Cisco Systems Stock Earnings Reports

Cisco reported a very strong Q2 FY2026: revenue of $15.3B (up 10% YoY) and non-GAAP EPS of $1.04 (up 11%), both above the high end of guidance, with record quarterly revenue and continued operating leverage. Product revenue grew 14% driven by networking (21% growth) — broad-based strength across campus switching, data-center switching, wireless, service-provider routing, servers, and industrial IoT — and strong AI infrastructure demand from hyperscalers. Cisco now expects AI orders in excess of $5B and >$3B of AI infrastructure revenue from hyperscalers in FY26, with growing pipeline (> $2.5B) from enterprise/neocloud/sovereign customers and a JV with AMD/HUMAIN for large-scale AI infrastructure. Silicon One and new G300/P200 silicon and high-performance optics (including 1.6Tb OSFP and 800G LPO) are strategic differentiators; Acacia optics bookings were triple-digit. Services revenue was down 1% and Security was down 4% year-over-year, partially due to Splunk’s shift from on-prem to cloud subscriptions (which creates a near-term revenue drag but longer-term ARR/subscription benefits). Orders were up 18% (10% ex-hyperscalers); total ARR $31B (up 3%); subscription revenue $7.8B (51% of revenue). Gross margin pressured by mix and higher memory costs (non-GAAP gross margin 67.5%, down 120 bps), and management outlined actions: price increases, contract term revisions with partners/customers, and supply-chain scale/advanced purchase commitments. Non-GAAP operating margin was 34.6%, tax rate ~19%. Q3 guide: revenue $15.4–15.6B, non-GAAP EPS $1.02–1.04. FY26 guide: revenue $61.2–61.7B, non-GAAP EPS $4.13–4.17. Capital returns: $3B returned in the quarter; dividend raised $0.01/Q to $0.42 and Cisco reaffirmed a target to return a minimum of 50% of free cash flow annually. Management emphasized they see multi-year, multibillion-dollar refresh opportunities (campus and AI infrastructure), remain confident in managing memory inflation better than peers, and expect continued strong cash generation to fund growth and shareholder returns.