思科 (CSCO) 2017 Q2 法說會逐字稿

Welcome to Cisco Systems' second-quarter and FY17 financial results conference call. At the request of Cisco Systems, today's call is being recorded. If you have any objections, you may disconnect. Now, I'd like to introduce Marilyn Mora, Head of Investor Relations. Ma'am, you may begin.

歡迎參加思科系統公司第二季及 2017 財年財務業績電話會議。應思科系統公司的要求，今天的通話正在錄音。如果有異議可以斷開連接。現在，我想介紹投資者關係主管瑪麗蓮莫拉 (Marilyn Mora)。女士，您可以開始了。

Thanks, Sam. Welcome, everyone, to Cisco's second-quarter FY17 quarterly earnings conference call. This is Marilyn Mora, Head of Investor Relations, and I'm joined by Chuck Robbins, our CEO, and Kelly Kramer, our CFO.

謝謝，山姆。歡迎大家參加思科 2017 財年第二季財報電話會議。我是投資者關係主管瑪麗蓮莫拉 (Marilyn Mora)，與我一起出席的還有我們的執行長查克羅賓斯 (Chuck Robbins) 和財務長凱利克萊默 (Kelly Kramer)。

By now, you should have seen our earnings press release. A corresponding webcast with slides including supplemental information will be available on our website in the investor relations section following the call. Income statements, full GAAP to non-GAAP reconciliation information, balance sheets, cash flow statements, and other financial information can also be found in the financial information section of our investor relations website.

現在，您應該已經看到我們的收益新聞稿了。電話會議結束後，我們的網站投資者關係部分將提供相應的網路廣播和幻燈片（包括補充資訊）。損益表、完整的 GAAP 與非 GAAP 調節資訊、資產負債表、現金流量表和其他財務資訊也可以在我們的投資者關係網站的財務資訊部分找到。

Throughout this conference call, we will be referencing both GAAP and non-GAAP financial results, and will discuss product results in terms of revenue, and geographic and customer results in terms of product orders, unless stated otherwise. All comparisons throughout this call will be made on a year-over-year basis, unless stated otherwise.

在整個電話會議過程中，我們將參考 GAAP 和非 GAAP 財務結果，並將討論收入方面的產品結果以及產品訂單方面的地理和客戶結果，除非另有說明。除非另有說明，本次電話會議中的所有比較都將以同比進行。

The matters we will be discussing today include forward-looking statements, including the guidance we will be providing for the third quarter of FY17. They are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on Form 10-K and 10-Q which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.

我們今天將要討論的事項包括前瞻性陳述，包括我們將為 2017 財年第三季提供的指導。它們受到我們在提交給美國證券交易委員會的文件中詳細討論的風險和不確定性的影響，特別是最新的 10-K 和 10-Q 表格報告，這些報告確定了可能導致實際結果與前瞻性陳述中的結果存在重大差異的重要風險因素。

With respect to guidance, please also see the slides and press release that accompany this call for further details. As a reminder, Cisco will not comment on its financial guidance during the quarter unless it is done through an explicit public disclosure.

關於指導，請參閱本次電話會議附帶的幻燈片和新聞稿以了解更多詳細資訊。提醒一下，除非透過明確的公開揭露，否則思科不會對本季的財務指引發表評論。

As a reminder, in Q2 FY16 on November 20, 2015, we completed the sale of the Customer Premises Equipment portion of our SP Video connected devices business, and accordingly had no revenue or expense from that business in Q2 FY17. As such, all of the revenue, non-GAAP, and product orders information we will be discussing is normalized to exclude the SP Video CPE business from our historical results. We have provided historical financial information for the SP Video CPE business in the slides that accompany this call and on our website to help understand these impacts. As a reminder, the guidance we provided during our Q1 earnings call also has been normalized in the same way. With that, I will now turn it over to Chuck.

提醒一下，2016 財年第二季度，即 2015 年 11 月 20 日，我們完成了 SP 視訊連接設備業務的客戶端設備部分的出售，因此 2017 財年第二季度該業務沒有收入或支出。因此，我們將討論的所有收入、非 GAAP 和產品訂單資訊都經過標準化，以將 SP Video CPE 業務排除在我們的歷史結果之外。我們在本次電話會議附帶的幻燈片和我們的網站上提供了 SP Video CPE 業務的歷史財務信息，以幫助理解這些影響。提醒一下，我們在第一季財報電話會議上提供的指導也以同樣的方式進行了規範。現在，我將把麥克風交給查克。

Thank you, Marilyn, and good afternoon, everyone. We performed well this quarter, delivering total revenue of $11.6 billion and non-GAAP earnings per share of $0.57. We drove strong profitability, healthy cash flow, and growth in deferred revenue, continuing our shift towards software and recurring revenue.

謝謝你，瑪麗蓮，大家午安。本季我們表現良好，總營收為 116 億美元，非 GAAP 每股盈餘為 0.57 美元。我們實現了強勁的獲利能力、健康的現金流和遞延收入的成長，並繼續轉向軟體和經常性收入。

We also drove 51% growth in our product deferred revenue related to our recurring software and subscriptions, which now stands at $4 billion. We're also pleased that the Board approved a 12% increase to our quarterly dividend to $0.29.

我們也推動了與經常性軟體和訂閱相關的產品遞延收入成長 51%，目前達到 40 億美元。我們也很高興董事會批准將季度股息提高 12% 至 0.29 美元。

We are delivering against our strategic priorities, offering unparalleled value to our customers, and we're executing and managing the Business to deliver greater shareholder return. Through a disciplined investment approach, we are focused on expanding our growth opportunities and strengthening our customer value proposition.

我們正在實現我們的策略重點，為客戶提供無與倫比的價值，並且我們正在執行和管理業務以帶來更大的股東回報。透過嚴謹的投資方式，我們專注於擴大成長機會和加強客戶價值主張。

We were very pleased to announce our intent to acquire AppDynamics as a continuation of our strategy to provide customers with deep analytics across the data center, the network, as well as their applications. Increasingly, customers are seeing significant business value being delivered through applications and access through intelligent networks. Combining Cisco's infrastructure, networking, and security analytics with the application analytics from AppDynamics, we will provide customers with unprecedented insights to improve business performance.

我們非常高興地宣布我們有意收購 AppDynamics，以延續我們的策略，為客戶提供跨資料中心、網路及其應用程式的深度分析。客戶越來越常看到透過應用程式和智慧網路存取所帶來的巨大商業價值。將思科的基礎架構、網路和安全分析與 AppDynamics 的應用程式分析結合，我們將為客戶提供前所未有的洞察力，以提高業務績效。

The conversations I have every day with business and government leaders around the world reinforce the importance of our strategy. They look to Cisco to connect everything and everyone by building highly secure, software-defined, automated, and intelligent infrastructure platforms. We offer these solutions through a variety of consumption options, giving our customers choice and flexibility.

我每天與世界各地的商界和政府領導人的對話都強調了我們策略的重要性。他們希望思科透過建立高度安全性、軟體定義、自動化和智慧的基礎設施平台來連接一切和每個人。我們透過多種消費選擇提供這些解決方案，為客戶提供選擇和靈活性。

I would now like to cover some key business highlights, starting with our Security business. We had another great quarter in Security, which continued its strong momentum and growth. Revenue grew 14%, and deferred revenue grew 45%, reflecting the strength of our best-of-breed offerings and architectural approach to security from the network to the endpoint to the cloud.

現在我想介紹一些關鍵的業務亮點，首先從我們的安全業務開始。我們在安全領域又度過了一個出色的季度，繼續保持強勁的發展勢頭和成長勢頭。營收成長了 14%，遞延收入成長了 45%，這反映了我們一流的產品和從網路到端點再到雲端的安全架構方法的實力。

Two weeks ago, we released the 10th annual Cisco cybersecurity report which highlights the increasing risk customers are facing around the world. Of the organizations we surveyed, over one-third of those who experienced a breach in 2016 reported substantial losses to their business. Customers are relying on Cisco's comprehensive portfolio of best-of-breach security products and services brought together in an integrated architectural approach to prevent and reduce the risk of business loss. As a proof point, deployments of our advanced threat solutions continue to be strong, as we added over 6,000 new customers, bringing the total to approximately 29,000 now using AMP, which led to revenue growth of 65% in the quarter.

兩週前，我們發布了第十份年度思科網路安全報告，其中強調了全球客戶面臨的日益增加的風險。在我們調查的組織中，超過三分之一的在 2016 年遭遇資料外洩的組織報告稱其業務遭受了重大損失。客戶依靠思科全面的最佳安全產品和服務組合，透過整合的架構方法來防止和降低業務損失的風險。作為證明，我們的高級威脅解決方案的部署繼續保持強勁，因為我們增加了 6,000 多名新客戶，使使用 AMP 的總數達到約 29,000 名，這導致本季度收入增長了 65%。

Similar to our success in the advanced threat market, we added over 5,500 next-generation firewall customers, bringing our total customer base to 67,500. In addition to our leadership in network and advanced security, Cisco is leading the market in delivering innovative, cloud-based security solutions. Last week, we announced Cisco Umbrella, the industry's first secure Internet Gateway to address new enterprise security challenges in today's mobile and cloud world. Cisco Umbrella is designed to help users gain secure access to the Internet anywhere they go, even when they are off the enterprise network.

與我們在高階威脅市場的成功類似，我們增加了超過 5,500 個新一代防火牆客戶，使我們的總客戶群達到 67,500 個。除了在網路和高階安全領域的領導地位外，思科還在提供創新的基於雲端的安全解決方案方面引領市場。上週，我們發布了思科 Umbrella，這是業界首個安全互聯網網關，旨在應對當今行動和雲端世界中新的企業安全挑戰。Cisco Umbrella 旨在協助使用者隨時隨地安全地存取互聯網，即使他們不在企業網路內。

Now, let's turn to collaboration. This quarter, we saw strong customer growth across our collaboration portfolio, with revenue growing 4% and deferred revenue growing 14%. Further expanding our portfolio of subscription-based offerings, we introduced Cisco's Spark Board, the first all-in-one, cloud-based collaboration and meeting room solution. Cisco Spark Board enables screen sharing, interactive white-boarding, and video conferencing, and is complemented by a new version of our Cisco Spark application, a messaging and meeting platform for mobile and desktop endpoints. In the few weeks since launch, we have already had several hundred Cisco Spark Board customers who will be receiving ongoing innovation as part of the Cisco Spark subscription that they purchased together with the device.

現在，讓我們談談合作。本季，我們的合作產品組合客戶成長強勁，營收成長 4%，遞延營收成長 14%。我們進一步擴展了基於訂閱的產品組合，推出了思科的 Spark Board，這是第一個基於雲端的一體化協作和會議室解決方案。Cisco Spark Board 支援螢幕分享、互動式白板和視訊會議，並由我們的新版 Cisco Spark 應用程式（用於行動和桌面端點的訊息傳遞和會議平台）進行補充。自推出以來的幾週內，我們已經擁有數百名 Cisco Spark Board 客戶，他們將在與設備一起購買的 Cisco Spark 訂閱中獲得持續的創新。

We are seeing good customer momentum in our Data Center business, with customers choosing Cisco for the breadth of our private and hybrid cloud solutions. Across our next-generation data center portfolio, we saw healthy customer traction, including our ACI data center switching portfolio grew revenue by 28%. This includes 1,300 new Nexus 9000 customers and 450 new ACI customers in Q2, bringing the total install base to 10,800 and 3,100, respectively. We are the only company to offer end-to-end visibility and security for 100 gig network build-outs.

我們的資料中心業務呈現出良好的客戶發展勢頭，客戶選擇思科是因為我們擁有廣泛的私有雲和混合雲解決方案。在我們的下一代資料中心產品組合中，我們看到了健康的客戶吸引力，其中我們的 ACI 資料中心交換產品組合的收入成長了 28%。其中包括第二季新增的 1,300 名 Nexus 9,000 位客戶和 450 位 ACI 客戶，使總安裝基數分別達到 10,800 和 3,100。我們是唯一一家為 100 千兆網路建置提供端到端可視性和安全性的公司。

In our core business, the network has never been more relevant in a world of increasing connectivity driven by cloud, social, IoT, and digitization. Over the last year, we have been working hard on driving innovation in our core business, and we are starting to see some of the benefits, such as our wireless portfolio this quarter. We believe we are in the early stages of a product innovation cycle driven by security, automation, and analytics across the portfolio.

在我們的核心業務中，在由雲端、社交、物聯網和數位化推動的日益緊密的連接性的世界裡，網路從未像現在這樣重要。在過去的一年裡，我們一直在努力推動核心業務的創新，我們開始看到一些好處，例如本季的無線產品組合。我們相信，我們正處於整個產品組合的安全性、自動化和分析所驅動的產品創新週期的早期階段。

To further strengthen our cloud software and IoT portfolio, as I mentioned earlier, we announced our intent to acquire AppDynamics, a market leader in application intelligence whose solutions are helping the world's largest companies improve their application and business performance. Customers will now have unprecedented insight into their data center, security infrastructure, and networking performance through real-time application analytics in the cloud and on-premise. Approximately 75% of AppDynamics product revenue is subscription-based, which aligns well with the way customers increasingly want to consume technology and with Cisco's strategic objective of moving towards more recurring revenue.

為了進一步加強我們的雲端軟體和物聯網產品組合，正如我之前提到的，我們宣布了收購 AppDynamics 的意向，AppDynamics 是應用程式智慧領域的市場領導者，其解決方案正在幫助世界上最大的公司提高其應用和業務績效。現在，客戶可以透過雲端和本地的即時應用程式分析對其資料中心、安全基礎設施和網路效能有前所未有的了解。AppDynamics 產品收入的約 75% 是基於訂閱的，這與客戶日益增長的技術消費方式以及思科朝更多經常性收入邁進的策略目標相一致。

The growing customer demand for real-time data is enabled by the increasing number of connected devices. We continue to build on the Jasper cloud IoT platform with new solutions. Today, Jasper connects more than 40 million devices, including over 12 million connected vehicles, and we are adding more than 1.5 million new devices per month. The number of enterprise customers utilizing data from the Jasper platform has grown from 4,000 a year ago to more than 9,000 this quarter.

隨著連網設備數量的不斷增加，客戶對即時數據的需求也日益增長。我們將繼續在 Jasper 雲端物聯網平台上建立新的解決方案。如今，Jasper 已連接超過 4,000 萬台設備，其中包括超過 1,200 萬輛連網汽車，而且我們每月新增的設備數量超過 150 萬台。利用 Jasper 平台數據的企業客戶數量已從一年前的 4,000 家增長至本季度的 9,000 多家。

In summary, we are confident in our strategy. We are delivering accelerated innovation across our portfolio. And we are pleased with the momentum across our businesses, and in our strategic shift towards recurring software- and subscription-based revenue. Now, let me hand it over to Kelly to walk through our Q2 results and outlook in more detail.

總而言之，我們對我們的策略充滿信心。我們正在加速整個產品組合的創新。我們對整個業務的發展勢頭以及向經常性軟體和訂閱收入的策略轉變感到滿意。現在，讓我將話題交給凱利，讓他更詳細地介紹我們的第二季業績和展望。

Okay, great. Thanks, Chuck. So, I will start with an overview of our financial results for the quarter, followed by some comments about our capital allocation and the Q3 outlook.

好的，太好了。謝謝，查克。因此，我將首先概述本季的財務業績，然後對我們的資本配置和第三季前景發表一些評論。

Overall, Q2 was a solid quarter, with revenue of $11.6 billion, down 2%, and non-GAAP EPS of $0.57, flat year over year. We continued to make progress on our strategic growth priorities, while maintaining rigorous discipline on profitability and cash generation. As part of our strategy to drive long-term profitable growth, we are prioritizing key investments, both organically and inorganically, such as the intended acquisition of AppDynamics.

總體而言，第二季表現穩健，營收為 116 億美元，下降 2%，非 GAAP 每股收益為 0.57 美元，與去年同期持平。我們繼續在策略性成長重點方面取得進展，同時對獲利能力和現金產生保持嚴格的紀律。作為推動長期獲利成長策略的一部分，我們正在優先考慮有機和無機關鍵投資，例如有意收購 AppDynamics。

Today, our Board approved an increase of $0.03 to the quarterly dividend, bringing it to $0.29 per share, a 12% increase, representing a yield of approximately 3.5% on today's closing price. We remain firmly committed to our capital allocation strategy and returning value to our shareholders.

今天，我們的董事會批准將季度股息增加 0.03 美元，達到每股 0.29 美元，增幅為 12%，相當於今天收盤價的收益率約為 3.5%。我們始終堅定地致力於我們的資本配置策略並向股東回報價值。

Let me provide some more details on our revenue breakdown. Total product revenue was down 4%, and let me walk through each of the product areas. Switching declined 5%, driven by weakness in Campus, partially offset by strength in the ACI portfolio, which was up 28%. Routing was down 10%, although we did see growth in orders. Collaboration grew 4%, driven by ongoing solid performance of WebEx, Unified Communications, and TelePresence. We saw good momentum again in the transition to subscriptions in SaaS offers with deferred revenue growing 14%.

讓我提供一些有關我們收入細目的更多細節。總產品收入下降了 4%，讓我來逐一介紹每個產品領域。由於校園業務疲軟，轉換業務下降了 5%，但 ACI 投資組合的強勁成長（上漲 28%）部分抵消了這一影響。儘管訂單有所增長，但路線規劃下降了 10%。協作成長了 4%，這得益於 WebEx、統一通訊和 TelePresence 持續強勁的表現。我們再次看到 SaaS 服務向訂閱轉型的良好勢頭，遞延收入成長了 14%。

Data Center declined 4%, impacted by the continued market shift from blade to rack, though last week we announced expansion of our UCS portfolio by offering the Microsoft Azure stack on UCS via an integrated validated system that enables organizations to deliver Microsoft Azure services from their on-premise data centers. The joint Cisco and Microsoft solution provides the tools for enterprises to grow and modernize their applications in a highly flexible and scalable hybrid cloud environment.

資料中心下降了 4%，受到市場從刀片式伺服器持續轉變為機架式伺服器的影響，儘管上週我們宣布擴展 UCS 產品組合，透過整合驗證系統在 UCS 上提供 Microsoft Azure 堆疊，使組織能夠從其內部資料中心提供 Microsoft Azure 服務。思科和微軟的聯合解決方案為企業提供了在高度靈活和可擴展的混合雲環境中發展和現代化其應用程式的工具。

Wireless grew 3%, with ongoing strength in Meraki and the continued ramp of our 11ac Wave 2 portfolio. Security grew 14%, with deferred revenue growth of 45%, as we offer more solutions to customers with increasing software content that results in greater recurring revenue. We had very strong performance in our advanced threat security of 65%, as well as strength in unified threat management and web security solutions. Our focus continues to be developing a best-of-breed portfolio, while offering customers the benefit of deep architectural integration spanning the network cloud endpoint, which we believe is outpacing our competitors. Services continues to execute well, growing 5%, with a strong focus on renewals and attach rates.

無線業務成長了 3%，Meraki 繼續保持強勁勢頭，我們的 11ac Wave 2 產品組合也持續成長。安全業務成長了 14%，遞延收入成長了 45%，因為我們透過增加軟體內容為客戶提供了更多的解決方案，從而帶來了更高的經常性收入。我們的高階威脅安全表現非常強勁，達到 65%，並且在統一威脅管理和網路安全解決方案方面也表現出色。我們的重點仍然是開發一流的產品組合，同時為客戶提供跨網路雲端點的深度架構整合的優勢，我們相信這將超越我們的競爭對手。服務業務持續表現良好，成長 5%，並專注於續約和附加率。

Overall, we drove13% growth in total deferred revenue, with product up 19% and services up 9%. We continued to build our product deferred revenue related to recurring software and subscription businesses to $4 billion, up 51%. We made good progress on increasing our recurring revenue, with 31% of our total Q2 revenue generated from recurring offers, up from 28% a year ago. In terms of orders, total product orders growth was flat, with book-to-bill greater than 1.

整體而言，我們推動了總遞延收入成長 13%，其中產品成長 19%，服務成長 9%。我們繼續將與經常性軟體和訂閱業務相關的產品遞延收入增加至 40 億美元，成長 51%。我們在增加經常性收入方面取得了良好進展，第二季總收入的 31% 來自經常性優惠，高於一年前的 28%。訂單方面，總產品訂單成長持平，訂單出貨比大於1。

Let's take a look at our geographies, which is the primary way we run the Business. We are seeing continued strength in the Americas, which grew 4%. EMEA was down 4%, and APJC was down 5%. Total emerging markets declined 7%, with the BRICs plus Mexico down 5%. In terms of customer segments, enterprise grew 1%, commercial grew 3%, public sector was down 6%, and service provider declined 1%.

讓我們來看看我們的地理位置，這是我們經營業務的主要方式。我們看到美洲地區持續保持強勁成長，成長了 4%。歐洲、中東和非洲地區 (EMEA) 下跌 4%，亞太及日本地區 (APJC) 下跌 5%。新興市場整體下跌 7%，其中金磚四國加上墨西哥下跌 5%。從客戶細分來看，企業成長1%，商業成長3%，公共部門下降6%，服務提供者下降1%。

From a non-GAAP profitability perspective, total gross margin was 64.1%, down slightly by 0.1 points. Our product gross margin was 62.4%, down 0.9 points, and service gross margin was 68.8%, growing 2.1 points. Operating margin was solid at 31%. We are maintaining our discipline and driving productivity with an ongoing focus of cost improvements and operational efficiencies, making the necessary trade-off to drive operating margin.

從非GAAP獲利能力角度來看，總毛利率為64.1%，略微下降0.1個百分點。產品毛利率為62.4%，較去年同期下降0.9個百分點；服務毛利率為68.8%，較去年同期上升2.1個百分點。營業利益率穩定在 31%。我們始終堅持紀律，不斷提高生產力，持續專注於成本改善和營運效率，做出必要的權衡，以提高營業利潤率。

At the bottom line, we delivered non-GAAP EPS of $0.57 and GAAP EPS of $0.47. We delivered operating cash flow of $3.8 billion, and ended Q2 with total cash, cash equivalents, and investments of $71.8 billion, with $9.6 billion available in the US. From a capital allocation perspective, we returned $2.3 billion to shareholders during the quarter, that included $1 billion for share repurchases and $1.3 billion for our quarterly dividend.

最終，我們的非 GAAP 每股收益為 0.57 美元，GAAP 每股收益為 0.47 美元。我們實現了 38 億美元的營運現金流，第二季末的現金、現金等價物和投資總額為 718 億美元，其中 96 億美元在美國可用。從資本配置角度來看，本季我們向股東返還了 23 億美元，其中包括 10 億美元的股票回購和 13 億美元的季度股利。

To summarize, we had solid performance in Q2 and managed the Business well. We're making the investments we need to deliver shareholder value over the long term, and we are being very disciplined in driving continuous cost efficiencies.

總而言之，我們在第二季表現穩健，業務管理良好。我們正在進行必要的投資，以長期實現股東價值，我們在推動持續成本效率方面非常自律。

Let me now reiterate our guidance for the third quarter. This guidance includes the type of forward-looking information that Marilyn referred to earlier. As a reminder, the third quarter of last year included an extra week, which resulted in higher revenue of $265 million, and higher non-GAAP cost of sales and operating expenses of $150 million, netting into $115 million of non-GAAP operating income.

現在讓我重申我們對第三季的指導。本指南包含瑪麗蓮之前提到的前瞻性資訊類型。提醒一下，去年第三季增加了一周，導致收入增加了 2.65 億美元，非 GAAP 銷售成本和營運費用增加了 1.5 億美元，淨收入為 1.15 億美元非 GAAP 營運收入。

The guidance for the third quarter is as follows. We expect revenue in the range of minus 2% to 0% year over year. We anticipate the non-GAAP gross margin rate to be in the range of 63% to 64%. The non-GAAP operating margin rate is expected to be in the range of 29% to 30%. The non-GAAP tax provision rate is expected to be 22%. Non-GAAP earnings per share is expected to range from $0.57 to $0.59. My guidance does not reflect any impact from AppDynamics. I'll now turn it back to Chuck for some closing comments.

第三季的指引如下。我們預計收入年減將在-2%至0%之間。我們預計非公認會計準則毛利率將在 63% 至 64% 之間。非公認會計準則營業利潤率預計在29%至30%之間。非公認會計準則稅務準備率預計為22%。非公認會計準則每股收益預計在 0.57 美元至 0.59 美元之間。我的指導並未反映 AppDynamics 的任何影響。現在我將話題轉回給查克，請他發表一些結束語。

Thanks, Kelly. Once again, we had a solid quarter, and I am pleased with how we're executing against our strategy. Let me summarize why I am confident in our ability to bring even greater value to our customers, partners, and shareholders. First, we delivered strong innovation in key areas such as security, collaboration, and next-generation data center, as we continue to also drive innovation in our core. Second, we have strong momentum in our transition, as seen with 51% growth in our product deferred revenue related to our recurring software and subscriptions, as we continue to add more software offers like you see with Cisco Spark Board. Third, profitable growth: We continue to stay focused on driving productivity and operational efficiencies. Lastly, we remain committed to increasing shareholder return, as you've seen with our dividend increase of 12%.

謝謝，凱利。我們又一次度過了一個穩健的季度，我對我們的策略執行感到滿意。讓我總結為什麼我對我們能夠為客戶、合作夥伴和股東帶來更大價值充滿信心。首先，我們在安全、協作和下一代資料中心等關鍵領域實現了強大的創新，同時我們也持續推動核心領域的創新。其次，我們的轉型勢頭強勁，隨著我們繼續增加更多軟體產品（例如 Cisco Spark Board），與經常性軟體和訂閱相關的產品遞延收入增長了 51%。第三，獲利成長：我們持續專注於提高生產力和營運效率。最後，我們仍然致力於提高股東回報，正如您所看到的，我們的股息增加了 12%。

Our customers have never cared more about what technology can do for their business. They are looking for speed, agility, visibility, and security in everything that they do. Cisco is uniquely qualified to meet these demands with our ability to drive automation analytics with intelligence and security, all the way from the network to the application. And that's why I am confident in our future. Marilyn, now I'll turn it back to you for questions.

我們的客戶從未如此關心科技能為他們的業務帶來什麼。他們追求所做的每一件事的速度、敏捷性、可見性和安全性。思科具有獨特的資格來滿足這些需求，我們有能力透過智慧和安全性來推動從網路到應用程式的自動化分析。這就是我對我們的未來充滿信心的原因。瑪麗蓮，現在我把問題交還給你。

Great. Thanks, Chuck. Sam, let's go ahead and open the line for questions. I just wanted to remind folks -- while Sam is doing that, I'd like to remind the audience that we ask you to ask one question.

偉大的。謝謝，查克。山姆，我們開始回答問題吧。我只是想提醒大家——當山姆這樣做的時候，我想提醒觀眾，我們要你們問一個問題。

(Operator Instructions)

（操作員指示）

Pierre Ferragu, Bernstein.

皮耶費拉古、伯恩斯坦。

Hi. Thank you for taking my question. I was trying to understand where we stand in the weakness you saw when you talked about three months ago. If I look at your guide, it's very encouraging. It shows that you were getting back to a sequential growth that is better than slightly above what you have done on average in recent years. And then, if I hear your comments, Campus was very weak in the quarter. Routing as well. And, you see orders coming back in routing. My question would be whether you see something similar in Campus? Can we expect that part of the business to improve in coming months and coming quarters? And then, maybe just more broadly, what's your feeling about the macro today? The uncertainty and the weakness in orders you could see three months ago, is this something that is improving now, already?

你好。感謝您回答我的問題。我試著去了解您在三個月前談到的我們所處的弱點。如果我看一下你的指南，它非常令人鼓舞。這表明你們正在恢復連續增長，並且比近年來的平均水平略高。然後，如果我聽到你的評論，校園在本季非常疲軟。路由也是如此。並且，您會看到訂單在路由中返回。我的問題是，您是否在校園裡看到過類似的東西？我們是否可以預期該部分業務在未來幾個月和幾個季度內會有所改善？然後，也許更廣泛地說，您對今天的宏觀感覺如何？三個月前您就看到了訂單的不確定性和疲軟，現在已經改善了嗎？

Thanks, Pierre. Let me just start, and then, Kelly, you can add whatever you like here. I think as it relates to our core portfolio, we have seen, obviously, some macro dynamics. Europe is clearly stressed with all the geopolitical dynamics that are occurring in Europe right now across several countries. And we also have begun to invest pretty significantly over the last year, and you'll see it over the coming year, in ensuring we had the appropriate investments in innovation in our core. But, you also see what we did with AppDynamics, and what I would tell you is that when you combine the analytics that we can deliver out of the data center with the analytics that we will deliver out of the core networking space with our security threat information and analytics out of our security portfolio combined with the application analytics that they have, we believe that we can create a differentiated architecture for our customers going forward. And, that's what we are -- that's the purpose in the acquisition and what we intend to do going forward. So, Kelly, any other comments on the macro and the sequentials?

謝謝，皮埃爾。讓我先開始，然後，凱利，你可以在這裡添加任何你喜歡的內容。我認為，就我們的核心投資組合而言，我們顯然已經看到了一些宏觀動態。目前，歐洲多個國家正在發生地緣政治動態，這顯然給歐洲帶來了壓力。在過去的一年裡，我們也開始投入大量資金，您將在未來的一年看到這一點，以確保我們在核心創新方面進行了適當的投資。但是，您也看到了我們對 AppDynamics 所做的工作，我想告訴您的是，當您將我們可以從資料中心提供的分析與我們將從核心網路空間提供的分析與我們的安全威脅資訊以及我們的安全產品組合中的分析與他們擁有的應用程式分析相結合時，我們相信我們可以為未來的客戶創建一個差異化的架構。這就是我們——這就是收購的目的，也是我們未來打算要做的事。那麼，凱利，對於宏觀和順序還有其他評論嗎？

No. I think just to add to that, I think, we do feel good about what we're seeing from macro in the US certainly and in commercial and enterprise. And, I would say to your point, Pierre, when you do adjust for that extra week last year, we are -- our guide -- we always call it like we see it, and it does show a bit of improvement there on both the top line and bottom line. So, I think like Chuck said, I think that the US is solid, and again, we're still cautious on outside the US and Europe and Asia.

不。我想補充一點，我認為我們確實對美國宏觀經濟以及商業和企業領域所看到的感到滿意。皮埃爾，我想說，就你的觀點而言，當你針對去年那額外的一周進行調整時，我們——我們的指導——我們總是實事求是地稱呼它，而且它確實顯示出頂線和底線都有所改善。所以，我認為就像查克所說的那樣，我認為美國經濟是穩固的，而且，我們仍然對美國、歐洲和亞洲以外的地區保持謹慎。

Great. Thanks, Kelly. Sam, we will go ahead and take our next question.

偉大的。謝謝，凱利。山姆，我們繼續回答下一個問題。

James Suva, Citi.

花旗銀行的詹姆斯蘇瓦 (James Suva)。

This is Justin on for Jim Suva. Thanks, Chuck and Kelly, for taking the question. I was just wondering if you could comment a little bit on your partnership with Ericsson? I know recently you've had a couple of different rollouts and then some good press releases in terms of what you are doing. I'm just wondering if you could maybe provide any updates or any milestones now that it's been about a year since you've had the partnership going? Thanks.

我是賈斯汀，為吉姆蘇瓦 (Jim Suva) 主持。感謝查克和凱利回答這個問題。我只是想知道您是否可以稍微評論一下您與愛立信的合作關係？我知道最近你們推出了一些不同的產品，並且就你們所做的事情發布了一些很好的新聞稿。我只是想知道，你們的合作關係已經過去了大約一年，您是否可以提供任何最新消息或里程碑？謝謝。

I think it was Justin, right? Justin, thanks for the question. It's pretty timely. In fact, we -- obviously, there's been a lot of uncertainty on the Ericsson side, and we believe that all the original business drivers that led us to establish the partnership with Ericsson are still very valid. I think we have had some 300 customer engagements together, and their new CEO came on board just about five weeks ago, I believe. And, we have been in a great deal of discussion since then on ways in which we could accelerate the partnership. He is committed to continuing and trying to make this as successful as we possibly can. We're going to meet again in Barcelona at Mobile World Congress, and I would say we're focused right now on how do we accelerate from here.

我認為那是賈斯汀，對嗎？賈斯汀，謝謝你的提問。非常及時。事實上，我們——顯然，愛立信方面存在著許多不確定性，我們相信，促使我們與愛立信建立合作關係的所有原始業務驅動力仍然非常有效。我認為我們已經與大約 300 名客戶進行了合作，我相信他們的新任執行長大約在五週前上任。自那時起，我們就如何加速合作進行了大量的討論。他致力於繼續努力並盡可能地取得成功。我們將在巴塞隆納的世界行動通訊大會上再次見面，我想說我們現在關注的是如何從這裡加速發展。

Thanks, Justin. Sam will go ahead and take the next question please.

謝謝，賈斯汀。請 Sam 回答下一個問題。

Paul Silverstein, Cowen and Company.

保羅·西爾弗斯坦（Paul Silverstein），考恩公司（Cowen and Company）。

If I could ask for a quick clarification and then a question. Kelly, I think last quarter you quantified the impact of the shift in the business model is over 2 percentage points in terms of the hit to growth as you increase your future visibility on the shift. Can you update -- I don't think I heard you give an update this quarter?

如果我可以要求快速澄清一下然後提出一個問題。凱利，我認為上個季度你量化了商業模式轉變的影響，隨著你提高對未來轉變的可見性，對成長的影響超過 2 個百分點。您能更新一下嗎—我想我沒有聽到您本季的更新？

I think what I say is between 1% and 2%. So, we are in that 1.5% to 2% range.

我認為我說的是在1%到2%之間。所以，我們處於 1.5% 到 2% 的範圍內。

Okay, and would that be your expectation on an ongoing basis?

好的，這會是您對未來的期望嗎？

Again, as we continue to accelerate the growth -- as we're continuing to grow it like we have been growing -- I referred it. It may get even more until it evens out, but in the last few quarters, it has been in that range.

再說一次，隨著我們繼續加速成長——隨著我們繼續像以前一樣成長——我提到了這一點。在達到平衡之前，它可能還會變得更高，但在過去的幾個季度中，它一直處於這個範圍內。

Thanks, Paul. Sam, we will take the next question.

謝謝，保羅。山姆，我們將回答下一個問題。

Mitch Steves, RBC Capital Markets.

加拿大皇家銀行資本市場 (RBC Capital Markets) 的米奇史蒂夫斯 (Mitch Steves)。

Thanks for taking my question. I want to circle back on the security piece. You have given out advanced threat numbers in the past and the breakdown there. So, how does the margin structure change as you grow the advanced threat and the web security piece versus the legacy security portfolio that you've had?

感謝您回答我的問題。我想再次回到安全問題。您過去曾給出預警威脅數字及其細目。那麼，隨著進階威脅和網路安全部分相對於您現有的傳統安全產品組合的成長，利潤結構如何變化？

We don't share gross margins by businesses, but I can tell you the margins are growing in our security portfolio overall between the mix of the growth in these areas and the acquisitions of the SaaS businesses we've been adding. So, it's very accretive to the Cisco average.

我們沒有分享各業務的毛利率，但我可以告訴你，在這些領域的成長和我們不斷增加的 SaaS 業務收購的共同作用下，我們安全產品組合的利潤率總體上正在增長。因此，它對思科的平均水準非常有增值作用。

Just one quick, small follow-up. Just on a repatriation potential, are you leaning more towards essentially M&A or buybacks or a dividend because you have raised it by 12% now. Just wondering how you think about that?

只需要一個快速、小小的後續行動。僅就匯回潛力而言，您是否更傾向於併購、回購或分紅，因為您現在已經將其提高了 12%。只是想知道您對此有何看法？

Mitch, first priority will be strategic investments that we will make, and then, obviously, followed with a focus on continued capital allocation and our commitment to returning capital to shareholders. It would be a combination.

米奇，我們的首要任務是進行策略性投資，然後顯然是專注於持續的資本配置和向股東返還資本的承諾。這將是一個組合。

Thanks, Chuck. Sam, let's go ahead and tee up for the next question.

謝謝，查克。山姆，我們繼續回答下一個問題。

Jeff Kvaal, Nomura.

野村證券的傑夫·克瓦爾。

Yes. Thank you very much for taking the question. One of the big themes with some of the other folks across the [com] landscape is web scale. That wasn't a major theme of the opening script. I am hoping that you could help us understand your positioning in web scale. Certainly in switching where the competition is heightened and also in routing and even DCI. Thank you.

是的。非常感謝您回答這個問題。網路規模是 [com] 領域中其他一些人關注的一大主題。這並不是開場腳本的主要主題。我希望您能幫助我們了解您在網路規模上的定位。當然，在交換領域競爭非常激烈，在路由領域甚至在 DCI 領域也是如此。謝謝。

Thanks, Jeff. So, as we look at MSDC what we've given you over the last few quarters is a very fixed list of 10 customers that we have given. And, I have said over and over that we have been spending a lot of time with these customers, really focused on understanding what their unique needs are. Frankly, some of them are so big they are a market of one unto themselves, and I'm very pleased with the progress we're making. If you look at those 10 just to give you the numbers this time. Overall, those 10 would be down, but if you normalize out one of those providers and you take the combination of the other nine, and that one had some pretty tough year-over-year comps. The other nine were up double digits, and we have one of the largest that was up triple digits for the second quarter in a row. So, I feel like we are making good progress, but we still have a long way to go.

謝謝，傑夫。因此，當我們查看 MSDC 時，我們在過去幾個季度中為您提供的是我們提供的 10 個客戶的固定清單。而且，我已經反覆說過，我們花了很多時間與這些客戶在一起，真正專注於了解他們的獨特需求。坦白說，其中一些市場規模很大，可以自成一體，我對我們的進展感到非常高興。如果你看一下這 10，這次只是為了給你數字。整體而言，這 10 家供應商的業績會有所下降，但如果你剔除其中一家供應商，並結合其他 9 家供應商的業績，你會發現，這家供應商的同比業績相當可觀。其餘九家公司的股價都上漲了兩位數，其中最大的一家公司連續第二個季度上漲了三位數。所以，我覺得我們正在取得良好的進展，但我們還有很長的路要走。

Thanks for the question, Jeff. We will go ahead and take the next question, Sam.

謝謝你的提問，傑夫。我們將繼續回答下一個問題，山姆。

Ittai Kidron, Oppenheimer.

伊泰·基德倫，奧本海默。

Thanks. Chuck, appreciate the opportunity. I guess I'm going to sound like a broken record and ask the same question I've asked over four or five quarters now which is your data center revenue. Your server business which has again continued to stay in range. Not showing much progress. How do you feel about the progress that you are making over there with hyperconverged? It just doesn't seem to be moving the dial [be it]? How do you resolve the issues in this business going forward?

謝謝。查克，感謝有這個機會。我想我會像老生常談一樣問出我已經問過四、五個季度的同一個問題，那就是你們的資料中心收入。您的伺服器業務再次繼續保持在範圍內。沒有顯示出太大的進展。您對超融合技術所取得的進展有何感想？它似乎沒有改變任何事？您今後將如何解決這項業務中的問題？

Thanks, Ittai. We can always count on you for that question. (laughter) First of all, I think in our next-gen data center switching portfolio, you can see continued performance and continued good adoption of those solutions from our customer base. I think on the hyperconverged, we certainly would like to see it moving more quickly. We have recently had a release of software that has helped with some of the capabilities, and I think that there are a couple more coming that should continue to give us more capabilities in that space. I think that we are also looking, as you would expect, at our broad strategy in the data center and where we need to go to ensure that we best position ourselves going forward. So, that work is going on as well right now, Ittai.

謝謝，伊泰。我們總是可以依靠您來回答這個問題。（笑聲）首先，我認為在我們的下一代資料中心交換產品組合中，您可以看到這些解決方案的持續性能和在我們的客戶群中的持續良好採用。我認為，在超融合方面，我們當然希望看到它發展得更快。我們最近發布了一款有助於實現某些功能的軟體，我認為即將發布的更多軟體應該會繼續為我們在該領域提供更多功能。我認為，正如您所期望的，我們也在研究我們在資料中心的整體策略，以及我們需要採取哪些措施來確保我們在未來處於最佳位置。那麼，這項工作現在也在進行中，Ittai。

Thanks, Chuck. Sam, let's go ahead and tee up the next question.

謝謝，查克。山姆，我們繼續討論下一個問題。

Vijay Bhagavath, Deutsche Bank Securities.

Vijay Bhagavath，德意志銀行證券。

Thanks. Hi Chuck, Kelly. I'd like to get bigger picture thoughts, Chuck and Kelly, on how you plan to broaden your senior management team? Any new areas or skill sets you will be looking for in the management team to drive profit and growth through the rest of this year and over the next few years? And, is the strategy focused primarily on doubling down on security, analytics, AI, automation?

謝謝。嗨，查克，凱利。查克和凱利，我想聽聽你們關於如何擴大高階管理團隊的更宏觀的想法？您希望管理團隊具備哪些新領域或技能，以在今年剩餘時間和未來幾年推動利潤和成長？而且，該戰略是否主要著重於加倍重視安全性、分析、人工智慧和自動化？

Vijay, don't mean to interrupt. Can you speak up just a little bit?

維傑，別想打斷我。你能稍微說點嗎？

We're having trouble hearing you.

我們聽不清楚你的聲音。

Can you hear me now?

現在你能聽到我說話嗎？

Not really. Try a little louder.

並不真地。試著大聲一點。

Okay. Is this better?

好的。這樣好些了嗎？

That's better.

那就更好了。

Okay. Chuck, my question was more on the senior management team. Any new skill sets, any new areas or avenues you will be looking for to round out the management team to drive top line growth? Or, will you primarily be doubling down on security, analytics, AI? Thank you.

好的。查克，我的問題更多的是關於高階管理團隊。您是否正在尋找任何新技能、新領域或途徑來完善管理團隊，從而推動營收成長？或者，您會主要加倍重視安全性、分析性和人工智慧？謝謝。

It's a great question. I think that when you look at the improvement we've been making around our transition to software and subscription business, you can assume that we will continue to look for people who have those kinds of capabilities. And, if you look at even the AppDynamics acquisition, David Wadhwani, who is their CEO, was one of the key drivers behind the software transition that occurred at Adobe so he very much understands how this transition will occur. You can assume that we are adding talent in the areas of artificial intelligence, machine learning, analytics, software skills around simplicity and automation. As you know if you look at our core, one of the biggest things are customers are looking for is to take out the cost of operating this infrastructure. And so, as we build out automation capabilities that allow them to very dynamically change their environments as opposed to the manual way it has been done in the past -- those skill sets as well. So, it's a combination of all those in addition to security and all the other areas you mentioned. So, it's broad-based.

這是一個很好的問題。我認為，當你看到我們在向軟體和訂閱業務轉型方面所取得的進步時，你可以假設我們將繼續尋找具有此類能力的人才。如果你看一下 AppDynamics 的收購，你會發現他們的執行長 David Wadhwani 是 Adob​​e 軟體轉型的關鍵推動者之一，因此他非常了解這種轉型將如何發生。您可以假設我們正在圍繞簡單性和自動化增加人工智慧、機器學習、分析、軟體技能等領域的人才。如你所知，如果你看一下我們的核心，你會發現客戶最希望的事情之一就是消除營運該基礎設施的成本。因此，隨著我們建立自動化功能，使他們能夠非常動態地改變他們的環境，而不是像過去那樣採用手動方式——這些技能也是如此。因此，除了安全性和您提到的所有其他領域之外，它還是所有這些領域的結合。所以，它具有廣泛的基礎。

Thanks for the question, Vijay. We'll go ahead and take the next question.

謝謝你的提問，維傑。我們將繼續回答下一個問題。

Steve Milunovich, UBS Securities.

瑞銀證券的史蒂夫·米盧諾維奇。

Thank you. Kelly, you mentioned the percentage of recurrent revenues, 31%. If you exclude services, are we still around 9% to 10% of product revenue being recurring? And, is there any way to turn that core routing switching business into something more recurring? We've never seen a hardware Company do that, if you will. But, through ELAs or something else, is there any way to turn that into little more of a subscription -- consistent basis?

謝謝。凱利，您提到了經常性收入的百分比，即 31%。如果不包含服務，我們的產品收入中是否仍有約 9% 到 10% 是經常性收入？那麼，有什麼方法可以將核心路由交換業務轉變為更具經常性的業務嗎？如果你願意這麼說的話，我們從來沒有看過硬體公司這樣做。但是，透過 ELA 或其他方式，有沒有辦法將其轉變為更一致的訂閱方式？

That's a great question, Steve. So, actually, product as a percentage of my total product revenue -- it is up to 10% now this quarter for the first time. So, we're happy about that. And, we are trying to make that shift in the core part of the business. Cisco 1 is an example of where we are taking our ELAs and our big cross-enterprise ELAs that really are our core networking business to do that. So, we're trying to find ways to find other offers.

史蒂夫，這個問題問得真好。因此，實際上，產品收入占我總產品收入的百分比——本季首次達到 10%。所以，我們對此感到高興。而且，我們正在嘗試在業務的核心部分實現這一轉變。思科 1 就是一個例子，我們正在利用我們的 ELA 和大型跨企業 ELA（實際上是我們的核心網路業務）來實現這一點。因此，我們正在嘗試尋找其他優惠的方法。

I will just point to another example though like the Spark Board that Chuck mentioned. It's a great new innovation and extension of TelePresence, but it's a great example of where we are selling that -- we used to sell it always as a system, now we're selling the equipment. But, we are selling it with a subscription. So, that's an example of how we have been able to drive new offers that had been traditionally just pure system or hardware. And, again, the teams are driving hard to find more ways to accelerate new offers that way.

我只想指出另一個例子，例如 Chuck 提到的 Spark Board。這是 TelePresence 的一項偉大的創新和擴展，也是我們銷售該產品的一個很好的例子 —— 我們過去總是將其作為一個系統來銷售，現在我們銷售的是設備。但是，我們透過訂閱的方式來銷售它。所以，這就是我們如何能夠推動傳統上只是純系統或硬體的新產品的一個例子。而且，團隊正在努力尋找更多方法來加速提供新的產品。

Steve, I want to just make a couple comments on this. One, if you look -- six quarters ago when I came into the job, our overall revenue -- our recurring revenue was 26%. In the first four quarters, we spent time taking our teams and helping our teams understand the transition that we were going to make. So, in the first four quarters, we gained 2 points. We took it up to 28%, and in the last two quarters, we've added 3 points. So, we've accelerated it. It has gone to 31% in the last two quarters. And, on the product side, that went from 6% to 7% in the first year, and then in the last two quarters, it's gone from 7% to 10%. I think we are finding ways to move that forward.

史蒂夫，我只想就此發表幾點評論。首先，如果你看一下——六個季度前，當我上任時，我們的總收入——經常性收入是 26%。在前四個季度，我們花了一些時間帶領我們的團隊並幫助我們的團隊了解我們將要進行的轉變。所以，前四節我們只拿到了2分。我們將這一比例提升到了 28%，並且在最後兩個季度中又增加了 3 個百分點。因此，我們加快了這一進程。過去兩個季度，這一比例已升至 31%。從產品方面來看，第一年從 6% 上升到 7%，而後兩季又從 7% 上升到 10%。我認為我們正在尋找推動這一進程的方法。

As it relates to the core, I think you'll see us come out with services around automation and analytics and other things that will be sold as subscriptions on top of the platforms. And, the last thing I will tell you is that we pulled some of -- one of the key leaders from the security portfolio who had really driven the whole product management portion of that transition to the heavy content of software and subscription that you see today, and he is now leading that for us in our core networking space in the enterprise networking. So, it's clearly a focus that he is trying to drive for us.

就核心而言，我想您會看到我們推出圍繞自動化和分析的服務以及其他將在平台上以訂閱形式出售的服務。最後我要告訴你們的是，我們從安全產品組合中抽調了一位關鍵領導者，他真正推動了整個產品管理部分向今天所見的軟體和訂閱的大量內容的轉變，現在他正在領導我們企業網絡的核心網絡領域。所以，這顯然是他試圖為我們推動的重點。

We will take the next question.

我們將回答下一個問題。

Mark Moskowitz, Barclays.

巴克萊銀行的馬克·莫斯科維茨。

Thanks. Good afternoon. Just following up on the cash repatriation M&A question, Chuck. Just want to get a sense going forward, should we think about a continuation of more of the string of pearls approach similar to AppDynamics? Or, can you make more sizable acquisitions? And then, Kelly, I wanted to get a sense if you could help us understand how we should think about deferred revenue, clearly growing nicely. What is the feedback loop 1 year, 1.5 years out from now in terms of does gross margin start to trend higher because of the deferred revenue mix is becoming [richer] in configuration? Thank you.

謝謝。午安.查克，我只是想跟進一下現金遣返併購問題。只是想了解未來的情況，我們是否應該考慮延續更多類似 AppDynamics 的珍珠串方法？或者，你能進行更大規模的收購嗎？然後，凱利，我想知道你是否可以幫助我們理解我們應該如何看待遞延收入，顯然遞延收入成長良好。就毛利率是否會因為遞延收入組合的配置變得更加豐富而開始呈上升趨勢而言，1 年或 1.5 年後，反饋循環是怎樣的？謝謝。

Mark, first off, I'll take the repatriation and the M&A question, and Kelly, you can take the next one. So, you are free to make comments on mine as well. (laughter) I think our M&A strategy is going to remain intact. Repatriation doesn't fundamentally change how we think about what we're going to do going forward. You can assume that we will continue to look for opportunities to drive the business value and the relevance to our customers like we did with AppD. They have a tremendous platform that really translates application analytics to real business performance information for our customers.

馬克，首先，我來回答有關遣返和併購的問題，凱利，你可以回答下一個問題。所以，您也可以自由地對我的評論發表評論。（笑聲）我認為我們的併購策略將保持不變。遣返不會從根本上改變我們對未來行動的看法。您可以假設我們將繼續尋找機會來推動業務價值和與客戶的相關性，就像我們對 AppD 所做的那樣。他們擁有一個強大的平台，可以真正將應用程式分析轉化為客戶的實際業務績效資訊。

And, just to comment on AppDynamics, they have a very robust enterprise solution that is delivered either from the cloud or on-premise and can be delivered to the customer on-premise or in the cloud. So, it's very flexible. And, they basically have 275 of the Fortune 2000, and they really have never had a substantial partner model. Those are the reasons we think that makes a lot of sense. So, strategic alignment and the ability for us to take it through our ecosystem are always positive. Kelly, comments on the deferred and the margins?

並且，僅就 AppDynamics 進行評論，他們擁有非常強大的企業解決方案，該解決方案可以透過雲端或本地交付，並且可以在本地或雲端交付給客戶。所以，它非常靈活。而且，他們基本上擁有《財富》2000 強中的 275 家企業，但他們實際上從未擁有過實質的合作夥伴模式。我們認為這些理由非常合理。因此，策略協調以及我們透過生態系統實現策略協調的能力始終是積極的。凱利，對於延期和利潤有何評論？

On the deferred, Mark, that is part of why we're trying to make this shift to software. Our customers want those offers and to have an easier way to run their IT departments. It clearly enables us to get higher margins, for sure. And, it's not only just the gross margins coming out of deferred revenue, but we are looking at our whole end-to-end operations and how we go to market, how we drive operations in the back end here. And, there is really opportunities to drive both gross margins and operating margins. So, that's why we are so focused on it. That's why we are looking at acquisitions to add to it, and it will continue to help improve our mix on the margins line.

關於延期，馬克，這就是我們試圖轉向軟體的部分原因。我們的客戶希望獲得這些優惠，並希望能夠以更簡單的方式來營運他們的 IT 部門。顯然，它確實能讓我們獲得更高的利潤。而且，這不僅是來自遞延收入的毛利率，我們還在關注整個端到端營運以及我們如何進入市場，如何推動後端營運。而且，確實存在提高毛利率和營業利益率的機會。所以，這就是我們如此關注它的原因。這就是為什麼我們正在考慮透過收購來擴大業務，這將繼續幫助我們改善利潤組合。

Thanks, Chuck and Kelly. Sam, let's go ahead and take the next question.

謝謝，查克和凱利。山姆，我們繼續回答下一個問題。

James Faucette, Morgan Stanley.

摩根士丹利的詹姆斯·福塞特。

Thank you very much. I just wanted to ask about product gross margins. They were a bit weaker than we had at least modeled, and I think in the 8-K, there's some indication that there was some pricing. But, I would like some more color there. Particularly, one thing that we noticed that the APAC margins were look particularly weak. Is this related to customer, geography? Just a little help on understanding where the pressures are on [product gross] margin?

非常感謝。我只是想問一下產品毛利率。它們比我們至少建模的要弱一些，我認為在 8-K 中，有跡象表明存在一些定價。但是，我希望那裡能有更多的顏色。特別是，我們注意到亞太地區的利潤率看起來特別低。這與客戶、地理位置有關嗎？能否提供一點幫助，幫助我了解[產品毛]利率的壓力在哪裡？

Sure, I will take that one and a great question. Gross margins, we have been -- again, continue to operate well. I will say there were two specific headwinds that we faced this quarter. And, to your point on APJC, I will refer back to a year ago we were benefiting from a national program in China where they were rolling out set-top boxes to tier 2 and tier 3 cities. Not our set-top boxes, but we were providing the smart cards to go with that which were -- they are basically for secure access, and it was very, very high margin. So, we had if you go back a year ago, SP Video in Asia was extremely strong because of that. That program has dramatically slowed down. And, again, that pure margin just isn't there any more, and you are seeing that flow through both the margins and the year-over-year revenues for both SP Video and APJC.

當然，我會回答這個問題，這是一個很好的問題。毛利率，我們一直——再次，繼續保持良好運行。我想說的是，本季我們面臨兩個具體的阻力。關於您提到的 APJC，我想回顧一下一年前我們受益於中國的一項國家計劃，當時他們正在向二線和三線城市推出機上盒。不是我們的機上盒，而是我們提供與之配套的智慧卡——它們基本上用於安全訪問，而且利潤非常高。因此，如果你回顧一年前，你會發現 SP Video 在亞洲非常強大。該計劃已大幅放緩。而且，純利潤率不再存在，你會看到它流入了 SP Video 和 APJC 的利潤率和年收入。

The other item that's a headwind for us this quarter is we are facing a significant cost increase to our memory costs -- our DRAM memory costs that we are paying. It's a very tight supply right now. And, we are seeing dramatic increases there. So, that's hurting us quite a bit as well. But, other than that, I would say the color is in the same line. Our pricing is in the ranges that we have been the last six to eight quarters. I'd say a little on the higher end, but in line with where we were Q3, Q4. A little worse than last quarter, but we were very low last quarter. So, in the normal ranges. It really those two specific things. I will say that I do anticipate those two headwinds to remain there next quarter as well as we had very strong SP Video -- that China program in Q3 as well.

本季對我們來說另一個不利因素是，我們的記憶體成本（即我們所支付的 DRAM 記憶體成本）大幅增加。目前供應非常緊張。而且，我們看到那裡正在急劇增加。所以，這也為我們帶來了極大的傷害。但是，除此之外，我想說顏色是相同的。我們的定價與過去六至八個季度的定價範圍一致。我想說的是，這個數字略高一些，但與我們第三季、第四季的水平一致。比上一季稍差一點，但上一季我們的表現非常低迷。所以，在正常範圍內。這確實是兩件具體的事情。我想說的是，我確實預計這兩大不利因素將在下個季度繼續存在，我們在第三季的中國專案 SP Video 也表現非常強勁。

Let's go ahead and take the next question, Sam.

我們繼續回答下一個問題，山姆。

Jess Lubert, Wells Fargo Securities.

傑斯‧盧伯特 (Jess Lubert)，富國證券。

Hi. Thanks for taking my question and congrats on a nice quarter. First, just had a clarification. There were a number of articles regarding a faulty clocking component over the last few weeks. Just wanted to see if you could comment to what degree that is or isn't impacting customer activities? And then, the question -- I was hoping you might be able to update us in a little greater detail regarding the trends you're seeing in the service provider vertical? You mentioned some encouraging order development? So, was hoping you could help us understand what you are seeing across geographies? What you are seeing from a product perspective? And, to what degree that improvement is coming from routing optical security or some other part of the service provider business?

你好。感謝您回答我的問題，並祝賀您本季取得了良好的業績。首先，我只是想澄清一下。過去幾週，有許多關於故障時鐘組件的文章。只是想看看您是否可以評論一下這在多大程度上影響或不影響客戶活動？然後，問題是——我希望您能夠更詳細地介紹您在服務提供者垂直領域中看到的趨勢？您提到了一些令人鼓舞的訂單發展？那麼，希望您能幫助我們了解您在不同地區看到的情況嗎？從產品角度您看到了什麼？並且，這種改進在多大程度上來自於路由光學安全或服務提供者業務的其他部分？

Sure. I will start on the supplier component issue. So, yes, those articles are out there. We have had an issue from a supplier come out. And, we did book a reserve for $125 million you can see in our GAAP results and in the press release to cover that. We always and continue to stand by our customers through any situations like this. This is very proactive. This is a failure rate that will happen over time, but we are working with our customers to work through that so we're not anticipating any impact from that from a top line perspective.

當然。我將從供應商組件問題開始。是的，這些文章確實存在。我們遇到了來自供應商的問題。而且，我們確實預留了 1.25 億美元的儲備金，您可以在我們的 GAAP 結果和新聞稿中看到這一點。無論發生什麼情況，我們都會始終支持我們的客戶。這是非常積極主動的。這種故障率會隨著時間推移而發生，但我們正在與客戶合作解決這個問題，因此從營收角度來看，我們預計這不會產生任何影響。

I will take the SP portion, Kelly. So, Jess, on the service provider space, it's really similar to last time. We talked about SP CapEx -- different service providers are looking at different areas of investment depending on what's going on in their network. So, you have some who are looking at macro radio densification as an example, and others are looking at building out capacity in the quarter. And so, we have -- and it's a segment that is very dominated by large customers.

我將負責 SP 部分，凱利。所以，傑西，在服務提供者領域，情況與上次非常相似。我們討論了 SP CapEx——不同的服務提供者根據其網路的狀況考慮不同的投資領域。因此，有些人正在以宏無線電密集化為例進行研究，而其他人則正在考慮在本季度擴大容量。所以，我們有——這是一個由大客戶主導的領域。

So, from a quarter-to-quarter basis, any number of customers that make any shift in their buying behavior can have an impact either positively or negatively. It's a space that I will just encourage you to look at longer term, but we did see -- we saw a definite improvement. We saw -- I would say from a regional perspective what I would tell you is the Americas was very strong. And, we saw general weakness in Europe and then the China space you had a lot of this SP Video implication that Kelly was talking about earlier. So, overall, I think the teams did a great job. We have -- I think the teams are working incredibly well on the next generation of capabilities in the platforms and in some of the software and automation and some of the same themes that we've been talking about in the enterprise core networks. I feel good about where they are right now.

因此，從季度來看，任何數量的客戶在購買行為上做出的任何轉變都可能產生積極或消極的影響。我只是鼓勵你們從長遠角度看待這個領域，但我們確實看到了——我們看到了明顯的改善。我們看到—我想從地區角度來說，美洲的表現非常強勁。而且，我們看到歐洲和中國市場普遍疲軟，這在很大程度上反映了凱利之前談到的 SP 影片的暗示。所以，總的來說，我認為團隊表現非常出色。我認為，我們的團隊在平台的下一代功能、某些軟體和自動化以及我們在企業核心網路中討論的一些相同主題方面做得非常出色。我對他們現在的處境感到很滿意。

Thanks for the question, Jess. We'll go ahead and take the next question, Sam.

謝謝你的提問，傑西。我們繼續回答下一個問題，山姆。

Simon Leopold, Raymond James.

西蒙李奧波德、雷蒙詹姆斯。

Great. Thank you for taking my question here. I wanted a little bit of hand-holding and help with interpreting this deferred revenue growth. 51%, obviously, a very big number. Looking at the balance sheet, it looks like it rose year-over-year by about $1.9 billion, and you talked about the total of software and recurring revenue at $4 billion. Could you help us get a better understanding of what are the components? And, I'm presuming there are some elements that maybe are growing much slower, some growing faster. So, help us understand what are the big drivers for that 51% growth. Thank you.

偉大的。感謝您在這裡回答我的問題。我需要一些指導和幫助來解釋這種遞延收入成長。51%，顯然是一個非常大的數字。從資產負債表來看，它似乎比去年同期增長了約 19 億美元，而您談到的軟體和經常性收入總額為 40 億美元。您能幫助我們更了解這些組件是什麼嗎？而且，我推測有些元素可能會成長得慢得多，而有些元素則成長得快得多。那麼，請幫助我們了解實現 51% 成長的主要驅動力是什麼。謝謝。

Sure. So, that 51% growth is year-over-year growth of over $1.3 billion. And, everything is growing in that space. I would say from a pure size, collaboration and security and Meraki are the biggest pieces of that because they have just continued to grow their businesses significantly, and they are all growing huge double digits. But, I will also say my switching and my routing as well as data center, we've done fiscal one bundles as well as big enterprise license agreements. They've also been growing huge double digits as well. So, at the end of the day, the year-over-year increases across the board, everything is up massively to drive to that 51%. And, again, just the biggest chunk of it between collaboration, security, and wireless, they are two-thirds I would say of the balance but the other pieces -- .

當然。因此，51% 的成長意味著同比增長超過 13 億美元。並且，一切都在那個空間裡生長。我想說，從純粹的規模來看，協作、安全和 Meraki 是其中最重要的部分，因為它們的業務一直在持續大幅成長，而且都實現了兩位數的大幅成長。但是，我還要說，我的交換和路由以及資料中心，我們已經完成了財務捆綁以及大型企業許可協議。他們也一直保持著兩位數的成長。因此，最終，所有方面都實現了同比增長，一切都大幅上漲，推動達到了 51% 這一水平。而且，再說一次，其中最大的一塊是協作、安全和無線，我想說它們佔據了平衡的三分之二，但其他部分——。

Wireless being Meraki.

無線電就是 Meraki。

Wireless being Meraki, yes. Hopefully, that gives you the color you are looking for.

是的，無線就是 Meraki。希望這能給你想要的顏色。

All right. Thanks, Kelly. Sam, let's go ahead and take that next question.

好的。謝謝，凱利。山姆，我們繼續回答下一個問題。

Jayson Noland, Robert Baird. Okay, great. Thank you. Kelly, just to clarify. There is no expectation of revenue or earnings impact from this clock issue in the current quarter?

傑森諾蘭、羅伯特貝爾德。好的，太好了。謝謝。凱利，只是想澄清一下。預計本季的時鐘問題不會對收入或收益產生影響嗎？

Not as of right now. Again, we're working very proactively with our customers in terms of how quickly and where they want to do their replacement. So, we're working very, very closely. But, as of right now, we have not seen and don't anticipate any massive revenue impact from this.

目前還沒有。再次強調，我們正積極主動地與客戶合作，了解他們希望以多快的速度以及在何處進行更換。所以，我們的合作非常非常緊密。但截至目前，我們還沒有看到、也不預期這會對收入產生任何巨大的影響。

All right. Thank you. That was our last question for today. I'm going to turn it over to Chuck for some closing remarks.

好的。謝謝。這是我們今天的最後一個問題。我將把發言權交給查克，請他做最後的總結發言。

Just a couple of comments, and first of all, I want to just thank you all again for joining us today. We did deliver strong innovation, I believe, which was reflective in the performance that we've had in security collaboration, next-gen data center, and we continue to drive innovation in our core enterprise and SP portfolio. The deferred revenue from our subscription and software business is indicative, I think, of the transition that you should continue to expect from us. We will continue to focus on driving profitable growth with productivity and operational efficiencies, and you also can count on the fact that we remain very committed to our shareholder return as was indicated in both our buybacks and our dividend, and then, the increase in the dividend this quarter. So, I just want to thank all of you for being with us today. And then, Marilyn, I will let you take it from here. Thank you.

只是幾則評論，首先，我再次感謝大家今天的參加。我相信，我們確實實現了強大的創新，這反映在我們在安全協作、下一代資料中心方面的表現上，我們將繼續推動核心企業和 SP 產品組合的創新。我認為，我們訂閱和軟體業務的遞延收入表明了您應該繼續期待我們的轉型。我們將繼續致力於透過提高生產力和營運效率來推動獲利成長，您也可以相信，我們仍然非常致力於股東回報，正如我們的回購和股息以及本季股息的增加所表明的那樣。所以，我只想感謝大家今天與我們同在。然後，瑪麗蓮，我就讓你從這裡拿走它。謝謝。

Thank you, Chuck. Cisco's next quarterly earnings conference call which will reflect all our FY17 third quarter results will be on Wednesday, May 17, 2017 at 1.30 PM Pacific time, 4.30 PM Eastern time. Again, I'd like to remind the audience that in light of regulation FD, Cisco's policy is not to comment on its financial guidance during the quarter unless it is done through an explicit public disclosure. We now plan to close the call. If you have any further questions, feel free to reach out and contact the Cisco investor relations group, and we thank you very much for joining the call today.

謝謝你，查克。思科的下一次季度財報電話會議將於 2017 年 5 月 17 日星期三太平洋時間下午 1:30、東部時間下午 4:30 舉行，屆時將反映我們 2017 財年第三季的所有業績。再次，我想提醒觀眾，根據公平揭露條例，思科的政策是不對其本季的財務指引發表評論，除非透過明確的公開揭露進行評論。我們現在計劃結束通話。如果您有任何其他問題，請隨時聯繫思科投資者關係小組，非常感謝您今天參加電話會議。

Thank you for participating on today's conference call. If you would like to listen to the call in its entirety, you may call 1-866-357-1423. For participants dialing from outside the US, please dial 1-203-369-0115. This concludes today's call. You may disconnect at this time.

感謝您參加今天的電話會議。如果您想完整收聽電話會議，請撥打 1-866-357-1423。對於從美國境外撥打電話的參與者，請撥打 1-203-369-0115。今天的電話會議到此結束。您現在可以斷開連線。