Summary
Cisco Systems, Inc. reported strong financial results for the third quarter and first nine months of fiscal year 2026, demonstrating robust revenue growth and improved profitability. Total revenue for the third quarter increased by 12% year-over-year, driven by a significant 17% increase in product revenue, while services revenue saw a slight decrease of 1%. For the nine-month period, total revenue grew by 10%, with product revenue up 13% and services revenue remaining flat. The company's strategic investments in areas like AI Infrastructure solutions, particularly within its Networking segment, are showing positive traction, contributing significantly to revenue growth. Despite a slight dip in gross margin percentage due to product mix and higher memory costs, operating income as a percentage of revenue saw a substantial improvement, indicating effective cost management and operating leverage. Diluted EPS also saw a strong increase, reflecting the positive financial performance.
Key Highlights
- 1Total revenue for Q3 FY2026 grew 12% year-over-year to $15.8 billion, with product revenue up 17% and services revenue down 1%.
- 2For the first nine months of FY2026, total revenue increased 10% to $46.1 billion, driven by a 13% rise in product revenue.
- 3Operating income margin improved to 25.0% in Q3 FY2026 from 22.6% in Q3 FY2025, and increased to 24.1% from 20.7% for the nine-month period.
- 4Diluted Earnings Per Share (EPS) increased significantly by 37% in Q3 FY2026 to $0.85 and by 24% for the nine-month period to $2.36.
- 5Networking product revenue experienced strong growth of 25% in Q3 FY2026, largely driven by AI Infrastructure and Campus Networking solutions.
- 6The company continues to return capital to shareholders, with $4.9 billion in dividends paid and $4.6 billion in share repurchases for the nine-month period.
- 7Cash and cash equivalents, along with investments, stood at $16.6 billion as of April 25, 2026, indicating a healthy liquidity position.