Cisco 2013 Annual Report Download - page 54

RESULTS OF OPERATIONS
Revenue
The following table presents the breakdown of revenue between product and service (in millions, except percentages):
Years Ended July 27, 2013 July 28, 2012
Variance
in Dollars
Variance
in Percent July 28, 2012 July 30, 2011
Variance
in Dollars
Variance
in Percent
Revenue:
Product ............................ $38,029 $36,326 $1,703 4.7% $36,326 $34,526 $1,800 5.2%
Percentage of revenue ................. 78.2% 78.9% 78.9% 79.9%
Service ............................. 10,578 9,735 843 8.7% 9,735 8,692 1,043 12.0%
Percentage of revenue ................. 21.8% 21.1% 21.1% 20.1%
Total .......................... $48,607 $46,061 $2,546 5.5% $46,061 $43,218 $2,843 6.6%
We manage our business primarily on a geographic basis, organized into three geographic segments. Our revenue, which
includes product and service, for each segment is summarized in the following table (in millions, except percentages):
Years Ended July 27, 2013 July 28, 2012
Variance
in Dollars
Variance
in Percent July 28, 2012 July 30, 2011
Variance
in Dollars
Variance
in Percent
Revenue:
Americas ........................... $28,639 $26,501 $2,138 8.1% $26,501 $25,015 $1,486 5.9%
Percentage of revenue ................. 58.9% 57.5% 57.5% 57.9%
EMEA ............................. 12,210 12,075 135 1.1% 12,075 11,604 471 4.1%
Percentage of revenue ................. 25.1% 26.2% 26.2% 26.8%
APJC .............................. 7,758 7,485 273 3.6% 7,485 6,599 886 13.4%
Percentage of revenue ................. 16.0% 16.3% 16.3% 15.3%
Total .......................... $48,607 $46,061 $2,546 5.5% $46,061 $43,218 $2,843 6.6%
Fiscal 2013 Compared with Fiscal 2012
For fiscal 2013, as compared with fiscal 2012, total revenue increased by 6%. Within total revenue growth, product revenue
increased by 5%, while service revenue increased by 9%. Our product and service revenue totals reflect revenue growth across
each of our geographic segments. The revenue increase was primarily due to the following: the solid performance of our
Service offerings, our acquisition of NDS at the beginning of fiscal 2013, and increased demand for our Data Center and
Wireless products.
We conduct business globally in numerous currencies. The direct effect of foreign currency fluctuations on revenue has not
been material because our revenue is primarily denominated in U.S. dollars. However, if the U.S. dollar strengthens relative to
other currencies, such strengthening could have an indirect effect on our revenue to the extent it raises the cost of our products
to non-U.S. customers and thereby reduces demand. A weaker U.S. dollar could have the opposite effect. However, the precise
indirect effect of currency fluctuations is difficult to measure or predict because our revenue is influenced by many factors in
addition to the impact of such currency fluctuations.
In addition to the impact of macroeconomic factors, including a reduced IT spending environment and budget-driven
reductions in spending by government entities, revenue by segment in a particular period may be significantly impacted by
several factors related to revenue recognition, including the complexity of transactions such as multiple-element arrangements;
the mix of financing arrangements provided to our channel partners and customers; and final acceptance of the product,
system, or solution, among other factors. In addition, certain customers tend to make large and sporadic purchases, and the
revenue related to these transactions may also be affected by the timing of revenue recognition, which in turn would impact
the revenue of the relevant segment. As has been the case in certain of our emerging countries from time to time, customers
require greater levels of financing arrangements, service, and support, and these activities may occur in future periods, which
may also impact the timing of the recognition of revenue.
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