Please. I'll sit over here. Okay. All right. Oh, yeah. I was looking forward to this conversation for a lot of reasons. Scott and I go way in the way, way back time machine. And that's what I love about this business is you stick around long enough, and it's a small world, and you never know where friends are going to show up. And in this case, we've got friends at Cisco, multiple friends at Cisco now, including my good friend Paul. So yeah, thanks for Scott for joining us. Scott Herren, CFO of Cisco, Sami down here in IR on the front. I don't know if there's other people from. Yeah. So Mark Patterson's our Chief Strategy Officer. And Derek Idemoto, who leads CorpDev. Oh, nice. Thanks for coming, guys. Well, we're going to try to keep this interactive towards the end. We'll save time for some Q&A. So save up your questions now. We'll prompt you when we get closer to that. But Scott and I were joking. Cisco traditionally would be, as a software analyst, a little outside of what I would look at. But increasingly, Cisco is, for kind of a lot of obvious reasons, pivoting more towards software. It's the growth engine of the business. It's where all the innovation is. And if you look at the senior leadership, we had a bus tour in this summer to see you guys. And it's incredible to see the software talent from a product perspective, from a president perspective. It feels like a different company in a lot of regards. We're 57% of our reported revenues now are recurring. We've made a huge amount of progress. That's one of the reasons that I left Autodesk, where you and I got to know each other quite well, and joined Cisco to help make this shift over to recurring revenue and software. So let's start with, we're going to obviously talk a lot more about this. But you guys just reported results in the middle of last week. Middle of last week. Middle of last week, yeah. I think it was, yeah, Tuesday or Wednesday, whatever that day was. You had a really solid quarter. And you've got such a global perspective on IT, buying patterns. And so I wanted to spend just a minute on just helping us kind of think about where we are in the economic cycle. One question that I've been asking folks is, and it's hard because there's a lot of idiosyncratic elements to companies, but do we think we've seen the worst of sort of some of the pressure out there? How are customers thinking about deploying capital as you just start this new quarter? Yeah. So what we saw was broad-based strength in the quarter that we just announced. So demand, which we gauge with product bookings or product orders, demand was really strong. It was strong across all of our major geographies. It was strong across all of our customer markets. And it was strong across all of our product segments. So what we're seeing is demand is coming back. And within the most hardware businesses, the recovery from all the supply chain constraints that we all suffered with for several years is pretty well behind us. And what hit us at Cisco is we built up a huge backlog, right? Our lead times extended. People pulled orders back. This is going back two years ago. And then we were able to clear that backlog really quickly. So over three consecutive quarters, we shipped between $3 billion and $4 billion of just excess backlog on top of existing demand. And what that led to is a lot of product stacking up at our customers. So if you look at our year last year, we're in our second quarter of our fiscal 2025 right now. Fiscal 2024, the inventory consumption, the need for our customers to actually implement all the product, we were able to ship them really quickly, put a lid on demand for part of last year, the first half of last year. We worked through all that. So the products that had stacked up at our customers' locations got implemented. And they got implemented through really our third quarter and our fourth quarter of last year. And as that's happened, what we expected is what's happening behind it is demand is coming back. We're seeing product order growth be very strong, 20% product order growth in the last quarter. That includes an inorganic piece from Splunk. We haven't lapped the acquisition of Splunk yet. But organically, 9% product order growth last quarter. So we're seeing demand come back. And it's broad-based. It's across markets. It's across product sets. And it's across customer segments. The one area I think of weakness, you saw a little deceleration in federal. US Fed. US Fed. Not globally. Yeah, U.S. Fed. And that, obviously, in a year-end for them, what drove that? And ultimately, then I want to get to kind of the new administration and what that could lead. But how should we think about U.S. pub sec spending? Yeah. U.S. Fed, I mean, if you live in this country, you've all seen this, right? We've seen kind of the ongoing budget battles and continuing to keep the government going with continuing resolutions. And there's been a couple of those, right, where they just sort of kicked the can. And I think the good news on that is we now have the same party in control of both sides of Congress and the White House. So the ongoing battles and kind of the political posturing that led to continuing resolutions instead of a proper budget should clear up pretty quickly. And so I think that's positive. Hold your political views aside for a moment. I think that's a positive for getting the government going again. But what we saw during the quarter is because of continuing resolutions and the Fiscal Responsibility Act, which I'm sure you're aware of. What that meant is a lot of what's normally a really big U.S. Fed quarter because, remember, U.S. fiscal year ends at the end of September. That's normally a big spend the money now. And it's particularly normally big in an election year, right? Before the election, spend the period because we don't know what the new administration is going to allow. And with the funding mechanisms the way they were, that did not happen during the quarter. None of those pipelines is still super strong. None of those deals are lost. But they're delayed until we can get a proper funding mechanism put in place. And so I think getting the budget in place will actually turn this around. I don't see U.S. Fed being particularly robust in this current quarter. New administration will come in. We'll get a budget put in place, and I think it does begin to come back in the second half of the year. I think what's important, one of the other questions that I have been asked is, well, what does that imply for your guide? Right? Is your guide dependent on U.S. Fed coming back? It's not. Our guide is not dependent on that in the second half of the year. I do think it comes back, but the guide's not dependent, and part of the reason for that is a lot of what we sell to U.S. Fed is what we—I just talked about software. And so that doesn't drive a lot of immediate revenue. It drives a lot of recurring revenue that really bleeds into the revenue stream over time. The other thing, sticking on the new administration, one of the questions that we get from everybody is like, "Okay, what does this mean from a, obviously, there could be a corporate tax benefit. But what does it mean from a tariffs perspective? What does it mean from potentially easing some of the M&A constraints? What does it mean from government efficiency, DOGE?" I mean, any thoughts from your perspective on what that could mean? Yeah. So first of all, who knows? Right? So that's what we're talking about. Yeah. We had a keynote yesterday. Somebody's like, "I don't even think Elon's going to be in the same spot in a year from now," which may be true, but. I don't know. I don't know. What I'd say, though, so if you take those each, corporate taxes are going to be what corporate taxes are going to be. I think that clearly there was a big divide between the two candidates for the president role between what was going to happen on corporate taxes. That's probably going to be longer-term good news. It depends, right? Because obviously, we're in a position of pretty big deficit spending. So that's more good news. I'd say that's incrementally positive. We have tariffs today. And by the way, regardless of who got elected, all the rhetoric was about tariffs going up. The truth is we've got a really great supply chain team. And there's tariffs in place today, Matt, as I'm sure you know. And what we've been doing really since the pandemic set in is looking at our supply chain and building it not just for efficiency. Supply chains forever were built simply for efficiency. That's not sufficient. It has to be built for both efficiency and resiliency. And that means being resilient against tariffs, being resilient against weather events, being resilient against geopolitical. And so we've been working on that path of making sure that we're resilient regardless of what the events are through our supply chain team. And so it remains to be seen what happens there in terms of what they can actually get done on tariffs. But our supply chain team, and this is something that we've been working on for quite some time. So there's no real change there. I do think it's a positive on the third of your points on M&A. It was, I'd say, a pretty activist FTC over the last four years. And my expectation is that probably is incrementally positive news for corporates as well. Yeah. We'll get to capital allocation in a bit here. But we've seen strong growth at Cisco with both SP and cloud. And I guess the question is, what's driving the robust growth there? And is it all cloud, or are there other aspects that's driving the business there? Yeah. I mean, if you look at SP and cloud, it was significantly more than 20% during the quarter. And it's mostly hyperscale, so web scale. Within that AI, we gave a stat on the call, just the AI piece. So backend AI sales into the hyperscalers was up triple digits in Q1. And we talked about we've got a target for this year, our fiscal 2025, to get more than a billion of AI backend infrastructure orders. And we took more than $300 million of those just in the first 90 days of the year. So I feel really good about that. And I think what's equally important about that statistic is it wasn't one whale deal with one specific hyperscaler. Four of the six hyperscalers that we sell to, each individually grew triple digits in the first quarter as well. So we're seeing good demand. What's that? Would you attribute that to Cisco? You know, I think it is in part due to their focus on continuing to have diversity of supply at the assembled level, but also at the semiconductor level, at the ASIC level, right? Regardless of who's doing the final assembly and snapping that together, because they almost all run their own software, right? So what they're buying is a bespoke product that matches to their architecture. We work very closely, engineering to engineering with each of those hyperscalers to design a product that just meets their needs, and there's a long certification process, and after that, you get what's called a design win, and then as they look to scale and need that particular element, they can order from us, so part of what's driving it is diversity of supply by them, by the hyperscalers. Part of it is having our Silicon One product, our Silicon One ASIC that's built into our top of rack that we sell to them. It's designed for power efficiency, and power, as you know, has become one of the big constraints as they're looking to scale things up, so to be clear, what's in that 300 million, more than 300 million of orders we took? Our systems, a small amount of just standalone chipsets, but also optics, but I think we're really positioned well to sell not just into the AI infrastructure, but into the AI inferencing in the enterprise, which we should come back to. Yeah. Well, that's literally the next question I was going to go to. So yeah, you read my mind. Talk about some of the strength there in the enterprise, whether it's by geo or product or any sort of vertical that you think is interesting from an enterprise perspective. Yeah. Enterprise was really strong for us in terms of year-on-year growth rates. And again, what we're seeing there is in the wake of consuming all of the amount of product that we cleared really quickly and shipped out to our customers, they've got that installed. And now they're moving on to the next project. So the first is kind of getting that wave behind us. And unfortunately, when you look at year-on-year growth rates, that wave is going to continue to perturb what those year-on-year growth rates look like because of the year we had last year, the compare points last year. So I think year-on-year growth rates are going to be a little bit tough until we lap the normalization. And we're normalizing right now. So, think about more as you look at product order growth from Q1 to Q2 and Q2 to Q3, more being sequential growth rates are going to be more informative than year-on-year growth rates because of what happened last year from that standpoint. I think one of the things, though, that, and we talked about this in both our Q4 call and again in the Q1 call that we had last week, that's driving that enterprise network demand. It's largely networking. And what's driving that demand is companies looking at their own AI needs. And it's less at this point buying AI inferencing to put in their own private data center. There's a small amount of that going on. But that market is still ahead of us. And I think there's a significant opportunity ahead of us all there. At the time when they're advancing their own AI applications, whether it's for productivity use or to building their own products, they're recognizing that that drives a lot of traffic. If you think about it, I'll use the example of our own customer support center. We've built AI heavily into that. We take about 1.5 million customer support calls a year. Almost two-thirds of them are initially handled by an AI agent. Here's what's happening. Call comes in. That's on the network, right? However it's coming in. That agent then speaks to the backend, comes back with an answer, sends it on. There's a response back from whoever has raised the issue. It goes back to the backend again. Networks, it's very heavy. AI usage internally inside the enterprise is driving a lot of load on networks. And what we're seeing then to circle back now to what's happening in enterprise is more and more enterprises recognizing that as their own AI projects are starting to graduate out of proof of concept and into beta and ultimately into production, the demand on the network is high. And they need to modernize their own networking infrastructure. And I think we're in the early stages of that wave as well. Oh, that's exciting. Before we get into some more granular product-related questions, I'm really curious on cyber and observability. You raised full year guidance on the Q1 call, and you talked about not anticipating any sort of federal improvement. I guess what gave you the confidence after Q1 to take the full year up this early in the year? Yeah. We took up both the top line and the bottom line. So the midpoint of our full year guide, and this is only 90 days into the year. And you know me. That's conservative. That's not my norm. We took up the top line by about $200 million at the midpoint and the bottom line by almost $0.08 at the midpoint. And that's really based on the broad strength that we saw in Q1. You saw what we guided for Q2. And then our expectations for the second half of the year give us a fair amount of confidence in that space. And then the great work that we've done on margins. Our gross margins were the highest that they had been in 20+ years, 69.3% in the first quarter. Now, some of that, there is a one-time benefit from a project that we've had in flight for several years on basically back to your tariff question, basically tariff refunds for components that we imported, paid a tariff on, turned around, and re-exported that box. You get that tariff back, well, they don't make it easy, and we've had a project to get those tariffs back for a long time and finally got over the finish line in the first quarter, so we had a catch-up. That's a one-time event that benefited us in Q1, and it was not insignificant. It was 50- 100 basis points that just that product alone benefited. It won't be that on an ongoing basis, but there will be a tail of that on an ongoing basis. So the great work that we've been doing in driving margins and driving profitability, and we're known for financial discipline as a company. And that is paying off. And that's what's leading to the bottom line take-up. Yeah. Yeah. Yeah. Back in our Autodesk days, yeah, the fact that we're 90 days in, and I think you have that kind of visibility, that says something. You touched on it. I want to pivot to AI. You touched on it a little bit five minutes ago when you talked about taking over $300 million of AI orders in Q1. I guess could you double-click on that? Is that optics? Is it Systems? Silicon One? Yeah. Could you just put a finer point on that? Because it really feels like you guys are in a unique position to continue to drive AI awareness within the customer base. I think we are in a pretty unique position, and part of that, so it's all the above. It's optics. There's a small amount of just chipsets, and it's systems at the same time that drove that $300 million, and that'll be the same for the more than a billion target that we've got for this fiscal year, so you step back and say, well, why? Why is that growing the way it is?, and part of it is we own our own ASIC. We own the control, the core control point in that network, and what you see, and it just makes sense, what you see from the hyperscalers is they don't want single vendor dependency, and they don't want it at the final assembly level at the product that goes at the top of the rack. They also don't want it at the semiconductor level, at the ASIC level. They want diversity at that level as well and not to be beholden to a single ASIC provider regardless of who's doing the packaging of the rack. And so I think both of those things play to our advantage and have given us a competitive advantage. And I think there's no question given our growth rates in that space relative to where we've been historically, we've taken a fair amount of share there. Yeah. I guess if AI continues to ramp within your overall mix and this continues to increase over time, obviously you're seeing a real strong mix shift towards software. Could that cause you to reassess the fiscal 2026 and fiscal 2027 targets? Because at the time, I think it was basically like a mid-single-digit growth target that you talked about. Could that be a positive impact on that kind of medium-term growth targets? Yeah. Of course, it could be. Now, that target, by the way, for fiscal 2026 and 2027, we're in Q2 of fiscal 2025 right now. That target's less than six months old at this point. So let's give it some time and let's see the momentum build. But of course, it could be. Yeah. Yeah. Yeah. It certainly feels like whether it's AI and we're going to pivot to Splunk here, there certainly seems to be some catalyst on that mix shift that could help improve kind of the overall growth profile. I think to that point, Matt, there are several catalysts for us right now. AI, and we talked about kind of three different categories of AI spending that'll be a tailwind. One is the picks and shovels business, right? Selling into the infrastructure build-out at the large hyperscalers. And that's where the more than $300 million of orders came from. There's the enterprise inferencing, right? And we have our own inferencing engine set up inside Cisco. I think most large enterprises are going to because of the need for privacy around the data and to augment the model with their own data. So that opportunity is still very nascent. And I think there's a significant opportunity. We launched last week what are called AI Pods. So what is an AI Pod? Think of it as a rack with our UCS servers, with NVIDIA GPUs on the servers, our control plane in the backend, and our top-of-rack switch that's a single orderable. It's configurable, but it's a single orderable SKU. And so if you're an enterprise and you've got your hands full trying to figure out what your AI projects are going to be and how to get the right skill set to actually do the AI application side, what they're looking for is, make it simple for me. Make it simple for me to stand up the capacity to do my own inferencing inside my own data center. And so the AI pods that we just launched are going right at that opportunity. I think that's a tailwind for us longer term. And then what we talked about earlier, this drives a lot of traffic on the network, both in the data center and just across the general network. Back to my customer support comment earlier. So there's a network refresh. There's a lot of traffic that's going to be driven on the network as these AI projects inside the enterprise go into production. That's a tailwind for us as well. And then Splunk, I know. Yeah. Let's pivot to Splunk. We had a call with Gary not long ago. And clearly, every investor or every company out there feels like Splunk is fair game for displacements. And I think Gary, whether that was a couple of months ago, said, "We're not seeing any change in renewal rates." That's been strong. Level set us on where we are at. How has it performed versus your expectations? And maybe talk about why some of those competitors won't be successful in taking Splunk share. It's the standard play. Whenever there's an acquisition, then maybe we'll come back and talk about HP Juniper at some point because we're on the other side of that equation. It's the play that everyone runs. We are not seeing, so I don't know how long ago that conversation was with Gary. We're continuing to see that same trend. Renewal rates and NRR are staying right where they were pre the transaction. From a top-line standpoint, both revenue and ARR are performing right in line with the case that we pulled together to drive that $28 billion acquisition, and we're actually slightly ahead in terms of profitability with where we expect to be at this point, so it's going really well, and I think part of it too is not only did we get great technology, we got some great leadership from that. And Gary, I knew Gary when he was at Proofpoint. I was on his board before he came to Cisco. So I've known Gary a long time. He's a very talented exec. And seeing him not just drive Splunk internally, but also become the President of Go-to-Market across all of Cisco, I think sends the right signal to the Splunk team. And we'll continue to see really good momentum there. And the integration, not just the people integration, the product integration is going really well. Because it feels like it's not just AppD, but it's also some of the existing cyber assets. That's exactly. At Cisco. Talk about how 1 + 1 = 3, in this case. Yeah. I think what everyone in cyber is trying to do is create a platform. You hear this, a security platform. And more and more what you hear from buyers, from CIOs and CISOs is what they want is fewer throats to choke. They need best of breed, but they also need a platform that all of these snap into that can cross-correlate events inside their environment. We had that same strategy at Cisco and built out, really rebuilt our security team, the leadership team, and the product line. We've now refreshed our firewall from top to bottom. Ultra high-end is still out there. Just recently, just in October, launched the low-end, the new low-end firewall line. But we also had this platform strategy. Splunk, with its SIM capabilities, gets right into that space. And so now we can not just cross-correlate the logs and the typical SIEM data, and they've got SOAR to actually work on the backend once they detect an anomaly. But we can now add to that the telemetry that we get from the rest of our security devices and the telemetry we get out of the network, which gives you the ability to not just detect ingress and egress, if that's the word. Egress. Egress. There you go. But east-west traffic as well with the capabilities that we've got. So it fits extremely well from a strategy standpoint, from a product standpoint. Almost no overlap between our products. AppD fits nicely as an on-prem application performance monitor inside the observability, the cloud-based observability that they already had. But it also fits well from a cultural standpoint and just not just the technology, but the leadership. It feels like when you guys acquired AppD years ago, to me, from an outsider perspective, it feels like there's more unification this time around versus when AppD was acquired back in the day. It feels like a more holistic solution set. It feels like different leadership from a product perspective as well. I mean, do you think Splunk's going to be different than AppD? 100%. It's going to be different than AppD, and rather than throw rocks at the past, let me just tell you what we're doing from a Splunk standpoint, being very thoughtful. There's a lot of executive attention. If you look at how Chuck and myself and our executive team are allocating time right now, two things are consuming the majority of our time, and that's AI and making sure we stay ahead of all of the various opportunities we have in AI, and the second is Splunk and driving that integration to success. It's going really well. I talked about the financial metrics. We've already integrated organizationally all the G&As. The finance team reports to me, the legal team reports to our Chief Legal Officer, et cetera. The product integration, technical product integration is going well. Organizational and sales integration also going well. We'll get another chance to accelerate that even further from a sales standpoint. The beginning of our Q3, because Splunk, their fiscal year-end was the end of January, just like we were at Autodesk. That's the end of our Q2, right? And so what we did when we acquired Splunk is we didn't reset all of their sales comps, all their goal sheets for their sellers. We left those in place. Well, those are going to reach the end of their fiscal year, their sales fiscal year on January 31st. At that point, we'll set goal sheets now for the second half of the year for both the Cisco sales team and the Splunk sales team. And we can integrate those much more tightly at that point. The one nuance there is that we always end our fiscal quarter at Cisco on the last Saturday of the month. It's the third month. They end on the last calendar day. And when you look at January, there's a few days that are hanging out there. So obviously, it's a huge focus on us right now. It's a little bit, as most enterprise software companies are, they're heavily weighted toward the fourth quarter. And within that, they're heavily weighted toward the third month of the fourth quarter. So we're working our way through that right now. This is going fast. We only have five minutes to go. I'm going to pivot. I wanted to ask more about Splunk, but let's just look at security. I think it grew 2% ex-Splunk. We spent a lot of time in the channel on the cyber side. And it really does feel like I mentioned this on our bus tour this summer. Cisco's coming up more often on the cyber side. And when we had the bus tour in there, I was like, "What's changed?" It really feels like it's been a whole leadership refresh that's really driven a lot of that unification of networking, cyber observability. It feels like that's driving. Talk about sort of the outlook on the cyber side. Yeah. Let me start with the 2% metric because you're right on that front. But we talked about U.S. Fed and some of just the funding dynamics that put a lid on what should have been a really big U.S. Fed quarter. If you eliminated U.S. Fed and looked at security, it grew ex-Splunk. It grew mid-teens to high teens. Oh, wow. So U.S. Fed and ex-Splunk. So we're still seeing really good, to your point. We're getting a lot of positive feedback in the channel. We're seeing really good growth, again, without the anomaly of U.S. Fed for the fourth quarter. And that is attributed to some of the things you just touched on. We, about three years ago, looked at cybersecurity and the strategy that we had and the leadership team. And Jeetu was running it at the time and said, "You know what? This is something we have to pivot more resources into. We have to put more focus on." And as we did that, brought in new leadership from a number of places. Tom Gillis, who was at VMware running their networking business, a couple of other key leaders, one from Proofpoint, interestingly, that have really rebuilt the strategy and gotten very quickly into execution. And so I talked about we've now refreshed the product line. We've had three new, an XDR offering, a multi-cloud defense offering, three new offerings there, and a SASE offering. They're doing quite well. So all launched within the last 6-9 months. And we already have 1,000 customers on those three offerings. So we put a greater focus on it. We've made a lot of changes in the team and brought in new leadership that are more industry experts. And we're starting to see really good dividends in that space. I lied. We don't have time for questions. We have three minutes, and there's like 10 questions more that I have for you, but from someone like myself who's coming at it from a software perspective, I'm curious. From your perspective, what's some of the biggest misconceptions right now about Cisco? Because to me, I look at this as like a simple mix shift game where I'm like, I see a faster growing cyber observability, AI piece, and then you've got kind of the core Cisco business. Is the right way to think about the core kind of growing in that maybe low to mid singles? And then you've kind of got that mix shift that could ultimately take those fiscal 2026 and 2027 targets maybe up a bit as time progresses? Yeah. I think it's both. I do think that the core, there are tailwinds to the core. I'm not updating the guide or the targets that we put out there for fiscal 26 and fiscal 27 yet. But I think there's the multiple tailwinds that we've talked about. In the fourth quarter, so go back a quarter, we put out a slide as part of our earnings call that just decomposed four of the larger deals we had in the quarter. Each were greater than $100 million transactions, which says something by itself. And we have four of those. And you look at what they bought, it was the standard core Cisco switches and routers, Wi-Fi access points, et cetera. When you look at why they bought it, it was an expectation for AI applications that they wanted to ramp up inside their enterprise. When they looked at their networking infrastructure, just thought, "You know, this is. I've been sweating this for too long. It's insufficient for the load that I know I'm going to put on it as AI goes into production." So I think one of the things that's misunderstood is the growth rate of the core will benefit from AI outside of what we'll sell specifically into enterprise inferencing and what we'll sell specifically into the large web scalers to build out the large language model training models. I think the second is cyber continues to do well. Our cybersecurity business, we have both the right talent in that space. We've got a strategy that is applauded by everyone. Our channel partners are super excited about it. Industry analysts have really had a bit of an about-face about the strategy that we've got there. We're executing well in cyber. I think that's a significant opportunity. Splunk continues to perform extremely well for us. That's going to be a tailwind to us longer term. I think you add all those together and being 57% recurring, you remember the revenue stacking, right? That goes with recurring revenue models. Really builds on itself. It drives not just revenue growth, but it drives cash flow growth as well. So kind of what I'm hearing is, in a lot of regards, it's a different Cisco than what you might have remembered even five years ago, let alone 10 or 15 years ago. And that it's this mix shift, even benefits to the core that could cause people to kind of think a little bit differently about Cisco over the next 5- 10 years. That's exactly right. Okay. Exactly right. We are out of time. Listen, Sami, Scott, thanks for coming. Really appreciate your time. Best of luck. Yeah, we're going to be watching you guys closely, certainly from you guys are a lot more relevant in my world than you used to be. All right, well, Matt, and congratulations to you. I saw as I was coming up the stairs, number two in software and mid-cap. And there's one more wrong, buddy. You got to. We're going to try to take on number one. But I appreciate that, Scott. Yeah. All right. Congratulations. Thanks, guys.