Cisco Systems, Inc.

Business and financial record

Cisco supplies networking equipment, security products, collaboration tools, software and services to businesses and cloud operators. Networking is currently driving much of its growth; product and services margins are moving differently.

The adjusted measures remove stock compensation, acquired-intangible amortization and specified acquisition, restructuring and tax items. Adjusted operating expenses rose about 2%, much more slowly than sales, helping offset the lower gross margin. Networking revenue reached $11.13 billion, up 43%.

For fiscal 2026, revenue was $63.33 billion and GAAP net income $13.27 billion, compared with $56.65 billion and $10.18 billion in fiscal 2025. GAAP earnings per share rose to $3.33 from $2.55; adjusted earnings rose to $4.33 from $3.81. Both years had 52 weeks.

What management expected

August's Q1 target was $18.0 billion–$18.2 billion of sales, adjusted earnings of $1.32–$1.34 a share and an adjusted operating margin of 35.5%–36.5%. Actual sales, adjusted earnings and operating margin exceeded those ranges; the 65.6% adjusted gross margin stayed within the 65%–66% forecast.

November's fiscal 2027 targets are revenue of $74.8 billion–$75.8 billion and adjusted earnings of $5.47–$5.53 a share, up from $72.2 billion–$73.4 billion and $5.05–$5.11 in August. The annual AI infrastructure revenue expectation from hyperscalers rose from $7.5 billion to $9 billion. Revenue and orders are separate measures.

Q2 targets are $18.0 billion–$18.2 billion in sales, adjusted earnings of $1.34–$1.36 a share, adjusted gross margin of 65%–66% and operating margin of 36%–37%. Fiscal 2027 runs through July 31, 2027 and has 53 weeks, one more than fiscal 2026.

Cash, debt and shareholder payments

Quarterly operating cash flow was $4.36 billion, up from $3.21 billion. Property and equipment spending was $502 million. At October 24, cash and equivalents of $7.78 billion and investments of $8.07 billion totaled $15.85 billion. Debt carrying value was $29.80 billion, including $10.43 billion classified as short term.

Cisco paid $1.65 billion in dividends and spent about $2.0 billion on share repurchases during the quarter. The program had about $6.1 billion of remaining authorization. The next declared dividend is $0.42 a share, payable January 20, 2027 to holders of record January 4.

Remaining performance obligations, contracted work not yet recognized as revenue, were $46.17 billion. That was 8% above a year earlier but below $46.73 billion in July.

Acquisitions and the next operating test

Cisco completed its acquisition of WideField Security during Q1 fiscal 2027. Its larger Splunk acquisition closed March 18, 2024, with merger consideration of approximately $27 billion. The next results can establish whether networking and AI growth continue to spread running costs over a larger sales base while gross margins remain below last year's levels.