Cisco Systems, Inc. (CSCO) Presents at J.P. Morgan 50th Annual Global Technology, Media & Communication Conference (Transcript)

Cisco Systems, Inc. (NASDAQ:CSCO) J.P. Morgan 50th Annual Global Technology, Media & Communication Conference May 23, 2022 3:10 PM ET

Company Participants

Todd Nightingale – EVP and General Manager of the Enterprise Networking and Cloud Group

Conference Call Participants

Samik Chatterjee – JPMorgan

Samik Chatterjee

Good afternoon, everyone. Welcome to the afternoon session, one of the afternoon sessions today, and we have the pleasure of hosting Cisco, and specifically, Todd Nightingale, who’s the EVP and General Manager of the Enterprise Networking and Cloud Group.

Todd, thank you for making it here and making it here in person, which is great to be back.

Todd Nightingale

Exciting to be IRL, man.

Question-and-Answer Session

Q -Samik Chatterjee

Thank you to the audience as well for being here in person. What we’ll do is. I’ll start off with a few questions here, again for everyone on the webcast, as well as in the room, please feel free to jump in with your questions. What we’ll do is open it up so that we can run the mic to you and you can ask your questions.

But since you know the drill tower, at least I’ve given you the good warning here, three standard questions. We are pulling every company for. First one, what’s the probability you would assign to a recession or a potential recession, however, you want to phrase it, because that’s the top concern that investors have based on whatever you’re seeing in relation to customer demand. What probability, if you had to I had force you, would you assign to a recession?

Todd Nightingale

I’m not sure that I’m the best person to assign a numerical probability to that, but I’ll tell you, our business is so focused on cloud transformation on hybrid work transformation right now. We don’t see it like we’re — through our lens, through our demand. We’re not seeing that effect, more than demand, because the way our supply chain and all the supply chain pressures are right now, we’re just at a record level of backlog as well. And we have such a low cancellation rate in that backlog, lower than we’ve even had pre-pandemic levels when we had such tighter backlog, with the demand being so strong, and the lack of cancellations. We just don’t see the signal for that right now.

Samik Chatterjee

Moving to the second one here, the China COVID situation and the impact it’s having on supply. How much worse is it making things? Is it materially worse? I mean, you obviously gave an update on the last earnings call. So somewhat an unfair question, but like how much worse does it get from the already strained environment we were in?

Todd Nightingale

Well, it’s unfair because we just wrote that answer and announced the last week. I mean, it’s very material for us. And I think for tons of people in semiconductor space. The situation that we saw with these citywide shutdowns, it is so sudden and so complete. The shutdown being so complete that finished goods sitting on a loading dock somewhere just can’t get out. And for us, we saw this with Shanghai just right at the end of our quarter and really round up having a significant impact. And so, that’s real and we’re modeling that, there’s a potential for this to continue for some time.

Samik Chatterjee

The last one in that sort of question line coming into this year, if I had done a similar poll, every company would’ve said supply normalizes second half of the calendar year, and I’m starting to see that sort of affirmation start to fade quite quickly here. So what’s the updated expectation now, when does supply normalize in your view?

Todd Nightingale

I’m going to try to do calendar year, fiscal year calculation, but like, we don’t see it. We don’t see it getting any amount substantially better in this quarter that we just started. And we do see the improvement starting maybe by the end of this calendar year, but I think it’s going to take, yes, more than a full calendar year just to get back to sort of the type of supply chain we were used to.

Samik Chatterjee

So let’s dive into more company specific stuff and thank you for tolerating me for the first three. Supply chain constraints are real, so like, it’s good for us to talk about it. No worries. So the last quarter you reported, which was last week, you sought divers in order trends between large enterprises and commercial customers. And obviously that’s our definition. That’s unique to Cisco, not everyone uses it, but any insights on what’s driving the divergence between those two verticals.

Todd Nightingale

Yes. Look, I think it’s important to note, like we specifically do break those out because there tends to be different dynamics. I think there’s two things going on here, first is, as we went — into the pandemic and then started and then started to see — when we went into the pandemic, we saw demand weaken. And then as we saw this huge surge, as people started to plan for the return to the office and really accelerate their cloud transformation, et cetera. And we saw this huge surge in demand in both cases, it was commercial led, you know? And so I think there’s something to that the commercial teams just react faster because they just have — far shorter planning cycles, which makes sense to me.

And the other thing is that on the enterprise side, these very, very large customers for us, those planning cycles are large and they’re — they have put in orders that are sitting in our backlog. And they’re looking — they’re planning to make sure that they have that equipment coming in and they’ve placed those orders. So like, some of the demand that we saw 30% growth year-over-year, I mean that wasn’t really sustained that — there’s no way that 30% number’s sustainable and they’ve planned and they’re tracking to that plan well now because they’ve put in those orders early.

Samik Chatterjee

Again sort of not going back, but if I think of a potential recession or a scenario analysis of that sort of outcome, how would you expect the different customer verticals, particularly these two to respond? I mean, does sound like you expect commercial to be the bellwether rather than the large enterprises, but how have you seen them respond in the past to economic slowdown?

Todd Nightingale

Yes, well, remember when we talk about enterprise versus commercial, we’re really talking about the size of the organization with the very, very large being in what we call enterprise. But when we look at the recession, I mean, the trends that we’re seeing that are driving Cisco growth and Cisco demand are around a return to office and a realization that building the workplace for hybrid work is something that requires a new thinking and how infrastructure is built.

We used to build sites with like wired ports on desks and the idea that most people would sit in their office to do email and work net model. And that’s not how offices are being used and they’re going to be used, it’s a more dynamic, more fluid environment. And really, what that means is a new way to think about wireless in the workplace. There is no longer any square foot of workplace that can’t have perfect connectivity because this just has to be dynamic and mobile.

I haven’t looked but we should track like, how many people are buying desktops versus laptops in the in the business space, it just is like everyone is moving to mobile and the spaces are more dynamic that’s driving a ton of our business into carpeted office space. There’s also this explosion of IoT. No one builds a conference room right now without a video unit for teleconference. And that’s just not a thing.

And that’s driving the need for more networking, more PoE, et cetera, in our business. And there’s an explosion of these devices, video monitoring, building, monitoring, you know, air quality monitoring, et cetera, we’re investing. In building automation systems like camera and sensor, building, monitoring portfolio, et cetera, but also the connectivity that’s needed for all of those systems.

So for us, the carpeted office spaces, the supply chain, manufacturing, logistics, that stuff, it feels like the business transformation is sort of outpacing any sort of speed of the economy, et cetera. Where we might see it, you know, I would guess would be more vertically specific, like hospitality, maybe retail, maybe in those other places. But remember, we do so much of our business in healthcare and government and carpeted office space. I don’t think we would see too much of an effect there.

Samik Chatterjee

And follow-up to that, I mean, you answered somewhat what I was going to ask you about the growth in the orders from here on. But I mean, I think putting the large enterprise sort of order trend that we saw, if I combined large enterprise and commercial, you still had double date order growth. So how are you thinking about sustaining that sort of double-digit number that you’ve just had in the recent quarter? How are you thinking about that sustaining even sort of in this current economic environment?

Todd Nightingale

Yes, look, I think that there’s an enormous amount opportunity in this space right now, as people rethink hybrid work. We think about it, there’s this huge expansion, the scope of IT. For years, the IT support for business for information workers, especially, it revolved around the office, like, of course, the experience is going to be 100%, perfect in the office. And if you want to work from home, great, but if it doesn’t work, and I can’t seem to fix it quickly, just come into the office, of course, it’ll work in the app, that’s no longer a thing. That’s it.

Any CIO, who responds that way to an executive won’t work you there in three months. And there’s this expansion of IT to the home. And we’re seeing that in a lot of ways. I know, like we’ve talked a lot about this transition to software, there’s tons of work going on in this industry. How does IT support the best possible experience that enterprise grade in office experience in everyone’s home.

And that can be supported with teleworker, networking equipment redundant that has redundant cellular backup that has high security support, security, cloud solutions, et cetera. It’s also done with monitoring technology and software that allows IT groups to get the same tools, to provide the same SLA the same experience in the home, that they do work. And look, I think the pandemic experience in a lot of ways was a huge success. For IT groups and network operators, especially who were able to have all of their workforce disappear from their office overnight and still be able to get through, still be able to make it and be successful, for the most part.

But now, there’s a real reckoning and understanding that we need to radically improve the tools and the infrastructure in people’s homes. So that that experience is enterprise grade all the time. I take conference calls with all Cisco employees from my house, and you better believe I do it on a system that has cellular backup on it. And it’s being monitored by IT as if I was in the office. And that is, I think, going to be more and more than norm, and we’re going to see that expansion of the business. And for the whole sector, any of my competitors aren’t focused on that expansion, I think it’s crazy.

Samik Chatterjee

I have to say, me and my team both have personal experiences were coming into the office fixes a lot of things.

Todd Nightingale

Well, if that’s if that’s true, a year from now, we failed.

Samik Chatterjee

Moving on. IT distributors and bars that we talked to pretty regularly, post-pandemic, they are saying that customers are showing increasing willingness to use software solutions, in some cases, sort of to try and mimic the same capabilities that they got from hardware appliances. What are you seeing in terms of customer buying behavior on your side? Like, is it pretty consistent in how you thinking about this sort of carrying forward?

Todd Nightingale

Yes, there’s times I think, when we can build software solutions, and we lean into that completely, like. And Cisco, we’re going through this corporate transformation towards SaaS recurring revenue kind of model. And what matters is the outcome, if you can do it with less physical hardware, great, for sure. We need to lean into that because it, the physical hardware, it’s just slower to move.

And by the way, it has supply chain constraints, which we all hate. And it’s a great example of that. If you want to run your home network, for example, with cellular back of, okay, you’re going to need hardware for that. But in order to provide monitoring for IT to be able to monitor that home network. You don’t — we purchased ThousandEyes at kind of at the beginning of the pandemic, not really knowing how the pandemic would play out.

It turns out actually, this is a huge use case for internet intelligence and IT monitoring in the home can be done purely with software. And so of course, we lean into that. We see other areas, SD-WAN driving a potential to put more network infrastructure, network intelligence into software, we lean into that. I think there’s some fundamentals about how far we’ll be able to take that.

Like physical radio is still going to have to be now in order to get Wi-Fi going to have to be within 100 feet or so, a couple of hundred feet. Ethernet can only go 300 feet. So there’s some physical limitations, but getting as much of that infrastructure into software or better yet, to be honest, into the cloud, it just makes the friction for adoption so much lower, and that is valuable, and that’s we focus on that in a really big way.

Samik Chatterjee

That’s actually a good segue. I mean, we’re definitely trying to sort of — or looking at the industry moving towards software. But if you I think, dialed back or step back sort of four, five years, there was this bigger debate about is it all public cloud, or is it hybrid cloud that’s going to be sort of the preferred architecture approach. Your discussions with customers, where is it today in terms of that debate? Are customers now sort of have made up their mind what they want to do, whether it’s all public cloud, whether it’s a hybrid cloud architecture, how are they thinking about what they want to sort of have longer term?

Todd Nightingale

I think people are aware that this is a journey, like there’s probably not a destination. You’re going to be building out a multi-cloud solution and tuning where your workloads go, whether that be for customer experience, whether that be for reliability or whether it be for cost optimization. And all three of those things need to get tuned. And especially up market, but really across the board, I mean, we see people focused on multi-cloud. They don’t want to get locked into a single IAS provider.

They want to have the ability to cost optimize, especially workloads that are very costly to run like high bandwidth, high transit costs, et cetera. And they want the flexibility and especially the flexibility to scale rapidly that you can get from the public cloud. And so what that really means is I think all of the major — all of the significant enterprise deployments here are focused on some version of multi-cloud solution so that they can tune their environment between IAS providers and some amount of private cloud infra.

What that means for Cisco is, we focus on multi-cloud tooling. When you look at our Intersight portfolio, our full stack portfolio, ThousandEyes app dynamics, all of that stuff, it’s always designed multi-cloud. The same set of tools, the same sort of policy and infrastructure management, visibility support that can work across clouds. And I think vendors in this space who are focused on the future are all looking there.

Samik Chatterjee

I know you addressed this, but maybe I’ll just ask a follow-up on this still, which is for a long time investor perception was that Cisco is going to be the one that benefits if enterprises stay mostly on-prem and adopt a hybrid cloud architecture as architectures move more towards a public cloud or a multi-cloud architecture, it gets a bit less beneficial for Cisco in that longer run – in that road map, right? Like how would you sort of respond to that investor concern that as enterprises move closer to the public cloud or multiple public clouds, there’s still leverage that Cisco has in terms of those workloads or where the — how the customer IT architecture gets built out.

Todd Nightingale

Yes. Look, I think if Cisco sells more cloud software and multi-cloud infrastructure support and less private cloud data center hardware, like we’re okay with that probably helps the margin. But what we really see happening right now is the pie for cloud infrastructure is increasing is increasing so quickly. And picking up mind share in that space, in any kind of multi-cloud solution is really driving huge dividends for any winner, who’s able to do that, and that’s where we’re focused.

I think certainly, if a customer decides that they want to put everything in the cloud, what they find — what they wind up figuring out is there isn’t a cloud. There are multiple IAS offerings, AWS, GCP, Azure, et cetera. And there’s also a ton of SaaS offerings. There’s Salesforce.com or ServiceNow or whatever other sets of tools they’re using. And it’s not dozens, it’s hundreds. I mean major enterprises are running on hundreds of SaaS offerings plus probably a couple, if not all three of those IAS and a private cloud.

And that — like controlling the complexity, providing a simple solution I think it’s that customer experience is where Cisco can add value. And we’re going to — and for us, it feels like an opportunity to add value, whether a little bit of the workloads — percentage of the workloads shift from private cloud to public cloud, I’m not sure that’s going to significantly hold us back.

Samik Chatterjee

Okay. Let’s move to quantifying a few things here, and I’m going to go back to your 2021 Investor Day. You outlined addressable market of $72 billion in 2025, which included switching enterprise routing, wireless networking and servers. You also announced a $26 billion TAM expansion direct-route Hardware as a Service. IoT expansion, automation and insights and hybrid cloud. The first part to that is, let’s take the core addressable market of $72 billion. And can you sort of outline, what is the growth expectation that you have for that addressable market? And what are the drivers there and when you get to the expansion.

Todd Nightingale

Yes. Look, we’ve published our growth targets, et cetera, and we’ll publish guidance for next year. But the hybrid work transformation and so many groups rethinking how their sites are more automated, more flexible, more mobile. For me, that’s just driving a ton of strength in that in that core business. Even without the expansion pieces, the IoT, the computer vision, the Hardware as a Service, just the core business, the idea of deploying enterprise infrastructure at schools, governments and businesses around the world, we’ve just seen a, I think, a change in this market as people realize there’s an explosion of IoT devices, there’s a need for effectively perfect mobility through these environments and they need to build out infrastructure to support all of that. And so, if anything, I’m maybe more bullish in that core than I was before. Sorry, talk expansion?

Samik Chatterjee

Yes. I mean my specific question on the expansion would be — I mean, you outlined IoT, obviously, that’s a big piece here, but I mean regarding all of these expansion opportunities, what have you done on the portfolio to tap into these expansion opportunities? And as a piece of that, I definitely want to delve into Hardware as a Service? And what are you seeing there from your customers as well?

Todd Nightingale

So look, I think in the expansion opportunities, like I think IoT is an enormous expansion opportunity for everyone because building automation, building monitoring is just getting to be so much more prevalent, no longer at the very high end, it’s no longer niche we launched and have really matured a smart camera portfolio as part of the Meraki offering. Now we’ve expanded that tons of growth and interest there. So we expanded to IoT and building sensors, air quality monitoring, building monitoring, presence monitoring, et cetera, buildings are getting more intelligent.

The buildings that are being built today are radically more intelligent with far more connected devices than we’ve ever seen before. And a big part of this expansion is really looking at Cisco’s entire portfolio, and it crosses between the pillars you’re talking about. So not just the Secure Agile Network — part that we’re talking about now in the $72 billion. But looking across the portfolio, when we think about that smart building, it’s collaboration technology, security technology and networking technology put together that drives that sort of future of a smart building.

And so something that we, I think, have really focused on in the last 12 months and is driving a ton of demand is this kind of bringing together of that. And so another place that we’ve invested, for example, is a technology called DNA Spaces, which is that kind of intelligent office platform. It brings together telemetry from Wi-Fi, from WebEx devices from Meraki sensors and cameras, all into one platform can give you a very intelligent view of the environment and gives a user experience for people using the environment and gives a back-end data feed to people who are trying to optimize their spaces.

And this idea of hybrid work coming from networking, security and collaboration technology being fused together, I think that for me is maybe the most exciting part of this sort of growth opportunity. When it comes to Hardware as a Service, in particular, we see a ton of interest in this. We were very, very focused on consumption-based billing. And actually, I’ve found a lot, a lot more interest in just subscription-based build.

Maybe I really would like to get my network spend into an OpEx motion, but I don’t want to lose the predictability of it. So I’d be much more kind of excited as an IT buyer in most spaces to buy something that’s like reliably build monthly instead of a big upfront CapEx cost. And so we’re kind of focused on driving that there. But still, I think strong demand on the Hardware as a Service piece.

Samik Chatterjee

Hardware as a Service, we’re still relatively early on in terms of the whole industrial sort of rolling out these consumption models. I mean, is there a way that we should think about which end market verticals will adopt it first, where is it sort of the most appropriate for which customers and then sort of the long — obviously, the larger enterprise maybe take longer. I don’t know, they have longer sales cycles as well.

Todd Nightingale

Well, I think the — I’m not sure I would say that. I mean we — I see a lot of interest in the high end of the market, maybe even more than the low end. I think because there’s more perhaps just more planning on how they want to spend, more attention to the style of procurement that’s going on.

And the way I look at this and the way our financial team does, too, is we have a lot of customers who are CapEx constrained and have OpEx flexibility and vice versa. And those people who have OpEx and a desire to move their spend to a reliable OpEx motion, not have to invest upfront. I think they’re going to be — those are going to be the groups that are moving over to Hardware as a Service, certainly first, but perhaps even in the long run.

Samik Chatterjee

Let’s open it up to the audience here. If anyone has a question, please raise your hand. And I think we’ll get a mic over to you, give us 30 seconds there.

Todd Nightingale

In-person question, I’m excited.

Unidentified Analyst

Does the Hardware as a Service model, do you think that will result in increased buying or more customers buying more like you historically have seen in the more pure software businesses where like you offer them Software as a Service, they upgrade more often, you’re able to produce more products for them and deliver a better service customers are happy paying like 2x or 3x more?

Todd Nightingale

Yes. I think two things there. I think, number one, it gives customers — it gives an amazing customer experience when it comes to life cycle management. And that’s a really big deal when it comes to IT groups and procurement groups that have to make upfront investments and then manage upgrades and renewals on what can be a complicated or sophisticated schedule, whereas if they buy it as a service and then they can decide gracefully when to get — when to upgrade and that can all be bundled in, there’s a huge opportunity for that. There’s also the reality that if you do buy it Hardware as a Service, and you choose to hold on to your hardware for longer, then there’s some upside to Cisco, which is great.

But I think maybe the most important part of this is the customer experience, the IT users experience just lowers the friction, not having to make a huge upfront expense sharing the risk with us as we deploy and then being able to pay as you grow your deployment as a service monthly, reliable fee. That’s just an easier, lower friction adoption motion for our customers. The same kind of adoption motion that we see in SaaS, and I think that’s why it’s like really kind of exciting for us. It kind of serves our customers better, lowers the friction to kind of adopt a new architecture and to move forward. So, yes, I think that’s very focused.

Unidentified Analyst

Expecting to pay more?

Todd Nightingale

So that’s a good question. I’ll just repeat it since the mic didn’t get to you. Over the lifetime of the customer do we expect them to pay more? I think probably some may, if they told their gear for longer. But I think the predominance — it will be more likely that we’ll actually see is them paying about the same but just having a smoother and more graceful life cycle management, upgrade to next-gen. So for Cisco, the benefit really is in that retention over time and life cycle management. But I think there are examples where people will go past the regular amortization of product and Cisco would find some upside there for sure.

Samik Chatterjee

Any other questions? Okay. To let me move to Cat 9K. And I feel like given all the supply volatility, we haven’t talked in detail about Cat 9K for a while on the earnings calls. It was one of your strongest ramping products and probably still is. How do you think about sort of headroom for upgrades now that customers are coming out of the pandemic planning their spend? And how critical is sort of that campus architecture and the Cat 9K in terms of their spending decisions?

Todd Nightingale

Yes. I mean, to be honest, Cat 9K has been an enormous enormously successful where it was the fastest ramping product when we’ve ever had. But also, it’s the first time we really expanded that platform not just for switching, but for wireless and finally, even routing in SD-WAN, all shipping in the Cat 9K platform, unifying the experience for all our customers.

But lately, we’ve really been focused on adoption and expanding the value in those licenses. So we’ve embedded now the hybrid work platform DNA Spaces solution into the high end of those DNA licenses. We’ve embedded ThousandEyes agents onto the catalyst hardware, and we’ve embedded licenses into that DNA license and really adding value to that software motion and focusing on adoption. So like we’re just getting to the beginning of where the renewals really start to kick in.

And my team is really focused on adding value to the software licenses, driving deep adoption of critical features and running that renewal motion. So, I think while — we just haven’t gotten to the ramp of renewals we’re getting there may be in the next year or two, and that will be super exciting for us, especially as we’re sort of kicking off this business transformation towards SaaS and recurring revenue.

Samik Chatterjee

Cat 9K, the subscription on top of it had a tiered approach to it and includes premium subscriptions in addition to sort of basic ones. How do you sort of still think about the differentiation that you can offer customers at those premium levels, subscriptions versus basic ones?

Todd Nightingale

Yes. Well, I’ll tell you, we started to standardize across the Company in those tiers, not just for catalysts, but you’ll see it more and more for Nexus for Webex for security across the board because we’ve had a good experience with it. I think, in particular because not only the value we ship day one in, let’s say, an advanced or premium license. We have — it’s not called basic, but we have like Tier 3 tier model.

But the future value that’s getting added and added to those premium tiers, so we add ThousandEyes to the premium tier. We’ve had DNA spaces. We added security licenses to the highest third tier. And that’s been very, very successful for us. So I think the strategy, we’re starting to build a track record with customers of adding values to the licenses they’ve adding value license they’ve already purchased. And that’s starting to kind of return rewards and adoption and renewal.

Samik Chatterjee

Okay. Got it. Just sort of closing out this discussion about subscriptions itself. Can you give us an update on where you are in relation to subscription with enterprise customers? We get, obviously, the Company-wide numbers from time to time, but where are you, particularly if I focus on sort of large enterprise per plus commercial sort of bucket. Where are we in terms of subscriptions? Where are there more opportunities? Is it more renewal that you’re now banking on? Or are there more products that can sort of drive those?

Todd Nightingale

As far as the D&A stuff, it’s still early to be honest. So obviously, those — the numbers haven’t really kicked in. And remember, when we did launch the Cat 9K, we did it on a subset of the portfolio and over a few years, launched it more broadly high-end they’re the slowest to adopt new technology. So we’re really getting to that now. But I will tell you this, trying not to disclose numbers, I’m not supposed to disclose.

At the high end of the market, we’ve seen a ton of interest in enterprise agreements, which take a holistic approach across all the licenses that they might have for an entire company or even across our whole portfolio, what we call WPA, whole portfolio agreement. And we’ve seen a ton of interest like very increasing amount of our motion, especially up market and enterprise, looking at EAs, which I think is good for the customer.

It simplifies their motion, gives them one co-terminating date for their — all their infrastructure. It’s good for Cisco because it’s not about like nickel and diming exactly which pieces renew, but instead of renewing the whole estate at once. And so, it simplifies the motion for customers. They certainly like and are drawn to it, and we’ve now leaned into it. We’re on our third generation of EA framework, and we continue to work on improvements there.

Samik Chatterjee

Got it. Before we end, I wanted to hit two really topics or technologies here. So Wi-Fi 6 refresh. I think there was a generally a perception that as the Wi-Fi 6 refresh starts going, that will have a pull-forward effect on the switching portfolio as well. So maybe touch on that and give us an update? And then the last one I’ll — in the interest of time, I’ll leave you with that, which is SD-WAN, technology that really in gained prominence heading into the pandemic. Where do we stand today in terms of growth trends and sort of where that SD-WAN portfolio goes and enabling customers from here on?

Todd Nightingale

As far as Wi-Fi 6 goes, I think people’s upgrade to Wi-Fi 6 and now Wi-Fi 6E, which is the newest generation of that stuff. Absolutely, it helped pull through switching infrastructure. Just the amount of bandwidth going to each of these devices requires higher bandwidth multi-gigabit switching, which required an upgrade. We’re still at the beginning of this stuff. These Wi-Fi upgrades, I think, getting into Wi-Fi 6, 6E and eventually Wi-Fi 7, we’re going to be in this transition for the next couple of years.

But I think — there’s another piece of it that’s driving not just the transition from sort of legacy Wi-Fi to legacy to Wi-Fi 6, but this idea that sites are no longer like nice to have Wi-Fi. It is mission-critical Wi-Fi not only in hospitals and supply chain like facilities, it’s mission-critical Wi-Fi in hotel rooms and carpeted offices and conference rooms and conference spaces everywhere.

I assume every single person here is connected over Wi-Fi like you can’t have a meeting without that. And that’s driving a higher — like a densification, higher density of Wi-Fi devices, which is driving an additional kind of demand on the switching. It’s also true that Wi-Fi is just getting more and more intelligent. These devices aren’t just Wi-Fi devices. They have radio monitoring, they have Bluetooth, IoT radio connectivity, et cetera, and they’re part of the IoT infrastructure. So there’s just a lot of momentum in the wireless space, and it’s why I think it’s really — it is driving these campus refreshes.

As far as SD-WAN goes, and I’ll say I’m a huge believer in the SD-WAN space as really kind of the future of routing. As more people move to be cloud first and building more sort of cloud-based infrastructure, more of our traffic is directed to the cloud and not internally between our sites and private data centers, the SD-WAN solution is how we drive success there. And what you’re going to see from us, and this gets back to kind of this portfolio of synergy. This combination of the security technology and the networking technology is so powerful.

And especially when it comes to SASE architectures with SD-WAN, that combination is, I think, the future of enterprise infrastructure as we move forward, the ability to flexibly connect sites, people working from home, individuals working on the road, best-in-class connectivity in offices with a cloud security layer, so powerful. And so, we’re sort of excited just being positioned with both these portfolios. You’re going to hear launches from us in this space at RSA and yes, super exciting.

Samik Chatterjee

Great. We’re close to the end on time here. So thank you for making it to the conference. And thank you for everyone for joining the session here. Thank you.

Todd Nightingale

Thank you so much. Congratulations. You’re down to the second. Well done. Thank you.