Cisco Systems, Inc. (CSCO) Earnings Call Transcript & Summary

This call is not for media representatives or BofA securities investment bankers or commercial bankers, including corporate and commercial FX. All such individuals are instructed to disconnect now. A replay will be available for BofA security investment bankers and commercial bankers, including corporate and commercial FX. The replay is not available to the media. Good day, ladies and gentlemen, and welcome to the Telecommute Series Diving into Cisco's Portfolio for the Telecommuting Workforce Call. Please note today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Tal Liani. Please go ahead, sir.

Great. And good morning, good afternoon, everyone. Thanks very much for joining us to another important call of our series of technologies that help companies with the telecommute situation. This morning, we're hosting Scott Harrell, who is the Senior VP and General Manager of Cisco's Intent Based Networking Group. Scott leads a global team and is responsible for all aspects of the enterprise and data center networking business, including business strategy, product development, user experience and go-to-market. We also have with us Marilyn Mora, Head of Investor Relations. And maybe before we start, I'll pass it on to Scott to just read the safe harbor and then back to me for questions. Thank you.

All right. Thanks, Tal. Thanks for hosting this call. We really appreciate it. As far as the safe harbor statement, I may be making forward-looking statements. And I refer you to our SEC filings on our Investor Relations website for anything else. And with that, Tal, I'll turn it back over to you for the Q&A discussion.

Great. Perfect. So Scott, thanks very much. And by the way, for the audience, I'll say that I'm going to ask a few questions. We have about 40 to 45 minutes for the call. I'm going to ask about 10 to 12 questions about the portfolio of Cisco. If you have any question you would like to ask, either wait for the end of the call, there's going to be an opportunity to ask a question or you can e-mail me a question and I'll ask it for you, same thing.

So Scott, I want to start with a general question. How is Cisco helping companies with remote access of teleworkers?

Thanks, Tal. Yes. No, it's a really compelling time for this kind of technology right now. And there's really 3 main ways that Cisco helps. Now one is around connectivity, how do we help your end users, your remote users actually connect to the network from home. Two is around security. Obviously, in these days and age, if you want to connect somebody, you want to do it a secure way. We have a whole portfolio that can help people do this remotely. And then three is around collaboration. If you're like me and you're a knowledge worker, you need to have great collaboration tools and those need to extend to the home.

Great. So you're a leader in wireless technologies. Let's talk about what you're seeing on the enterprise networking side, and we'll start with wireless. But feel free to talk about enterprise networking in general. What is the impact you're seeing from the coronavirus pandemic?

Yes. So there's 2 big ones that we see in the connectivity space, in the networking space. One is there's -- obviously, there's a huge shift of people moving from the campus to working at home, especially in the knowledge worker space. The second one is there's a big push for IT in general to be extremely flexible and be able to quickly set up and provision mobile offices or mobile clinics from a health point of view and have this ability to rapidly deploy these types of sites. When we look at what this means from a homeworker point of view, there's really 2 sides to it. One is the classical VPN connectivity that many of you probably experience, where you have a VPN client and you connect to a corporate network that way. And we'll talk more about that in a second when we talk about security. But the other way is you might have a premium teleworker, and this could be somebody who is maybe handling sensitive data like PII. So if you're in the medical field, this is patient data; or it could be somebody who's handling other types of important information like your social security information, whatever it might be. In those cases, oftentimes, what the companies are looking for is they're actually looking for a smaller-scale version of what they would deploy on a branch or campus site. And in that case, we have a whole portfolio of capabilities to help people do that. We have a series from Meraki, the Z-Series in particular, where you can provide in a single box that is easy, just -- if you're a home user, you just take it home with you, you plug it in and you not only get wireless, you get -- you get Switching, but you also get full security stack and full routing stack all in one small form factor that can be deployed by an average end user, an average home user. And it immediately gets managed and provisioned from the corporate network. So for instance, we have a huge health insurance provider who needed their agents to go home and work from home. And so they took -- 2,000 agents, they send them home, but they send them with the Meraki Z-series so that they could connect. And by doing that, now they can handle even the most sensitive data but they can also have great experience for things like Voice over IP because they want their connections from work for collaboration to extend seamlessly also into the home. And this is superpowerful for a lot of companies, and we see all kinds of examples like this, where we see this huge push to actually drive knowledge workers to be teleworkers. And it crosses many different verticals. Obviously, health care is a big one right now, but it also applies to things like financial segment like yourself as well as anybody who basically needs a more high-powered teleworker. If you look at our wireless portfolio, the same is true there. One of the things that people kind of miss in all this is they're really heavily focused on VPN concentrators. But most of our wireless technologies can also be seamlessly extended to the home or to a small site. We have a technology called OfficeExtend, where all you have to do is take -- you can literally take a corporate access point, reprogram it, access points of the wireless things you connect into. And you could take that home, plug it into your home broadband connection. And now instead of having the VPN back to a central site, you can actually come across whatever your wireless SSID is at work. In Cisco's case, it's blizzard. And so I can actually feel like I'm home, but wireless network at work. And the nice part is that's a secure tunnel. It's encrypted. And so we're seeing a lot of people actually want to just extend their wireless infrastructure out into the local sites. For home users, we've seen the university send home all their professors, this was kind of in the Southeast, and all their employees so they could both do things like remote learning from home, but also just do basic research. And they could have easy access into the university facilities. We've seen this for pharmaceutical. We've seen this for public sector. We see a lot of these stand-up health clinics, and they use both techniques. We had a large hospital who basically had to stand up a bunch of these quick patient cares for testing, for evaluation, for all kinds of things. And basically they did is they either put down one of those Meraki devices and quickly had a tent that could be popped up or they often would take one of these APs and just extend it into that site. There's a lot of innovation going on from a networking point of view as far as how the IT teams are dealing with this crisis. We're giving them several different techniques partially because we also, of course, have to balance things like availability of supply. We want to -- sometimes they have certain kit on hand, sometimes they don't. And so we're trying to meet them with whatever they have in their network and make it easy for them to extend to all these different scenarios they have right now.

So just a follow-up on this. So we -- corporates invested in enterprise WiFi for many years. We went through generations and higher speed. And let's try now -- I assume -- and you correct me if I'm wrong, but I assume that there is coverage. There is coverage. Wherever you want to have WiFi, you have WiFi already. What's driving wireless investment? It's still growing very nicely. Is it just about better speed going from generation 1 to the next generation? Or are there other things -- like you mentioned for the home environment, but are there other things that are driving wireless investments?

Yes, Tal. It's a great question. We'll talk about this a little more generically as far as the enterprise goes. This is actually, I think, shaping up to be a golden age for wireless. There's 2 primary new technologies, one you've probably heard a lot about because of all the press, which is 5G on the cellular side. And we're going to see that play a role inside the enterprise, too, for mission-critical applications. But the other big wireless technology, and this is more important, inside the walls of the enterprise is called Wi-Fi 6. And this is the next evolution of WiFi. Just like 5G is the evolution of 4G, Wi-Fi 6 is the evolution of WiFi from Wi-Fi 5 and Wi-Fi 4. And these used to have long names, but then the industry changed it to something more comprehensible like Wi-Fi 6. But Wi-Fi 6 is really interesting and really compelling because, A, it does dramatically increase the bandwidth, but it also makes WiFi much more deterministic. So one of the challenges of WiFi historically is -- and we've probably all experienced this, is sometimes when there's a lot of people in the room, it can be -- you can start to have a big degradation in kind of performance because a single access point, a single WiFi node wasn't really built to handle that. Well, with Wi-Fi 6, you can actually make sure the critical assets, maybe it's like a collaboration unit, maybe it's the lighting or something else that's connected to the wireless, those things are preserved, and they have priority on the WiFi. But also, it's just built in a way that it handles high density much better. So if you think about universities or you think about hallways or you think about anywhere, that's really important because now there are so many more devices on the network. Every user is often coming in with 4 or 5 devices, and the amount of traffic per device has gone up. And then you have all the IoT devices that are in a typical enterprise, all of them need connectivity. That used to be largely wired, and a lot of that's now becoming wireless. And so the load on those APs, those access points is going way up. And I think Wi-Fi 6 is really going to transform the experience from an end user like what we all experience for wireless, but it's also going to be a transformation for all the things that now need to connect that will sometimes outnumber the people on the site by like an order of 2 -- magnitude 2 or 3 or 4. And this is really important as we look forward because the future of wireless and the future of enterprise networks is a wireless-first world. I mean if you think about your own experience, I don't know about you, but I make switches for a living, and the primary way I connect and work is almost always wireless. Now those wireless access points have to connect to a switch, so you're still going to sell plenty of switches and plenty of switch ports, but the way we're going to experience the network as users is primarily going to be wireless. And so anything we can do to improve that experience is great for enterprise because that makes those workers more productive, makes them better as they do their job. The second piece I'll put on there for you is as everything goes wireless, as you have many more things and many more people connecting, the other big trend is it's not enough now just to build the access point. You have to build a very sophisticated layer of automation and analytics so that they can be easily managed. Wireless can be notoriously difficult to troubleshoot because it matters who is in the room with me, it matters what the devices were, it matters what the OS layers were on those devices, it matters what's the state of the network, all this stuff matters. And so what we've been investing in, and this is where something called intent-based networking comes in, is a whole new framework for how you manage the network, which is called intent-based networking. And this is a huge seminal shift in how you build and operate networks for enterprises, and it's frankly just getting started. This is a completely different architecture from how we've historically done it for the last 30 years about how you manage the networks. And this is really critical to how -- in particular how you manage wireless networks. And it's really about bringing the next generation of analytics, all the fancy terms you've heard of, machine learning, machine reasoning, kind of AI being brought to bear now on networking as well as a whole new set of capabilities around automation.

Got it. So I'm going to ask you another follow-up on your last point of the question because this is an educational call for investors. And we hear a lot about intent-based networking. You just touched on it. I'm going to ask you in a very simple way. What is intent-based networking? How is it different than the previous networking architectures?

Yes. So historically, and by historical I mean it's still -- the majority of people probably still do it this way, is IT administrators would manage on a box-by-box basis. So I go in and program the switch and put a set of instructions on it basically for how they handle traffic. And I would do it on a box-by-box basis. And I do the same thing for wireless, oftentimes with a central controller, but the same basic principle for wireless. And the challenge with this is it creates a network while superpowerful and can handle a lot of different things, and if you have somebody who's really good at command line interface, they can make the boxes do a lot of things, over time, you have the ability to make mistakes, maybe make an error in how you program the device. And that can have big implications for an enterprise's network. And so what we've seen is people want something that's functioning and working. They're not real prone to want to touch it because if you think about this network as kind of being this huge interdependent matrix where every node of the network depends on another node of the network, if you make a mistake anywhere, you can impact not just 10 people, you can impact 1,000 people, 100,000 people, 1 million people. And so what ends up happening is the rate of change in those networks kind of slowed down because people were cautious to make change. The challenge with that is, on the user and device side, we're seeing rapid evolution of needs as all the IoT devices become wired in, as everybody goes wireless and as the expectations in the network grow tremendously. Like people used to think of wireless as a best effort service. If it didn't work, everybody carried around their Internet cable and they would just plug in. But now people are building business processes on top of the wireless network, they're connecting. You know if you go into hospitals, a good time to talk about that, like all those machines in the hospital are wirelessly connected. They depend on the network to do their job. And if you're connected to one of those machines, you want the network to perform extremely well. And this is the expectation across many industries now. When you go into a distribution facility, all the robots that go around and pick the packages that we're all receiving at home right now, they're all wireless. And they all rely on the wireless network to actually do their job and make sure you get your Nespresso pods or whatever it is you need from Amazon right now to kind of keep your work-from-home life going. And this has really changed the way people think about the network. The second piece is that at the application layer, as things move to the cloud, now people are having 30-plus paid-for SaaS apps. These are things like Microsoft Office 365, things like salesforce.com. All these SaaS apps, they're changing rapidly. The same with IaaS, Infrastructure-as-a-Service. And what this means is -- on the other side, so you have users that are often connected to an application. And now what you see is on both sides of the equation, you're seeing rapid change on the user side and the device side as well as on the application side. What it means for the network is the network itself now has to become much more dynamic, much more flexible and much more available. And this requires just a shift in how you approach because most IT teams are not getting bigger. In fact, many are getting smaller. And so you had to rethink how you manage and how you operate these networks completely. And that's where intent-based networking comes in. It's about going from managing a box at a time to managing an entire fabric at a time. And so instead of just managing one box, I manage the entire network with a set of centralized policies that are written in English language. I don't have to understand every nuance of COI. If you think about this going -- for some of us that are old enough, going from like MS-DOS to Windows, right? Nobody really regrets that we went to -- well, most people don't regret that we went away from MS-DOS. This is the same thing for the network. We're taking people and are extracting them up a level and allowing them to automate and provision the whole network at a single time. At the same time, for better availability, if you're going to troubleshoot this network that's now dealing with more complexity than it's ever had to deal with because the users and devices and the applications are constantly changing and constantly evolving and moving all the time, you need a next generation set of analytics. And so those are really the 2 cornerstones. It's how do you apply a full suite of automation, a full suite of analytics. And what it means for IT is they could move much faster. They're no longer inhibiting the speed of the business. Like IT can be the leader of the pack whenever there's a change the business wants to make. That means that they can actually become more proactive in how they troubleshoot. We've all had to experience, probably in some time in our life, what we call IT. And we said we've had this problem. They asked you a list of like 15 questions. And at the end of it, it stops with, "Hey, well, just try to reboot your PC. If that doesn't work, call me if it happens again." But that's a very unsatisfactory outcome for an IT engagement. But now we can give them, with this next-generation analytics, the ability to actually call you if they want to and say, "Hey, listen, we solved this problem. Multiple different users with euro athlete load on your phone. Please upgrade to this level. And we don't think you'll experience this problem." And we can move them to a much more proactive stance, which is really important when the availability of the network becomes paramount to running the business. And so this is a huge sea change for the industry. It's a huge sea change for the IT and how they manage stuff. And the last piece of it is security, is when you should go to this fabric architecture. Once you have this layer of analytics, you can now start to do very sophisticated things with the network that before was very hard to do and very few people did, things like segmentation. And anybody who's been watching the news has seen ransomware as a topic that comes up. Well, ransomware is a fundamentally different way to attack networks. It's not about landing on the network and stealing data. That's classically what we think about as people used to steal social security numbers, and they used to steal your information so they could basically do identity theft. Now we're seeing a lot of -- that still goes on, but now what we're seeing a lot of as well is people land on a network and they spread across the network as fast as possible with the goal of locking it down and basically impacting the availability of the network. We've seen this in major cities. We've seen this in health care. We've seen this in all the different types of industries. Well, if the goal of the attacker is to land on the network, anywhere they can land and then move as fast as possible, one way you can inhibit that and stop that is you start to subdivide the network. These days, most laptops don't need to talk to any other laptop. Most devices -- lightbulbs don't need to talk to laptops. But a lot of the networks were built in a very open and permissive way where everything could talk to everything. Now with this new automation analytics layer, you can start to segment the network so that if a ransomware, for instance, does get in your network, it can't go very far. Its impact will be constrained and will be shortened. The best analogy you can get for this is think about a hotel. When you walk into a hotel, you have access to the lobby, you have access to the restaurant, but you don't have access to all the rooms. Your key only opens one room. And from a network user, there are places you're going to want to have access to that everybody is going to have access to. But for the most part, in the hallways and everything else, I only need to give you access to one room. It's the same thing with segmentation. We can do that with intent-based networking at scale, and it radically changes the security posture of all our customers when we do that against some of the most modern threats like ransomware.

Got it. So that leads me to my next question about security. And I wanted to kind of go back to the current environment and ask you, are you seeing any opportunities in the market for certain products that you didn't see just a few months ago?

Yes. I mean I think from a security point of view, I don't know that we're seeing opportunities we didn't see a few months ago. What we're seeing is increased demand for some of those investments that we had put in place. Cisco, many years ago, have seen the transition to the fact that the corporations are going to consume more and more of the security via the cloud. And the nice thing about delivering security from the cloud is it moves wherever the user goes. And so if you are in the office, we can provide security from the cloud there, and it can complement whatever on-prem securities within that office. But as you move to a Starbucks and then to your home, we can also protect you as you move across these different areas. And work is not really a place anymore even before this work-from-home crisis. It's kind of wherever you are. And the security needs to move with you because you're going to be working standing in the line at a Starbucks, you're going to be working standing in the line at a restaurant. And most people will pull up their phone and will start to like answer an e-mail and start kind of accessing different apps. And of course, now more than ever, they'll be working from home. And so the security needs to seamlessly migrate with you wherever you go.

Got it. We did change the way we work in the last few weeks, and we are now distributed. We're working from home. We're not concentrated in the campus. So in an environment of distributed workforce, cloud-based solutions seem like having an advantage. Do you agree with the statement? And how are you positioned for cloud-based security?

Yes. I mean clearly, like we talked about, there are some times where you're going to want to have a physical appliance that applies security even at the home. And those are some of the earlier use cases we've talked about. But for a lot of your employees, you're going to want to have a cloud-first approach for that security. And Cisco actually has several solutions to help with this. We have sets of capability that spans how do I protect you as you go from a user to access the Internet or access the cloud itself. That's a technology called Cisco Umbrella. And we have a free version of this called OpenDNS that consumers can use, and it's incredibly powerful. We also have something called Cisco-Duo, which is basically some -- many users have probably experienced this, but is when you log into a corporate website, you want to make sure that you're who you say you are because identity theft can be a big thing, credential theft can be a big thing. And so what Duo does is provides a secondary challenge, and this is where you'll get like a ping on your cellphone sometimes to say, "Hey, listen, did you really mean to log into Bank of America website? Please confirm this is you." We have a whole set of technology to help do that for a corporation so that they can secure their apps even if it's not an on-prem app, maybe it's a SaaS app, and you want to make sure that the users are who they say they are. And so those are 2 really good cloud security applications that we've seen huge interest in. Umbrella, in particular, has been very useful in this new world of living because you have a lot of people that are accessing that every day, and you have people that are trying to maliciously take advantage of this crisis. COVID-19 is something that everybody at the home is constantly checking their websites for. And the reality is attackers know this. And what they're doing is they're using COVID-19 to basically exploit the fact that people have interest in the topic. And so when this first really started to hit, there weren't that many websites that had a URL that had either COVID-19 or had corona in them. And so what's happened -- and the URL is what you basically type into the browser to actually go to a website. And what happened is since the crisis broke out, we've seen actually a huge increase in domains registered and URLs created that have COVID-19 or corona in them. And the reality is 75% of those are actually what we call phishing websites. They're there to either download malware onto your PC or they're there to trick you into giving them information so they can steal your information. And these sites are very sophisticated, very good. But one of the things that Umbrella can do is it knows all the domain names in the world, and it can instantly protect you every time one of these new domain names is created by an attacker and hacker and keep you from surfing to that website. Very, very powerful technology, very simple to implement. Anybody can implement this for their end users, and it's super easy to do and super convenient to do. And so this is a real powerful technology and like giving an example of how the supplies like if you think about schools, schools have sent all their students home. They've sent all their faculty home. These kids are now going to come back in via VPN to do the home e-learning, but you want them protected and you want the faculty protected as they're doing these activities. So we have a huge school system in the Northeast that had a challenge. They had iOS devices, so Apple devices. And the problem was that the other cloud security player that they had protecting them on-prem couldn't actually span to actually protect them off-prem and in the cloud. And so what they realized -- for iOS devices specifically. So they realized this, and within days, they had converted the majority of their users to Cisco Umbrella to protect these iOS devices, whether it was students or teachers. And it was completely transparent to the end users. They didn't feel anything. They didn't have any interruption or any kind of negative experience in doing it. So super-fast rollout, super effective security and protecting some of our most vital assets, which are our kids, right? So this is the power of the cloud-based technology. It's that speed and it's the efficacy you can generate because you see all these connections all over the world all at once in one big cloud.

I want to ask you about the integration of all these products. But before that, there is also the question of endpoint. Talk about your endpoint offerings.

Yes. So we talked about cloud. And one of the other ways we use cloud is actually to help -- position to help protect the endpoints. If you don't know the endpoint market for security, it's actually a huge massive security market in itself. And it's really about how do you protect valuable assets like laptops. These could be PCs, these can be MACs and some different things. And if you think about Umbrella as something that protects you as you transit out to the Internet, these endpoint technologies actually scan files that come to you. They can be from a trusted source, like somebody e-mails you a file. It can be something that you intentionally downloaded that you wanted. It can be a lot of different things. It can be files and can actually be something that got downloaded to your PC. What these endpoint technologies do and what ours does, which we call AMP, advanced malware protection, is it actually constantly scans for signs of malware in these files, either before it lets it on the PC, once it's activated or once it's on the PC, to watch for it and see if its behavior is potentially malicious or nefarious. And if it is, it will quarantine that file. And this is superpowerful, super advanced technology. It's not relying on kind of what we classically think about as kind of antivirus, which is probably the equivalent of what most users think about, where they had a whole bunch of signatures and they were trying to match the signature to the file. This is much more behavioral-based technique because malware is constantly changing and it's constantly adapting. And so you can't rely on a static signature. This is the next generation of endpoint malware detection as well as response. And the nice thing is it runs seamlessly to the user, just runs in the background. It could be provisioned from the cloud. All the telemetry from the endpoints go to the cloud. And we can actually monitor and manage the behavior of those files on the endpoint using the cloud. It's a giant kind of machine learning engine to observe the behaviors of all these files. And this is really impactful technology. And what's cool about it, you asked a little bit about integration, is we've actually integrated it with several other products as well. So we integrate it with our firewall. We integrated it with our e-mail gateways. We integrated it with our web gateways. We integrated it with Umbrella. So if we see a bad file anywhere in the world, like if I see it come into your corporate network via the firewall, I can instantly then block it on your endpoints as well. And the converse is true as well. So the more of this you have, the more powerful it becomes because it sees more and more data. And that's something that's been really attractive to our customers. Most of our competitors, they sell a dedicated endpoint technology. And the problem with that is if I learned about a file that maybe hit one user, it doesn't necessarily help me protect all my users. Whereas, the way Cisco approaches this problem, it's an architectural-based approach. If I see a file anywhere on any device across any user, I can use that information to protect all users. And this is something that's unique to Cisco and is superpowerful.

Great. Okay. I want to -- for the interest of time, I'll -- we'll talk about your collaboration portfolio. And I wanted to talk about your WebEx portfolio. What technologies are included? And what's the differentiation that you offer versus other collaboration tools in the market?

Yes. So our portfolio is very broad. And I'm a heavy consumer of it myself. And I think it's an excellent experience. But basically, we have a couple of different solutions. One is around how do you actually conduct meeting and social collaboration. And this is WebEx Meetings, this is WebEx Teams as well as cloud-based calling. We have a whole another set of capabilities around content center solutions, and this is about how do you have users who are maybe supporting end customers and help them actually do that. And then we have on-premise equipment, so this is stuff you might interact with at work, things like telepresence units that go into a room or go onto a desk as well as what we call WebEx Boards. We can get up and interact with the collaboration kit itself and actually have -- be a virtual whiteboard as well as the virtual meeting space. And then, of course, IP phones, which are what many of us see ubiquitously around the world, it'd be on people's desk and still be heavily used by users despite the rise of things like Voice over IP and things like collaboration technologies like WebEx and Teams. And so those -- that's the primary set of our portfolio. What's been interesting as we've watched this need to remote working is these collab tools have really become a lifeline for most businesses. The remote work is now centered around tools like WebEx and like Teams to keep everybody connected, keep everybody engaged. Video is superpowerful as a means for communication, and the collaboration tools from Cisco enable that. We do this in a very comprehensive fashion. You asked about differentiation. We take a security-first approach to this. We are one of the world's premier enterprise security companies. And so we take that -- we leverage our DNA and we apply it to our collaboration tools, which is really important for most of our users, particularly in the corporate space, because a lot of times they're conducting very sensitive business across these collaborations. And ours are -- our tools are built with that in mind. We never sell any data, never rent any data. And we are very openly transparent with our customers. When we do have an issue, we have very sophisticated disclosure processes. And we're very much -- this is one of the key tenets to what we do. The other piece though that -- there from a differentiation point of view is just like we're doing on the network side, we're bringing advanced analytics to bear and allowing you to do all kinds of interesting things with that cloud portfolio that we couldn't do before. And then we have this -- from a differentiation point of view, as I mentioned, we have on-prem and we have cloud. So we have a true hybrid architecture that can support both because while it's great to have cloud-based solutions, users and devices, they're still physical and they still reside in workplaces. Whenever this crisis is over, they will go back to those workplaces. And a lot of times, you need to have systems that seamlessly transition between the 2, and Cisco can do that better than anybody. And then the video quality itself, like we've all had that experience where perhaps you had a bad experience with the video quality, Cisco's is incredible, and it's really a great experience. And we've invested a lot to make that happen. What we're seeing is, even with the coronavirus hitting massive surges in the amount of meetings, we've had -- just in March, we had 14 billion-plus meeting minutes. We have 324 million attendees. This is like a 2.5x growth in just the Americas, 4x in Europe and like 3.5x in Asia Pac of traffic. The service -- I mean there's been stress and strain on the systems. The services performed incredibly well despite this explosive increase in utilization. And I think that's a testament to the team and all their work. I mean from an engineering point of view, it's been amazing how well our services has performed despite this massive influx of traffic. So that's another thing that I think clearly differentiates us, is we've built this to provide enterprise-class experiences.

Got it. So at the interest of time, I'm going to ask my last question and then open it for Q&A. And I want to ask about the telcos market, the infrastructure for telcos. At the high level -- or at a high level, what is your view on the readiness of the networks -- telcos' networks to handle the recent spike in data traffic? And what are the areas that are already well built and areas of needed investments?

Yes. I think what's been interesting, Tal, is like the experience that we've seen and I think most of the users have seen is, in general, the telcos have been able to handle the huge change pretty well. And I think a lot of this is attributed to the -- that when -- historically, when you would see the busiest time in telco networks is actually 6:00 p.m. to 10 p.m. and was driven by all the streaming people did, whether it's for Netflix or whatever service you like. And during the day, between like 9 and 6, the load wasn't actually as high as those peak hours. And now what we've seen is that it's basically flattened out, and you see a heavy load from the start of the day to the end of the day. But the reality is the peaks haven't gone up that much. And all these telcos have been able to respond incredibly well to this kind of change in capacity needs at the time of the day because it doesn't impact the top peak capacity in most cases. There are some cases where it's caused some challenges, of course. I think the bigger thing has been on like the exchanges in the peer endpoints, where these different telco networks meet up, we have seen increases in traffic there, and there's been some need to provision increased capacity for that. As far as, as they look forward, telcos are going to have to make lots of investments. If you look at this in the longer run, bandwidths continue to go up. And all of us are using richer and richer applications. And the reality is, is that we in the industry as well as the telcos themselves, we need to continue to invest and innovate around ultra-high performance. And this is where you've seen Cisco come out with things like our new Silicon One ASIC, our new optics and our optics investments to allow you to drive down dramatically as an SP the cost per bit and what it takes you to actually move traffic through a switch or through a router, actually lower that cost per bit or per byte so that you can actually drive tremendously higher volumes of traffic at the same or lower price points. And this is a huge innovation cycle we have to go through and the SPs have to go through. But just doing it from a hardware point of view won't be enough. They've also got to become more flexible to be able to deal with things like COVID-19 but also just to deal with the changes in the user behavior because, like we talked about, the users and the devices and the applications are becoming more dynamic. And so they need to have -- just like in the enterprise, they need to have high levels of automation. They need to start applying analytics to that environment in a much different way than they've ever done before and allow themselves to become much more flexible. And this is a general theme you'll see in the IT industry, is the networks themselves just have to become much more flexible and have to move through these fabric-based architectures, whether it's in the enterprise or whether it's in the service provider. And I think for a lot of our service provider partners, they're still going through some of these transitions and still making that change to this kind of new world.

Got it. So let me stop here and give the opportunity for people to ask questions. Operator, would you mind to open the lines for Q&A?

[Operator Instructions]

Great. So I think we asked all the right questions and you answered all the right answers. So I think we can conclude here. Scott, thank you very much for the time and explanations. There is a replay of this call, if someone wants to hear. We covered so many aspects that if you want to hear this call again, there's a replay for this call for the next few days. And you can always shoot me a question. If I don't know the answer, I'll get the answer from Marilyn in the right channels. Thanks so much, and have a great day.

Thanks, Tal. Thanks, everybody.

Thank you.

Thank you. And again, that does conclude our conference for today. We thank you for your participation.