Good morning. Welcome everyone to Cisco's Virtual Investor Day. On behalf of Cisco's executive leadership team, I'd like to welcome you to today's event, and we all hope that you're staying healthy and safe. I'm Marilyn Mora, Head of Investor Relations at Cisco, and today, you're going to hear how Cisco is very well positioned to drive long term growth through key market transitions by continuing to execute on our business transformation where you've seen great results over the last couple of years and by delivering best in class innovations to take advantage of the tremendous opportunities that we see ahead, which you'll hear about in a moment. But before we do that, I do want to remind the audience that the matters we will be discussing today include forward looking statements, which are subject to the risks and uncertainties that we outlined in detail in our most recent SEC filings, including our most recently filed 10 ks, which outlines risk factors that could cause actual results to differ materially from those contained in our forward looking statements.
Now, we'll also be referencing financial measures that are non GAAP in nature. We will be providing a reconciliation of our GAAP to non GAAP financial measures up on the Cisco Investor Relations website. So go check that out. Now on to the agenda. Kicking us off will be Chuck, who will walk you through our vision, our strategy and how we're going to drive growth.
Then you're going to hear from our engineering leadership team, starting with Liz Santoni, followed by Todd Nightingale, Jeetu Patel and Jonathan Davidson, who will provide a deeper dive view into those market opportunities and provide you with a view into those platform innovations we're delivering to the market. Then we're going to take a 15 minute break. Following the break, we're going to continue with Jeetu Patel and Liz. And then
we're going to host a
Q and A session with our entire executive leadership team. Following that Q and A, you're going to hear from Jerry, you're going to hear how our go to market strategy is well aligned to our customers' top customer priorities. And then you'll hear from Scott, who's going to walk you through how everything you've heard today comes together to drive long term shareholder value. And then you'll hear from Chuck and Fran who will walk you through our purpose and all of the initiatives that we've been driving. And then we'll shift to our 2nd Q and A session of the day where you'll have a second chance to ask your questions to the entire executive leadership team.
And then we're going to wrap with Chuck, who's going to provide some closing remarks. But before I turn it over to Chuck, just two quick things. We're going to make a survey available throughout the event and post the event. So strongly encourage you to fill that out, provide us with your feedback as we'd love to hear it. Secondly, all of the presentations that you hear today, including the full entire replay of today's event, will be made available on the Cisco Investor Relations website within the next 24 hours.
So with that, it is my pleasure to introduce Chuck Robbins, our Chair and CEO.
Thank you, Marilyn, and thank all of you for joining us today. And for those of you who will be observing Yom Kippur, I hope you have a meaningful fast. We are so excited to share more with you today about the progress that we've made in our business transformation over the last few years, about the innovation that we've been driving, about our strategy moving forward and I'm thrilled that you're going to get to hear from our incredible leadership team about why we're so confident and optimistic about the future. When I became CEO, we talked a lot about the change we're going to drive in the organization. We talked about moving to more software and driving a fundamental business transformation.
We are going to show you how that's moved over the last few years. We talked about innovation and the need to balance organic and inorganic innovation and to accelerate the pace of innovation. And we talked about the importance of purpose and culture And we all know how important it is today to retain and attract talent and we've been focused on all of these things over the last few years. We began with an incredible foundation from a global leadership perspective. We serve over 1,000,000 customers and partners every day, 98% of the Fortune 500, the investments that we make every year in R and D are driving innovation and patents, but perhaps I'm most proud of the fact that the last two years we have been named the world's best workplace And this is something we've worked hard on and we're very proud that we've been able to accomplish it.
And again, in the war for talent that we have today, this is really important. But also in today's complex supply chain world that we live in, with the component shortages that we're facing, I'm incredibly proud that Gartner named our global supply chain team the number one supply chain team in the world and they are doing an incredible job of helping us navigate This super complex time that we find ourselves in. If we step back 4 years to fiscal 'seventeen, we had our last analyst conference and we set out some targets that we're going to give you a view on how we expected our software transition to occur. We said at the time that we expected 30% of our revenue to come from software by the end of fiscal 'twenty We were at 29% for that year, but we were at 31% during Q4 of that year. We said that 2 thirds of our software would come from subscriptions And we are well ahead of that at the end of fiscal 'twenty and we have continued to improve at 79% as we exited fiscal 'twenty one.
And we said that we expected greater than 50% of our revenue to come from software and services and we exited fiscal 'twenty ahead of that and continue to accelerate And drive that number higher. But perhaps the most important aspect of our transformation that we've been driving is this move towards subscription software. We started When I became CEO with $3,400,000,000 in subscription software and we exited last fiscal year At almost $12,000,000,000 that is a 23% CAGR over that time period and our total software grew at a CAGR of 10%. And we've always said this is good for our customers. This allows us to innovate faster.
It's good for Cisco. It makes us more competitive. It gives us more visibility and predictability in our results, which obviously the more consistency we can drive, the better it is for our shareholders. And this candidly is at the heart of why we were able to provide annual guidance for the first time on our last earnings call and why you will hear our long term guidance from Scott a little later today. And this transformation Has driven our remaining performance obligations to over $30,000,000,000 Last quarter, On our earnings call, we announced that we exited fiscal 'twenty one with $30,900,000,000 in RPO and we all know that this is a key indicator of the success of a software company.
So we're really proud of what we've achieved. And so much of that has happened because of the innovation that our teams in engineering have been driving. The leaders you're going to hear from later today have been driving the accelerated innovation for several years and it's been both organic and inorganic as we said it would be and it's been faster which we said it would be. We're also embracing flexible consumption. We basically said if it can be delivered as a service, it will be.
There is so much innovation that I could talk about that we've delivered over the last few years. Think about the Catalyst 9,000. We delivered that in 2017 and it's the 1st enterprise networking portfolio platform that we delivered with a subscription and people didn't believe we could deliver an Ethernet switch with a subscription on it and it became the fastest ramping product In the history of the company, the Silicon One investments that we made over the last 5 years to deliver the Cisco 8,000 and that silicon will be at the heart of the rest of our portfolio over the next few years. And this technology is now driving a lot of our web scale success that we'll talk about a little later on. Technologies like SecureX, a single platform where we can correlate threats and help our customers react to security issues much more quickly than they could otherwise.
The incredible innovation that our team in the collaboration space has delivered on this WebEx suite that we said over a year ago we were going to deliver and the quality and the innovation and the pace has just been incredible. CX Cloud, the platform that is going to give our customers A single place to engage with us across the technology they own but also around the orchestration of different platforms that they may have in their infrastructure. And then in the service provider space, this move towards routed optical networking that we will lead and you'll hear about later from Jonathan today, where we really flatten the networks and make the networks more efficient and more cost effective in our service provider customers. The other thing it's important to talk about is cloud because 4 or 5 years ago, cloud was viewed as a negative headwind to Cisco. Now at the time we had good traction in building out private cloud infrastructure with our enterprise customers, but we did not exist in the public cloud infrastructure.
And we told you, we were going to invest and it was going to be a marathon. We built the silicon. We built the systems And we said we have to be ready when the webscale players begin to move to the next architectural transition and we were ready. And that's what led us on our last earnings call to announce that we have grown 160% year over year in orders from that segment and it now represents 30% of the overall service provider business for Cisco. Our teams have done an amazing job and have positioned us for that business to be a growth driver for many years to come.
The other aspect of cloud that's so important is this move towards hybrid multi cloud architectures with every enterprise customer. This is requiring them to re architect everything about their technology infrastructure. Their traffic patterns have shifted completely with applications in the public cloud, applications in the private cloud, SaaS applications in the distributed nature of everything that they're doing. And we've embraced cloud across our portfolio. As we continue to drive the business transformation that we talk about and delivering more predictability and more technology as a service, embracing cloud has helped us to deliver even our hardware platforms with cloud management that gives us the ability to not only deliver subscriptions and more predictability that allows us to innovate faster again for our customers.
And every customer that I talk to will tell you that they're accelerating their digital transformation. They're moving faster than they ever thought they would be. This digital revolution is real and is accelerating and it's driven by this move to hybrid everything, hybrid cloud, hybrid work, which requires modernized infrastructure, a new security architecture, the entire world depends on connectivity. Everything that we do in life every day or in business every day depends on connectivity. In this cloud first world, with the rise of applications and the distributed nature of everything that we do, the network and the fundamental technology that we provide are going to be so important to the future.
And sustainability. In order to achieve the sustainability goals that we all talk about on a global basis, it is going to require an intersection with the digital technology focus. If we want to make the grid more efficient, we need to connect it. If we want to make manufacturing systems more efficient, we need to connect them. We need to be able to drive automation and deliver insights and that just is going to lead to more and more investment in the technology that we build.
And perhaps most importantly, every government leader, every peer of mine, every CXO around the world truly understands the value of technology in a way that they never have before. They always believed it was important. But over the last 18 to 24 months, they have experience technology and the power of technology in a way that they never had prior to COVID. And I believe as we come out of this and as we look to the future and as our customers accelerate this digital transformation that we are so well positioned Because the customers' priorities align with the technologies and the innovation that our teams have been delivering. Every customer is thinking about how they reimagine and re architect every application that they have.
We all understand this transition to hybrid work and every customer is trying to figure out how do I power this hybrid work model into the future. And candidly with the new variants that we've seen, Now it has to be super adaptable to employees coming in and employees going back home. We just don't know what the future holds. We also know that this distributed environment, this cloud world that we live in is going to change how we have to think about securing the enterprise And all of this leads our customers to have to fundamentally transform their infrastructure. If you're an enterprise, you have to transform your infrastructure to deal with this distributed Multi cloud world with hybrid work.
If you're a service provider, you're dealing with 5 gs and if you're a cloud player, you're looking at the 400 gig transition And there are so many of these transitions that are happening at the same time. Hybrid cloud is positive for us as we talked about, hybrid work, cloud security, Full stack observability as applications are written for the public cloud, also running in a private cloud, as applications candidly become more distributed and Liz will talk about this later on. We have the ability through so many of our assets like AppDynamics and ThousandEyes to give these applications visibility that they've not had before. And in the future, we believe that applications can actually reroute Based on intelligence that we have about what's going on in the infrastructure or what may be happening the next day in the infrastructure. Technologies like 5 gs, we've talked about the fact that our customers have started and they're in the midst of the consumer 5 gs revolution and the enterprise services where they will begin to build standalone backbone networks, we are on the very front end of a multiyear investment cycle around the enterprise 5 gs services.
We've been in the midst of this transformation to WiFi 6 and it will continue and we're simply at the very front end of the 400 gig transition, 1st starting in the webscale providers, the cloud players and then moving into the enterprise. And the transition that's going on in the webscale providers to 400 gig and these new architectures that our teams did such an incredible job building the innovation that positioned us to be where we are today with these customers. IoT, we have seen this continue to accelerate quarter after quarter after quarter It's finally becoming a meaningful part of our business, growing very consistently. And as I said earlier, this focus on sustainability will only lead to more investments in IoT and all of these technologies have edge components and Liz will talk a bit about how we think about the edge strategy as we go forward. And we've developed our strategy that you'll hear about all day today around 6 pillars that enable us to help our customers as we first understand their priorities, we couple that with these market transitions that are occurring And that's at the heart of how we've developed our 6 pillar strategy that you will hear about all day today around creating secure agile networks for our customers, Really bringing the leading solutions for hybrid work and this is not just collaboration or WebEx, this is about intelligence in the Enterprise space when you go back through understanding where people are through DNA spaces, the security that's going to be required in the distributed world that our customers are going to be in, thinking about how to deal with remote workers.
The home office now has to be viewed as a small branch. So hybrid work spans our networking portfolio, our collaboration portfolio and our security portfolio and candidly All aspects of our business. End to end security, our customers are having to re architect it all based on everything that we're talking about today. And then Jonathan is going to hit on why we're building the Internet for the future with so many of the technologies that we've been investing in over the last 5 years. We believe we have the ability to help our customers optimize their application experiences and you'll hear about that as well.
And again, all of these are enhanced through capabilities that we're going to deliver at the edge, whether it's a SASE edge, the application edge, the carrier edge, And again, you'll hear more about this today. And as we deliver innovation to our customers, we're focused on 1st and foremost, our customer experience, we want to drive simplicity in everything we do. We've truly adapted a cloud first approach to how we innovate and our technology portfolio. We've also developed a flexible consumption strategy. So as we bring new technologies to market, we want them to support Flexible consumption for our customers, so again we can meet them where they are.
We need to provide visibility and automation so that we can just continue to enhance the value of our full stack observability strategy that we have, security has to be built in from the beginning And that's so important and all of our teams are bought into it and they're focused on it. We're incredibly focused on delivering quality from the very beginning and interoperability, and this is so important. Our customers have asked all of us, every vendor over the last 5 to 7 years, please drive interoperability for me. I need to move faster and even if you're competitors, please drive the interoperability that I need to run my business and move with more speed and we're committed to do just that. And then the purpose of our company.
In late 2019 early 2020, we launched our new purpose to power an inclusive future for all. And we all know how important it is for an organization to have a purpose. Our employees care about Having purpose in what we do every day and this manifests itself in our technology because we fundamentally believe that if we can people who have previously been unconnected, we can give them opportunity, whether it's in a village, in an emerging country or whether it's in a community in the United States It's been left out of the economic expansion. It's also through our CSR efforts, our Network Academies program. The last fiscal year, 3,000,000 students participated in and almost 80% of them would tell you that they have either got a better job or got their first job as a result Of that training and COVID has taught us that we can connect people And we can educate them.
We can even deliver certain aspects of healthcare. And perhaps most important, it's taught us that we can hire them right where they are, they can work remotely and I think this opens up an incredible opportunity for us to continue To execute on our purpose and to really bring more people into the global economy. And this is important to our employees as I said, it's important to our customers. We talk about this a lot with them. And based on my conversations with all of you, it's important to you as well, the entire ESG strategy.
In the last week, you may have seen that we announced our net zero commitment. We are going to be net 0 on scope 1, 2 and 3 by 2,000 40 and we're going to be net 0 on Scope 1 and Scope 2 by 2025. And Fran and I will talk more about this later today. When I think about our customers and our partners and why they do business with us and why they engage with us so strategically, 1st and foremost, it starts with trust. We've been there for 37 years.
We have incredible partnerships With our partners that we go to market with and with our customers and we've had a lasting brand that they believe in. And this has never been more evident than it was during COVID When our teams worked so hard every day to help our customers in the early phases of getting their employees working from home, Getting them the collaboration capabilities they needed, the security that they needed and making them productive. And we know how shocked everyone was About how productive the world has been during this very trying time. It's also based on the innovation and the power of the portfolio that our teams have built. This portfolio that's designed for the modern world and it's built on choice.
We have introduced so many new ways for our customers to consume our technology. We disaggregated software and hardware. We're now delivering flexible consumption models, delivering our technology as a service. We want to truly meet our customers where they are. And this is why we're confident about the future and I'm so optimistic and you're going to hear today about how we think about the future, about how we're going to continue to accelerate our business transformation, about the great work and the innovation engine that we have that's delivering on this incredible portfolio for our customers.
And I'm confident because of the amazing leadership team that we've put together and the incredible employees that work at Cisco every day. I hope you believe that what we tell you, you should expect us to deliver on. In 2017, we set out targets and we delivered on them. And today you're going to hear more about the targets that we expect to deliver over the next few years. Our commitment is that we're going to do everything in our power to make that happen.
And we're going to try to drive success and progress as we move forward and to accelerate the momentum that we feel right now in the business. I want to thank you all for being with us today. And now I'd like to turn it over to Liz, who will share more on our strategy and the opportunity ahead. Thank you.
Thank you, Chuck, and hello, everyone. Thank you for joining us today. I'm Liz Antoni, and I'm the Chief Strategy Officer and General Manager of our applications portfolio here at Cisco. So I'm going to go into a bit more detail on our strategy and also share the tremendous growth opportunities we see for the next few years. This is both in our current markets and the markets we're expanding into.
Now Chuck talked a little bit about our focus on helping customers with their digital transformation efforts, which have accelerated over the past 18 months. We've identified here the most pressing needs of our customers in this multi cloud hybrid work app centric world. Our customers want to deliver a cloud experience across a hybrid multi cloud world, simplifying and automating operations, reduce complexity, have it delivered as a service and manage as a subscription, power the hybrid workforce with secure and robust access, a safe and trusted workplace and the best inclusive collaboration experiences. So employees can work from anywhere, they can work anytime and with anyone. Mitigating risk across an ever expanding attack surface.
Now with the move to the cloud and edge, our customers are looking for simplicity. They need this integrated high efficacy end to end security solutions across user devices, network, clouds, data and applications. Then it's about optimizing for the best application experience. It is the planet of the apps. And our customers are looking to achieve application development velocity and scale all of this while also gaining observability across the full stack and breaking down the silos across their teams.
NEX is about meeting the traffic requirements for this new world. As Jonathan will tell you a little bit later, Internet traffic spiked around the globe as businesses, classrooms and even gyms went virtual overnight and that continues to grow. With the explosion in data intensive applications, including streaming video and with 5 gs and Wi Fi 6, our customers are rethinking this economics of operating a cloud scale network as they plan for the high bandwidth and low latency use cases. And lastly, as corporate social responsibility has become a greater C suite priority, our customers are turning to technology for these initiatives. For example, they're looking to improve inclusivity in the hybrid world, ethical AI in the algorithms, achieve carbon neutrality in their supply chain, embrace responsible consumption across their operations.
Technology is becoming an enabler for their environmental, social and governance goals. You saw this exact slide in Chuck's talk as well. I wanted to bring it back up again as I believe that these market transitions are significant tailwinds for Cisco's business. I'll touch on this and you'll hear more on this when Todd, Jonathan, Jeetu and I come back and go through our product strategy. Take hybrid work.
Our customers are accelerating their efforts to transition tools and technology to enable hybrid work for employees to work from any place, any time with anyone and have that collaborative, inclusive, always on secure experience. There's a tremendous growth in web scale. The complexity of architectures and the volume of data continues to increase and the need for flexibility and scalability we'll continue to drive the pace of webscale growth for the coming future. Then the need for 5 gs, WiFi 6, 400 gig, it's there because the higher speeds, lower latency and increased capacity are needed for everyone from hybrid work to modern applications. And at the edge, applications and workloads are moving closer to users and devices and where data is generated.
As users, devices, applications and the data continue to be more distributed, customers are looking to address a variety of trade offs around cost, latency, performance, data sovereignty, localization and availability. And they're looking to do all of this with a flexible consumption model and have solutions delivered as a service and through subscription. Now Gartner focused forecasts that public cloud spending will grow at 20% CAGR to almost $500,000,000,000 by 2022. And this continued acceleration to the cloud is creating tailwinds for every single part of our business, driving growth from connectivity and security to application experiences and the edge. Now I know in the past, there's always been this ambiguity of what cloud really means to Cisco's business.
It's positive. We continue to be confident in cloud as a significant growth driver for our business. And here's why we believe that. First, it's about building the cloud. We've been helping build private clouds for our enterprise customers for years.
We're also powering the hypergrowth of web scalers with our silicon, our optics, our software and systems for the webscale cloud. Our customers can now build a flexible, easy to manage infrastructure to power the Internet of the future. And in addition to our industry leading performance and innovation, we stand out by placing purchasing flexibility in our customers' hands, which is resulting in a market share shift towards us. And Joe know that Jonathan is going to talk through this in terms of our investments the revscalers are making in our Silicon 1 and Cisco 8,000 systems. I'm tempted to use an example in terms of what he talks about where 4 of the 6 global hyperscalers are making long term investments in our Silicon 1 and 8000 series routers to bring operational agility, massive scale and performance into their networks.
We have strong alliances with the major cloud providers, including AWS, GCP and Azure. And we're looking forward to seeing these relationships get even stronger. 2nd, hybrid multi cloud is now the de facto way of operating. Our customers' environments have a mix of cloud native, cloud only applications and services combined with edge and on premises applications and services. They need a trusted partner like us to help them navigate this transition.
92% of enterprises have a multi cloud strategy. 82% have a hybrid cloud strategy. Our portfolio supports our customers through their cloud transition no matter where they are in their journey and no matter the level of heterogeneity in their environments. Just using one example, our SD WAN cloud on ramps allows our customers to take their multi cloud journey across public clouds, colo facilities and SaaS clouds. With the integrations that we've done across all the major cloud, colo and SaaS vendors, our customers face a seamless onboarding to their multi cloud journey, no matter their destination.
And I'm tempted to use yet another example with our IntuSight platform, where our customers can simplify their hybrid cloud journey, whether it is automating infrastructure and workload delivery across their on prem and public cloud environments or managing their application resources across these environments in real time. And with IntraCyte Services for HashiCorp's TerraForm, he actually simplifies and secures that infrastructure as a code strategy across the hybrid multi cloud environment, securely and seamlessly integrating on prem into site managed environments with the TerraForm cloud to deliver that consistent infrastructure as code experience across on prem and public clouds helps accelerate application innovation while reducing risk. Embracing hybrid work requires delivering solutions for a distributed workforce to access distributed applications across the entire environment. And then from trusted workspaces with hot desking solutions and devices, you have proximity alerts, you have density monitoring. To every one of the homes becoming a branch office overnight, Cisco's solutions are designed to optimize cloud infrastructure and enable employees to work remotely and access all their applications and data securely.
And it's an app centric world and apps are now the business. So it's critical to deliver the best user experience, both for traditional and cloud native applications by delivering visibility, insights and actions across all of the environments and any application stack. And we're the only vendor that can offer them a comprehensive view across this full stack. So when we think about going from we'll
take a look at our
growth strategy. Everything we build uses a cloud first and app centric approach. Every product in our portfolio, if it can be, is cloud managed, cloud delivered, offered as a service, delivering unparalleled experiences at scale with simplicity and speed. And as you heard from Chuck, we're a sizable software company. Our subscription business continues to grow and hence so does our predictable revenue.
And every part of our portfolio, not just software, is available and will be available as our service if our customers want to consume it that way. Both in our current business and in our expansion markets, we're expanding our trusted relationship beyond IT, networking and security and reaching new buyers and users, including app developers, lines of business, cloud and digital teams. So when I think about our growth strategy, it's about building, transitioning and expanding. Our product strategy, what we build, the $6,500,000,000 plus we spend in R and D is aimed at delivering multiyear continued growth. Now these six areas should look a bit familiar.
These are the 6 pillars of our company strategy that Chuck talked about. Secure Agile Networks. It is about our enterprise infrastructure solutions with built in simplicity, security, agility and automation that provides that unparalleled connected experiences, supporting any on prem hybrid or multi cloud environment from the data center to the home office with simplicity, with flexible consumption options. The portfolio here is comprised of our campus solutions, including our fastest ramping product in history, our SD WAN solutions that I just mentioned, our carpeted and our non carpeted IoT solutions, our cloud networking and compute solutions as well as InterSite for cloud infrastructure management and ThousandEyes for network and Internet visibility, all being unified in a platform suite. And Todd will talk to you about this a lot more.
In authorizing application experience, it is really about enabling the best end user experience with greater speed, agility and scale for cloud native and traditional applications. We want to arm our customers' teams with industry leading observability and performance tool to to optimize the application experience. And here, we're able to actually reach net new audiences, including developers, lines of business, cloud and digital teams. And as I'll talk about this a little bit later, we're extending our leadership in application observability towards full stack observability in a way that only we are equipped to deliver. In hybrid work, it's about a secure and robust access, a trusted workplace and the best collaboration experiences for the hybrid workforce.
We believe there's a massive opportunity for us here. There are over 1,000,000 knowledge workers worldwide. And IDC estimates this broader space is going to be a 1.1 $1,000,000,000,000 market. And as Jeetu will walk us through in detail, we have a chance to define this category. We have a chance to become category leaders and participate in all aspects of connecting, securing and optimizing the employee experience for the hybrid workforce and the trusted workplace.
In Internet of the Future, it's about transforming connectivity to the Internet and the cloud by efficiently meeting the ever growing demand for low latency and higher speeds. Our high performance routed optical networking systems based on our Silicon 1 and pluggable optic solutions allow us to transform the economics of building and operating networks for our web to scale our service provider and our enterprise customers and help them deliver the promise of the cloud and 5 gs and Wi Fi 6. Our high performance 8,000 series sonic routers that are increasingly popular with the service providers and hyperscalers and our Silicon 1 and optics components are all available in a variety of consumption models, which means that if you're a cloud scale network operator, you no longer have to make the trade offs between programmability, bandwidth and operational agility, we are meeting our customers where they prefer to consume. And we're really excited about our value added services for our telco customers, including the world's largest mobile IoT platform, our 5 gs IoT control center and our recent entry into the carrier edge. In end to end security, it's simple, integrated, high efficacy, end to end security solutions delivered on prem or in the cloud.
Unifying user endpoint edge and application security on a common platform to reduce and mitigate risk in a rapidly growing threat environment. We have the most comprehensive security portfolio in the world, ranging from our cloud security and access solutions to our 0 trust architecture, our endpoint protection, our data and workload security solutions, our extended detection and response solutions, vulnerability management and our recent announcements of API and application security delivered seamlessly through our integrated SecureX platform and backed by our world class threat intelligence from Talos, protecting you every step of the way. Capabilities of the edge. We believe that the move towards the edge is a critical paradigm shift in technology that will continue to accelerate. As users, devices, applications and data continue to become more distributed, our customers are looking at the edge, as I mentioned earlier, to address that trade offs around cost, latency, performance, data sovereignty, localization, availability, we define edge into 4 areas: the Sassy Edge, connecting and securing users and devices the Application Edge, protecting and accelerating apps and data the Enterprise Edge, about infrastructure platforms optimized for distributed apps and data, CarrierEdge for service providers with edge assets.
We can actually bring our entire portfolio to deliver capabilities across all of these edge services. And as we go through the top 5 in detail, you will see how we include edge services in each one of them. We have market transitions that are tailwinds. We have cloud as a growth driver. We're building product to address our customers' key needs, expanding our user base.
We're making this big investment as we believe that we have a massive market opportunity ahead of us. We're already a leader in several very large markets across our portfolio today. And we address almost $260,000,000,000 today. And beyond that, keeping with our strategy and the needs of our customers, we're actively moving into several large and expanding markets, which are growing even faster. As you can see, at double digit rates, adding another $140,000,000,000 opportunity for us for a total of over $400,000,000,000 in TAM in 2025.
These new markets we are entering are aligned with our strategy of expanding our software business and continued move towards a software as a service, anything as a service operating model. And will help us reinforce our leadership in IT, networking and security and extend our reach to new users and buying centers like application developers in cloud and digital teams. It also changes the composition of business, as you heard from Chuck, more software, more recurring business. I know Scott's going to talk about that some more as well. And as we continue our transformation journey, we believe that there are significant broader opportunities available to us in markets adjacent to where we play today.
You heard me talk about earlier that IDC recently sized a $1,100,000,000,000 plus opportunity in the future of work, which we see as a tailwind to the broader Cisco business, given the large applicability of our entire portfolio into this new category. And we believe there are multiple 100 of billions of broader opportunity they're adjacent to where we sell today, including areas like AI and analytics, smart building solutions, things like contact tracing, expanding even further into hybrid events and experiences, additional content management and collaboration use cases and solutions and support for this new category. And as we expanded to SaaS, we can use automation to eliminate a lot of currently cumbersome tasks for our customers, reduce distractions like alert fatigue and really focus them on outcomes. While we're all well on our way to that in our existing businesses, we believe a continued move towards automation offers a large adjacent opportunity for us down the line. And when you combine all of this, you see our TAM is more than $900,000,000,000 It is clear we're not opportunity constrained.
I'm super excited about the growth opportunity ahead of us. You can see that there are meaningful opportunities in each of our existing markets with ample room for us to penetrate even further within each one of these as these markets grow at a healthy mid single digit over the next 4 years. And the expansion markets are large and they're growing with significant opportunities tied to higher CAGRs. You see this growing at a CAGR of 18% over the same period. And I know Scott's going to highlight for you in his presentation the subscription portion of this entire market is growing at a much higher pace in the mid teens compared to the non subscription component, which is very aligned with the way our customers want to consume technologies and highlights the massive opportunity that still lies ahead of us for subscriptions, very consistent with our strategy and the direction that we're taking as a company.
We're focused on capturing the growing opportunities by continuing to deliver incredible value to our customers. Customers choose us for a number of reasons that are pretty unique to us. The breadth and scale of our portfolio. We have the sizable portfolio that grows across domains and architectures, we can integrate these products and services to deliver outcomes for our customers with speed and simplicity. For example, take hybrid work.
We're bringing together our WebEx suite, our entire security portfolio, our branch networking solutions, DNA Spaces for location based analytics, our Meraki for sensors and cameras, all to power hybrid work. And in full stack observability, combining the power of some unique assets AppDynamics, ThousandEyes, IntraCyte into a single solution providing visibility, insight and and across the full stack, across all data types and across a hybrid multi cloud experience environment. In simplicity and experiences, it's really about us delivering a consistent experience across a hybrid multi cloud environment. We need a common operating model that spans across all of these environments. And whether it's the application of the infrastructure, we're focused on optimizing the experience.
A track record of sustained innovation. As you saw in Chuck's section a little while ago, we have a demonstrated history of technology, go to market and operational innovation. It positions us well in solving our customers' biggest challenges. We're a trusted partner, offering neutrality and choice. Our customers want choice.
They want choice of cloud, public, private, SaaS, edge, they want choice of developer stacks, and choice of app stacks. We enabled that, meeting our 1,000,000 plus customers and partners where they are. Lastly, security built in from the ground up. And whether it's our silicon or software or applications, we secured at the lowest common denominator, the dedicated vulnerability and penetration testing to ensure the resiliency of our solutions. So I trust this gives you a good sense of our strategy and our path forward towards the large opportunity we're going after and why we are uniquely positioned to win it.
Now I'll hand you over to Todd to share more on Secure Agile Networks, and you'll see me come back a little bit later to talk about applications. Thank you.
Thanks, Liz, and welcome, everyone, to Cisco Investor Day. I'm so excited to be here. My name is Todd Nightingale, looking after the Enterprise Networking and Cloud Business at Cisco. We're excited to talk to you through what we're doing with Secure Agile Networks. In our networking business, our focus is to deliver an end to end enterprise infrastructure solution that provides unparalleled connected experiences and I really believe that it's that experience, the user experience, the management, the IT experience is going to really matter.
It's going to matter the next decade of innovation in this space. You heard from Chuck and from Liz massive market transitions that we are seeing across the world today. But look at how important these first two are. Hybrid cloud is changing the way that we deliver applications in practically every industry. For years, we've been seeing this transition to cloud.
And now customers are accelerating that transition for 1, but also truly expanding to a hybrid cloud Multi cloud model to make their applications more reliable and more resilient. I practically do not have a single customer meeting that doesn't start 5 minutes today on hybrid work. It is absolutely the transition that is going to drive What technology and facilities teams are doing for the next 5 years. Everyone, every organization, every industry has to rethink how we will come to work in the future, and Cisco is in the middle of that transition, both in the WebEx and collaboration businesses and the networking and IoT businesses. Cisco is at the forefront.
Cisco has the opportunity to drive the future of hybrid work. And I look at all the rest of these transitions, and I think Liz really brought up really the most important ones here. These technologies are making these first two They are driving the future of hybrid cloud and the future of hybrid work. We see an explosion of connected devices in the world right now. 29,000,000,000 devices are expected to access the Internet by 2023.
That's nearly 4 devices per person. That is remarkable, 4 devices per person globally. But we're actually not just talking about personal devices. We're talking about IoT devices, Devices that demand a different level of connectivity, different level of battery life, a different level of experience and because of that new types of technology. The advances in Wi Fi 6 and 5 gs, new types of edge technology allowing us to connect IoT devices and provide a more complete experience.
And of course, we're seeing this transition in 400 gig in the cloud as well. And Cisco is leading the way, leading this transition in networking to support an Explosion in IoT and, of course, an explosion in hybrid cloud as well. And that hybrid cloud transition, it really is important to so many of our customers. Every one of our customers has been building this transition to the cloud for years. And now they're realizing that that transition to the cloud, it can't be locked into a single vendor, single infrastructure as a service offering.
They need to build the most reliable, resilient offer. They can't be locked in. They need real agility and that's why 55% of CIOs are planning to invest in multi cloud technology just by next year. Multi cloud and hybrid cloud technology are really taking over this market. It's going to be platforms that can provide real agility, real optimized application experiences in multi cloud and hybrid cloud, they're going to matter most.
And I really think you should check out Liz's section coming up on the application experience because This is such an important transition for our customers in an area that Cisco can really have a huge impact. All of these transitions, they are driving momentum for Cisco and we are feeling that in our networking business. We've seen double digit growth this past quarter In our core enterprise networking space. That's a really remarkable result for Cisco. And that business, that core enterprise networking business, it is being transformed more and more to a software business.
We saw 29% of that business now has been transformed to software and 2 thirds of that software Are now in subscriptions. This is the transition that Chuck and Scott have been talking about and we're seeing it not just in our collaboration, our security business, we're seeing Core networking business as well. We have a huge momentum that's been propelling us and will continue to propel us in the future with a 1000000 customers for Cisco as well as 330,000,000 networking devices. That's an enormous installed base and it represents an enormous opportunity for us. Our flagship product, the Cat 9 ks, the market leading product in campus networking, branch networking, enterprise networking, it is the fastest ramping product in Cisco's history.
But more than that, we are just scratching the surface. Over 70% of our installed base has yet to upgrade to the CAT 9 ks. We have so much more to do and that has been driving our momentum, But that 70% has the opportunity to drive our momentum for years to come. And that's why we're so excited about the growth opportunity here. We see a $72,000,000,000 TAM in our core businesses in areas where we have an enormous and broad portfolio and incredible strength in the market, of course, throughout networking and wireless and switching and routing and SD WAN, but also in the cloud, in our server and x86 business and our management and orchestration across all of that infrastructure, true end to end enterprise infrastructure.
And there's so much opportunity for us to expand from here. We see more than $26,000,000,000 in expansion opportunity in very close adjacencies, hybrid Cloud automation insights powered by machine learning, IoT expansion, we're going to talk a little bit about that in a minute, and of course, our transition to hardware as a service and true solutions as a service at Cisco. This rolls up to a $90,000,000,000 opportunity here. And I think so much of this can be grabbed by Cisco because we have enormous momentum in the market, enormous trust from our customers, And we are driving the transitions that they need to grab on to as well. We see it in our customers already.
Take a minute and talk about Renown Health. It is such an interesting group. Renown Health is the largest healthcare provider in Nevada. And of course, Healthcare has been front and center for Cisco for the last 2 years. We've gone to great lengths with healthcare groups around the world to set up some of the most agile, most flexible sites so we can set up temporary connected intelligent sites and clinics to do COVID testing as well as now COVID vaccinations, we've been working closely to expand the capabilities of healthcare groups to do telehealth because we know that social distancing is so important and that there are so many people, so many patients whose family and friends can't visit them.
And so that remote connectivity is so important. It's part of the reason why Renown Health has been investing so much, not just In their response to COVID into their temporary sites, but in their 74 core sites throughout Nevada, they deployed best in class Cat 9 ks technology across the board. They use DNA Center to orchestrate that space with deep assurance technologies and machine learning from DNA Assurance. But more than that, they also deployed DNA Spaces to understand how their facilities are being used to get intelligence from their networking team and their technology teams brought to their facilities groups, their operations teams and their medical teams. And the response and the results of this have been amazing.
Not only did they were they able to upgrade and transition their networks With remarkable speed, thanks to the automation of DNA Center. But this is one of the most mission critical networks in the world. It's a true IoT medical network Connecting thousands of medical devices across all their hospitals. There is no network that could be, I think, more mission critical Been a modern IoT driven healthcare network. I think what's really interesting is in addition to trusting Cisco with that, they use Cisco to build out their guest network Designed to connect guests to the hospitals and their patients and importantly those patients who need to connect to guests who cannot visit.
And that is an important mission I think. But what was really interesting, I think, is that we saw so much of their staff connecting to that network. But just by providing that access, It became mission critical. It became part of how the hospitals run, and we see that across all of our customers. So many customers who've built networks And now they realize after the fact these have become mission critical networks that require more reliability and more agility to react to the needs of their business, their schools and their governments.
We've had another great example of that in the cloud space with a leading financial provider and a leading bank in Europe. And as they were looking to the next generation of how they would deliver applications, they chose Cisco to help them build out their cloud, their private cloud. They built out 8 massive data centers in order to provide best in class application experience to their customers and they use Nexus to connect those data centers to build a best in class data center fabric to optimize the experience of their customers and their employees On their applications, but also to improve the agility of those applications so that their technology groups could expand and scale that infrastructure and scale those applications to serve their users and their customers better. This is a remarkable achievement because the deployment was so fast. They use Nexus to get deep insights about what's really happening, about optimizations that needed to happen.
And now that this bank is looking to expand their cloud footprint into the public cloud, once again, they're turning to Cisco and they're turning to NEXUS and NEXUS Dashboard to be able to make that bridge, to provide one policy across their public and their private cloud to deliver true high big cloud experience to their application and their DevOps teams and real best in class experience for their users. And that is the transition that we're talking about. In fact, we see transitions around the industry, and we need to look inward at Cisco as well. And I think it's really important we do talk about this a little bit. Cisco is such a strong company, so trusted by so many enterprises around the world.
And you can see down the left of the slide so many of the reasons Cisco is trusted, but we have an opportunity to transition with our customers, to transition our business practices and we are well on the way in all of these transitions. Cisco is well known for having the most powerful, most feature complete technology in the world, especially in agile networks. We have the most feature complete networking technology in the world, far none. We have an opportunity to turn that into powerful intuitive experiences by leveraging best in class platforms Put the user first and truly driving adoption and expansion on those platforms. Cisco has one of the most broad portfolios in tech, I would say the broadest portfolio from collaboration, security to networking.
But we have an opportunity with this platform strategy to drive a broad and aligned portfolio, a portfolio that gets strength from its breadth by providing a unified experience and we're starting to see that transition at Cisco today. Cisco has a strong go to market, best in class enterprise sales team and a partner ecosystem that is the envy of the industry. But with a platform first go to market, we can power that partner ecosystem. We can power that sales team by giving them a land, adopt, expand motion that can make them more efficient, that can make them faster, that can help them reach more customers and probably customers we never thought we could reach before. Cisco is trusted by IT teams around the world.
In fact, one of the most trusted brands in IT. What you'll see with our technology, With this drive to hybrid work, this drive to hybrid cloud, Cisco's trust is starting to increase beyond Just the IT group, applications teams and DevOps teams are trusting Cisco with their hybrid cloud facilities and operations teams are trusting Cisco With their hybrid work and their facilities and operations. And as we expand into IoT, as we expand into applications, and you'll hear Jeetu talking about collaboration and Liz talking about our application ecosystem. We have so much opportunity to expand Cisco's trust throughout the enterprise And that includes the finance teams. Cisco, of course, has best in class purchasing offers across the world.
But by making those offers more simple and more flexible, we have a real opportunity to drive more trust in the finance team. We've launched Cisco Plus, our best in class solution as a service brand. And with that, we have a real opportunity to give customers the most flexible ways to buy Cisco technology, giving Cisco an opportunity to capture more wallet share while the customers have to make fewer decisions because they're not buying just hardware as a service or software as a service, they're buying an entire solution as a service from Cisco, a brand that they can trust. And I really believe it's the platform strategy that's going to get us there. And I'm really excited about this.
This is how we bring together the breadth of Cisco's technology into highly aligned user experience. We have best in class platforms across the board and these platforms are driving phenomenally simple experience that can make all of our IT teams and Facilities teams and operations teams more efficient that can make them more agile, that can help them serve their customers better. And importantly, it helps Cisco as well. It helps us align a real platform driven go to market. We've been leading with these platforms for a few years now and they are attaching phenomenal amounts of software licenses and software subscriptions.
And you see that in the numbers. You'll see it from Scott a little bit later. You heard Chuck talk about it earlier. With those platforms and that attach, we've been able to drive remarkable adoption. We're realigning our teams with the help of our CX group to drive best in class platform orchestration and adoption of the key features that matter most that help our customers be the most efficient and provide that best in count, Best in class customer experience.
And because of that, because of that attach motion and that adoption, we have the opportunity to expand, not just expand within our existing TAM, within our existing networking solutions, but we can expand to new technologies. We can Expand Cisco's go to market into new TAM and capture new opportunity. And that is really exciting. It's an awesome way For platforms to reach new parts of our customers, impact our customers in new ways. We're seeing this stuff throughout the portfolio and DNA Center perhaps our most important platform across the board, we've seen a 100% higher key feature adoption for DNA Center in this past year.
The features that matter most are our agility, our automation and Actually, the network assurance features in DNA Center, they're being adopted 100% faster than they were a year ago. And that's driving a far faster adoption And process through our lifecycle and because of that we have a far higher renewal rate this year than we did just last year. This type of land and expand, This idea of driving adoption is really the key measure of success at our customers is incredibly healthy for our business and it's driving this transition to SaaS and this real transition to subscription based business. On the Meraki platform, we've seen this real ability to expand. Meraki was acquired at the very end of 2012, primarily as a wireless business.
As part of Cisco, we've been able to expand Meraki to a full networking stack And a really healthy large business that's growing incredibly fast. But what's so interesting is that the platform, That platform, the Meraki dashboard is really the lead in this portfolio and we've expanded it to include smart cameras and environmental sensors, real IoT technology that paired with WebEx provides really best in class hybrid working smart facilities. And So many customers who are comfortable with the Meraki dashboard, comfortable with the Meraki platform have been able to expand from wireless to switching to routing, But now into new parts of TAM, into that facilities TAM and the camera TAM, which has remarkable upside opportunity for Cisco and the power of the platform to expand into new TAM, It's really so exciting for us. I think it's a huge part of why we're going to win and continue to win for years to come. Cisco has best in class innovation.
I can't say that enough. In the networking business, we have the most complete, most powerful portfolio in the world and our customers trust Cisco Networking. By driving this platform transition using DNA Center and Meraki, Nexus, Dashboard and Intersight, we have a huge opportunity to transform the experience that our customers have to build a truly unparalleled experience End to end, from user to application. And that's why those transitions that we heard from Chuck this morning are so important. It's really from user to application that matters from end to end.
And that experience is truly agile. If we empower IT groups to serve their users and their customers better, there is really an unending amount of potential here. And of course, lastly, Cisco is the most trusted brand for these networking teams. And for good reason. Cisco has transitioned customers from one technology to the next.
We pioneered technology transitions into this market for years And customers are trusting Cisco once again to transition into Wi Fi 6 on to 400 gig, into the edge, to the true multi cloud. And I think these three things are really why Cisco wins and why we're going to continue to drive this momentum for years to come. Best in class innovation, a platform's experience end to end and a truly trusted experience from Cisco. Thank you so much for your time today. Thanks for coming to Investor Day.
And with that, I would love to invite to the stage my partner in crime, Jeetu Patel.
Thank you, everyone, for joining us today. I'm so excited to talk to you about the opportunity that we see for hybrid work and why Cisco is so uniquely positioned to capture this opportunity. Now one of the reasons we're excited about hybrid work is because it ties back to our corporate purpose so neatly, to power an inclusive future for all. And with hybrid work, there's an opportunity to empower 3,000,000,000 digital workers on the planet to participate equally in a global economy regardless of their geography or language Preference or personality type or even tech proficiency level. As we all know, opportunity is pretty unevenly distributed in the world, but human potential is not.
And it's pretty clear that technology can really level the playing field for us. Now, one of the questions we get asked frequently Is what does the future of work actually look like? And we believe that the future of work is definitively going to be hybrid. Sometimes People are going to work choose to work from home. Sometimes they're going to want to work in the office and sometimes they're going to be somewhere in the middle.
Now, the really interesting part about hybrid work is that it's going to be more complex than when everyone was in the office Or when everyone started working from home during COVID. Now the past year and a half has shown us the work has completely changed for all of us. For example, 77% of the employees are saying that they're going to embrace a flexible work style according to studies. What's even more interesting is that 98% of all meetings will include at least 1 remote participant. And yet, while there are 110,000,000 meeting rooms and classrooms around the world, only 6.4% of them are video enabled.
There's a massive need to address this disconnect. And this does not even include the need to ensure that employees have a better, more immersive work experience from home. Now what's different about hybrid work opportunities is that it's truly cross functional as an undertaking. There is a definitive technology change that's required that will need to be managed, but also a significant cultural and facilities change that's going to be needed. This is going to be a collaborative effort between IT, HR and facilities within an organization.
So IT is going to remain a pretty important Technology decision maker as we move forward, but HR and people teams are actively thinking about the impact of hybrid on culture and employee well-being and recruiting and retention and team dynamics and so much more. And facilities teams Are completely reimagining the physical workspace itself. So thinking about how people work better together when in the office And also our offices are configured not just to optimize for the people physically together, but also inclusively Accommodating the ones not in the office. Literally every department and line of business organization Is thinking through the implications of hybrid work. And this gives Cisco the opportunity to have a very different strategic level conversation with our customers And in doing so, positions us as their go to partner in this kind of transition.
Now that's where the breadth and the power of Cisco truly comes in. We believe that no other company in the world can deliver the solutions needed for hybrid work more completely than Todd discussed our vast array of networking devices, cameras, sensors and so much more that are critical to modernizing workspaces and creating smart buildings. Later, I'm going to give you an overview of our security offerings. Let's discuss right now the significance of collaboration and devices in driving our vision for hybrid work. Now, this past year, we made major strides with WebEx in helping our customers navigate the challenges of the past 18 months and in figuring out the new normal.
Our customer momentum is stronger than ever. WebEx is a leading player in the collaboration market And we are proud to be trusted by 95% of the Fortune 500. Now, we recently reached a significant milestone in our calling business as well, hosting 8,000,000,000 calls per month. Our product momentum over the past year has been nothing short of remarkable And has never been better. In fact, in my personal career, I've never seen momentum like this anywhere in the 30 years I've been in business.
We drove massive innovation velocity and added over 1,000 features to our portfolio organically, and we also acquired 5 companies that will prove to be very strategic to the future of hybrid work. Now most of these acquisitions were integrated into our platform within weeks of closing, delivering Immediate benefit to our customers. And furthermore, we've actually been recognized as an Industry product and design leader for our innovative portfolio that just keeps getting better every day. Now, as Liz mentioned, there's a sizable market opportunity in front of us and hybrid work helps us drive new conversations with our customers about a topic that's very relevant for them We believe there's no other vendor that's better positioned than Cisco to help our customers capture this $83,000,000,000 opportunity. We see this growth coming in 3 primary areas.
1st is by capturing new customer logos. 2nd is by focusing on expansion of the Webex suite within our existing installed base. And third, is by increasing the penetration of devices for all types of hybrid workspaces. Now, if we focus on Webex Suite as an opportunity that we see just within our installed base, for each dollar of customer spend on existing Webex seats today, there's 5 incremental dollars of expansion available. And when you layer on devices on top of this, the opportunity gets even larger.
And so let's take a deeper look at the strategy to power hybrid work. And it starts with the Webex CyberWorks suite at the core of our strategy. The suite includes calling, messaging, meetings, polling, Q and A, events, whiteboarding and our newest addition, Async Video. Now, this suite sits on top of a hybrid work platform where all of our capabilities in the suite are available as APIs and SDKs. And this gives us the extensibility to integrate into 3rd party applications bidirectionally.
Not only can third parties integrate into the WebEx experience, But WebEx can be embedded into these 3rd party experiences. Furthermore, these APIs and SDKs Also used to build specialized experiences, some of which we build ourselves, like WebEx Contact Center or Event Center and others that are built by our partner ecosystem. Now between our suite, the ability to integrate bidirectionally with other applications and our specialized experiences, our customers are able to take out point solution costs throughout their organizations And we're able to coexist with Microsoft products. Now, when we talk about our customers, they tell us that they are fundamentally reimagining workspaces as they plan for hybrid work as well. They're thinking about how to give people the flexibility to work more productively from anywhere with a consistent experience.
And as Todd said, our customers want more facility awareness. Now we can help our customers here with a vast array of networking solutions, sensors, cameras, management software, In addition to collaboration devices to support any type of workspace, whether at home, in the office or anywhere in between. In fact, In a recent meeting with American Express, they shared how they've upgraded their workspaces in preparation for the adoption of hybrid work. They specifically highlighted how we make it easy for them to collaborate no matter what their location. Lastly, it's important to note that we leveraged investments in artificial intelligence across the entire platform.
Also, we believe that privacy is a basic human right And that security should be built in from the ground up rather than being bolted on as an afterthought. Now, we're really excited about our innovations that And the entire portfolio. It's truly allowed us to deliver the best platform to enable hybrid work for our customers And we've been accelerating our pace of innovation even more. While we don't have time to show you all of the innovations that our customers are so excited about, let me just talk to you about a few of my favorites. In hybrid work, inclusivity is more of a challenge than ever before.
One of our innovations enables language translation into 120 different languages in real time so that language is no longer a barrier For people being able to communicate effectively with each other. Now, as I mentioned earlier, 98% of the meetings have at least one participant that's not going to be in the same physical location as everyone else. The question we often hear is how do you make an inclusive experience for everyone Where no one feels left out. Now, we are solving this by using our camera intelligence technology. This is really cool.
Based on massive investments in AI actually. So, to detect people in a room, what we do is we detect people in a room, focus in on them and create individual video streams for each one of those people. Now, this allows everyone to see each other's body language, facial expressions, therefore feeling more connected. That way no one in the room actually feels like a second class participant in a meeting. Now, as we discussed earlier, organizations are fundamentally reimagining how their offices will be configured as well.
And it's clear that there's going to be more shared work spaces and less dedicated desks. So in addition to our headsets and cameras, we've introduced a brand new category of a device called a Webex Desk Hub specifically designed to enable hot desking. Just walk up to any open desk, put your smartphone on the desk hub, and it instantly recognizes your identity and can even display your family photos. It makes any shared space your personal desk and lets you easily join your next meeting while giving the IT administrator the telemetry on whether the desk is occupied or not. Now, meetings are more valuable When everyone is engaged.
That's why we acquired Slido and integrated its audience engagement platform right into the Webex suite as well. So Slido provides the flexibility for additional real time attendees participating through capabilities like Q and A and polling. So there are dozens of use cases for this, like icebreaker questions or checking the pulse of a team at the start of a meeting are getting feedback and input from a large group of people during the meeting. It makes every meeting Feel like a conversation. In fact, Spotify has been using Slido as part of their quarterly earnings calls to manage Q and A with financial analysts.
They capture analyst questions in Slido and address the most relevant questions live during the call. Another area that I'm really excited about is our acquisition of Socio and its events platform. Because just like the future of work is hybrid, so is the future of events. So, SOCIO allows customers to leverage the best of both The live and virtual worlds, while actually improving the experience for attendees and providing bigger reach and value for our customers. Now, SOCIO can handle the entire attendee event experience from the beginning all the way to the end, everything from registration to interactive networking to viewing post event recordings, all of that is handled at SoCio.
SoCio combined with our existing event capabilities of webinars and webcast to enable Webex Suite to handle events of all sizes and allows our customers to dramatically reduce spend on other event solutions. As I mentioned before, hybrid work happens in the office, at home or anywhere in between and it's important for people to come across professionally even when there are distractions, which can be pretty common when working in a shared space. And audio is one of the most important aspects of human communication. That's why we acquired BabbleLabs and integrated its audio intelligence technology right into WebEx. So this background noise removal for meetings and calls takes out the distracting sounds like dogs barking and leaf blowers and keyboard sounds and street noise And so much more.
And we recently released, in addition to that, my voice only with audio intelligence technology. So this technology focuses on the voice of the person closest to the microphone and removes any other speech in the room. So what's great is for working this is kind of great for working in settings like contact centers or office cubicles or shared spaces where many people are talking at once. Now, one of the most important and inclusive ways For people communicating around the world is still calling. It is the backbone of several organizations' workflows across multitude of industries such as retail, financial services institutions, hospitals and so much more.
Now, we just announced, like I mentioned, that we reached a significant milestone that Cisco had of 8,000,000,000 calls monthly and supporting more than 39,000,000 cloud calling users worldwide, the most of any cloud calling provider. We know that some customers continue to depend on the legacy enterprise phones and deep integrations with Unified Communications Manager It's something that they rely on. It's also known as UCM. Now, when customers purchase Webex Suite, they not only get access to the full set of capabilities of Webex Calling, but they're also entitled to UCM Cloud. So, this is the best of both worlds, making it easy for huge UCM customers To migrate to the cloud and also make sure that they can take advantage of doing it at their own pace.
No other vendor in the industry can offer this type of flexibility. Now, we've talked a lot about connecting the hybrid workforce, But we can't forget about connecting our customers themselves with their customers. And the same foundational technology that powers hybrid work can also power modern omnichannel customer experiences. And this is such a strategic area because brand loyalty and customer experience are now board level conversations and we are addressing this with our WebEx contact center solution that we launched last December. Now it's a specialized experience that takes all of the core capabilities of WebEx and adds purpose built features to engage and service customers at a completely different level.
And our acquisition of IMI Mobile delivers omnichannel customer interaction, including support for multiple digital channels so that customers can reach you in different preferred ways, Whether that be chat, text, social, email
or a
phone call. And there's continuity that's maintained, so people don't keep getting asked the same questions over and over again. Now these features are only as good as the satisfaction that they create for our customers. And all of the work over the last year has been delivered with a delightful user experience for our customers. We've taken this really seriously And we are seeing the results in spades.
Our most recent usability Net Promoter Score Has substantially improved and is now at 75. And this delight is actually translating to success in many companies in a variety of different industries. These are just a few examples. As customers shift to this mixed mode of hybrid work, They're realizing that the benefit of all of the breakthrough innovations we've delivered is profoundly high. So, they're seeing firsthand how Cisco can fundamentally transform how they work.
So, let me just share a few examples on how our strategy is starting to take hold in the market. So, first, I'd like to talk to you about an expansion deal that we did recently. We closed with 1 of the largest global tech manufacturers. And their journey started with us in 2017 with a modest meetings footprint. Over time, the use of our products had them grow into a large device footprint as well.
As they were reconsidering the incumbent telephony provider, we were included as part of that evaluation to be the end to end provider. After an evaluation, they chose WebEx across meetings, calling and contact center And they also equip the workforce with our video and handset devices. But our approach to hybrid isn't just attractive for existing customers in the installed base. We're also seeing our best of breed Webex suite displays competition as well. So we started a small Webex calling pilot at a large sports equipment manufacturer who was not a WebEx customer actually.
They were so satisfied that it quickly evolved into an entire competitive displacement, thanks to the best of breed strength of the suite that interoperated really well with each other. Now, what really tipped the scales for the customer were our differentiated features such as noise removal, real time translations, as well as being able to have a complete collaboration solution via the Webex suite. Now they're adding our WebEx contact center and more devices to the mix as well. So, in addition to the investments we're making in our portfolio, we're also investing for growth with targeted marketing activities. So, for Formula One fans, we recently launched our Driving Hybrid Work campaign.
This features Team McLaren and shows how WebEx helped Transitioned them to hybrid work and hybrid sports. And just a few weeks ago, we lit up the NASDAQ billboard with our WebEx integration partners illustrating how powerful partnerships power hybrid work. So, what we're discussing here is how Cisco can fundamentally transform how the world works. What we're hearing from our market and our customers on why we win comes down to a few structural advantages and differentiation characteristics that I'd like to share with you. The sheer breadth of our portfolio across world class networking, devices, security and collaboration is a huge one.
The magical experiences we've created for our users that only get better when you're using devices in any workplace and any workspace and our secure open platform, which gives the people the flexibility to work in their way, including interoperability with some of our competitors. Now, we can use these unique advantages to capture the market opportunity within the customer base and beyond. Now I'd like to hand it over to Jonathan, who's going to tell you all about the Internet of the future.
Thank you, Jeetu. I have to agree with you. Flexibility in the way we work opens new opportunities and levels the playing field for many. This is why our innovations for the Internet for the future are so important. The Internet has become the backbone for economies, industry and daily life.
Over the last 3 decades, the Internet has added $13,000,000,000,000 to the global equity market capitalizations. It has connected people, Accelerate business and advanced knowledge around the world. Post pandemic, the Internet crossed the fuzzy boundary between luxury and necessity. Businesses went virtual and over 1,200,000,000 children began learning in online classrooms. Internet traffic spiked by 25% to 45% around the globe and continues to grow annually at over 35%.
Unfortunately, many are unable to participate. Over 3,000,000,000 people remain unconnected or underserved. In the early days of the pandemic, a picture of 2 young students went viral. They were using the Wi Fi in the parking lot of a fast food restaurant here in Silicon Valley, just so they can attend school online. It was very sobering.
Cisco believes empowering an inclusive future for all. But as more services move online with 5 gs, the digital divide widens. Not many realize that an Internet connection is affordable in only 29 countries. Bringing the Internet to the offline Could add $6,700,000,000,000 to the global economy and lift 500,000,000 people out of poverty. Today, those that have enough connectivity and those that do not have enough is largely determined by economics.
Rural and low income areas lag urban and affluent areas because profitability is a constant struggle for the communication service providers or CSPs. Growth stagnates because legacy networks are too complex. They can serve too much power and they cost too much to operate. Today, for every dollar CSPs invest in their network infrastructure, they're spending $5 on operational expenses. And this only gets worse with growth and growth is a given.
5 gs has the potential to connect billions of people and trillions of things. But delivering 5 gs effectively requires us to first transform the economics of building and operating a network. We must transform the Internet for the future. We're happy to share some successes we are already enjoying in network transformation due to our great team, targeted execution and focus on customer outcomes. By all accounts, Cisco had a phenomenal Q4 and fiscal 'twenty one.
And our service provider business, we saw our 3rd consecutive quarter of acceleration, which delivered more than double digit growth year after year. And our webscale business, we saw increased momentum, delivering record performance with more than 160% order growth year over year. And on a trailing 4 quarter basis, orders grew more than 80% due to customers adopting products across the portfolio and early traction of our 400 gig solutions. We also saw very strong adoption of our Acacia Optical solutions. Customer demand is increasing for leading edge optics technology to address growing bandwidth requirements.
I'm confident in our multi year strategy and I'm very excited about the future. I believe that we are at the beginning of Transforming how networks are built, managed and delivered. The TAM for our traditional core businesses is steadily growing from roughly $33,000,000,000 in 2021 to $36,000,000,000 in 2025. By 2025, we see ourselves expanding this TAM to $50,000,000,000 and winning more share in the process. The Internet for the future is sparking fundamental architectural shifts that is disruptive to existing TAMs.
We are investing and executing to transform networking. In addition, the Internet for the future is creating more upside growth opportunity for us in adjacent areas where we have strength. This amounts to an additional $14,000,000,000 TAM by 2025. Over the past 6 years, Cisco has invested 1,000,000,000 in both organic and inorganic innovation to transform the Internet for the future. Specifically, our strategic investments in Silicon and Optics Technologies creates a unique differentiator for Cisco.
Silicon is the DNA of the Internet. Silicon is the control point for performance and power efficiency. Silicon sets the foundation for how economical it is to build critical network structure, with Cisco Silicon One, we have gone from introducing 1 chip to 10, ranging from 3.2 terabits per second to 25.6 terabits per second in a span of less than 16 months. And that is just the beginning. Cisco's Silicon 1 architecture is so revolutionary.
We have the confidence that we will lead in performance and power efficiency for the next decade. Optics are required for most high speed transmissions over 100 gig. In fact, all communication service providers, enterprises, public institutions and web scalars will need optics. Most recently, we acquired Acacia and Luxtera, both our leading manufacturers of high speed optical technologies, the market for coherent optics over 100 gig where Acacia is a proven leader is projected to more than triple from 2021 to 2025. And as speeds increase, optics become a larger part of the total spend.
In fact, at 400 gig and above, they have the potential to outweigh the cost of routing ports. We will continue to sell components, including optics to our existing customers as well as traditional Cisco competitors, which we refer to as network equipment manufacturers. Together our silicon and optics investments allow us to build the best products and revolutionize the architecture of the Internet. Our portfolio is in its prime. Every platform is at the top of its game.
The race has changed and it will be very difficult for the competition to keep up. Our Cisco 8000 platform is already more than twice the density and 3 times more power efficient than alternative platforms. We are extremely excited for the future. We're just beginning to ramp our volumes as we begin transforming the Internet for the future with routed optical networking. Now Cisco launched routed optical networking in March of this year.
This is the most significant change that the Internet has experienced in over 30 years. The economics are so compelling that we believe all major network investments from our March launch forward will cap legacy optical investments and begin to move to routed optical networking. Our leadership in silicon, optics, software and systems enable Cisco to once again redefine the economics of building and operating networks in ways no other vendor is capable. As Leonardo da Vinci once said, simplicity is the ultimate sophistication. Using high performance routing based on Cisco Silicon 1 and pluggable optics from Acacia, we have flattened the legacy network from 3 layers to 1.
In the past, those 3 layers had 3 different operations teams. This, of course, creates inherent Challenges and significant inefficiencies simply coordinating the day to day operations. The new simplified routed optical network is now automated with Cisco Crosswork to cut total cost almost in half to legacy 3 layer deployments. Routed optical networks is an open ecosystem and we expect to see competitors attempt to adopt this approach As more and more customers move in this direction. It's not often you get to reinvent the Internet.
This is change of epic proportions. Routed optical networking allows Cisco to disrupt the $17,000,000,000 legacy optical market. We'll be able to move billions of TAM from legacy optical vendors to routing, where we have a leading market position. For traditional or legacy optical vendors have a multi $1,000,000,000 transponder market to protect. They've done this in the past by locking their customers into a razor razorblade strategy.
We break this model with digital coherent pluggable ZR optics acquired from Acacia. The dying gas for every legacy economic model is one of contractual lock in, and we're seeing that now. As legacy vendors are unable to compete with innovation, they are now resorting to contractual lock ins to delay this uncomfortable truth. This routed optical network transition will not take place overnight. We believe this transition happens steadily over 3 phases.
Phase 1, customers begin integrating transponders with pluggable optics in routers. That is happening now and begins to disrupt a multi $1,000,000,000 market. Phase 2, customers deploy routers instead of ROADMs. And in Phase 3, customers convert private line services to IP instead of OTN. Colt is a great example of an early mover on router optical networking.
Headquartered in London, Colt Technologies is a leading provider of high bandwidth and on demand connectivity. They're partnering with Cisco on a new global router optical network architecture that utilizes the Cisco 8000, Silicon One, Segment Routing and Acacia 400 gig OpenZR Plus Optics. The new Internet architecture provides Colt with a significantly simpler and more scalable network that reduces costs, space and power. Hyperscalers are also a great glimpse into the future. We refer to a subset of our target webscale customers as hyperscalers.
They build the biggest cloud networks on the planet. In fact, 6 of the top hyperscalers are responsible for nearly half of all U. S. Internet traffic. Analysts have projected that the global data center spend for hyperscalers growth from $6,100,000,000 in 2021 to over $10,000,000,000 in 2025, growing at a CAGR of 14%.
Hyperscalers push industry boundaries and they break the status quo. They are in the forefront of operational agility and massive scale. They value industry leading performance and innovation. When we win here, it's because we have the best portfolio, we've demonstrated our agility and shown the most flexible purchasing models. These flexible purchasing models help Cisco stand out across our broad portfolio, we're offering a variety of business models to meet our customers in any way they prefer to consume our innovation.
These consumption models include component models, including optics and silicon only, software only, systems only and of course, fully integrated systems. By offering our customers choice, Cisco is beginning to gain market share from our competitors. 4 of the top 6 hyperscalers are making long term investments in Cisco Silicon 1 and Cisco 8000 systems. 2 of the top 6 hyperscalers prefer using a 3rd party OS on top of an open Cisco 8000 system. And 2 out of the top 6 hyperscalers have begun using Cisco Silicon 1 on a component level and building their own systems.
Of course, 3 out of the top 6 hyperscalers use at least 2 of the models simultaneously. These business models are so important. They enable Cisco to fully access the entire data center market. The data center white box deployments, which is primarily a hyperscaler based deployment model, grew from 778,000,000 in calendar 'fifteen to over 2,000,000,000 in calendar 'twenty at a CAGR of 21.4%. In the past, this was largely a non addressable market for Cisco.
Our strategic decisions to offer silicon only, software only and systems only options enables us to target this entire TAM. Microsoft participated in our initial December 2019 launch of Cisco Silicon 1 and the Cisco 8000. They also participated most recently in our updated Cisco 8000 announcements in March of 2021. I'd like to thank Microsoft for their continued partnership. It has been a real pleasure partnering with them on massive scale infrastructure.
This is an exciting space As hyperscalers plan their next generation networks, we are winning new footprint. We bring the best technology, the right engagement models, great quality, the agility and the most flexible consumption models that are right for this segment. Hyperscalers have a huge impact on businesses and our lives today. 5 gs has the potential to have even a greater impact. 5 gs is the gateway to the Internet for the future.
5 gs is a massive transformation. It will enable billions of people to have a better experience and enable 3,500,000,000 things to connect over the next several years. And we believe that Cisco is a critical 5 gs vendor as we are helping our customers and partners monetize They're multi $1,000,000,000 5 gs investments through B2B and B2C engagements. While still in the early days, there's a lot of 5 gs spend in front of us. 80% of mobile operating investment in 5 gs will be made over the next 5 years.
Worldwide, our mobile core networks have more than 1,000,000,000 mobile subscribers. In fact, we have partnered with T Mobile to deliver the 1st nationwide 5 gs network in the U. S. That is winning awards for performance and reliability. A large portion of future 5 gs spend is in emerging high revenue enterprise deployments.
These include 5 gs mobile IoT services, Private 5 gs Networks and Fixed Wireless Access. We see market opportunity in Private 5 gs and Fixed Wireless Access due to 3 factors. 1st, Cisco is a trusted brand in enterprise IT with number 1% market share. 2nd, our cloud native 5 gs core is built to go to market as an on premise application or as an in an as a service model. And finally, we are already operating a mobile IoT SaaS and have real world experience.
Cisco's 5 gs IoT services target high value IoT use cases to drive revenue growth for our communications service provider partners. It also drives efficiency for a broad spectrum of businesses and industries. We've deployed the world's first 5 gs IoT services and today we offer the world's largest mobile IoT platform. With more than 50 communication service provider partners in 82 countries, we're growing our 5 gs IoT services at more than twice the pace of the industry. Smart utilities and connected cars are examples of Cisco's IoT services.
Connected car forecasts are projecting every new vehicle produced will be connected by 2025. Cisco is number 1 in the connected car market. We are the 1st to deploy 5 gs IoT nationwide in China. Cisco is well positioned to capture this growth in IoT. As an example, Cisco is partnering with AT and T to launch 5 gs services for the Internet of Things, including connected cars.
The AT and T control center powered by Cisco delivers lower latency and faster speeds for enterprise customer IoT deployments. It gives businesses visibility to all IoT devices on the network and helps mitigate security risks, identify anomalies and data usage and optimize traffic classification reporting with machine learning. And by adding 5 gs, we open the door to massive IoT connectivity that will transform retail, make smart factories a reality and revolutionize healthcare. Cisco's strength in enterprise uniquely positions us to capture growth in private 5 gs in conjunction with Wi Fi 6. Our expertise in helping our communication service provider partners monetize their networks while reducing costs makes Cisco an ideal partner.
However, private networks come in all shapes and sizes with a number of technical variations and multiple software and hardware stacks. At Cisco, we believe simplicity wins. So working with our customers to reduce network complexity and dramatically simplify deployment and manageability. As we continue to deliver growth in our mass scale infrastructure portfolio, we will focus on a 3 part strategy. Transformative innovation to redefine economics and lower total cost of ownership.
This includes Cisco Silicon 1, rotted optical networking, public 5 gs and automation. Number 2, cross domain leadership to drive business development and help our customers grow new revenue. This includes private 5 gs, mobile IoT, fixed wireless access and the carrier edge. And finally, flexible purchasing models to provide quality and choice for hyperscaler, webscaler and white box data center opportunities. This includes components, software only, system only and integrated systems.
Given the momentum we're seeing in our business, I have more conviction than ever that we have the right strategy, we are investing in the right areas and we will continue to extend our competitive advantages to drive growth. From cell phones to smart cars and even into space, Cisco is transforming the Internet for the future and powering an inclusive future for all. It's been a long morning and we have a lot of great content ahead. So let's take a 15 minute break before we go back to my colleague Jeetu Patel to dive into security.
We've all spent time wondering, waiting for the world to go back to normal. We've taken work home. We've changed our lives and seen some lives changed forever. We want to go back to how we were. But what if instead of going back, we go Helping make spaces safer and healthier with video analytics, managing compliance to the latest regulations, Giving new confidence in the places we work, shop and receive care with touchless secure access designed to keep people flowing, moving in and out more safely and easily and improved indoor air quality for our comfort and confidence.
Cisco provides the network and collaboration. Honeywell provides the sensor technology and management systems that display dashboards of detail. Building owners, managers and IT have full visibility to help create healthier workspaces. With Honeywell and Cisco together, everything works. The future of the workplace is built on safety, safer meetings, safer environments for productivity
they're the world where every one of us is connected, I'm going. There's a world where buildings are smarter, where automation fuels productivity. And our plan of health is as important as our own. There's a world where everyone is invited anything is possible. Good morning.
Cisco, the bridge
We have employees distributed all across the country. Being able to Connect seamlessly, easily with a consistent experience is paramount. We are always going to have a hybrid workforce. Having great audiovisual and seamless experience just brings it to life.
The communication systems before WebEx
was a poor experience for our end users. It It was taking 6 to 15 minutes to get a meeting fired up. The anxiety level for
our employees was just Astronomical.
When we started looking at different solutions, we really set a goal to be able to start a conference, Share content under 60 seconds. With WebEx, we've actually been able to achieve that to get under 30 seconds.
T Mobile is leveraging WebEx as part of its return to office strategy to include Things like a touchless environment. We want our employees to feel included and that they have a voice. The power of a head nod in a video is amazing In emoji reactions and even moving towards things like Slido, where we're not just presenting content to people, but we're making that content interactive.
The WebEx capability is just going to be a part of how we operate because we have a distributed workforce, because there will always be people who are remote. It allows everyone to be part of the and the organization, anyone can share content. They can share a photo or a presentation and allows everybody to take a lead and be we'll be a strong participant in the conversation.
Webex will play a
key part in T Mobile's future collaboration strategy. That's a platform that we can integrate across our technology stack and can adapt to the changing needs of our different employee groups.
We're pleased to announce that we're and the
the
one company has the vision to understand it all, the experience to securely connect it all on any platform, in any environment. So you can work wherever work takes you. In a cloud first world, between your cloud and being cloud smart, there's a bridge. Cisco, the bridge to possible.
We get it. Work isn't just an in the office from 9 to 5 kind of thing anymore, which is why we built the Webex app
to work on your term.
We are pleased to announce that we
are in a position to be able to deliver the critical. Take rural Europe, where local doctors leaving for big cities is creating a medical desert. For patients left behind, many lack the mobility or the flexibility to reach critical urban appointments. The remedy, it turns out, is as much a technological marvel as it is a medical one. But designing such a wonder came with its own set of challenges, taking everything Cisco knows about mobility, connectivity, videoconferencing and security into account and together with partner Deutsche Bahn, dispatching it from the cloud to create a 21st century lifeline.
Now no area is too remote. No diagnosis or specialists unavailable. All because one company the future. Cisco, the bridge to possible.
We need a part. It's nearly done. Can you repeat that? That's better. It's done.
With WebEx, the McLaren
where will you be in 5 years? Where will we be in 5 years? In 25? In 50? Let's be here and here with her and him and they, let's connect them.
Let's connect everyone. Let's deliver technology that gives them access to power opportunities. Let's set a new standard for data security and personal privacy. Let's change the system, promote equality and fairness in the workplace. Let's tear down the barriers to social justice for a more inclusive world.
That's clean house, Cisco has made it its purpose to power an inclusive future for all. Where will we be in 50 years? Let's go see.
Hello again. Let's talk about the opportunity we see in our security business next and why it's so strategic for Cisco's future. Now it's clear that cybersecurity is one of the top of mind issues for companies worldwide, And we've seen so much in the past year in terms of ransomware attacks, which are only increasing. They've impacted organizations of all sizes in every industry in both the public and the private sector. And if we think about the cost of cybercrime, the way that we think about GDP of countries, it would be the 3rd largest economy in the world behind only the U.
S. And China, over $6,000,000,000,000 in global damages. But the real cost Actually, it's the potential inability for companies to run their businesses when breaches occur. And recent attacks have shut down some of the most critical services and infrastructure that the world relies on, like pipelines, utilities, food processing, transportation, even hospitals. And attacks like these will only continue because the rewards far outweigh the risks for cyber criminals.
Furthermore, dire consequences of these attacks make this an important Board and CEO level initiative. So for organizations today, the security risk continues to keep increasing because of a combination of 3 major market transitions. The first is a shift to hybrid work, as you've heard from many of us today, Where people will choose sometimes to work from home, other times they're going to choose to work in the office or sometimes somewhere in the middle. The second shift is from owned and controlled IT environments to cloud infrastructure and applications. And both of these trends are expanding the threat surface of attacks.
Now the third trend is a massive shortage of cybersecurity skills available today. This makes it much harder for organizations to combat these threats effectively. Now for security businesses at Cisco, our goal is to empower the world to reach its full potential securely. And we value our role as our customers' most trusted partner. And we want to make sure that we can provide them with the most effective security solutions possible to protect their people, their customers and their data.
And we're building off tremendous accomplishments in the past year. We've seen incredible momentum with our customer base. Today, we have over 300,000 customers and 100% of the Fortune 100 that trust Cisco's security products. On the product front, we've been relentlessly innovating. We've delivered more than 500 innovations across our portfolio in the past year, And we've continued to supplement our organic innovations with acquisitions including world class brands like OpenDNS and Duo over the course of the past few years.
Now, we're also focusing on product quality and a delightful user experience that we want to deliver to our customers. A great example of this is Duo, where users love how frictionless the product is. We're taking a similar user focused mentality to other products and seeing great results. And the industry is recognizing our leadership. We've received numerous top rankings and awards from analysts and media, including Forrester, SC Magazine, CRN and many more.
Now Cisco has an incredible opportunity for growth in this end to end security business. The TAM for our core security offerings today is 43,000,000,000 We have an expansion TAM opportunity for an additional $37,000,000,000 in the areas of detection and response, 0 Trust and application security. So it's a combined TAM, total TAM of $80,000,000,000 for us to pursue with our security portfolio. Now for our growth, we'll be focusing on adding new customers and also expanding within our existing installed base, which we think there is tremendous amount of opportunity in doing. 1 of our levers for expansion is our enterprise agreements or EAs.
This is really interesting. Over the past 4 years, more than 4,000 500 customers purchased Cisco's security software through this type of an EA. But this actually is just a fraction of the overall security customer base that we have. So, our overall security customer base owns 1.4 secondurity products on average, with customers who have an EA in place on more than 4 security products. So, this creates a massive opportunity for increasing the number of EAs and also growing the penetration rate.
Now, in the current state of the security market, the fact is Things are just far too complex for customers. The technology market is large and it's highly fragmented. There are 3,500 secondurity vendors in the world, and no single vendor owns more than 10% of the market. Now the result is that many companies use more than 50 different security point solutions in their environments. It gets to be too much for security operations teams to effectively manage.
Now on top of that, there are 4,000,000 security jobs around the world That go unfilled. So customers that we talk to are at a crossroads trying to determine the best approach for security That they want to take with the security technology. They're deciding between 2 very different approaches, whether they want to go out and consolidate the security products and adopt a platform approach or they want to manage multiple solutions and take on the burden of stitching it all together themselves. Now we believe that an open standards based platform is what's required for customers to be successful in today's security environment. So, we're delivering the industry's most complete and open platform for security.
Let me explain to you what that means really. So we start with a complete portfolio to protect our 4 key target areas for attacks, the users, devices, networks, and applications and data. And we're working hard to provide a breadth of capability across all of these areas to make each of them best in class in their own right. And we believe it's the broadest coverage of anyone else in the industry that we've seen. Here are just a few examples of what we offer.
For users, Secure Access by Duo is our core solution for identity verification and secure remote access, which are cornerstones of 0 Trust. For device security, we're introducing Cisco Secure Client, a single unified agent that collects all the telemetry needed across multiple products so that customers don't need multiple agents installed on every device. This is a pretty big deal for customers actually. For networks, we provide firewalls, gateways and analytics to keep the environment safe Regardless of the network configuration. And for applications and data, we're integrating security within our AppDynamics application performance monitoring platform.
So secure application, which is what we've named our product, creates visibility and shared context across applications and security teams to simplify the lifecycle of vulnerability fixes to business applications. And to simplify the experience for security operations, our Securex solution provides unified visibility and detection across our entire portfolio. And we complement our offerings with a range of services, including threat intelligence and incident response services in addition to design and deployment and optimization services. Now on top of these products and capabilities that we have, we deliver solutions that solve our customers' biggest security pain points. So first, we have application security that ingests events and alerts from our security products and from applications.
Then we use our machine learning to detect the anomalies and threats to the application and notify the InfoSec teams. So, what this does is it allows the teams to create a baseline of a typical application behavior and build policies in the runtime to automatically prevent against future attacks. 2nd, we enable 0 Trust security to help our customers verify user identity, determine the health of the user's device and take appropriate action, whether they're sitting inside or outside of the network and no matter what application or resource they're accessing. And this way, nobody gets more access than they need to get the jobs done, a fundamental foundation of 0 Trust. Now 3rd, the world of networking and security are actually converging and our investments in Secure Access Service Edge, often referred to as SASE, have created the ability for network and security teams to leverage our cloud services to connect users in any location to the cloud applications and resources they need efficiently and effectively.
Now, we can further simplify this by providing a single dashboard for managing a policy based access model. All of this means lower complexity and lower cost of IT for teams while their users get secure connectivity experiences that they expect in a highly performant manner. And 4th, we help our customers detect and respond to threats faster with extended detection and response. With XDR, we give our customers visibility across the entirety of the portfolio and correlate the data so that the threats don't get missed. Now we accelerate their investigations and we orchestrate and automate their response processes, thus reducing the time to resolution and taking a burden off of the understaffed SecOps teams that are just buried typically.
And with our recent acquisition of Kenna Security, a risk based vulnerability management solution, we help customers prioritize the threats that are the most important to them. And our entire portfolio is backed by threat intelligence and incident response from Talos, the world's largest the most trusted threat intelligence group. We use Talos research and incoming data across a broad portfolio to continually update our products and to advise our customers when something does go wrong. And we are seeing our customers respond across many different industries and in multiple market segments. These are just a few examples that you see on the screen.
Now, what we're hearing from our customers is how much they value our end to end holistic approach to security. The breadth, the depth, the integration of our platform is making it much easier for them to secure their environments and respond to the threats way faster than what they used to in the past, which gives them not just peace of mind, the business continuity. Now as you look at our growth opportunities moving forward, we're going to continue our focus on product innovation and integrating our platform. And we're doubling down on our overall pace of innovation in some very specific areas to solve our customers' biggest problems. The first of these is 0 Trust.
Here we're releasing passwordless authentication to make the process incredibly simple for users. We're also developing continuous trusted access to validate whether a user should continue to have access based on their behavior that they exhibit. And we're working on device insights, which correlates the data from multiple tools to provide a unified view of every device that accesses the environment. It ties into SecureX so that when a vulnerability is identified, you know which devices are impacted And you can automatically limit their access and orchestrate a response. The second area of investment for us is in Sassy, we're integrating our security and networking capabilities and providing them as a cloud delivered service.
So examples include over here, integrating security with our Meraki and Viptela SD WAN solutions. Now we do this while also improving our intrusion detection and our single device client, the unified agent that reduces the number of agents that are needed in the device. The third area is threat detection and response, where we're focusing on ways to help customers identify and respond to threats faster. We continue to innovate on our Securex investigation and orchestration capabilities that integrate the risk space vulnerability management capabilities from our recent Kenna acquisition. So, our portfolio is key to our growth and our customers land and expand as they move forward.
And we're seeing a very healthy pattern of this kind of expansion today. So, we know that 80% of our customers start their journey on one of the 4 key products in our portfolio, Secure Firewall, Umbrella, Duo or Secure Endpoint. Now once this happens, a quarter of these customers go on to purchase at least one additional security product from us in the future. Now, as a proof point, our 11,000 largest customers have brought more than 3 security kind of products on an average of over a 4 year period. Here's a real example of how the strategy works.
A leading pharmaceutical company with a Cisco security ELA and from the fiscal year 2017 to 2020, they deployed multiple products, including secure firewall, secure network analytics, Secure Workload. Since then, they signed and expanded 5 year whole portfolio agreement, what we typically refer to as a WPA, and I've added 6 additional products to cover for users, devices, cloud and workload. Now another example is a large multinational conglomerate. BASE started as a traditional secure networking customer And by fiscal year 2019, they had expanded to AdDNS Security. And in fiscal year 2020, They started Security Choice EA, which is what they signed with us.
That included a range of additional products, including our next gen firewall, umbrella and identity services engine, along with a set of services components. So, So the question you might ask is why does Cisco win in the end to end security market? That's because of 3 key advantages that we have. The first one is we have an incredible amount of breadth in our portfolio. We have all the pieces our customers need across security and networking, across any deployment model, cloud or on prem.
2nd, we have scale. And in the security business, scale really, really matters. The massive scale of our data and visibility across our product installed base gives us an edge at seeing and stopping the threats in a very timely manner. 3rd, we're dramatically simplifying security. For example, our SecureX platform gives our customers the visibility and the automation that they need to dramatically reduce the time and cost to address these threats in an automated fashion.
But before I close out, let me just give you these closing thoughts about the end to end security business. 1st, we've got great momentum with our customer base and in the industry. 2nd, we're differentiating ourselves in the market with our open platform strategy like none other. And third, we're relentlessly innovating. We're only going to be increasing our pace of innovation as we move forward.
But most importantly, we have a massive growth opportunity ahead of us, both within the Cisco customer base and within the market at large. So with that, I'd like to thank you all for taking the time and hand it over to Liz to discuss optimized application experiences.
Okay. I'm back to talk about optimized application experiences. So I'll talk to cloud native platforms and full stack observability and how we're leading the market in delivering optimized application experiences. Our customers are moving to more of a cloud native approach because it better meets developer and end user needs. Developers get the velocity, the scalability and flexibility and businesses can deliver the best end customer experience.
And we're focused on giving customers the ability to build, secure, deploy and observe across both traditional and cloud native or what sometimes people call modern applications. So why are we focused here? Because this is a $36,000,000,000 market that is growing by double digits. And what I'll do is I'll show you in a bit on how we're bringing together some unique assets and putting them together plus leveraging our leadership in networking and security to deliver outcomes for our customers, something that is very unique and differentiated to us. So I'll talk to cloud native first, starting with developers and their needs.
As enterprises digitize and rely more and more on applications to reach their customers, the developers that build these applications are increasingly important and influential in IT decisions. The way modern application developers work is changing too, because it's the rise of DevOps and SecOps DevSecOps practices, it's driving greater collaboration across the developer, across SREs, platform ops and security teams. And the technology has evolved as well because in modern application the intelligence and infrastructure, the network and security is moving up the stack to the application layer, where developers just need to manage these areas. And to do that, they need tools like infrastructures of code and things like service mesh. IT and security teams have also evolved to meet the changing needs of developers and reduce friction.
They must manage the IT estate to ensure security and enforce policy, all without slowing down development velocity. And when we talk about modern applications, we also interchangeably use cloud native applications as well. Cloud native is simply a shift in how applications are developed and operated. Modern applications are no longer just this monolith. Rather they have been broken up into a mesh of microservices, many of which could be from third parties such as public clouds or SaaS providers.
Cloud native applications bring that scalability, the velocity and flexibility. It allows enterprises to rapidly deliver seamless digital experiences to their and to power the shift to a cloud native approach, the entire IT stack has had to evolve from the application layer itself to the connectivity, the security, the automation and the underlying infrastructure. And all of this by the way could be deployed anywhere on prem, at the edge or in the cloud. With this shift to cloud native comes a new set of challenges that IT teams and developers must manage to reap the benefits. And most of our customer environments have a mix of cloud native and traditional applications, which the teams have to manage.
We are well positioned to help our customers navigate the complexity of this transition to cloud native and unlock its benefits with our portfolio of cloud native solutions. 1st, with InterSite, which is the cornerstone of our cloud native platform, we offer a foundational container platform and infrastructure as code capabilities to simplify deployment and provisioning for our customers. Developers can automatically deploy apps and infrastructure, extending the speed and agility of public cloud tools to private cloud and data centers. Next with our suite of application networking capabilities including Service Mesh Manager and Workload Connectivity Manager, we help our customers connect to, discover and manage the microservices that make up modern applications. Do things like discovery and connectivity of APIs from Layer 7 through Layer 3 services, multi mesh control that bridges heterogeneous meshes, deep application layer visibility even at the SQL transaction layer and it bridges traditional event driven architectures to cloud native.
And as Jeetu mentioned earlier, we're building our extensive security portfolio and extending it to the application layer. We're building security at the application development time. Our API security offer and at runtime with secure application, we're enabling the security of APIs regardless of the API provider and regardless of the technology. We're providing seamless API security embedded in the developers' favorite IDE, their development environment to deployment and to runtime, with policy management that includes security and geofencing roles and the ability to deep inspect security API, secure API traffic and reconstruct API specifications. Now from here, I want to move into full stack observability.
But as I do that, I would love to share some key data points. First, the number of applications that people are using on a daily basis jumped by 30% compared with just 2 years ago. I would bet that most of you are going, yep, I can relate to that, because we're all using more apps and digital services than we ever did before. We also recently surveyed IT decision makers worldwide and 75% told us that they wrestle with the overwhelming amounts of data noise, but they don't have the resources they need to act on the data. 85% say that quickly cutting through volumes of data to identify root cause of performance issues will be a big challenge in upcoming years.
And 96% anticipate negative consequences for their business from not having visibility and insight into the whole technology stack and how it impacts both the network and the application. So when the app does not work, who takes the wrap for the app? Because there's multiple teams involved. You have DevOps, you have AppOps, you have NetOps, you have InfraOps, YoussefSecOps, they're all involved in figuring out performance optimization and security for every digital experience. Traditional monitoring gives these teams the ability to address issues within their domain.
It gives them visibility into their domain, defining what normal looks and provides them with baselining, health rules, alerts when issues pop up, but it's all within that domain. They don't get to see how these issues in their domain impacts the overall application experiences and most important, the impact of the business. And most of the time, they only get to know about it when something blows up when execs and customers are calling and tweeting. And by then, everyone is guessing and pointing fingers. See that's not going to work in this highly competitive environment where automation speed and agility, they are table stakes for digital transformation.
And with the move to the cloud native applications, you now have the components of the application that are distributed and the scale is much larger and beyond the control of IT. This is why enterprises need full stack observability, where they can go beyond domain monitoring to shared correlated context across all of these teams, where the focus is on outcomes to deliver exceptional experiences that keep users coming back and to acquire new users. Every single one of our customers has a lot of apps and they expect to build even more. They're all competing for users' attention, their loyalty, their trust. They want to move at speed and be agile and also save costs.
But the application landscape is complex. I've talked to a lot of our customers and almost all of them have a combination of traditional apps, many are still monolithic where all the components are tightly stitched together. They're modernizing some of these by rewriting some parts. Most of their newer applications are built cloud native where the guts of the app is distributed because they're developers that can then use components and services from many places, whether it's on prem, SaaS clouds, public clouds. It gives developers the ability to use what makes their app competitive, to get it out to market fast, dynamically add services that can enhance the app, drop ones that don't add value.
They want to be able to keep it secure. They want to scale it to millions of users, but they still want to have a customized experience for each and every user. But all of this makes the app landscape really complex. It's distributed, the scale is massive and it's across a hybrid and multi cloud environment. And all of this as to work together in concert to deliver the best application experience or the best user experience.
So our approach to full stack observability builds and monitoring. We provide visibility insights and actions across the full stack from the API all the way to the bare metal across all data types. We do this for traditional and cloud native applications and across a hybrid multi cloud environment. See 95% of our customers have a mix of traditional and cloud native apps and we tie it back to the business context so customers know there is a problem, why the problem occurred and what to tackle immediately, we help optimize for performance, cost and security. And we actually cover already a number of use cases across performance optimization and security.
Maybe I could quickly call out a couple of use cases. Here's a customer who will tell you, I want actionable end to end insights into the application experience, its underlying dependencies and its business impact. What they need is digital experience monitoring. The application experience is based on the performance of the application as well as many networks and services from the Internet to CDNs to DNS that are outside of IT's controls. Suyo IT teams have limited visibility into the external environments that shape the application.
It leads to longer mean time to resolution, to degrad the user experience and damage revenue and reputation. The application and network teams that support user Verience needs to come together and decide which issues should they prioritize based on the application and business impact. We have a solution for that. It's our AppDynamics Dash Studio integrated with ThousandEyes Internet and Cloud Intelligence. Another example is in security where the customer tells us, I need to actively identify and block against vulnerabilities found in application run times in production, because there's a common lack of visibility into how security incidents actually impact the application, the end user and the business overall.
The need, the AppOps and the SecOps teams to collaborate. Our solution for that is AppDynamics Secure Application. We ingest and have real time visibility into all data types that are relevant to our customers. These are commonly known, by the way, as the MEL stack. Its metric, events, logs and traces, we've also added support for open telemetry standard.
This gives us visibility into the application performance, services that make up the app and development environments, the end to end connectivity, the infrastructure that runs the app or the workload, whether that's private cloud, it's public cloud or the distributed cloud of the edge. Security when the application is in whether it's in run time development and in run time. We also bring in outside invisibility and monitoring of business transaction and associated outcomes and the end user experience. Now we've seen many monitoring vendors provide visibility in each area. They just don't do that like us across the full stack.
In insights, as I mentioned, customers get a lot of alerts from their current monitoring tools when things go out of baseline. It's overwhelming when all they want to know is which alert should my team prioritize so my business does not get impacted when my end users stay on my application. We take all the relevant data, contextualize it and then correlate it in real time to understand the dependencies and the business impact. And now on the actions parts, the ops teams can now take the actions across their domain to enhance application experience and maximize transactions revenue based on their business specific KPIs and most often these KPIs focus on performance, on optimization and security. This is how full stack observability from Cisco helps our customers keep their applications running all the time, make it easy for the users, secure the users and the organization's data and helps them optimize costs.
Now behind the scenes, we have some powerful ML models that are running because correlating all this data and tying it to the business metrics and doing it in real time is just beyond human scale. For example, with AppDynamics, we use machine learning for dynamic baselining. We get alerts on true issues versus just setting things like static thresholds. We also use machine learning to help automatically identify root causes when there are issues in business transactions by looking at topological relationships. We have an AI approach for optimization.
Now we see security and observability coming together. We ingest security threats and vulnerability data as well as alerts and events from our security portfolio and the application. We then use machine learning to detect anomalies and threats. And within our secure application solution, machine learning is used to build a baseline on a typical application behavior and then alert the InfoSec teams on events that seem malicious. We have significant productivity momentum today across AppDynamics, ThousandEyes and InterSite, things like the Cisco Secure application that's built into AppDynamics and it offers automatic setup of instrumentation for AWS Lambda.
ThousandEyes is integrated with AppDynamics Dash Studio. Hindustai just released 6 new services and there's 5 more planned for this year. With customers, we have great momentum. AppDynamics is now used in all the top 10 financial institutions globally and in top 5 telecommunications firms worldwide. ThousandEyes actually counts more than 175 of the Fortune 500 as customers and all of the top 10 U.
S. Banks. Indusight reached 7,000 customers 25,000 users and 63% of the Fortune 100 are customers. Our success has been sustained for some quite some time. AppDynamics is a 9x Gartner Magic Quadrant leader and a Gartner Peer Insights customer choice.
ThousandEyes has a net promoter score of 50 we have a 4.7 out of 5 Gartner Peer Insights rating. Intersight is a leader in the Forrester Wave for infrastructure automation platforms and has been recognized as a tech innovator by CRN. So our full stack observability solution is comprised of these 3 SaaS services that are integrated: AppDynamics, which includes secure applications, ThousandEyes and Intersight. An AppDynamics can monitor across all the different applications related domains. It can correlate business transactions, driven insights back to the business, applying context to everything so customers know where to focus.
You have Secure App from AppDynamics, which simplifies the lifecycle of vulnerability fixes and security incidents to business applications by creating that shared context across application and security teams. And with ThousandEyes, we extend our reach deeper into network and Internet, getting visibility into issues that could be impacting the user experience. IntraCyte is our SaaS platform that enables automation of infra and enables our customers to deploy and manage traditional and cloud native applications. These are powerful assets, but they're even more powerful together. More than any one solution by itself, it's a power of and.
Our full stack observability solution helps bring teams together by giving them access to common correlated data with shared context, so they're all focused on what matters most to the business. We actually call this the mean time to innocence. And for us, this is opening up new buying centers and users, including app developers, cloud and digital teams. Our customers, by the way, are already seeing the benefits of full stack observability from better user experience and increased performance and uptime to increase revenue and bottom line performance. In an effort to bridge the gap between its IT teams and gain real time visibility into and performance of its entire application ecosystem, AutoNation deploys AppDynamics and ThousandEyes to accelerate their leading edge digital transformation.
Freedom Financial, another one of our customers, uses AppDynamics, ThousandEyes and InterSite to consolidate and streamline application and cloud instance monitoring for its family of companies providing people first financial services. And FICO turned to AppDynamics and ThousandEyes to enhance the performance and resiliency of the personal and business credit management services. With integrated offerings that enable visibility, insights and actions across the full stack, we are leading the market with a very unique and differentiated solution. The depth and breadth of our portfolio is unmatched in the market. It really is the power of and, and it delivers always on availability, trust, security, performance and optimization, all with correlated business context connecting app performance with business outcomes.
We have the track record of innovation to enable this from bringing together observability and security across both development and runtime to powerful machine learning models focused on predictive insights. We win because we're helping deliver real outcomes with the best application performance so that we enable our customers to have higher revenues, enhanced brand reputation and higher customer satisfaction. Thank you. And with that, I'll hand you to Marilyn for Q and A.
All right, welcome to our Q and A session. As you see here, we've got our entire executive leadership team here with us. So we're going to open up the Q and A. And just two quick reminders, when you do ask your question, please make sure to unmute yourself. And second, please hold any modeling questions until you hear from Scott later today and you'll have that opportunity in our second Q and A session.
So let's go to the first question. Looks like our first question will come from Tal Liani of Bank of America.
Unmute. Now I'm on mute. Can you hear me now?
Yes, I can hear you clear. Good.
Perfect.
So you provided very strong performances or presentation about applications and about security. But at the end of the day, last quarter, the application segment declined 1% and the security was only up 1% and it's majorly underperforming the competition. So the question is what's missing? If your strategy is good and you report on good successes, what is really the reason that you're undergrowing the industry and what can you do or what are you doing in order to improve the execution on these fronts?
Let me make a couple of comments quickly and then Scott, I think you can talk a little bit about what we talked about. So Tal, first of all, thanks for the question and hope you're doing well. I think what we talked about on the last call was the fact that in security in particular, we had supply chain issues around some of the hardware components that are in that category. And we also talked about the fact that all of the future areas that we are Really excited about for our customers, we're all growing double digits. So Scott, you want to iterate on that a bit and share a little bit of that information?
Sure. And you said it just right, Chuck. It is the areas that we're investing in. So within security, that's the cloud based and the 0 trust areas. We're seeing double digit growth and we saw that in Q4, headwinds in a couple of spaces, most notably driven by some of the supply chain constraints around our firewall business.
The same on the application side. When you look at applications, I think people tend to equate that to collaboration and within collaboration to WebEx. We actually had double digit growth in the application space on the WebEx suite as well. So we had nice growth in the areas that we're investing in. It's the exact same areas that our customers are investing in.
But at the end of the day, and Sorry to be hard on it, but at the end of the day, the competition is going through. If you take Palo Alto or you take Check Point or you take Fortinet, they're going through the same struggles. It's the same struggles for the entire industry, but still they're outgrowing Cisco. So what's unique with Cisco that doesn't enable you to grow And how long does it take you to change what needs to change in order to take advantage of the opportunity because there is a great opportunity now?
Yes, Tal, I think you're exactly right. And it comes down to the fact that our if you look at our like hardware business and security as an example, the network firewall business is materially larger than some of these other businesses. So if you compare the businesses that are cloud based, that are software based, that are really where the customers are moving, I think we're well positioned. I think that we have We're going to continue to invest. Jeetu talked a lot about the innovation pipeline.
But I think what you really what we're really looking at is you have the older firewalls, then you have the next generation firewalls. Next generation is doing well. And then that part of the portfolio in the last quarter was really affected by supply chain And we saw the same thing in the collaboration space. And so I think that's really what it is and it's probably a scale issue based on the size and the fact that a lot of the competitors you're talking about are virtually all software based portfolios at this point. But I I think the innovation that the team has planned over the next year will continue to improve our hand in areas where we need to be more competitive, we'll be more competitive in the next 12 months.
Great. Thank you. Thank you.
Thanks, Tal.
It looks like our next question will come from Rod Hall of Goldman Sachs.
Thanks, Marlon. I guess, Chuck, I wanted to ask you the presentation, there are a lot of different things going on, a lot of moving pieces, Different technologies, different strategies. And I'm trying to get my head around how you would characterize Cisco's business, if we look out 3 to 5 years, a little bit further, I know we're in the middle of COVID now and still in maybe survival mode a little bit, What does this business look like? What's your vision for this business a little bit longer term?
Yes, Rod, thanks for the question. I hope you're doing well. It's really interesting in this environment to be taking questions from you and CEO over video as opposed to an earnings call or a callback where we just have audio. So I think if you look at the technology strategy that we laid out, if you look at the 6 pillars that I talked about, those are the technology areas that we think are really leading our customers on these multiyear investment cycles. So the secure agile networks that sort of which is the infrastructure rearchitecture to deal with public private cloud, SaaS, etcetera, so that's a first.
These application experiences that Liz talked about, Which is really around the infrastructure that we have sold for years and the applications are coming closer and closer and closer together and there's so much opportunity for us to actually enhance the overall application performance and in some cases over time we think we can actually help applications modify their behavior based on positive attributes or potential negative attributes that are going on in the infrastructure. You got the Internet for the future that we talked about, you've got end to end security, you've got hybrid work and then over the next 3 to 4, 5 years the edge will become increasingly more important As we look to the future. So on the technology front, I think that strategy is a multiyear strategy and we can see some of The big market transitions that I talked about and the team talked about today around 5 gs, around 400 gig, the progress we're making in web scale, the hybrid work transition, the hybrid cloud transition, all of these are multi year investment cycles for our customers. So from a technology perspective, that's how we see this coming together. From a business model perspective, Scott will lay it out a little bit later today, but this journey that we've been on to continue to increase our software, subscription software inside our business, when I took over, we had $3,400,000,000 in subscription software.
We exited last year at almost $12,000,000,000 So the team has done Amazing job. 81 percent of our software now is sold as a subscription as opposed to I think it was 40% back in 2015. So I think it's sticking with this multiyear technology strategy and continuing to push the business transformation that we've been pushing.
Yes, just I don't know if I can Marilyn, can I follow-up on that?
You have a quick one. Okay, quick.
Yes, quickly. I guess the thing I would say, Chuck, is it seems complex. It's hard to Do you feel like it's too complicated, like it's difficult for people maybe within the organization, external the organization to get their heads around it? Do you feel like the organization is lined up in these kind of 6 areas and can execute against it?
I think we have probably the most precise execution tied back to our strategy that we've had in As long as I can remember, to be honest. So what we do is complex, unfortunately, and we try our best to simplify it a little bit more, but It's the technology that we build and deliver. It's a broad portfolio and it is complicated. So we'll continue to try to simplify the messaging. Rod, maybe you can give us some advice later.
All right. Thanks, John. Thanks.
All right. Our next question is from Nina Marshall at Morgan Stanley.
Great. Thanks. And I think I'm the only one in the office today. So Maybe just on the service provider point, the goal that Jonathan spoke to of service providers Modernizing their architecture has been out there for a long time. And service providers have kind of missed out on multiple attempts to Modernize or capture incremental revenue opportunities.
And so just want to get a sense of, is it just the scale of the opportunity now whether it be fixed wireless or IoT that helps give you confidence that we kind of see some of that modernization or is it really Just you have gotten to the stage where the efficient technologies you can give them are more bite size or they can make more incremental changes. Just a sense on what kind of makes this time different in service provider modernization? Thanks.
Go ahead, Jonathan. So great question. Thank you for that. I'd love to share more about what we're seeing in the market, specifically around the Communication service providers, there's obviously the tailwinds of 5 gs that is really forcing upgrades all the way from the macro tower, All the way back, sell side routers, aggregation routers and all the optical equipment that goes along with that. So that's one huge piece.
The second is, as you mentioned, just the overall trends, we're back to the traditional 35% growth rate year over year on Internet traffic, so connectivity is continuing to grow as well. And not only that, but like Liz talked about, there's still connectivity that's happening up into the public cloud spaces from applications being everywhere. So there's more connectivity needed between applications, between users, between things. And so the CSPs must upgrade their infrastructure. It's really at a tipping point, especially with the 5 gs momentum.
So as you see 5 gs moving from country to country around the world, from CSP to CSP, you're going to see the build outs happen from the cell site router, the metro region and even the core infrastructure and we've seen that happening in places that have leaned in like in South Korea and Japan and obviously here in the U. S. Where I think we're all more aware just because a lot of us are living here. So you've seen all the build outs happening with the major providers here. We certainly believe that that's the driver and we believe they have to move to this new architecture that we're calling routed optical networking because it simply is Less expensive to do that and when you're spending tens of 1,000,000,000 of dollars to go and build an infrastructure, having a 35% to 50% savings is a massive Ability to go and build more infrastructure to connect more people and things to the internet to change people's lives.
Got it. And just on the second part of that question, which was just on Kind of IoT or some of the other incremental revenue opportunities, just what will make them kind of modernize or like what technologies can you give them to capture those opportunities that they might have missed out on, unfortunately?
Yes. So we're seeing things like Connected Car really take off. We're partnering with folks like AT and T and T Mobile and Telstra was just announced in the last week, we now have 185,000,000 devices that we are Operating as a SaaS service in partnership with over 50 CSPs around the world. And we're seeing that we're back to pre COVID growth rates on the IoT control center. So that's the really one of the key areas.
There's lots of different use cases, whether it's smart meters and other things and there's specific use cases, but the one thing that ties them all together is a 4 gs or 5 gs connection. And I think we're just going to see more and more of that over time as additional use cases come online.
Great. Thanks.
Thanks, Nina. And our next question is from Sameet Chatterjee at JPMorgan.
Hey, I hope you can hear me. I really just wanted to ask about the common theme across all the presentations today seem to be The TAM expansion that Cisco is looking at and when I talk to investors that does seem to run contrary to how investors think about Cisco as a more mature company in the space. If you can just talk about like what's really driven that? Is it more of the flexible consumption models you're kind of looking at? Is it more about kind of where you've Seeing the portfolio where you expanded the portfolio.
And then the second part to that, should we be thinking about this TAM expansion as a culmination of The investments you've made already in the portfolio or is there kind of more that is this more going to be driven by investments that are coming up in the next 3 or 4 years? Thank you.
Liz, you want to take that?
Sure.
Happy to. So I explained it this way. I would say when you
look at the TAM, we
should look at it as the way I talked about was our current businesses, right? So the businesses that we're heavily invested in, we have significant market leadership in. That TAM is about $260,000,000,000 right? So that comprises everything that we talked about today. Then when you look at the expansion these are markets that are adjacent to us, right?
So and each of us talked about that a little bit as well. Like I talked about it in applications, full stack observability is a massive adjacent market. Jeetu talked about whether it's in application security, whether it's in CPaaS. So these are markets where we have the portfolio today and we'll continue to build that as part of the roadmap. That total makes about $400,000,000,000 And we're pretty very confident that we not just have the innovation, the product, but we have credibility with our customers to actually deliver capability in that market because we're putting the breadth and depth of our assets together to deliver outcomes to that.
Then when we look at future opportunities, take future of work, that's a $1,100,000,000,000 opportunity per IDC. Even if we look at a smaller portion of that, we can bring our higher assets in the company today, whether that's collaboration, it's networking and security, we can bring that to bear. We haven't even counted things around events and what we can do. All of the acquisitions that Jeetu has already made in its portfolio. And when you think about, again, automation, there is another area in terms of automation is a big part of our portfolio today, whether it's orchestration of the infrastructure, whether it's around assurance, whether it's around analytics, but there's so much more in terms of when we look at our customers on where they want to take a number of tasks and automate it.
We have the portfolio. We're continuing to build on top of that. You take full stack observability. You take applications for that matter. If we think that if our customers think that the number of events and alerts that they get today is too many, think about when we go to this cloud native, more microservices based, that's going to be a ton more alert.
So you'll need a lot more in terms of automation. So that additional $500,000,000,000 that we talked about, we're absolutely we absolutely believe that that's an opportunity that we can go into. So when you look at the total between our current markets, the adjacent ones that we're already in, where we're building out the roadmap and then the expansion, that's why we feel pretty confident that's close to $1,000,000,000,000 $900,000,000,000 close to $1,000,000,000,000
Thank you.
Thanks for taking my question.
Good. Go ahead.
Welcome. Our next question is from Ittai Kidron at Oppenheimer.
Thanks and great to finally have an event like this. Hopefully, we can do this every year. So a couple of questions for you first, Chuck, on your M and A strategy. As you guys kind of covered it through the presentation and work, We're going through massive changes all around and your strategy up until now is buy small, buy technology, try to Fitted into your business, sometimes you went a little bit big $4,000,000,000 $5,000,000,000 but nothing substantial. You're playing over so many domains.
So I guess the question is, are you willing to take more aggressive steps on the M and A front to accelerate The transition and to make sure that you're not losing pace with what's going on in the industry, because doing everything internally or for small acquisitions isn't necessarily going to enable you to get to where you need to get. You need to be a little bit more aggressive on that front. So I'm wondering if there's a little bit more flexibility on that front going forward.
Ittai, It's good
to see you. Thanks for the question. Look, what we our current plan, one of the big things that we've tried to do over the last 6 years is if you we used to take a bit of heat that most of our innovation was coming from acquisitions and I think we've actually balanced that out Very well over the last several years and you've heard all the great things that the teams are talking about, which has been a combination of good acquisitions as well as I think some really good organic innovation. But our M and A strategy largely remains the same. That being said, for the right strategic fit to achieve what you described, we're open and flexible.
We take into consideration strategic fit. We take into consideration valuation and How well we think that it will integrate culturally. So we're not opposed to doing that. We just we would just need to find the right one that is valued properly. Valuations are a little extreme right now as you know.
Yes. Not sure how long if you wait for those to correct, but thanks.
I'm not sure that they will. So
Yes. I have a follow-up for Todd on the networking side. Todd, great presentation there, I guess I want to ping you on the commentary that you have with respect to your CAT 9 ks and I think you mentioned that Still 70% of the portfolio has yet to upgrade. I guess my question is in playing a devil's advocate here, why is that a good statistic? Why isn't that a bad statistic?
Why can't one say that 3, 4 years into this transition, why haven't more customers have already upgraded to this platform, which clearly brings a lot of value? It's
a great question. And I'll tell you, I think, of course, we'd love our customers to upgrade The day we released new code, but these are mission critical networks deployed in schools and governments, healthcare, retail, they're being used. And
The all of these verticals, all
of these industries, they are refreshing their equipment as per the promise of Their initial investment, their life cycles are 5, 7 or even more years. But the reason it's a good statistic, I think is, There's so much more opportunity for us. This is already the fastest ramping portfolio, the fastest ramping product line we've ever had at Cisco and yet We haven't even gotten to half of the opportunity to do this first gen refresh, which is really exciting. And there is going to be more Cat 9 ks innovation and generational shift on top of where we already are. So I guess from my point of view, it's exciting because we're already so far along and we're not even halfway through the initial refresh.
That's an exciting opportunity. There's one other wrinkle, which is the Cat 9 ks is the first time we've attached this subscription revenue to our core networking business. And so The fact that we have 70% of that deployed base still to transition into a subscription model means that our subscription Upside is huge right now and that's exciting for
us for sure.
All
right. Thanks, Itay. We've got time for one last question for this session, but don't worry, we've got plenty of time in our next session to answer all the questions that are coming in. So our next question is coming from Paul Silverstein at Cowen.
Marilyn, can you guys actually hear me?
We can hear you.
The beauty of technology. Chuck, a question for you. So for those of us who remember, I think it was Something on the order of 15 to maybe 20 years ago, when you all implemented, that's the term of art, but it was the work councils. At the time, we all had multiple markets. I think there were at least 10, if not more, that were over $1,000,000,000 I think with the targets at Time, it was going to be meaningful to Cisco's expansion.
Just to please help us advocate, I hear the enthusiasm, you all portrayed an extremely positive outlook in terms of market opportunity and execution, but on the opportunity front, these multi tens of 1,000,000,000 of dollars of incremental market opportunity, How and why is it different this time in terms of your realization to a meaningful extent of 1 or more of the multiple market opportunities you've spoken about There's dramatic expansions. How is it different from that period? At the risk of being unfair, I think a lot of that never came to fruition. I don't know if it was Going the socialist communist route of our councils as opposed to having one individual with responsibility, What's the difference this time? Why should one believe that you'll be more successful?
Well, Paul, I have to tell You asked one question that we actually didn't prep for. But I would tell you that It's the leadership team and I think we have a much simpler operating model today. And I think in fact, I had a conversation with our Board recently And for some of our board members who have been here for a couple of decades actually said to me that we have the best engineering leadership that we've that I mean, we've had these guys the teams are just executing. So while I think that your question is really valid, I just have a high degree of confidence in the team and the innovation that we're delivering, the organic innovation and the pace of organic innovation, I can't remember when it's ever been moving the way it is now. So I feel good, but You can look at us in 5 years and see how we did and ask the same question or tell us your observations then.
Fair enough. Appreciate the response. Thank you.
All right. Thank you. All right. That wraps up the first Q and A session for the morning. We're now going to segue to Jerry Elliott, who's going to talk to you about our go to market strategy, our sales motion and why we're so well aligned with our customer priorities.
And we'll see you in a little bit for the Q and A.
Hi, everyone. I hope you are all safe and healthy and that your families are as well. My name is Jerry Elliott, and I'm the Chief Customer and Partner Officer at Cisco. I have the privilege of leading our global sales, partner and marketing teams. So far today, you've heard from Chuck about our vision and strategy and from our great engineering leaders about the innovations we're bringing to market now and into the future.
My goal is to tie these together and talk about what all of this means from a go to market perspective. I wanted to start here. A few weeks ago, we held our annual sales kickoff event, something we call Cisco Impact. We get the entire field together, 25,000 folks across 90 countries and we talk about our go to market strategy and the investments we make for the year. We kicked off the event by stating that we have 2 distinct goals for the team this year.
First, we have to drive top line growth. That's The mission number 1 this year as it is every year. What makes this year a bit different though is the size of the opportunity in front of us. As Chuck outlined at the top, we have a clear opportunity to capture and lead these once in a generation market transitions. Areas like hybrid cloud and hybrid work as examples.
We've been having these conversations with customers for years, But the speed at which things are accelerating, coupled with investments we've made to our portfolio and our go to market have put us in a really strong position. While growth is the primary goal, how we grow is just as important. So our second message to the team is that we have to continue the transformation journey we're on. We need to accelerate our recurring software we need to provide flexibility and choice into our offerings and meet the buyers where they are. And we need to broaden our access into new buying centers within our customers.
We have made great progress on this journey. Chuck shared some of the accomplishments and Scott will dig a little bit deeper in a moment. At Impact, I stress to the team that we should be Proud of how far we've come in a relatively short period of time, but that the most important chapters of this story still lie ahead. Here's the framework that Chuck shared in his section. Every piece of our strategy, every phase of our transformation, every innovation comes back to one fundamental question.
How do we add the most strategic value to our customers in each of these areas? Our customers are reimagining how their applications interact with their employees and their customers. Every company is tackling how to empower their teams in this new world of hybrid work. They are fighting every day to secure their enterprises With cybercrime rising 600% during the pandemic and given their choices around cloud first, cloud native, multi or hybrid cloud environments, they have to rethink and transform their infrastructures. This is all great news for Cisco.
The world is moving towards our collective strengths. And as you heard from our engineering leaders, we are investing heavily to drive these transitions. From a sales and marketing perspective, these trends have also given rise to new buying centers, which represent massive opportunities for us. So let's go through this layer by layer and detail the different ways we are enabling and Powering our teams to have these conversations and reach these new buyers. Applications used to be an extension of a customer's brand.
Now in most cases, the app is the brand. We've heard that 500,000,000 new applications will be developed by 20 23, and the great majority will be written exclusively for the cloud. And this trend has greatly raised the profile of the AppOps and the DevOps teams within our customers' organizations. As you heard from Liz, we can share with them our completely unique and differentiated position. The combination of AppD, ThousandEyes and Intersight helps us our customers monitor and manage their application performance across the entire technology stack.
Or said in a slightly different way, the more you can see, the more you can solve. And the more you can solve, the more you can automate, that's what we help our customers do. Every company on the planet is rethinking their approach to work. We know that work is no longer a place you go. It's something you do from anywhere.
And we also know that this conversation is way bigger than just collaboration. It's security, IoT, infrastructure, facilities and so much more. Hybrid work, perhaps more than any other macro trend, has completely shifted the conversation with our customers. HR and Facilities Management have as much influence in these plans as the network and the IT teams. And as you heard from Todd and Jeetu, no other vendor can deliver hybrid work in the same way Cisco can, networking plus devices, security and a great collaboration suite.
With the explosion of apps, it also means that more data is being created and shared by more users from more locations than ever before, more, more, more. Today there are 20,000,000,000 devices connected to the Internet. And by 2023, that number will jump to 29,000,000,000, Nearly 4 devices per person. The old paradigms for security won't work in this new dynamic. The workloads are too complex, the workforce too distributed and the workplaces are changing and being redefined by the day.
As Jeetu outlined, our 0 trust solutions and SecureX platform gives our CSOs and SecOps teams a simplified, unified and totally integrated view into their environments. This enables them to secure access across users, devices and locations, and we are uniquely positioned to win with breadth, scale and simplicity. As Liz, Todd, Jeetu and Jonathan shared, moving to an app centric cloud first hybrid world has introduced all kinds of complexity into the network. So it's clear that the digital enterprise requires a new kind of infrastructure. Only Cisco can provide the 3 ingredients, backbone, cloud and data center required for the newly merged enterprise and consumer network, where work and life they now look to us to help them be more agile.
Now every customer, regardless of where they sit in the organization, wants 3 things when they're considering new technology. Quality, of course, that's job number 1. But they also want a simple, flexible way to buy and consume, and they want to realize the most value in the least amount of time. To better serve our customers and empower their teams to go capture these transitions, we are investing in a few specific areas. First, we're launching a brand new powerful and extremely flexible enterprise agreement platform, which will accelerate the great success we've already had with our EAs.
On average, our EA customers in our Enterprise segment increased their annual spend by more than 35% in the 12 months following the EA purchase versus what they had spent prior to that. And in our Commercial segment, 50% of our EA customers purchased 3 or more architectures compared to 15% of our non EA customers. We are building on this foundation with our new platform. Starting in October, every Cisco software technology and their associated services can now all be in one agreement even when multiple partners are involved. And we're giving customers the flexibility to shift their investments between the technologies as their business needs evolve.
This is what our customers and our partners have been asking for and it's the biggest investment we've ever made to our buying programs. We're also investing to give our customers and partners more choice and flexibility in how they buy our technology. We will introduce and accelerate additional routes to market, like cloud marketplaces and managed services. And a third category we are calling digital and at scale that we will focus on low touch, highly automated transactions like the agency motion, for example. Our customers and our partners need us to move in this direction and we're taking a big step forward this year.
Underpinning each of these areas is the innovation we're making to our CX Services portfolio helps our customers maximize their Cisco investments and reach their desired outcomes quicker and more efficiently. This all starts with Success Tracks. Success Tracks is a suite of services that helps our customers accelerate their adoption and their path to value, while reducing the complexity and risk in how they manage their networks. Each offerings include real time expertise, insights and analytics, contextual learning and support at the right time based on the customers' purchases and their progress. We're now offering 5 success tracks, including campus, data center network, data center compute, integrated secure operations and Meraki.
Success tracks are delivered and monitored through a one stop digital experience platform we call CX Cloud. CX Cloud provides our customers with a single pane of glass for tracking their Cisco investments and their services contracts. Let's take a look at how Washington Trust Bank is using CX Cloud to manage their network.
I used to get to the office early to check-in on things to make sure that nothing had happened to the network Overnight, but now with CX Cloud, I have the ability to monitor my entire network at a glance from anywhere. It's literally the second page I open every day. I start with DNA Center and immediately open up CX Cloud. With 48 sites in 3 states in the Pacific Northwest, there is a lot to keep tabs on. I tend to keep a pretty close eye on the lifecycle tracker.
I really like trying to move that race car Farther along the track, as a mountain bike racer myself, it really resonates with me to be out in the front like that. It actually prompts me to go back and look at things that maybe Stop with me and I can log in from anywhere. I find myself being able to focus more clearly on future projects and I just didn't have that kind of time before. The The most important thing to me as a network administrator is having the confidence in my network, the confidence in my equipment, the confidence in the tools that I use to manage that equipment NCX Cloud gives me that. In mountain biking, you're not looking down at your front tire.
You're actually looking ahead. So you're actually anticipating The rocks and your path through the rocks with network administration, you're not looking down, you're looking ahead. It's about what's coming next. So I still go to work early, but that's so
when customers can accelerate their technology adoption, realize the full value of their investments and count on enablement and support at every point in the lifecycle, it drives renewals, it drives our growth, and it drives overall loyalty from our customers. Finally, we are investing in our marketing motions to reach these new buyers and maximize our great brand. There is so much to show you here, so get ready. 1st and foremost is the investment we are making to completely rebuild and redefine cisco.com as a demand Generation Engine, our website is one of our most important and valuable brand assets. In FY 'twenty one, we had more than 110,000,000 total visits and 187,000,000 page views.
In FY 'twenty two, we're going to offer that massive audience a simple, streamlined and hyper personalized experience where they can try, buy and renew directly from cisco.com. One of the most successful marketing activities over the last few years has been our sponsorships. Our work with Riot Games, the Tokyo Olympics, Jimmy Kimball Live and the USGA, just to name a few, have driven revenue, product usage, visibility and brand awareness. Here's a quick recap of some of the big wins in FY 'twenty one and a preview of what's coming this year. There are some great brands in that reel, but perhaps the most exciting is our agreement to be the official technology partner of the NFL.
This has the potential to put our brand in front of billions of people around the world and has opened the door to some exciting Cross marketing opportunities. Here's the spot that we'll be playing across the NFL slate of games this year.
The biggest season ever. Then it's win or go home. In For every fan, the fate of their season can come down to this, billions of secure connections per second. When the game is on the line, then the game is always on the line. The NFL relies On Cisco.
As the world begins to fly again, we're going to have a significant presence in some of the world's busiest airports, including San Francisco, San Jose, London Heath Road, Changi and Frankfurt. This has the potential to get our brand in front of 225,000,000 travelers this year. Here's what that looks like. Finally, we are continuing to build on our Bridge to Possible campaign, the most successful marketing platform by any measure in the history of the company. We're going to use this canvas to start talking about some of the market transitions we spoke about at the top.
The first of these is hybrid work and covers our smart building solutions as well as reinforces some of our recent commitments we've made to sustainability. Let's take a look.
We're in this together. Yet nature has given And given, it's our turn to do more. Cisco's smart building solutions and our partners' technology benefit both humans and nature. Catalyst switches connect securely, delivering power over Ethernet, reducing costs and Greenhouse Emissions. Cisco Wireless and DNA Spaces use intelligent automation, Sustainability is essential to powering an inclusive future for all.
That's why Cisco committed to achieving net zero emissions by 2,040. Between meeting human needs and protecting upon us, there's a bridge.
In addition to our new motions, we're also making investments in our team. This starts by evolving our compensation structure to further our transformation to one of the largest recurring software and services companies on the planet. We are moving all services to an annual model with a multiyear uplift for account managers, systems engineers and managers. We are doubling the focus on recurring revenue by increasing the percentage of software and services to their overall goal. And we're going even further by enhancing the comp structure in the latter half of this year to focus on incremental annual contract value.
Chuck detailed upfront some of our unique advantages. And our engineering leads talked about how we differentiate in the market and solve our customers' biggest challenges with technology. I would echo all of that and add one other unique element, the size of our team and the scale of our partner ecosystem. The global sales and marketing organization is 25 1,000 strong across 90 countries, one of the largest go to market teams in the industry. Our global scale increases fivefold because of our incredible partner ecosystem.
Our partners drive 90% of our overall bookings, exponentially multiplying our presence, our capabilities and our impact. I like to call our partners Cisco's not so secret weapon. Our ecosystem sends the value of our technology and innovations, helps customers consume and manage technology in new ways and ensures that customers realize the full value of their Cisco investments. This enables Cisco to deliver the right solution and business outcomes to our customers across every industry, vertical, region and country. I'll finish where we started.
The Cisco sales and marketing organization is laser focused in 2 areas this year. First, we will focus on driving growth and capturing key market transitions like full stack observability, Sassy, hybrid work and hybrid cloud and more. And second, we will continue to transform how we go to market and put even more emphasis on driving recurring revenue. We've been around for 37 years And we'll be around for 37 more, because we always keep our customers' priorities at the center of everything we do. That's not a feature of Cisco.
It's not the mission of Cisco. It is Cisco. Thank you so much for your time and please stay
well.
Okay. Thanks again for joining us today. I'm Scott Heron, the CFO at Cisco. We've now heard from Chuck, who laid out our strategy over the next several years. We've heard from Liz who talked about the opportunity we see and a fair amount of granularity in each of those markets.
Our product leaders who laid out their strategy to win in each of those markets and Jerry who continues to evolve our go to market motion and to have the sales team transformed the same way we're transforming the rest of the business. I want to talk now about how it all comes together in driving profitable growth. First of all, I want to say that I will be making forward looking statements and those are made pursuant to the Safe Harbor Act. And we'll also be talking I'll be giving some non GAAP metrics and in the appendix of this deck you'll find the reconciliation of those to the proper GAAP metrics. I want to also say that there's no change to our guidance.
This is the same guidance we provided on our earnings call a couple of weeks ago. No change for the full year 5% to 7% growth on the top line, $3.38 to $3.45 or 5% to 7% growth on earnings per share as well. We talked first about our financial strategy and I've alluded to this on the last couple of earnings calls that we've had. It's 1st and foremost to drive profitable growth across the company. I think that is the single biggest thing we can do to unlock value inside Cisco.
The second is continue the disciplined financial management and operating efficiency that Cisco has become known for.
And I'll show you in
a couple of slides the great success we've had. We've built that skill set, it's not going to change. I want to maximize the value we create through the course of this transformation by building the amount of subscription and recurring revenue we have that you can then renew next year and new sales stack on top of that and get that revenue stacking which not only accretes to greater revenue growth and greater cash flow growth, it gives us greater visibility. And so there's less volatility in our results. So maximizing value through the transformation and then continuing as part of our disciplined financial management, continuing to examine our investments, both the organic investments we make and the inorganic investments we'll continue to make.
Those are the 4 components of the financial strategy. I think it's always important to understand how we drive revenues. And we run our company on the 3 geographic segments of Americas, Which you can see continues to be round number 60% of our revenues, EMEA which is round number is 25% and APJC at roughly 15%. I think what's more interesting is by customer market, how do our revenues how do we drive revenues. And you can see it's pretty balanced there between enterprise, public sector, commercial and service provider.
And bear in mind that smallest piece is the service provider. That's also where our webscale business fits in and you've seen some of the great results we've had within our webscale business. So nice diverse customer mix as well. Let's look at what that's meant in terms of how we've performed over the last few years. And you can see starting in fiscal 2017 through fiscal 2020, Obviously, the impact on the revenues of the pandemic and the economic slowdown that the pandemic brought to everyone around the world.
The way our fiscal years fall, our fiscal year ends at the end of July and the new fiscal year begins at the beginning of August. So what that meant is the depth of the impact of the pandemic hit the last two quarters of our fiscal 'twenty and the first two quarters of our fiscal 2021. So even though the pandemic was only about 4 quarters, it had a significant effect on both our fiscal 2020 and our fiscal 2021 results. But then you see we've talked on our earnings calls about the great momentum that we've seen in demand through Q3 and Q4 of last year And it's that momentum that carries over into fiscal 2022 and is what underpins that 5% to 7% growth rate that we've guided to for the year. On the earnings per share, what you see there is the results of the disciplined financial management that we've talked about.
Even as the revenues were being significantly impacted by the pandemic, we grew earnings per share in fiscal 'twenty and albeit nominally grew earnings per share again in fiscal 2021 and you see the 5% to 7% growth in earnings per share that we're projecting now for fiscal 2022. So good continued solid financial discipline. Last time we were together was in fiscal 'seventeen and at that point as we were embarking on making this transformation, we set ourselves a handful of targets. 1 was to drive 30% of our total revenues from software. The second was to drive 2 thirds of that subscription revenue of that software revenue from subscriptions.
And then the last was to have more than half of our total revenues come from the combination of software and services. So how do we do? On software as a percent of total revenue, we came in just shy of the 30% target, albeit we did hit it for the 4th quarter, for the full year it was just shy of the 30%. In the Q4 of fiscal 'twenty we did hit the 30% and you can see we maintained that In the fiscal 2021, the mix of that that was driven by subscriptions we well overachieved. It wasn't the 66% target, it was 74% in fiscal 2020 And then we added 5 more points of mix in fiscal 2021.
So strong growth in our subscription revenue software subscription revenue And versus the 50% target for fiscal 2020 and the sum of software and services, we overachieved a 51% And then added 2 more points to that in fiscal 2021. I think the takeaway from this is we have both the discipline and the operational excellence. When we set these kind of long term targets, we execute to them and we achieve them. And I'm proud of the way the team has achieved that set of targets. So as we continue to make this evolution, there's a different set of metrics.
We'll obviously continue to provide the traditional P and L, balance sheet, cash flow statements, but there's a different set of metrics that give you a good sense of how we're executing on the transformation. Things like software revenue, which we've talked about, things like how much are subscriptions as a percent of our total revenue. And that's both software plus the subscription services that we provide things like technical support and as Cisco Plus now gains traction in the marketplace, those subscriptions will also fall into subscriptions as a percent of our total revenue. I'll show you how we've done on that. ARR or annualized recurring revenue.
And this is a key metric that every company that drives a lot of subscription based revenue looks at. So I'll talk about how we've done on that and how we define that. And then RPO which stands for Remaining Performance Obligations and why that's important. So let me walk through each of those. Chuck showed this slide earlier.
I think it's a really important slide and it starts of course in fiscal 2015 when Chuck became CEO. And what you see is going from in the green bars $8,400,000,000 of software revenue in fiscal 'fifteen, Almost doubling to $15,000,000,000 of software revenue at the end of the year we just closed our fiscal 2021. At $15,000,000,000 of software revenue That makes Cisco one of the biggest software companies in the world, certainly in the top 10. You can debate where within that top 10. But we are one of the biggest Software companies in the world and I don't think anyone thinks of Cisco in those terms.
I think what's even more impressive is you look at the growth of the blue bars. That's the amount of that Revenues that were subscription based to just short of 80%, 79% in the year we just closed. So significant amount of progress not just in driving more software revenue, but driving more of it from subscription. And again, it's that subscription base that leads to the revenue stacking and gives us greater visibility to where we're headed and less volatility. Great progress on the software transformation.
If you take it up one more click, we don't just sell software on a subscription basis. We sell a lot of our services, particularly our tech support services on a basis, we sell a lot of our services, particularly our tech support services on a subscription model. And what this shows is again from fiscal 2015, about 25% of our revenues were driven by total subscriptions. To the year we just closed, it's almost 44%. And underneath that, again, the 23% compound annual growth rate of our subscription revenues.
So great strides on this and a very impressive growth rate of our software subscription business. Okay. I mentioned ARR earlier and this is an operating metric that again most companies that sell on a subscription basis look at. And what it is, so everyone since it's operating metric, everyone has their own definition. For us, what ARR is, is the annualized revenue run rate of all of our active subscriptions, whether they're term licenses or SaaS or maintenance contracts, Whether they're recognized ratably or upfront, take that and annualize it, that's what our ARR is.
And you can see again, very nice trend in ARR beginning in fiscal 2019 when we implemented rev rec 606 growing at 11% total compound annual growth rate over those 2 years And again within product growing at 25%. So very nice base of ARR for us to renew to drive growth into the future, Even stronger growth within the product piece which is I think very important of the ARR. And remaining performance obligations are RPO. And this is one of the better leading indicators of any company that's on a subscription model. So what is RPO?
RPO is the sum of our deferred revenue, which you can see on the balance sheet, right, and unbilled contract revenue. So what does that mean? Well, if we sell a multi year agreement, let's say we sell a customer a 5 year agreement, but within that we agree to bill them annually, right, 1 year at a time for 5 years. Customer commits to 5 years of billings, but we've only billed them 1 year at the point of sale. The other 4 years are unbilled And because they're unbilled, they don't sit on our balance sheet anywhere, right?
So the sum of that unbilled tail of sales that we've already made plus the deferred revenue that's on our balance sheet, but some of those is remaining performance obligations. And this is a real leading indicator of revenues that will come into our revenue stream in the future. So you can see what we've accumulated in at the end of fiscal 2021 It is just short of $31,000,000,000 $30,900,000,000 of remaining performance obligations. And I think what's equally impressive underneath that is The $16,300,000,000 that is current, meaning it turns into revenue within the next 12 months. So $16,300,000,000 of revenue Already sitting in our remaining performance obligations over the next 12 months of fiscal 'twenty two.
You notice the growth rates are faster obviously in the long term than they are in short term Because when you sign a multi year deal only the 1st year, the 1st 12 months fits in current or short term, the remaining years fit in the long term. So the long term is always going to grow a little bit more quickly. That's RPO. RPO has become as I said one of the key leading indicators for every company that's doing what we're doing and Selling more and more of the revenues on a subscription model basis. That's what we've done.
I think it's something that everyone in Cisco takes a lot of pride in and rightfully so. So let's look ahead. Okay. Great progress to date. How do the next few years look?
The first thing I want to say is Traditionally, what we've done is we've given you insight into our revenues, not just in the geos, which is the way we manage the company, but also we've given you some visibility into 3 product categories, infrastructure platforms, applications and security. As we look ahead and what we've talked about already today is the opportunity we see in a little bit more granular basis. So secure agile networks, which Todd talked a lot about how we win in that space, hybrid work and end to end security, which G2 spoke about, Internet for the future, which Jonathan spoke about and then optimized application experience, Which Liz runs for us. Not only do we talk about the opportunity in those categories, we'll begin to give you visibility to how our results Look what our revenues look like in each of those categories. And we've defined for you over on the right hand side what the elements of each of those categories are.
So Better transparency of our results going forward. I don't want to spend a ton of time on this slide, but It's impressive enough that I wanted to show it again. Liz walked through this earlier. Just within our existing and our expansion markets, we have north of $400,000,000,000 worth of total addressable market in 2025. You can see how it breaks down by element.
That's both again what we see in our current TAMs and also in the expansion TAMs. More than $400,000,000,000 of opportunity for us to pursue that's right in front of us. Beyond that, there are adjacent opportunities. And if you add to that what we see as adjacent opportunities that we haven't yet invested in, But they're adjacent to where we are driving sales in the future of work and automation of potentially another $500,000,000,000 by the time you get to fiscal 'twenty five. So in aggregate $900,000,000,000 worth of opportunity for us to pursue.
We're not opportunity constrained as we look at the future. So where is the growth coming from? So let me zoom back in on the $400,000,000,000 of total addressable market In our current markets and in the expansion markets that we see today, interestingly, most of that growth is coming from the subscription recurring revenue elements of all of those TAMs, Right. If you take those TAMs and add them up and say how much of that is just driven by the recurring revenue subscription elements, 16% compound annual growth rate of those product subs. So what it tells you is where we're investing is the same place our customers are investing, which is moving to a Far more ratable, a far more subscription recurring revenue world.
The non subscription product non subscription, that's largely driven by hardware, Still a big number and it still will grow out through time at about a 2% growth rate and services also at about a 2% growth rate. In fairness, one of the headwinds, the services growth out through time is the more you sell product subscriptions, the more the support element of that gets embedded in the product side as opposed to being sold separately as services, but 2% compound annual growth rate out through fiscal 'twenty five of our services business. So what do we see? We've done a lot of modeling and understood both the opportunity in the markets, understood our product sets, understood our roadmaps, how we stack up competitively, understood how we think we're going to progress with Cisco Plus out through time. And this is what we see for Cisco in that same timeframe out through fiscal 'twenty five.
Our product subscription revenue will grow at 15% to 17%, compound annual growth rate between fiscal 2021 fiscal 2025 our product non subscription 2% to 4% and the services business 2% to 3%. And again, some of that is moving up into the product line. Some of that is we continue to have services business that is not attached to the product side of our business. In aggregate, what that drives is 5% to 7% compound annual growth rate of Cisco's revenues Between the year we just closed in fiscal 'twenty one and where we'll be at the end of fiscal 'twenty five. As we pursue that growth, we're going to continue to be disciplined and focused on margins, both on the value creation side of driving our margins through greater software innovation, through the portfolio shift to subscriptions that we've talked about, through the leadership position that we're in now with our silicon and optics business and continuing to be disciplined on the pricing front.
On the cost savings side, we've got the best supply chain team in the world for 2 years in a row. They work hand in hand with our product engineering teams to continue to drive value, to cost reduce that, to manage commodity prices. We've got cost savings opportunity in automation and digitization across the board, not just within our cost of goods sold line, within the OpEx line as well. You'll continue to see us invest in automation. And then you just heard Jerry talk about some of the expanding routes to market that she's investing in, some of the low cost routes to market like marketplace Sue that 5% to 7% growth on the top line.
So what does it all mean? We talked about revenue growing at a compound annual growth rate of 5% to 7%. Subscriptions as a percent of that revenue going from the 44% that we showed you earlier up to 50%. So while revenues are growing 5% to 7%, The percent of those revenues driven by subscriptions and again that will be software, that will be subscription based services and it will be the Cisco Plus business. Will be 50% of that by the time we get to fiscal 'twenty five and we'll show balanced growth on the bottom line.
If the top line will grow at a 5% to 7% Compound annual growth rate, the bottom line and non GAAP earnings per share will grow at a 5% to 7% compound annual growth rate out through that time. That's the targets that we're setting for ourselves. I have a lot of confidence in the leadership team and in the work that we've done to get to this point that we'll achieve those targets out by fiscal 'twenty five. I want to spend a minute on capital allocation because I know this is really important to all of us, to me as well. And our cap allocation strategy is really unchanged.
We we'll continue to invest in both organic and inorganic opportunities to grow our business. That's job 1. We'll offset the dilution of our equity plans on an annual basis And then we're returning excess cash to shareholders, which you've seen us do and I'll show you on the next slide how we've done that over the last several years. We maintain our commitment to returning a minimum of 50% of our free cash flow to shareholders annually. So how has that looked?
You can see the pattern. You can see the growth rate of our dividends over the last 5 years, Which is a sign of confidence in our company and the growth of our company and in the cash accretion that we expect to get out as we grow. So nice growth in the dividend through time. You can also see we've done a great job of reducing the shares outstanding through share buybacks. In the table on the right, you can see what that meant in terms of total dollars spent through that time.
And obviously, we had an outsized buyback in both our fiscal 2018 and our fiscal 2019 which was when tax reform was put in place. It enabled us to repatriate a lot of cash that we had trapped offshore. We took a lot of that cash and returned it to shareholders and reduced the share count, driving value for everyone. So I think we've done a really nice job on cap allocation and there's really no change to our strategy Forward. So let's put it all together.
We've made great progress in the business. We've made great progress with the business model shift to subscription. And again, the benefit of that is not just the growth you get from the revenue stacking. It's the visibility and the ability the predictability of our revenue stream. That's good for you as investors, that's good for our customers and partners, and it's good for us as the leaders of the company.
We've got significant opportunities to invest in growth, And we'll do it in a disciplined way. We've built the disciplined financial management muscle. You've seen that in our results. I think it's something Cisco is known for as a company. That's not going to change.
We're going to continue to be disciplined in our financial management and will deliver sustainable returns through dividends and share buybacks. I'm proud of what we've accomplished. I'm proud of the progress that we've made to this point. I'm excited about the way we can expand that recurring revenue subscription model base out through time. The steps we're taking to do it not just in software and services, But with Cisco Plus in the hardware and the networking as a service businesses, I think it's we've demonstrated the management team has focus and the operational excellence that we put out long term targets, we achieve those targets.
It's an exciting time to be a part of Cisco. I want to thank you again for being here. And with that,
I'll turn it over to Chuck.
I am really proud of the strong strategic vision that our team has been able to share with you today, but it's also as I said in my presentation supported by a tremendous culture. And in late 2019, we launched our new purpose as an organization to power an inclusive future for all. And I'm joined by Fran Katsudis, who is going to help us talk about this. So Fran, you want to talk a little bit about that purpose and how we came about it and what it means?
Happy to. And I would say, Chuck, the timing of having this new purpose with everything that we've gone through over the last year and a half was perfect. And I think it guided us. Something that's pretty amazing is over the last few months, we have worked to take this purpose and operationalize it and to be clear around how we're going to hold ourselves accountable. And each word in our purpose has meaning.
So power is all about how we close the digital divide and securely power the world's connectivity. Inclusive is about advancing social justice and scaling development for fair and equitable access to opportunity. Future is about ensuring a sustainable regenerative future for our planet, for our children and for all is building partner ecosystems to be a have a list and multiplier to scale impact for all.
Yes, it's amazing Fran because we all believe so much in making an impact And it's core to who we are. And I think we did our first CSR report in 2,005 and we really have integrated purpose in everything that we do.
That's right. It's interesting because at this moment, I think we're more focused than ever on how we drive lasting systemic and generational Change how we work on the investments and the infrastructure that's needed to achieve this. It's interesting Chuck, I think you said this a couple of years ago. CSR once upon a time was something that sat on the side, but now we know it has to be embedded in everything we do. The most marginalized are bearing the brunt of all of this and we recognize that our responsibility is to do more, but also to see this as an opportunity for innovation and impact.
Our stakeholders expect this too. We hear it from partners, investors, our employees and prospective talent. We even see that many candidates come to Cisco for their interviews having read our CSR report. I think in the future, we're going to see many more Chief Purpose Officers because organizations have to operationalize impact around these critical issues. And our people and our technology, just put us in such a unique position to do this.
Yes, it's really great because Our technology creates the opportunity to connect people and allow them to have more opportunity. And at the same time, our community service efforts The things that we love to do to make an impact on a global basis are just really core to who we are. And a few years ago, we started A program called Country Digital Acceleration where we really line up our priorities in countries with the head of state for the country and try to really make a difference in the country. You want to talk a little bit about that?
Yes, that's right. When we launched the CDA program, it was based on the belief that digitization at the national level, at the government level creates opportunities to improve global economies, education, innovation, healthcare and people's lives, while also delivering incremental growth to Cisco. And today, the program operates in 43 countries across 6 continents with more than 1,000 active or completed projects, which is pretty amazing. Our CDA work is helping connect people prepare them for participation in the digital economy and close the digital divide. And Chuck, you were in North Carolina for the launch of one of our projects.
Yes, I actually was there with the Governor, Governor Cooper. And it's really connected to broadband, which whether you're in rural Parts of emerging countries or communities in the United States that feel like they've been left behind, there's a need to connect and we wanted to expose the innovative ways that these rural providers in many cases can actually provide that broadband connectivity. So it's a rural broadband Innovation center that we've launched in North Carolina and there's 18,000,000 Americans in rural areas that need access to broadband and it certainly has been really highlighted during the pandemic.
Absolutely. So there are 2 others that I had the honor of being a part of in the last couple of months. So in South Korea, we launched a digitization program that's investing in key areas like 5 gs, smart factories, cloud and skill development. And in Mexico, we had the digital reskilling for Mexican women to train them to participate in the digital economy.
It's so great. And along the way as well, we're very committed to diversity, equity and inclusion. In fact, our leadership team, my leadership team is one of the most diverse certainly in tech where 50% of our leadership team are women and there's also great ethnic diversity and we have a whole set of measurable objectives that We hold ourselves accountable for in this space and we've made a lot of progress I think.
We have and every member of the ELT is held to their diversity initiatives and it's part of our compensation program, which is wonderful as well. I think the other thing that I would say is this all started with our commitment to Conscious culture. And we know that conscious culture is built on full spectrum diversity, which basically means that we look at all diversity, which is inclusive of Gender, generation, race, ethnicity, orientation, ability, nationality, background, culture and I think when you do this, your people feel more engaged. In the U. S, we just saw some of the data that shows that 96 percent of our employees believe that we're a great place to work.
As you know, we've been recognized as back to back world's best place to work, which is meaningful to us. And accelerating fairness and equity, that's at the heart of our conscious culture. We also have work like our pay parity work that we've been doing for the last 5 years, which expands the assessment of parity and we're taking it into everything that we do. And I think it's led to this level of Transparency as well. Something that Cisco does that very few companies do is that we actually share our ER cases not just with leadership and the Board, with every employee and we do that on an annual basis.
1 of our social justice beliefs and actions is focused on increasing representation in Cisco for African American black employees at all levels. And it's about ensuring that the processes we use to hire, promote, sponsor and pay our employees are rooted in equity and fairness. And maybe Chuck, it would be good to share a few of the examples here as well. So I'll share a couple of the goals that we've set. So one goal is to achieve a 25% increase in representation of all employees who self identify as African American, Black from entry level through to manager level by 2023 and a 75% increase from Director through VP and above by 2023.
And I'm pleased to say that we're on track to meet our goals. From fiscal year 2020 to now, what we've seen is a 20% increase in our hiring rate for African American black employees and for non executives, we've seen an 11% increase in overall representation. And a positive impact that we've seen from this approach is that this focus on equity more broadly helps us to really look at all of the underrepresented categories at Cisco.
And it really does help when you're super intentional about The activities that you're undertaking to actually move the needle here. We also have very strong social justice beliefs. This started Actually in early 2020 before the racial reckoning that we saw later that summer. And we believe if you see injustice, you Speak up, you act boldly. We support our communities and we subsequently set out 12 goals with measurements and they're owned by leaders across the company now.
That's right. We created the blueprint for how we would act as a business. We are investing $300,000,000 over 5 years into our social justice beliefs and actions to drive systemic generational change. And this includes donations, partnerships and internal resources to be accountable and to execute on our commitments. And let me share an example of one of them that illuminates how we're approaching this work.
One of our actions has us committed to preserving the legacy of historically black colleges and universities for generations to come. We are excited to provide HBCUs the tools and resources to survive and thrive in the modern age. We are committed to help modernize their technology. The $100,000,000 in hardware, software and services will build the infrastructure they need. Cisco is also giving $50,000,000 to contribute to an endowment that will ultimately pay for the education of 4,500 students at HBCUs in perpetuity.
And we're pleased to partner with Student and we saw this as a chance to create a recurring impact and to provide opportunities for thousands of students, not just one class or school, but across the entire HBCU system.
Yes, that's fantastic. So obviously, another area that's been a key focus area for us and is a big issue globally is climate change. And we've been working really hard on Lots of strategies in this space, renewable energy, energy efficiency, reducing our greenhouse gases, but also products and solutions that reduce our carbon footprint and we made a really big announcement last week. You want to talk a little bit about that?
Yes, I'm really happy to. So last week, we announced our commitment to be net 0 for Scope 12 by 2025 and net 0 for all emissions by 2,040. And there's 4 key areas that we're focusing on. So the first is to increase the energy efficiency of the technology that powers the Internet. And the largest share of our greenhouse gas emissions is in Scope 3, which is the use of our products by our customers and their devices, data centers and offices.
Silicon One is a programmable chip for high performance networking. You heard about it today, which provides a huge reduction in carbon emissions and packaging. And with just one chip, the physical size of the system is reduced, which equates to over 200 times reduction in shipping transport volume and 26 times reduction in power consumption, we know that's meaningful to our customers. The second area is accelerating the use of renewable energy. We've already reached reached 100% renewable energy electricity in the United States and various European countries and in India where the electricity sector is dominated by fossil fuels, we've gone from 2% renewable to 60% in just 5 years.
That's something we're really proud of. The 3rd area is just continuing to embrace hybrid work. And what we've seen in a short time is that 20% to 30% decline in employees commuting and that's what we expect to see. That's what our employees have told us they would like to do and I think that will be huge for us as well. And then lastly, investing in innovative carbon removal solutions.
This is a key aspect of how we're investing through our Cisco Foundation, the $100,000,000 Climate Action Commitment and our first ever Greenhouse Gas Solutions Prize.
It's So important, and I've talked about it, that this push for sustainability is actually going to be good for our business as well. We're seeing it now in like Our sales to the webscale players, the cloud providers because power consumption is actually a key criteria for how they make those decisions. And as we move into more sustainable Activities over the next few years in order for us to actually deliver on many of those goals, technology is going to be required. So we think it's going to be positive. Into our supply chain, it's super important that our supply chain is also aligned with this commitment and John Kern, who works with us there, has been a big driver of our sustainability strategy over the past few years.
And I'm so proud of that team because they've been Ranked number 1 in Gartner Supply Chain, top 25 for 2 years in a row.
That's right. I think you can all expect to hear us talk about this a lot more. We're a founding member of the Responsible Business Alliance. We use its industry standard code of conduct to set expectations for our suppliers, including human rights and worker safety, we also hold our suppliers accountable. In fiscal year 2021, we assess the working conditions of more than 200,000 workers and our supply chain through on-site audits, if suppliers aren't meeting our standards, we work closely with them to ensure they address and fix the root cause and that workers' human rights are upheld.
This is incredibly important to us. And while this work is so important within the company and from within the employee level, I think Chuck there's such power when the Board is behind it as well. Can you share a little bit about how these conversations are taking place at the Board?
Yes, I mean, every one of these topics that we're talking about today has high level board visibility. In many cases, we have dashboards that we create Every 2 months, we have our board meetings to deliver. We actually have had the audit committee has gotten involved with the publishing of our CSR report to just make sure that everything is valid and it's all good. We give DEI metrics and updates. We give ER case updates.
I mean, we're super transparent about all of these areas when We're talking to the board and then they built it into our you mentioned this earlier into our company performance goals so that our efforts in these spaces are Tied to our compensation and how our goal how we're measured as a team.
That's right. Accountability is so important to us. And we set these goals, but we also have to measure ourselves against the ambitious metrics that we set out to achieve to create scale both with internal and external validation. When we set our goal of positively impacting 1,000,000,000 people by 2025, we asked PwC to audit and verify our progress along the way. And I'm proud to say that we've reached 530,000,000 people.
We're over halfway there to our goal. And in addition to the external verification, we also know that we must invest in the internal infrastructure necessary to hold ourselves accountable. And we have a rigorous approach around our ESG reporting, we stood up in office to oversee our investment and our social justice beliefs and actions.
Yes, it's so true Fran and we care so much about giving back to our communities as well And one of the big ways that we actually are positively impacting those 530,000,000 people is through our Cisco Network Academy program, which has been around for 25 years, I think, and it really helps reduce social inequalities. We've trained over 15,000,000 people through NetAcad to date and I think a very high percentage of them either get a better job or their first job in tech and it's one of the most powerful programs that we have.
It really is. A lot of them actually go back and get additional education as well, which is amazing. We know that partnership is critical and we have to build ecosystems of impact. We have to work with our partners, our customers, nonprofits, government leaders and investors to build the networks that can scale and just multiply impact. And we want our employees to realize their role in driving our purpose forward too.
The same way in which we talk about conscious culture being something that every employee owns, we want to feel that same way about purpose. Something that's amazing is that we're already at 80% community impact participation across Cisco. I don't know of other companies that have that number, which is really exciting. And maybe Chuck, a good way to close is just to highlight that we're doing this in a robust and differentiated way to show a bit about how we're mapping purpose across the company. You'll see some of the goals, initiatives and metrics captured on this slide and it's just a handful of examples of the detailed mapping we're doing across the company so that we can then go about setting even more ambitious goals to continue driving impact, empowering this inclusive future for all.
Thanks, Fran. It's a great conversation. I want to thank you for all your work in this space. You've been Quite a leader for us at Cisco in helping us achieve a lot that we've talked about and what we're going to do in the next few years. And now we're going to turn it over to Marilyn
All right. We're about to begin our second Q and A session of the day. We've got the entire executive leadership team with us, so let's open up for the first question. And it looks like our first one is coming from Amit Daryani at Evercore.
Thanks a lot and thanks a lot for doing this event. It's really helpful and informative. I guess my question really is, we're looking at about 5% to 7% top line growth and really a comparable number on the bottom line, 5% to 7%. And I think a lot of investors will struggle with The lack of operating leverage that you're alluding towards, especially given the fact that if a lot of the growth is coming from software and subscription,
I I would imagine it's
a higher margin proposition for Cisco versus that. So maybe just touch on why the lack of operating leverage and what are the investments, if that's the case, They should be making as an offset to that.
Yes, thanks for the question, Amit. I expected this one would come up. It's nice to see it be the first in the rotation. And what I'd say is we're focused on, you've heard me say this before, balanced profitable growth. I do think over time, there's some Mixed, there's some competing factions inside our gross margin, let me say it that way right now.
Obviously, the more we build software into it, it has higher margin at the gross margin line. But we've got component cost increases and those are going to be with us for some time. Over time, I do think gross margins trend down. I'm sorry, it trended better over time. The amount of COGS goes down a bit.
But we also have significant opportunities. Liz walked us through $400,000,000,000 TAM just in our existing and expansion markets and another $500,000,000,000 of Potential TAM and adjacent markets that we could go invest in. So we haven't picked one out yet. There's not a and here's the next acquisition. There's an opportunity for us to drive that growth.
And I think when I think about balanced profitable growth, that's what I'm trying to do. We're trying to manage this to balance the bottom the growth on the bottom line At the same rate and pace that we see on the top line, we have built the skill set and the muscle and the culture of disciplined financial management. That's not going to change. You should expect us to continue to do that and to do that effectively as we've done through time, but we're also going to be investing to capture some of that growth. And Just to add one more data point to that and you've probably already done this math as well.
If you pick the midpoint of our 5% to 7% growth on the top line That's where we ended in fiscal 'twenty one. That says fiscal 'twenty five, we're a little bit higher than $60,000,000,000 in revenue on the top line. And if you do the same thing in our earnings per share, it puts us above $4 of earnings per share at that point. That's an attractive set of financials and that's where we're headed.
Yes. And if I might add, Scott, I think if you look back at one example where we have invested, I think in the Silicon One architecture and the Cisco 8,000 and look at the growth that that's now producing for us in a market like the web scale space where we virtually had 0 business 5 years ago And we see more areas like look at what we've done with the Wi Fi 6 portfolio, the Cat 9 ks, all of that stuff with innovation. And we just don't think it's the right time to take our foot off the accelerator, particularly in a period where we're going to have some extended COGS pressure. We don't want to risk the future by making some bad short term decisions, and that's how we're thinking about it right now.
Thanks for that question. Thank you.
Thank you. Thank you.
All right. Our next question is from Sami Badri of Credit Suisse.
Hi, thank you. Assuming you can hear me right now.
Could you speak up just
a little bit, Sami? You're a little low.
About this, could you come back to me while I switch?
No, you sound good now. Good.
Okay, great, great. Scott, I wanted to go back to your growth rate that you're messaging for the next few years. You did guide to 5% to 7% And you did not really change the capital return program or at least the intensity rates that you have historically been buying back stock at and returning capital at. What is M and A going to do? Like how are you going to be using M and A in the playbook at least for the next couple of years?
Should we assume the remaining free cash flow is all going to go towards M and A or how should we think about hiring to achieve 5% to 7% growth?
Yes, it's
a great question, Sami. And by the way, nice job on your preview note. What I'd say on that front is you don't expect a change in tenure in our M and A activity. We'll continue to do that on a kind of an opportunistic build versus buy or Accelerate time to market, expect there to be some level of M and A going forward as you've seen from us traditionally. There is not built into that 5% to 7% growth a major acquisition.
We're not it's not dependent on a major acquisition to get to that top line 5% to 7% growth. And from a cap allocation standpoint, we'll do what we always We'll continue to assess with the excess cash we have relative to doing the buybacks to offset dilution and opportunities we have to invest in future growth, we'll make that assessment as we go. I think we've done a it's an area that I think we can take a lot of credit for. We've done a really nice job with our share buybacks as you've seen over the last few years retiring 800,000,000 shares through buybacks. So I think we Again, we should get credit for being on top of that, for understanding the way to drive leverage with cap allocation, and that's what we'll continue to do.
Got it. Got it.
I have one quick follow-up for Jeetu. There was a stat you threw out there. It said overall security customer base consumes 1.4 secondurity products on average and then customers that consume security under an EA consume about 4.1 products on average. So could you just kind of give us the kind of the duration it takes for a customer to ramp up into that 4.1 profile, is that 2, 5, 10 years? That would be great.
Yes. So, it's about a 3 to 4 year period where you can actually see that progression happening. And one of our biggest advantages is the fact that we are in security, one of the few platforms that's available that actually provides solutions Across all of the different control points from user to device to network to application. So when you start with one area, we actually have a strategy where we can land and then expand from there into different areas. And the beauty about having a single platform As you actually provide a lot of context on the visibility with security, which gets missed when you go out and keep buying point solutions.
And so that's a big area. It's not only are we going to be able to scale that growth with having more products, but you provide more context, which then turns to better efficacy You know within the market.
Got it. Thank you.
Thank you.
Our next question will be from Tim Long of Barclays. Tim, are you on mute? You may need to unmute yourself. Okay, I'm not hearing Tim. So I think we'll going to the next question here is Simon Leopold at Raymond James.
Thank you very much for taking the question. I wanted to see if we could unpack the subscription business a little bit more. So I appreciate and I'm grateful for the breakout you've given us. The next step would be maybe trying to understand how you're allocating expenses and investment. So I'm trying to get a better idea of what you're investing in that subscription business.
So if it's 30% of revenue, what percent of your sales and marketing R and D are going to these new faster growing efforts? Thank you.
Yes, thanks for the question, Simon. I would say that it's a virtually impossible question to answer, unfortunately. You know the Cisco sales force. Let me just start there, right? They sell the entire portfolio of our products.
There are some sales specialists, But by and large, the sales and marketing cost is it's 1 unified Cisco sales force outselling all of our products. From an R and D standpoint, I would say the majority of what we spend on R and D is focused on driving that subscription base, whether it's in Todd's businesses and secure agile networks, Obviously, in the 2 that G2 walked us through, you can expect those to be heavily weighted there. In Liz's full stack observability and optimized application That will be heavily focused on a subscription model. Perhaps Jonathan is the one that is slightly less focused on that space, although the IoT that rolls up under there is also on a subscription model. So I would say in a qualitative way, Simon, it's the vast majority of what we spend in R and D.
And just as a quick follow-up, when you've talked about the revenue from subscriptions, we often hear the term off box and on box. Do you have a way of segmenting the software business between Onbox and Offbox, if that's meaningful for you?
Yes, I've heard that question asked with slightly different terminology. I think everyone's got their own, but I get the concept that you're poking out there. And What I'd say is the vast majority of our software subscription sales are not attached to the hardware.
Thank you very much.
If I could just add one thing to that last answer. There is element of having a subscription piece of software that is connected to a piece of hardware, but not monetized through the hardware. So that's the only clarification that I would make on that, like the DNA portfolio we have in our catalyst platforms,
Thank you.
Thanks, Simon.
Thanks, Simon. Our next question is going to come from Jeff Kvaal at Wolfe Research.
Thanks very much, everyone, and thanks for hosting this. I guess I would like to be a little bit Mosaic perhaps and ask for a little bit of color on where we are with the supply chain constraints. I think the bar, I think it has shifted out a couple of quarters into mid-twenty 22 now, but I would love to know if you feel like we're bottoming or where we are in the process. And then I'm also going to follow-up for Jonathan. It Jonathan, like you really were trying to make a Microsoft announcement there.
And I'm just wondering if we could dig into that color a bit. Thank you.
Yes. I'll go first and talk about supply chain.
Then Jonica have the fun part.
Right. Mosaic is not a word I often hear attached to Supply chain. And what I'd say there is, it's a really fluid situation for everyone, not just for us, for everyone in the marketplace. I'm really impressed by our supply chain team. We've talked about this repeatedly, number 1 in the world and that's not just within Technology, number 2, I think was Colgate Palmolive, so number 1 supply chain team in the world.
They've done a great job on that front, but you just there is no question there's an imbalance of supply and demand on several components. I think the focus has been on semis. Clearly, there's an imbalance there. There's an imbalance in ASICs going further than that. There's an imbalance in memory.
There's an imbalance on power supplies. So it's not just one thing. It's not just look at 1 commodity And then the world is cleared up and it's up into the right after that. So it's a fluid situation. We are Blessed with a great team that's driving that.
I would still say my expectations are somewhere in the second half of fiscal 'twenty two Before we begin to see some loosening up of that. Okay.
All right. So if I wasn't clear, so absolutely we love partnering with Microsoft, as you saw the quote from Dave, we've been partners with them for years. And as I think you're very well aware, when you go into this space, you start really working with them to build what they need for the next generation. And this is why it has taken us multiple years to build the seminal technology that's needed at the silicon level, the systems level, at the software level to go and be able to partner with folks like Microsoft and many others, not only in the hyperscaler space, but across the entire webscale platform. And we look forward to continuing that.
This is just the beginning of what we consider to be a very long term journey and voyage that we have with them, we think the relationships across the board are very positive. But like anyone else in business, we are striving to earn their business every single day. I think we've done a good job so far to date, but there's a lot of opportunity left in front of us.
If I could add
one comment, Jonathan. I think if you look back at the period of time where we were effectively locked out of their infrastructure, the cloud players in general, I'm not talking specifically about one customer. I think if you look at that, We always said that we were going to we were building to insert at the next architectural transition and those architectural transitions last A long time. Think about the length of time that we were locked out of the last one. So we think that and when you think about our long term growth, this is an area that is going to be a strong contributor to that because these franchises and these architectural decisions are multiyear decisions.
So we're really pleased with the work the
all right. Thanks, Jeff. Really appreciate that. And our next question, I think we've now got him back on, is Tim Long at Barclays, are you on Tim?
Yes. Hope, can you hear me now?
Yes.
Sound great.
Great, great. Thank you. Sorry about that. Maybe just a follow-up back to the revenue growth targets, if I could. Maybe Scott or Chuck, if
you could just give us
a little bit more color on a few different Dynamics of that, first, if you look at kind of the traditional core businesses, what's the market share view in there? 2nd, how much are you relying on the expansion markets and adjacent markets in the out years to get to that number? And then 3rd, any view on assumptions for software renewals as I think those will be pretty important over the next 2 years. Thank you.
Yes, those are great questions, Tim, and I'm glad we were able to get you back. What I'd say let me give you a little insight into what under Hence the work that was done to arrive at that 5% to 7% compound annual growth rate. We talked or I talked a little bit during my presentation about where the growth is in our total addressable markets and it's heavily in the subscription side. The way we model this is we went down actually to the product line level in each product line, we not only looked at what our expectations are, what the market growth looks like, how much of that do we think will capture via Subscription sales versus non subscription sales in that product line, we've built up $22,000,000,000 of annualized recurring revenue at the end of fiscal 'twenty one. So we also have a big renewal base, right?
And we know when those things will come up for renewal and we have a what our projection of renewal rates are for each of those out through time. And by the way, it varies by product line as you'd expect. So there's not a for the last part of your question, what's the there's not one number that represents that. It's a whole set of numbers That varies by product line and slightly by geo. That's the level of granularity that we've built into the model and that's what underpins the 5% to 7%.
Okay. Just maybe is there a lot of it that comes from newer areas, just as a follow-up that It seems like it's a pretty big TAM expansion. Just curious how much you're relying on the growing in that TAM expansion?
No, it's focused on the areas that we're already in. So the current piece of that and some of those expansion markets that we're already investing in within that $400,000,000,000 of TAM that we talked about does not include any of the $500,000,000,000 that's in adjacent markets.
Okay. Thank you very much.
All right. We've got time for one final question here. And I see that Aaron Rakers at Wells Fargo is on. Aaron?
Yes. Thanks, Marilyn. I appreciate you letting me ask a question. I kind of want to build on the last kind of question around kind of renewal rates. The mechanics around subscription,
I was wondering if
you could help us on average, I can appreciate there's no single number of this, but the typical terms of the subscription that you're seeing today, Let's just take Catalyst 9 ks. As we think about those hitting to a renewal cycle, in that big product family, are we talking about 110% net dollar retention, just any kind of mechanics around some of the bigger buckets would be helpful as we think about the subscription model. Yes.
I understand why you're grappling with this and unfortunately there's not a simple answer to it. What I'd say though is we put an enormous amount of focus on renewals. And so within Maria Martinez team, we've built out a very, very large but successful customer success team because as you know renewals are based on adoption, right? It's not making the phone call at point of renewal, you have to drive adoption. The customer has to be receiving value.
That's one of the big customer benefits of us making the shift to subscription, Right. It transmits some of the risk of getting value back to the vendor, back to us. So we are very focused on that. We understand it at a very granular level, What's coming due? Where are they in terms of adoption of features?
Where are they in terms of overall adoption? And it's that motion that precedes the renewal rates. And so I'm reluctant to give you some overall average. I'm not sure it would be super helpful to you. What I would say is One of the other metrics that I talked about, if you're thinking about how you're going to build your model, one of the other metrics that we gave you is $30,900,000,000 of RPO And of that 53%, more than $16,000,000,000 coming in the next 12 months, that can be the basis of your own waterfall model.
So you can begin to model out what comes in to the revenue stream from deferred, what are the new sales gets dropped into deferred and will be recognized in the future. And I'd encourage you to think about trying to adjust your model to reflect that kind of a waterfall basis. That's the way we've modeled it and it's a big enough base that it really makes a difference in the way you build the model.
Very good. Thank you very much.
All right. So that concludes our Q and A session. So I'm going to turn it over to Chuck, who's going to wrap us up with some concluding remarks.
Well, first of all, I want to thank all of you again for joining us today. We appreciate the significant investment of your time. If you can't tell, we're excited about our future. We're confident about our future. From the progress we're making on our transformation, the shift to software to all the fantastic innovation happening both in our portfolio but also in our operating model to how our entire team has embraced our purpose to power an inclusive future for all and our ESG commitments, the investments we've made for the past several years combined with us being at the front end of the multiyear customer spend cycles in many of the key markets that we all talked about today like hybrid cloud, hybrid work, 5 gs and web scale, we believe that position us well for the future.
Our portfolio has been designed for this moment and our teams are ready And you've seen the strength of the leadership team today. I'm incredibly proud of what we've accomplished including meeting the targets we laid out in 2017 and the acceleration of this progress despite the pandemic, you have my commitment and the commitment of our entire team to drive long term profitable growth with financial and operational discipline and to continue to deliver the innovation that matters most to our customers. Our team is focused, they're energized and we know how to execute to meet our goals. This gives me great confidence and I hope that you share that confidence. Thank you again for spending time with us today and please stay safe.