of the cost savings from this restructuring plan in our key growth opportunities. As a result, the overall cost savings from this restructuring plan is not expected to be material for future periods.