Cisco Systems (CSCO) Earnings Date & Reports

Key Takeaways

• Cisco reported record fourth-quarter fiscal 2026 revenue of $17.3 billion, up 18% year over year and above consensus estimates of roughly $16.8 billion.
• Adjusted earnings per share (EPS) came in at $1.22, beating the $1.17 consensus estimate by $0.05; GAAP (generally accepted accounting principles) diluted EPS was $0.97.
• Total product orders rose 35% year over year, while artificial intelligence (AI) infrastructure orders from large cloud providers, known as hyperscalers, reached $4 billion in the quarter.
• Fiscal 2027 guidance calls for revenue of $72.2 billion to $73.4 billion and adjusted EPS of $5.05 to $5.11, above consensus expectations.
• Non-GAAP gross margin declined 2.1 percentage points to 66.3%, reflecting a shift toward hardware-heavy AI infrastructure sales.
• Despite the beat, shares reversed lower in after-hours trading as investors weighed valuation and margin pressures against strong demand.

Earnings Context and Why It Matters

Cisco's fourth-quarter fiscal 2026 results, for the period ended July 25, 2026, close out a fiscal year in which the company re-emerged as a key beneficiary of AI-driven network spending. As one of the world's largest networking equipment providers, Cisco is closely watched as a barometer for enterprise technology budgets, data center investment, and security demand. The report matters because it shows whether AI infrastructure momentum is translating into sustainable revenue and profit growth, not just order backlog. Investors also use Cisco's guidance to gauge the durability of the broader networking upgrade cycle and the company's ability to manage margin pressure from a changing product mix.

Reported Results

Cisco posted record quarterly revenue of $17.25 billion, an 18% increase from $14.67 billion in the prior-year period. Product revenue rose 24% to $13.5 billion, while services revenue was flat at $3.8 billion. Networking led the growth with a 28% increase to approximately $9.8 billion. Security revenue rose 14%, collaboration revenue increased 12%, and observability revenue grew 6%.

On a GAAP basis, net income rose 51% to $3.86 billion, or $0.97 per diluted share, compared with $2.55 billion, or $0.64 per share, a year earlier. On a non-GAAP, or adjusted, basis, which excludes certain items, net income rose 23% to $4.9 billion, or $1.22 per share. That topped the consensus estimate of $1.17 per share.

Profitability showed a mixed picture. Non-GAAP operating margin improved to 35.9%, but non-GAAP gross margin declined to 66.3% from 68.4% a year earlier. Cisco attributed the gross margin decline mainly to a higher mix of AI infrastructure hardware shipments. Operating cash flow increased 27% to $5.4 billion.

For the full fiscal year, Cisco reported record revenue of $63.3 billion, up 12%, and non-GAAP EPS of $4.33, up 14%. The company issued fiscal 2027 guidance for revenue of $72.2 billion to $73.4 billion and adjusted EPS of $5.05 to $5.11. For the first quarter of fiscal 2027, Cisco guided to revenue of $18.0 billion to $18.2 billion and adjusted EPS of $1.32 to $1.34, both ahead of consensus.

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Market Reaction and Investor Sentiment

Cisco shares initially jumped as much as 8% in after-hours trading following the release before reversing lower, according to market reports. The reversal highlighted a cautious investor response despite a clear top-and-bottom-line beat. Heading into the report, the stock had climbed roughly 60% year to date and was trading near its all-time high of about $130, leaving little room for disappointment. With the stock valued near 30 times forward earnings, above the broader market multiple, investors focused on the decline in gross margin and questions about the durability of hyperscaler AI orders. The after-hours pullback suggests the market wanted stronger confirmation that AI-driven growth can continue without further eroding profitability.

Forward Outlook and Key Factors to Monitor

Looking ahead, Cisco's fiscal 2027 guidance points to accelerating full-year growth, supported by expectations that AI infrastructure revenue will nearly double to about $7.5 billion from roughly $4 billion in fiscal 2026. The company also pointed to strong product order momentum, including networking orders up 40% year over year in the fourth quarter, as a sign that demand extends beyond AI-specific hardware.

Several factors will shape the next several quarters. First, investors will monitor whether non-GAAP gross margin stabilizes or continues to face pressure from memory costs, component availability, and a higher mix of AI hardware. Second, management noted that price increases contributed about five percentage points to fourth-quarter revenue growth, and those benefits are expected to be lapped in fiscal 2027. Third, the company flagged that fiscal 2027 guidance implies slower growth in the second half of the year due to tougher comparisons. Fourth, Cisco is navigating tariff exposure and a restructuring program announced in May that reduces about 4,000 positions, or roughly 5% of its workforce, as it redirects investment toward AI and growth areas. Finally, investors will watch remaining performance obligations (RPO), a measure of contracted future revenue, which stood at $46.7 billion, and annual recurring revenue (ARR), which reached $32.1 billion, for evidence that software and subscription momentum is holding up.

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