CISCO SYSTEMS, INC.

Previous wording

Cisco designs and sells a broad range of technologies that help to power, secure, and draw insights from the Internet. We are integrating artificial intelligence (AI) into our product portfolios across networking, security, collaboration and observability to simplify how our technology is delivered, managed and optimized and to help customers maximize the business value of their technology investments and accelerate their digital transformation.

Current wording

Cisco designs and sells a broad range of technologies that help to power, secure, and draw insights from the Internet. We are incorporating artificial intelligence (AI) into our product portfolios across networking, security, collaboration and observability as well as integrating our products more tightly together. We are simplifying how our technology is delivered, managed and optimized and helping customers maximize the business value of their technology investments.

Previous 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.

Current wording

In the first quarter of fiscal 2026, we delivered strong revenue growth across all geographies and solid margins as we saw a positive demand environment. Total revenue increased by 8% compared with the first quarter of fiscal 2025, driven by revenue from Networking, particularly within our AI Infrastructure and Campus Networking solutions. Within total revenue, product revenue increased by 10% and services revenue increased by 2%. In the first quarter of fiscal 2026, total software revenue was $5.7 billion across all product areas and services, an increase of 3%. Total subscription revenue increased 2%.

Previous 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.

Current wording

Total gross margin decreased by 0.4 percentage points. Product gross margin decreased by 0.6 percentage points, primarily driven by negative impacts from product mix and pricing, partially offset by productivity improvements and lower amortization of purchased intangible assets. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, decreased by 1.8 percentage points. Operating income as a percentage of revenue increased by 5.6 percentage points primarily driven by lower restructuring and other charges and revenue growth in the first quarter of fiscal 2026. Diluted earnings per share increased 6%, driven by the revenue growth and operating margin improvement, partially offset by the income tax benefit of $720 million we had in the first quarter of fiscal 2025.

Previous 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.

Current wording

In terms of our geographic segments, revenue from the Americas increased by $0.7 billion, EMEA revenue increased by $0.2 billion and APJC revenue increased by $0.1 billion. 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 10% was driven by growth in Networking of 15% and Observability of 6%, partially offset by declines in Collaboration of 3% and Security of 2%.

Previous 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.

Current wording

We continue to operate in a highly competitive environment, and one that is complex especially with respect to tariffs and trade policy. 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

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

Current wording

The following is a summary of our other key financial measures for the first quarter of fiscal 2026 (in millions):

Previous wording

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 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.

Current wording

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, resulting in contracts that 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 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.

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 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.

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 customers that we sell to directly. 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 customers under these programs were to deviate significantly from our estimates, which are based on historical experience, our revenue could be adversely affected.

Previous wording

Inventory is written down based on excess and obsolete inventories, determined primarily by future demand forecasts. Inventory write-downs are measured as the difference between the cost of the inventory and net realizable value, based upon assumptions about future demand, and are charged to the provision for inventory, which is a component of our cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Current wording

Inventory is written down based on excess and obsolete inventories, determined primarily by future demand forecasts. Inventory write-downs are measured as the difference between the cost of the inventory and net realizable value, based upon assumptions about future demand, and are charged to the provision for inventory. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Previous wording

We record a liability for firm, noncancelable, and unconditional purchase commitments with contract manufacturers and suppliers for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory.

Current wording

We record a provision for firm, noncancelable, and unconditional purchase commitments with contract manufacturers and suppliers for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. Both provisions are a component of cost of sales.

Previous 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.”

Current wording

Our total provisions for inventory and the liability related to purchase commitments with contract manufacturers and suppliers were $63 million and $201 million for the first quarter of fiscal 2026 and 2025, respectively. If there were to be a sudden and significant decrease in demand for our products, or a higher incidence of inventory obsolescence because of rapidly changing technology or customer requirements, then 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 nine 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 quarter of fiscal 2026 and 2025.

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 15.5% 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.

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 a tax provision of 15.7% and a benefit of 19.6% in the first quarter of fiscal 2026 and 2025, respectively.

Previous wording

Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. Although we believe our reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in our historical income tax provisions and accruals. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties.

Current wording

Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. Although we believe our reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in our historical income tax provisions and accruals. We adjust these reserves due to changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, and the related net interest and penalties.

Previous 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.

Current wording

Total revenue increased by 8%. Product revenue increased by 10% and services revenue increased by 2%. Our total revenue reflected growth across each of our geographic segments.

Previous wording

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 wording

Product revenue in the Americas segment increased by 12%, with growth across each of our customer markets, led by the Service Provider and Cloud customer market which was largely driven by revenue from our AI Infrastructure solutions. From a country perspective, product revenue increased in the United States and Mexico by 13% and 25%, respectively, partially offset by declines in Brazil and Canada of 28% and 3%, respectively.

Previous 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.

Current wording

Product revenue in the EMEA segment increased by 6%, with growth across each of our customer markets. From a country perspective, product revenue increased in the Netherlands, United Kingdom and Saudi Arabia by 35%, 6% and 9%, respectively.

Previous 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.

Current wording

Product revenue in the APJC segment increased by 7%, with growth across each of our customer markets. From a country perspective, product revenue increased in Japan, Singapore and China by 12%, 50%, and 15%, respectively, partially offset by a decline in Australia of 11%.

Previous 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.

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 15%, or $1.0 billion. The increase was primarily driven by double digit revenue growth in Service Provider Routing, particularly within our AI Infrastructure solutions, Data Center Switching, and Enterprise Routing. We also experienced revenue growth in Campus Switching.

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 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.

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 decreased by 2%, or $37 million. The decline was driven in part due to a change in how our customers consumed Splunk offerings, shifting from fewer on-premise deals to more cloud subscriptions. We also experienced a revenue decline in our prior generation products. These declines were partially offset by growth in Secure Firewall, Duo, and SASE 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 4%, or $44 million, primarily driven by growth in our Collaboration Devices, CPaaS, and 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 decreased by 3%, or $30 million, primarily driven by declines in our Devices and 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 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.

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 by 6%, or $16 million, primarily driven by growth in ThousandEyes.

Previous 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.

Current wording

Services revenue increased 2% in the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025, with the growth driven by higher revenue from professional and support services. Services revenue increased across all of our geographic segments for the first quarter of fiscal 2026.

Previous 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:

Current wording

The following table summarizes the key factors that contributed to the change in product gross margin percentage for the first quarter of fiscal 2026, as compared with the corresponding prior year period:

Previous wording

(1) Productivity includes overall manufacturing-related costs, such as component costs, warranty expense, provision for inventory, freight, logistics, shipment volume, and other items not categorized elsewhere.

Current wording

(1) Productivity includes overall manufacturing-related costs, such as component costs, warranty expense, provisions for inventory and the liability related to the purchase commitments with contract manufacturers and suppliers, freight, logistics, shipment volume, and other items not categorized elsewhere.

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. 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.

Current wording

We regularly enter into purchase commitments with contract manufacturers and suppliers and in recent periods have increased such commitments related to manufacturing Cisco Silicon One and other products to meet demand from hyperscalers and other customers. We expect to continue entering into these additional purchase commitments in fiscal 2026. These purchase commitments have in turn significantly increased our supply chain exposure. 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, or we are otherwise unable to mitigate this exposure. 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

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.

Current wording

We experienced a gross margin percentage decrease in our Americas segment due to negative impacts from product mix and pricing, partially offset by positive impacts from productivity improvements.

Previous wording

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

Current wording

Gross margin percentage in our EMEA segment increased primarily due to productivity improvements, partially offset by negative impacts from pricing and product mix.

Previous 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.

Current wording

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

Previous 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.

Current wording

R&D expenses increased primarily due to higher headcount-related expenses reflecting our investments in AI and higher share-based compensation expense, partially offset by lower acquisition-related costs.

Previous wording

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 wording

G&A expenses decreased primarily due to lower acquisition-related costs and lower headcount-related expenses.

Previous 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.

Current wording

In the first quarter of fiscal 2026, foreign currency fluctuations, net of hedging, increased the combined R&D, sales and marketing, and G&A expenses by approximately $36 million, or 0.6%, compared with the first quarter of fiscal 2025.

Previous wording

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 wording

For the first quarter of fiscal 2026, the decrease in amortization of purchased intangible assets was primarily due to certain purchased intangible assets that became fully amortized.

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 $34 million and $709 million in the third quarter and first nine months of fiscal 2025. We expect this plan to be substantially completed by the end of the first quarter of fiscal 2026. 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.

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 $147 million in the first quarter of fiscal 2026. We expect this plan to be completed by the end of the second quarter of fiscal 2026.

Previous wording

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 wording

Operating income increased by 43%, and operating income as a percentage of revenue increased by 5.6 percentage points. These changes primarily resulted from lower restructuring and other charges and revenue growth in the first quarter of fiscal 2026.

Previous wording

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 issuances of senior notes and commercial paper.

Current wording

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 decrease in interest expense was driven by a lower average balance of debt outstanding and lower effective interest rate on commercial paper during the period.

Previous wording

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

Current wording

The change in our other income (loss), net was primarily driven by higher unrealized gains on privately held investments.

Previous wording

The provision for income taxes resulted in an effective tax rate of 5.8% for the first nine months of fiscal 2025 compared with 17.1% for the first nine 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).

Current wording

The provision for (benefit from) income taxes resulted in an effective tax rate of 15.7% for the first quarter of fiscal 2026, compared with an effective tax rate of (19.6)% for the first quarter of fiscal 2025. The increase in the effective tax rate was primarily due to a $720 million tax benefit related to the 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 Cut and Job Act (“Tax Act”) (our fiscal 2018).

Previous wording

The net decrease in cash and cash equivalents and investments in the first nine months of fiscal 2025 was primarily driven by cash returned to stockholders in the form of cash dividends of $4.8 billion and repurchases of common stock of $4.7 billion, net repayments of short-term borrowing and debt of $1.6 billion, capital expenditures of $0.7 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 $10.0 billion.

Current wording

The net decrease in cash and cash equivalents and investments in the first quarter of fiscal 2026 was primarily driven by cash returned to stockholders in the form of cash dividends of $1.6 billion and repurchases of common stock of $2.0 billion, and capital expenditures of $0.3 billion. These uses of cash were partially offset by net cash provided by operating activities of $3.2 billion and the release to us of approximately $0.6 billion of restricted cash previously held in escrow.

Previous wording

The remaining authorized amount for stock repurchases under this program is approximately $15.4 billion, with no termination date.

Current wording

The remaining authorized amount for stock repurchases under this program is approximately $12.2 billion, with no termination date.