01—Abstract
Summary
Summary of the 10-Q filed November 18, 2025. Cited figures are marked; the original filing is the authoritative source.
Cisco Systems, Inc. (CSCO) reported its first quarter fiscal year 2026 results, demonstrating robust top-line growth driven by an 8% increase in total revenue to $14.9 billiona.
This growth was primarily fueled by an 10%b surge in product revenue, particularly in Networking, which saw a 15% uplift, with strong contributions from AI Infrastructure and Campus Networking solutions. Services revenue also grew by a modest 2%. Despite an 8% increase in operating expenses, improved operating leverage, driven by lower restructuring charges and revenue growth, led to a significant 43% increase in operating income and a 5.6 percentage point expansion in operating margin to 22.6%.
Diluted EPS rose by 6% to $0.72c, though this was partially impacted by a strong prior-year tax benefit. The company maintained a healthy gross margin of 65.5%, though slightly down from the prior year's 65.9% due to product mix and pricing pressures, partially offset by productivity gains.
Cisco's balance sheet remains strong, with $8.4 billiond in cash and cash equivalents and a substantial $42.9 billion in remaining performance obligations (RPO), indicating a solid revenue outlook. The company continued its commitment to returning capital to shareholders, with $1.6 billion in dividends paid and $2.0 billion in stock repurchases during the quarter.
02—Key points
Key Highlights
- Total revenue increased by 8% year-over-year to $14.9 billion, driven by broad-based demand across geographies and product lines.
- Product revenue grew 10%, significantly bolstered by a 15% increase in the Networking segment, with AI Infrastructure solutions being a key driver.
- Operating income saw a substantial 43% increase, leading to a 5.6 percentage point improvement in operating margin to 22.6%, reflecting strong operational leverage.
- Diluted earnings per share (EPS) rose by 6% to $0.72, demonstrating improved profitability.
- The company generated strong free cash flow of $2.9 billion, underscoring its robust operational efficiency and cash generation capabilities.
- Cisco continued its capital return program, paying $1.6 billion in dividends and repurchasing $2.0 billion of its stock during the quarter.
- Remaining performance obligations (RPO) stood at $42.9 billion, providing good visibility into future revenue.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Cisco Systems, Inc. kept $0.19.
- Revenue$14.88B100.0%
- Cost of revenue−$5.14B34.5%
- Gross profit$9.74B65.5%
- Operating costs−$6.38B42.9%
- Operating income$3.36B22.6%
- Interest, other & tax−$503.0M3.4%
- Net income$2.86B19.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed November 18, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $14.88B$13.84B | +7.5% |
| Cost of Revenue | $5.14B$4.72B | +8.9% |
| Gross Profit | $9.74B$9.12B | +6.8% |
| R&D Expenses | $2.40B$2.29B | +5.0% |
| Operating Expenses | $6.38B$6.76B | −5.6% |
| Operating Income | $3.36B$2.36B | +42.6% |
| Net Income | $2.86B$2.71B | +5.5% |
| EPS (Basic) | $0.72$0.68 | +5.9% |
| EPS (Diluted) | $0.72$0.68 | +5.9% |
| Shares Outstanding (Basic) | 3.96B3.99B | −0.9% |
| Shares Outstanding (Diluted) | 3.99B4.01B | −0.5% |
05—Questions
Frequently Asked Questions
What drove the revenue growth in the first quarter of fiscal 2026?
Revenue growth was primarily driven by an 8% increase in total revenue to $14.9 billion. Product revenue increased by 10%, with the Networking segment showing particularly strong performance with a 15% increase, significantly supported by AI Infrastructure and Campus Networking solutions. Services revenue also contributed with a 2% increase.
How did Cisco's profitability fare in the quarter?
Profitability improved significantly. Operating income grew by 43% to $3.4 billion, expanding the operating margin by 5.6 percentage points to 22.6%. Diluted EPS increased by 6% to $0.72. This improvement was attributed to revenue growth, operating leverage, and lower restructuring and other charges, partially offset by a large tax benefit recognized in the prior year's quarter.
What is Cisco's financial health and outlook based on the balance sheet and performance obligations?
Cisco's financial health remains strong, with $8.4 billion in cash and cash equivalents. The company's future revenue outlook is well-supported by remaining performance obligations (RPO) totaling $42.9 billion. This indicates a substantial backlog of contracted revenue, providing good visibility for future financial performance.
How is Cisco returning capital to shareholders?
Cisco continues its commitment to shareholder returns. In the first quarter of fiscal 2026, the company paid $1.6 billion in dividends and repurchased $2.0 billion of its common stock, demonstrating a continued focus on capital allocation.
06—Continue