01—Abstract
Summary
Summary of the 10-Q filed May 19, 2026. Cited figures are marked; the original filing is the authoritative source.
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%a 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.
02—Key points
Key Highlights
- Total revenue for Q3 FY2026 grew 12% year-over-year to $15.8 billion, with product revenue up 17% and services revenue down 1%.
- For the first nine months of FY2026, total revenue increased 10% to $46.1 billion, driven by a 13% rise in product revenue.
- Operating 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.
- Diluted 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.
- Networking product revenue experienced strong growth of 25% in Q3 FY2026, largely driven by AI Infrastructure and Campus Networking solutions.
- The 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.
- Cash and cash equivalents, along with investments, stood at $16.6 billion as of April 25, 2026, indicating a healthy liquidity position.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Cisco Systems, Inc. kept $0.21.
- Revenue$15.84B100.0%
- Cost of revenue−$5.76B36.4%
- Gross profit$10.08B63.6%
- Operating costs−$6.12B38.6%
- Operating income$3.96B25.0%
- Interest, other & tax−$587.0M3.7%
- Net income$3.37B21.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed May 19, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $15.84B$14.15B | +12.0% |
| Cost of Revenue | $5.76B$4.87B | +18.3% |
| Gross Profit | $10.08B$9.28B | +8.6% |
| R&D Expenses | $2.38B$2.33B | +1.8% |
| Operating Expenses | $6.12B$6.08B | +0.7% |
| Operating Income | $3.96B$3.20B | +23.7% |
| Net Income | $3.37B$2.49B | +35.4% |
| EPS (Basic) | $0.85$0.63 | +34.9% |
| EPS (Diluted) | $0.85$0.62 | +37.1% |
| Shares Outstanding (Basic) | 3.95B3.97B | −0.5% |
| Shares Outstanding (Diluted) | 3.98B4.00B | −0.5% |
05—Questions
Frequently Asked Questions
What is Cisco's revenue performance for the third quarter of fiscal year 2026?
In the third quarter of fiscal year 2026, Cisco Systems, Inc. reported total revenue of $15.8 billion, a 12% increase compared to the same period in fiscal year 2025. Product revenue saw a substantial 17% increase, while services revenue experienced a 1% decrease.
How did Cisco's profitability change in the third quarter of fiscal year 2026?
Cisco's profitability improved significantly. Operating income as a percentage of revenue increased to 25.0% in Q3 FY2026 from 22.6% in Q3 FY2025. Diluted Earnings Per Share (EPS) also rose by 37% to $0.85.
What are the key drivers of revenue growth for Cisco?
The primary driver of revenue growth is the strong performance in product revenue, particularly within the Networking segment, which saw a 25% increase in Q3 FY2026. This growth is significantly attributed to AI Infrastructure and Campus Networking solutions. Strategic investments in AI across its product portfolio are a key focus for the company.
What is Cisco's approach to returning capital to shareholders?
Cisco continues to prioritize returning capital to shareholders through cash dividends and share repurchases. For the first nine months of fiscal year 2026, the company paid $4.9 billion in dividends and repurchased $4.6 billion of its common stock. They target returning a minimum of 50% of their free cash flow annually to stockholders.
06—Continue