Summary
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 billion. This growth was primarily fueled by an 10% 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 $0.72, 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 billion 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.
Financial Highlights
55 data points| Revenue | $14.88B |
| Cost of Revenue | $5.14B |
| Gross Profit | $9.74B |
| R&D Expenses | $2.40B |
| Operating Expenses | $6.38B |
| Operating Income | $3.36B |
| Net Income | $2.86B |
| EPS (Basic) | $0.72 |
| EPS (Diluted) | $0.72 |
| Shares Outstanding (Basic) | 3.96B |
| Shares Outstanding (Diluted) | 3.99B |
Key Highlights
- 1Total revenue increased by 8% year-over-year to $14.9 billion, driven by broad-based demand across geographies and product lines.
- 2Product revenue grew 10%, significantly bolstered by a 15% increase in the Networking segment, with AI Infrastructure solutions being a key driver.
- 3Operating income saw a substantial 43% increase, leading to a 5.6 percentage point improvement in operating margin to 22.6%, reflecting strong operational leverage.
- 4Diluted earnings per share (EPS) rose by 6% to $0.72, demonstrating improved profitability.
- 5The company generated strong free cash flow of $2.9 billion, underscoring its robust operational efficiency and cash generation capabilities.
- 6Cisco continued its capital return program, paying $1.6 billion in dividends and repurchasing $2.0 billion of its stock during the quarter.
- 7Remaining performance obligations (RPO) stood at $42.9 billion, providing good visibility into future revenue.