Cisco Systems, Inc. (NASDAQ:CSCO) Q3 2018 Earnings Conference Call - Final Transcript
May 16, 2018 • 04:30 pm ET
While Michelle's doing that, I'd like to remind the audience to ask just one question so that we have plenty of time for others in the audience to ask a question. So with that, I'll turn it to you, Michelle.
Thank you. James Faucette from Morgan Stanley Investment Research. You may go ahead, sir.
Great. Thank you very much. Chuck and Kelly, I guess I wanted to ask, as you -- one of the key things that investors are looking at is the continued growth in subscriptions, et cetera. And it seems like the deferred continues to grow nicely. One of the key questions that we have though is, as you continue to show good demand for the new Catalyst 9K products and distribution expands, what are you seeing in terms of attach rates for subscriptions to that new product? Are they maintaining the levels that you had seen at the early stages of launch or are they starting to normalize back to more traditional levels? Just trying to get a little color on how well that tying strategy is working for you. Thank you.
Yeah, James, thanks for the message. I'll comment. And then if Kelly wants to add anything, we'll let her do that as well. I would say it's been very consistent over the last four quarters, I think, since we put it in the marketplace in Q4 of last fiscal year. I think we had one month of activity. So it's been incredibly consistent. We're really pleased with the acceptance of this product. I think adding 2,700 more customers in the quarter, if you think about that, that means we added over 40 customers per day that acquired a Catalyst 9000 for the first time. And the acquisition of that product, in my opinion, is a clear belief in the next-generation architecture with the automation platform that we're announcing, which is what the advanced subscription model requires. And so I think that's reflected in the continued high uptake that we see on the advanced subscription. Kelly?
Kelly A. Kramer
Yeah. No, I think that covers it. Vast majority is the Advantage, which has the advanced features and the higher margin profile. And then the only other thing I would add is, it is very evenly spread across commercial, enterprise and public sector in terms of the demand and where we're seeing all the business.
All right. Thanks, James, for the question. Michelle, let's go ahead and take the next question.
Thank you. Rod Hall from Goldman Sachs. You may go ahead, sir.
Yeah. Hi, guys. Thanks for the question. I just wanted to try to dig under the covers a little bit on the revenue guidance. Obviously, service provider orders are weak and sounds like routing's weak in line with that. Just wondering if you could, Kelly, maybe give us any idea how much service provider video is affecting that guide and also the routing within that guide, like what are you assuming there. Are you assuming routing