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31
Driving Shareholder Value Kelly Kramer Executive Vice President, Chief Financial Officer June 9, 2015

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Driving Shareholder Value

Kelly Kramer

Executive Vice President, Chief Financial Officer

June 9, 2015

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This presentation contains projections and other forward-looking statements regarding future events

or the future financial performance of Cisco, including future operating results. These projections and statements are only

predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements. Please

see Cisco’s filings with the SEC, including its most recent filings on Form 10-K and Form 10-Q, for a discussion of important risk

factors that could cause actual events or results to differ materially from those in the projections or other forward-looking statements.

During this presentation references to historical financial measures of Cisco will include references to non-GAAP financial measures.

Cisco provides a reconciliation between GAAP and non-GAAP financial information on our website at www.cisco.com under

“Financial Info” in the “Investor Relations” section.

http://investor.cisco.com/investor-relations/financial-information/Financial-Results/default.aspx

Non-GAAP measures for future periods would not include, when applicable, share-based compensation expense, amortization of

acquisition-related intangible assets, impact to cost of sales from purchase accounting adjustments to inventory, acquisition-

related/divestiture costs, significant asset impairments and restructurings, significant litigation settlements, the income tax effects of

the foregoing, significant tax matters, and other items that Cisco may exclude from time to time in the future, such as significant

gains or losses from contingencies.

Forward-looking Statements

GAAP Reconciliation

Cisco and/or its affiliates. All rights reserved. Cisco Public 2 Investor Day 2015

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Cisco and/or its affiliates. All rights reserved. Cisco Public Investor Day 2015

Profitable Growth Strategic Investments Capital Return

Core Financial Values

Cisco and/or its affiliates. All rights reserved. Cisco Public 3 Investor Day 2015

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Leading Market Share

#1 = 9 | #2 = 2

50% 46% 45% 31% 34%

14%

77% 53% 67% 50% 39%

#1 ENT

Routing

#1 Wireless

LAN

#1 Switching:

Modular / Fixed

#1 Voice #1 SP

Routing

#2 Storage:

Area Networks

#1

TelePresence

#1 Web

Conferencing

#2 X86

Blade Servers

#1 Network

Security

#1 Cloud

Infrastructure*

Cisco and/or its affiliates. All rights reserved. Cisco Public 4 Investor Day 2015

Source: Dell’Oro, Synergy, Infonetics, ACG; Q1’CY15 Market share data

Cisco Network Security share DOES include Sourcefire; Web Conferencing is SaaS

* Q4’CY14 Synergy data

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Cisco and/or its affiliates. All rights reserved. Cisco Public Investor Day 2015

Cisco Competitive Advantage

Source: Dell’Oro, Synergy, Infonetics, ACG; Q1’CY15 Market share data

Cisco Network Security share DOES include Sourcefire; Web Conferencing is SaaS

Competitors listed above are not the only competitors in these markets and share shown is relative share versus listed competitors

* Q4’CY14 Synergy data

Cisco

Huawei

HP

Juniper

Brocade

Rest of Market

Cisco

Alcatel-Lucent

Juniper

Ericsson

Huawei

Rest of Market

Cisco

HP

Huawei

Juniper

Arista

Rest of Market

Cisco

Avaya

Mitel

Unify

Microsoft

Rest of Market

Cisco

Aruba

Ruckus

HP

Rest of Market

Cisco

Brocade

HP

Qlogic

Rest of Market

Cisco

Polycom

Huawei

Logitech

Vidyo

Rest of Market

Cisco

Citrix

Microsoft

Adobe

Intercall

Rest of Market

Cisco

Checkpoint

PAN

Fortinet

Dell

Juniper

McAfee

Rest of Market

Cisco

HP

Lenovo

Dell

Hitachi

Rest of Market

Cisco

HP

Microsoft

Dell

IBM

#1 ENT

Routing

#1 Wireless

LAN

#1 Switching:

Modular / Fixed

#1 Voice #1 SP

Routing

#2 Storage:

Area Networks

#1

TelePresence

#1 Web

Conferencing

#2 X86

Blade Servers

#1 Network

Security

#1 Cloud

Infrastructure*

Cisco and/or its affiliates. All rights reserved. Cisco Public 5 Investor Day 2015

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Cisco and/or its affiliates. All rights reserved. Cisco Public Investor Day 2015

Performance Against Our Financial Strategy

Revenue $B

CAGR = 3%

Delivering EPS growth

with expanding

Operating Margins

Executing portfolio trade-offs to fund growth areas

Enhancing software and

service offerings to drive

growth and profitability

$1.62

$1.85

$2.02 $2.06 $2.18

FY11 FY12 FY13 FY14 FY15E

Non-GAAP EPS $

CAGR = 8%

$43

$46 $49

$47 $49

26%

28%

28% 28%

29%

FY11 FY12 FY13 FY14 FY15E

RevenueNon-GAAP Operating Margin

FY15E assumes mid-point of Q4’15 guidance

Cisco and/or its affiliates. All rights reserved. Cisco Public 6 Investor Day 2015

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Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15

Product Orders Growth… Tale of Two Cities

Executing well in

Commercial,

Enterprise and Public

Sector

Increasing relevance

with SPs driving

wallet share

When SP and/or EM

return to growth…

~1-3pts on total

product orders

(4%) 1%

1%

1% 5%

2%

0% 6% 9% 9% 10% 8%

(8)% (5)% (9)% (9)% (1)% (5)%

(4%)

3%

(12)%

Total

Product

SP &

Emerging

Markets

Rest of

Business

Cisco and/or its affiliates. All rights reserved. Cisco Public 7 Investor Day 2015

YoY Growth Rates

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Business Becoming More Predictable

Product Deferred growth driven by subscription

businesses (41% of total, up from 22% in FY11)

- Meraki, Security, Collaboration

- Software, ELAs

Product Subscription Deferred 4-yr CAGR >25%

~20% of NTM secured and ~10% of following year

Driving more software as well as recurring revenue

FY11 FY15E

$12

$15

4-yr CAGR

5%

9%

4% Service

Product

Deferred Revenue

The FY15E amount is an estimate. Actual results may differ materially due to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

$B

Cisco and/or its affiliates. All rights reserved. Cisco Public 8 Investor Day 2015

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Driving Operational Excellence

Incremental Growth

$0.08 of Opex for every $1.00 of

Incremental Revenue Growth

Disciplined Opex Management

Rigorous portfolio management

Driving efficiencies to create

capacity to invest

Investing in strategic long-term

growth areas

$43.2 $48.7

$16.0 $16.4

FY11 LTM

Revenue

Non-GAAP Opex

$5.5B

$0.4B

$B

Cisco and/or its affiliates. All rights reserved. Cisco Public 9 Investor Day 2015

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70%

30%

Material Shift of R&D Portfolio to Fuel Profitable Growth

78%

22%

FY14 R&D $5.4B

FY15E R&D ~$5.5B

Security, Software, & Cloud

Security, Software, & Cloud

Disciplined and deliberate

portfolio planning

Shifting investment to key

growth areas

– Meraki, Security, Collab,

Cloud, Virtualization, SDN

Within Core – dynamic

shifts… over $1B

– To Web 2.0 accounts

– Packet Optical

Non-GAAP R&D

Cisco and/or its affiliates. All rights reserved. Cisco Public 10 Investor Day 2015

The FY15E amount is an estimate. Actual results may differ materially due to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

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Strong Cash Flow Generation

FY05 FY07 FY09 FY11 FY13 FY15E

Operating Cash Flow

Acquisitions

10-year CAGR = 5%

$8

~$13

Cisco and/or its affiliates. All rights reserved. Cisco Public 11 Investor Day 2015

$B

Acquisitions

Capital Expenditures

Share

Repurchase

Dividend

Primary Uses of Cash

FY05-FY15E

The FY15E amount is an estimate. Actual results may differ materially due to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

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Cisco and/or its affiliates. All rights reserved. Cisco Public Investor Day 2015

Driving Strong Shareholder Returns

$0.24

$0.32

$0.68

$0.76

$0.84

FY11 FY12 FY13 FY14 FY15

Annualized Dividend per Share

CAGR = 37%

FY02 FY06 FY10 FY14

Reduction in Share Count

Share Repurchase # Shares Outstanding

% FCF Returned ($B) 7.4B Diluted shares outstanding YTD

5.2B

31% reduction; 2.3B shares FY11 $7 84%

FY12 $6 57%

FY13 $6 52%

FY14 $13 120%

FY15E ~$8 ~72%

Dividends per share is Q4 annualized

Cisco and/or its affiliates. All rights reserved. Cisco Public Investor Day 2015 12

The FY15E amount is an estimate. Actual results may differ materially due to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

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FY11 FY12 FY13 FY14 3Q’15YTD

Rev Growth 8% 7% 6% (3)% 4%

GM % 63% 62% 63% 62% 63%

Opex % Rev 37% 35% 34% 34% 34%

Op Margin % 26% 28% 28% 28% 29%

EPS Growth 1% 14% 9% 2% 7%

Div Payout Ratio 15% 17% 34% 37% 39%

Our Scorecard Strong Execution and Discipline

Back to growth

Steady Gross Margins

Driving efficiencies

Expanding Margins

Growing faster than Rev

Growing with Earnings

Annualized dividend per share divided by Non-GAAP EPS

All numbers Non-GAAP except revenue growth

13

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Future Growth and Profitability

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$25B

FY15E 3-5 Years

~2-4%

CAGR

Revenue $B Large Market … maintaining leadership position

Strong track record of managing price / performance

Continued innovation

Leading with Solutions… VMS, IOT, Connected Lighting,

IWAN

Refresh cycle in Campus, WAN, Branch, Wireless Wave 2

Great traction with Nexus 9K and ACI

Maximizing 10G / 40G / 100G transition

FY15E assumes mid-point of Q4’15 guidance

This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular period may differ materially due

to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

Switching, Wireless and Routing Driving Solid Growth

Cisco and/or its affiliates. All rights reserved. Cisco Public 15 Investor Day 2015

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$3B

FY15E 3-5 years

~20-25%

CAGR

Accelerating Data Center

FY15E assumes mid-point of Q4’15 guidance

This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular period may differ materially due

to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

Public, Private, Hybrid Clouds driving opportunity

Driving Converged Infrastructure for Data Centers

Delivering solutions: Big Data, Analytics, VDI

Developing New Technology stacks for the digital world:

OpenStack… Metacloud, Piston

Innovating portfolio of new offerings with UCS Mini,

modular servers and storage optimized servers

Cisco and/or its affiliates. All rights reserved. Cisco Public 16 Investor Day 2015

Revenue $B

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Enabling Cloud

$5B

FY15E 3-5 years

Cloud

Applications

Security

Collaboration

Video

Cloud

Infrastructure

Networking

Servers

Services

~20-30%

CAGR Revenue $B

CIMK v1.0

FY15E assumes mid-point of Q4’15 guidance

This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular period may differ materially due

to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

Industry Leading Cloud Infrastructure Portfolio

Accelerating our Cloud Based Applications and Services

Growing Hybrid Cloud Ecosystem and Innovation…

Intercloud

Secure workload portability across private and public

clouds

Cisco and/or its affiliates. All rights reserved. Cisco Public 17 Investor Day 2015

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~10-15%

CAGR

Revenue $B

FY15E 3-5 years

Differentiating with Security

$2B

FY15E assumes mid-point of Q4’15 guidance

This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular period may differ materially due

to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

Solving customers #1 challenge… Cybersecurity

Broad portfolio across the attack continuum – Before, During

and After

Security Services – Advisory, integration, managed

Integration across the broader Cisco portfolio – ACI, Routing

/Switching, IoT

Accelerated Services and AMP growth

Driving Portfolio to Software and Recurring Revenue

Cisco and/or its affiliates. All rights reserved. Cisco Public 18 Investor Day 2015

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Enhancing Growth and Margins through Software

Unlocking software value and building a recurring revenue

business

Higher software mix with shift from a la carte features to full

solution suites (Cisco One)

Drive strategic multi-year customer relationships via ELAs

Expanding TAM into adjacent markets such as Data &

Analytics

Increasing growth via on-prem and cloud subscriptions in

Security, Collaboration, Meraki

Software offerings drive increased infrastructure spend FY12 FY15E 3-5 years

$6

$9

~10-15%

CAGR

FY15E assumes mid-point of Q4’15 guidance

This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular period may differ materially due

to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

Cisco and/or its affiliates. All rights reserved. Cisco Public 19 Investor Day 2015

Revenue $B

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IoE win… Connected Factory 3

Wallet Share Gain in Security, Switching & Routing 2

Enterprise Wide ELA

Multi-year deal to license Cisco's full

software portfolio

Selling solutions vs. boxes drives

increased stickiness with customer

Drove share of wallet and new TAM into

IoE

Significant ROI generated for

customer… technology protection,

security

Drives greater speed and flexibility to

drive business value

Use Case… One Year On…

Enterprise Wide ELA

Scope: Software - OS, Application S/W S/W Upgrades and Maintenance Support Term: 6 Years

Solving Customers IT problems vs. Vendor

1

20

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$11B

FY15E 3-5 years

Services as a Platform for Growth

~4-7%

CAGR

FY15E assumes mid-point of Q4’15 guidance

This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular period may differ materially due

to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

Expanding our Portfolio of Service Offers

Enhance and Optimize Customers’ Investments

Through Smart Analytics

Land, Adopt, Expand, Renew

Delivering Solutions Linked to Customers’ Business

Outcomes

IoE drive incremental opportunity

Cisco and/or its affiliates. All rights reserved. Cisco Public 21 Investor Day 2015

Revenue $B

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Cisco and/or its affiliates. All rights reserved. Cisco Public Investor Day 2015

Acquisitions… Focused on Cloud, Security and Software

*

*Announced but not closed

Cisco and/or its affiliates. All rights reserved. Cisco Public 22 Investor Day 2015

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Future Long-term Value for Shareholders

Network at the core of the digital age

Capture growth opportunities

Drive recurring revenue model

Driving value through software, solutions and services

Wildcards Service Providers/Emerging Markets

Growth over 3-5 Years

FY15E 3-5 years

$49B

Total CAGR ~3% - 6%

Growth Drivers (CAGR)

Switching, Wireless, Routing 2% - 4%

Data Center 20% - 25%

Services 4% - 7%

Security 10% - 15%

Collab, SP Video and Other 0% - 3%

FY15E assumes mid-point of Q4’15 guidance

This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular period may differ materially due

to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

Cisco and/or its affiliates. All rights reserved. Cisco Public 23 Investor Day 2015

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Future Growth and Profitability

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Driving Gross Margin Stability

Levers

Digitization

Acceleration of innovation

Investing for growth

Integrated architectures

Software

Pricing excellence

Solutions at scale

Value engineering

Commodity price

management

Optimizing variable costs

Sustainable Differentiation Cost Savings

Cisco and/or its affiliates. All rights reserved. Cisco Public 25 Investor Day 2015

Technology Innovation

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FY 14 FY15E 3-5 years

Driving Operating Margin

~ 30% 29% 28%

Non-GAAP Operating Margin % of Revenue

34% 34%

FY14 FY15E 3-5 years

Low 30s

Non-GAAP Opex as a % of Revenue

Securing Profitability Through Portfolio Management & Disciplined Operational Excellence

Emphasis on Maintaining Profitable Growth

FY15E assumes mid-point of Q4’15 guidance

This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular period may differ materially due

to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

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Shareholder Value Approach

Shareholder

Value

14% 16%

FY14 FY15E

ROE %

37% 39%

FY14 FY15E

Dividend Payout % Non-GAAP EPS $

$2.06 $2.18

FY14 FY15E

Profitable Growth Driving ROE Ongoing Return of Capital

FY15E assumes mid-point of Q4’15 guidance

Based on Non-GAAP EPS and annualized dividend per share

This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular period may differ materially due

to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

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Profitable Growth Strategic Investments Capital Return

In Summary

3-6% Revenue Growth… 5-7% Non-GAAP EPS Growth… >50% FCF Returned to Shareholders

Profitable Growth Strategic Investments Capital Return

Cisco and/or its affiliates. All rights reserved. Cisco Public 28 Investor Day 2015

This long-term financial model does not represent projections or guidance for a particular period, but rather a long-term model management utilizes in managing the business. Actual results for a particular

period may differ materially due to a variety of factors listed in Cisco’s SEC filings, including business and economic conditions.

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These presentation slides and related webcast may be deemed to contain forward-looking statements, which are subject to the safe harbor

provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements

regarding future events (such as statements regarding our growth and strategy) and the future financial performance of Cisco that involve risks and

uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events

or results due to a variety of factors, including: business and economic conditions and growth trends in the networking industry, our customer

markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information

technology spending; the growth and evolution of the Internet and levels of capital spending on Internet-based systems; variations in customer

demand for products and services, including sales to the service provider market and other customer markets; the return on our investments in

certain priorities, including our foundational priorities, and in certain geographical locations; the timing of orders and manufacturing and customer

lead times; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations

in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate

and operate these acquired businesses and technologies; our ability to achieve expected benefits of our partnerships; increased competition in our

product and service markets, including the data center; dependence on the introduction and market acceptance of new product offerings and

standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents,

intellectual property, antitrust, shareholder and other matters, and governmental investigations; natural catastrophic events; a pandemic or epidemic;

our ability to achieve the benefits anticipated from our investments in sales, engineering, service, marketing and manufacturing activities; our ability

to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during economic downturns; risks related to the

global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; changes in

provision for income taxes, including changes in tax laws and regulations or adverse outcomes resulting from examinations of our income tax

returns; potential volatility in operating results; and other factors listed in Cisco’s most recent reports on Form 10-K and Form 10-Q. The financial

information contained in these presentation slides and related webcast should be read in conjunction with the consolidated financial statements and

notes thereto included in Cisco’s most recent reports on Form 10-K and Form 10-Q, as each may be amended from time to time. Cisco’s results of

operations for prior periods are not necessarily indicative of Cisco’s operating results for any future periods. Any projections in these presentation

slides and related webcast are based on limited information currently available to Cisco, which is subject to change. Although any such projections

and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain

points during the year. Such information speaks only as of the date of these presentation slides and related webcast.

Forward-looking Statements

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Thank You.

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Cisco and/or its affiliates. All rights reserved. Cisco Public Investor Day 2015

GAAP Reconciliation Guidance for Q4’FY15

Q4 FY’15

Share-based compensation expense $0.05 – 0.06

Amortization of purchased intangible assets and other acquisition-related/divestiture costs 0.04 – 0.05

Subtotal $0.09 – 0.11

Restructuring and other charges 0.01 – 0.02

Total impact to GAAP EPS $0.10 – 0.13

Share-based compensation expense is expected to be recorded to the various line items of the GAAP income statement in similar proportions as Q3’FY15.

Amortization of purchased intangible assets, other acquisition/divestiture-related costs, and restructuring and other charges will be reported as GAAP operating expenses, cost of sales, or other income (loss) as applicable.

Guidance assumes no additional acquisitions, asset impairments, restructurings, tax or other events, which may or may not be significant.