1 00:00:02,520 --> 00:00:09,039 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News ed you're looking at 2 00:00:09,039 --> 00:00:11,320 Speaker 1: the company that's adding the most in points upside. 3 00:00:12,080 --> 00:00:14,319 Speaker 2: Yeah. One of the big movers to the upside is 4 00:00:14,360 --> 00:00:17,480 Speaker 2: Cisco shares currently up around four percent. They'd open much 5 00:00:17,520 --> 00:00:19,919 Speaker 2: higher than that. The key bit is they're trading at 6 00:00:19,920 --> 00:00:23,040 Speaker 2: their highest level since the year two thousand, after the 7 00:00:23,040 --> 00:00:26,480 Speaker 2: company raised its outlook and showed progress on capturing more 8 00:00:26,520 --> 00:00:29,560 Speaker 2: of the global AI spend. Let's get the details with 9 00:00:29,720 --> 00:00:34,320 Speaker 2: Cisco's CEO, Chuck Robins. Chuck, in the year two thousand, 10 00:00:35,240 --> 00:00:38,480 Speaker 2: Cisco was one of the original four horsemen of technology. 11 00:00:39,600 --> 00:00:42,080 Speaker 2: Based on the numbers you gave and what you said 12 00:00:42,120 --> 00:00:45,280 Speaker 2: on the call, do you feel like customers, the new 13 00:00:45,320 --> 00:00:50,040 Speaker 2: ones and investors now understand Cisco's place in this new 14 00:00:50,120 --> 00:00:50,800 Speaker 2: AI era. 15 00:00:52,600 --> 00:00:54,640 Speaker 3: Well, first of all, thanks for having me, and you know, 16 00:00:54,680 --> 00:00:56,840 Speaker 3: I'm super proud of what the teams have accomplished. We 17 00:00:56,920 --> 00:01:00,280 Speaker 3: had a record quarter and set ourselves up for what's 18 00:01:00,360 --> 00:01:02,120 Speaker 3: likely going to be the best year we've ever had. 19 00:01:02,200 --> 00:01:04,319 Speaker 4: So it was just a great performance. 20 00:01:04,840 --> 00:01:06,960 Speaker 3: And as I've been asked a lot over the last 21 00:01:06,959 --> 00:01:10,240 Speaker 3: twenty four hours to reflect back on two thousand and 22 00:01:10,319 --> 00:01:13,800 Speaker 3: it's kind of an interesting comparison, but I think that, Look, 23 00:01:14,480 --> 00:01:19,240 Speaker 3: the hyperscalers are some of the most advanced customers in 24 00:01:19,280 --> 00:01:22,880 Speaker 3: the world. They do the deepest analysis of the technology 25 00:01:22,880 --> 00:01:26,440 Speaker 3: before they make decisions, and I think that their decisions 26 00:01:26,480 --> 00:01:29,960 Speaker 3: to continue spending more with us speaks volumes about the 27 00:01:29,959 --> 00:01:32,679 Speaker 3: innovation and the technology that our teams are building right now. 28 00:01:32,720 --> 00:01:34,760 Speaker 3: So I'm really proud of them, and I think it'll 29 00:01:34,760 --> 00:01:36,520 Speaker 3: just extend into the enterprise over time. 30 00:01:37,600 --> 00:01:39,840 Speaker 2: Chuck, who are some of those new customers that you've 31 00:01:39,840 --> 00:01:41,759 Speaker 2: been able to sign in the air context. 32 00:01:42,800 --> 00:01:47,120 Speaker 3: Well, we're just talking about the major hyperscalers, primarily in 33 00:01:47,120 --> 00:01:50,560 Speaker 3: the United States, but we've also announced these sovereign deals 34 00:01:50,560 --> 00:01:52,400 Speaker 3: in the Middle East with G forty two and the 35 00:01:52,400 --> 00:01:55,720 Speaker 3: Emirates as well as Humane in Saudi There's a lot 36 00:01:55,760 --> 00:01:57,720 Speaker 3: of work going on in the neo cloud space. We're 37 00:01:57,760 --> 00:02:01,480 Speaker 3: seeing sovereign players start pop up now in parts of 38 00:02:01,480 --> 00:02:05,520 Speaker 3: Europe as well as Southeast Asia and India. So it's 39 00:02:05,560 --> 00:02:08,320 Speaker 3: a broad swath of customers. But the one point three 40 00:02:08,360 --> 00:02:11,840 Speaker 3: billion that we talked about is strictly the top hyperscalers 41 00:02:12,040 --> 00:02:13,440 Speaker 3: that we're doing business with. 42 00:02:13,480 --> 00:02:15,760 Speaker 4: So you're talking about five companies and. 43 00:02:15,680 --> 00:02:18,440 Speaker 1: They're good for the money, as you can tell from 44 00:02:18,440 --> 00:02:20,840 Speaker 1: the cash flow that they have chuck not two hundred 45 00:02:20,840 --> 00:02:23,000 Speaker 1: million dollars. That you are expanding into sovereign, you are 46 00:02:23,000 --> 00:02:26,359 Speaker 1: expanding into enterprise and neoclouds. How do you bake in 47 00:02:26,480 --> 00:02:28,320 Speaker 1: some of the risks that the market just cannot get 48 00:02:28,440 --> 00:02:30,280 Speaker 1: enough of talking about this circular economy. 49 00:02:31,680 --> 00:02:33,959 Speaker 3: Well, so we did talk about the fact that we 50 00:02:34,360 --> 00:02:37,639 Speaker 3: have over two billion dollars now in our pipeline through 51 00:02:37,639 --> 00:02:39,359 Speaker 3: the end of the fiscal years, over the next three 52 00:02:39,440 --> 00:02:44,400 Speaker 3: quarters in neo cloud, sovereign cloud, enterprise, and we just 53 00:02:44,480 --> 00:02:47,160 Speaker 3: we see that continue to accelerate. We took two hundred 54 00:02:47,160 --> 00:02:50,480 Speaker 3: million dollars in orders in Q one, and it's just 55 00:02:50,919 --> 00:02:54,320 Speaker 3: it's a natural way the technology technologies have been evolving 56 00:02:54,360 --> 00:02:57,880 Speaker 3: over the last decade or more. They start in the hyperscalers, 57 00:02:57,919 --> 00:03:00,280 Speaker 3: they moved through the telco space in this in this 58 00:03:00,400 --> 00:03:02,520 Speaker 3: case the neo clouds and the sovereign players, and then 59 00:03:02,560 --> 00:03:05,919 Speaker 3: into the enterprise, and it's happening exactly that way. And 60 00:03:06,120 --> 00:03:07,920 Speaker 3: our bread and butter over the years has been in 61 00:03:07,919 --> 00:03:10,600 Speaker 3: the enterprise. And we have lots of technolo knowlogy, we 62 00:03:10,680 --> 00:03:14,120 Speaker 3: have a partner ecosystem, we have full stack solutions, we 63 00:03:14,160 --> 00:03:16,440 Speaker 3: have security, we have all the things that they're looking 64 00:03:16,440 --> 00:03:19,960 Speaker 3: forward to actually build out AI workloads and deal with 65 00:03:20,000 --> 00:03:21,200 Speaker 3: AI with confidence. 66 00:03:21,720 --> 00:03:24,240 Speaker 1: Let's just go to that security a little bit of 67 00:03:24,240 --> 00:03:26,040 Speaker 1: a fly in the ointment. Let's say, I know you've 68 00:03:26,080 --> 00:03:28,960 Speaker 1: talked clearly about perhaps how the booking of revenue can 69 00:03:29,000 --> 00:03:31,239 Speaker 1: be misinterpreted, but how are you going to sell that 70 00:03:31,360 --> 00:03:34,040 Speaker 1: more holistically? How do you think the security part of 71 00:03:34,080 --> 00:03:36,240 Speaker 1: the offering can really start firing on all cylinders. 72 00:03:37,360 --> 00:03:40,080 Speaker 3: Well, I started by saying clearly we're not pleased with 73 00:03:40,120 --> 00:03:42,280 Speaker 3: where we are yet, but I will say over the 74 00:03:42,360 --> 00:03:44,480 Speaker 3: last two to three years, we've made a lot of progress. 75 00:03:44,720 --> 00:03:48,840 Speaker 3: It's a major decision for customers to make big platform decisions. 76 00:03:48,880 --> 00:03:51,320 Speaker 3: In security, We've had a lot of great wins. I'm 77 00:03:51,320 --> 00:03:54,400 Speaker 3: proud of what the teams have built. And we saw 78 00:03:54,760 --> 00:03:58,040 Speaker 3: our next generation firewalls, we saw mid teens growth and 79 00:03:58,160 --> 00:03:58,960 Speaker 3: orders there. 80 00:03:59,240 --> 00:04:01,960 Speaker 4: We saw double arr growth and Splunk. 81 00:04:02,360 --> 00:04:04,440 Speaker 3: We saw our new and refreshed products on the security 82 00:04:04,480 --> 00:04:07,560 Speaker 3: side continue to show growth. And the issue we had 83 00:04:07,560 --> 00:04:10,040 Speaker 3: in the quarter was really it's an accounting issue around 84 00:04:10,120 --> 00:04:14,480 Speaker 3: how cloud delivered Splunk versus on prem delivered Splunk. The 85 00:04:14,520 --> 00:04:18,440 Speaker 3: cloud stuff is ratable and realize revenues realized over the 86 00:04:18,480 --> 00:04:20,800 Speaker 3: life of the term, and the on prem stuff gets 87 00:04:20,839 --> 00:04:23,560 Speaker 3: recognized immediately, and we just had a major shift in 88 00:04:23,560 --> 00:04:25,760 Speaker 3: how our customers consume it, which is great for us 89 00:04:25,760 --> 00:04:29,040 Speaker 3: in the long term that they're buying more cloud based solutions, 90 00:04:29,480 --> 00:04:32,120 Speaker 3: but it creates a little bit of a challenge on 91 00:04:32,200 --> 00:04:34,279 Speaker 3: revenue during the quarter. The good news is the networking 92 00:04:34,320 --> 00:04:37,400 Speaker 3: business is doing incredibly well and can cover that for us. 93 00:04:39,040 --> 00:04:41,320 Speaker 2: Chug it is fair to say at a minimum that 94 00:04:41,360 --> 00:04:43,520 Speaker 2: the Cisco of today isn't the same as the Cisco 95 00:04:43,560 --> 00:04:46,760 Speaker 2: of two thousand. What you've done is kind of been 96 00:04:46,839 --> 00:04:49,520 Speaker 2: open about the product lineup and you've used M and 97 00:04:49,560 --> 00:04:53,040 Speaker 2: A to change the footprint of the company. What's your 98 00:04:53,120 --> 00:04:55,760 Speaker 2: latest thinking on that, the products that you offer and 99 00:04:55,800 --> 00:04:58,960 Speaker 2: what you need to do, either organically or inorganically to 100 00:04:59,040 --> 00:05:00,600 Speaker 2: offer what the world of once. 101 00:05:02,120 --> 00:05:04,599 Speaker 3: I think the big things that we did we obviously 102 00:05:05,040 --> 00:05:08,200 Speaker 3: introduced a lot more software into our portfolio in areas 103 00:05:08,240 --> 00:05:11,760 Speaker 3: that are strategic, like security, and this Plunk acquisition has 104 00:05:11,800 --> 00:05:13,920 Speaker 3: been a great one. I think the other thing that's 105 00:05:13,960 --> 00:05:16,680 Speaker 3: worth calling out is this investment that we started in 106 00:05:16,680 --> 00:05:20,599 Speaker 3: twenty sixteen. To be clear on our silicon strategy that 107 00:05:20,800 --> 00:05:24,680 Speaker 3: is absolutely the reason that we're having success today in 108 00:05:24,720 --> 00:05:27,240 Speaker 3: the hyperscaler space. If we did not have our silicon 109 00:05:28,560 --> 00:05:31,200 Speaker 3: and develop and design our own silicon, we wouldn't be 110 00:05:31,839 --> 00:05:33,200 Speaker 3: participating at all. 111 00:05:33,320 --> 00:05:34,680 Speaker 4: It's just black and white. 112 00:05:35,400 --> 00:05:38,520 Speaker 3: And so as we as we look at both internal 113 00:05:38,520 --> 00:05:43,360 Speaker 3: innovation as well as or inorganic opportunities. We're very focused 114 00:05:43,400 --> 00:05:47,240 Speaker 3: on security, We're very focused on AI. We've made some 115 00:05:47,320 --> 00:05:51,440 Speaker 3: tech and talent deals. Anything that can help us accelerate 116 00:05:51,480 --> 00:05:56,120 Speaker 3: our solutions in those areas, we're open to look at Shuck. 117 00:05:56,200 --> 00:06:01,359 Speaker 2: I do not apologize for this next question. We or 118 00:06:01,400 --> 00:06:03,360 Speaker 2: are we not in an AI bubble? 119 00:06:05,000 --> 00:06:08,479 Speaker 3: Oh, it's just it's so funny. Look, the customers that 120 00:06:08,520 --> 00:06:13,080 Speaker 3: are buying the predominant amount of this technology have incredible 121 00:06:13,080 --> 00:06:17,919 Speaker 3: balance sheets, have incredible cash flow, have incredible profitability. I 122 00:06:17,920 --> 00:06:21,240 Speaker 3: think Caroline said that they actually pay their bills and 123 00:06:21,240 --> 00:06:25,320 Speaker 3: and so, and they view it as an existential issue 124 00:06:25,320 --> 00:06:28,719 Speaker 3: for them. That's that's a really key element. They don't 125 00:06:28,800 --> 00:06:30,840 Speaker 3: view this as something that's nice to have. They don't 126 00:06:30,920 --> 00:06:33,280 Speaker 3: view it as something that is okay, if we if 127 00:06:33,279 --> 00:06:35,120 Speaker 3: we if we're successful. 128 00:06:34,600 --> 00:06:36,160 Speaker 4: Great, if we're not great. 129 00:06:36,800 --> 00:06:39,919 Speaker 3: They view it as existential, which you see with the 130 00:06:40,000 --> 00:06:41,760 Speaker 3: level of spending that they're putting into it. 131 00:06:41,880 --> 00:06:45,120 Speaker 4: So it's it's a lot and it's moving fast. 132 00:06:45,480 --> 00:06:48,160 Speaker 3: And but the difference between now in two thousand is 133 00:06:48,200 --> 00:06:53,320 Speaker 3: that these are massive companies with strong financial performance and 134 00:06:53,360 --> 00:06:55,640 Speaker 3: they believe in this one hundred percent. So I don't 135 00:06:55,680 --> 00:06:58,080 Speaker 3: think it's going to change. We haven't gotten into physical AI. 136 00:06:58,760 --> 00:07:02,279 Speaker 3: We have, we're just getting into synthetic training. We haven't 137 00:07:02,279 --> 00:07:04,760 Speaker 3: gotten into robotics. We haven't gotten into the enterprise in 138 00:07:04,800 --> 00:07:07,359 Speaker 3: a big way yet, and so there's a there's a 139 00:07:07,440 --> 00:07:09,600 Speaker 3: huge opportunity ahead for all of us. 140 00:07:09,640 --> 00:07:10,120 Speaker 4: I believe. 141 00:07:10,640 --> 00:07:14,920 Speaker 1: Chuck Bluemberg Intelligence Analysis says your projections are conservative. Briefly 142 00:07:15,200 --> 00:07:15,960 Speaker 1: are the conservative? 143 00:07:17,560 --> 00:07:20,040 Speaker 3: Well, I think you said that last quarter, so you 144 00:07:20,160 --> 00:07:24,520 Speaker 3: proved to be correct ninety days ago. But look, I 145 00:07:24,560 --> 00:07:26,480 Speaker 3: think based on what we know today we're ninety days 146 00:07:26,480 --> 00:07:30,960 Speaker 3: into the year, were taking what we have in our backlog, 147 00:07:31,040 --> 00:07:33,320 Speaker 3: what we see in the forecast. But again, we have 148 00:07:33,360 --> 00:07:35,760 Speaker 3: three more quarters to play out. Lots of things can change. 149 00:07:35,800 --> 00:07:39,000 Speaker 3: The World's very dynamic, but we're very confident in the 150 00:07:39,080 --> 00:07:40,360 Speaker 3: numbers that we put up yesterday. 151 00:07:41,080 --> 00:07:43,720 Speaker 1: Cisco CEO Chuck Robins, was a joy to catch up 152 00:07:43,720 --> 00:07:43,920 Speaker 1: with you.