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CISCO SYSTEMS, INC. 8-K Report, Financial Results (Feb 12, 2025)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 12, 2025
Period End
February 12, 2025
Security
CSCO
In the record · 2016–202610-K1110-Q328-K146

CSCO filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 146 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Mar ’17Mar ’17
  2. Restructuring8-K · Aug ’20Aug ’20
  3. Leadership change8-K · Nov ’22Nov ’22
  4. Leadership change8-K · Oct ’26Oct ’26

01—Abstract

Summary

Summary of the 8-K filed February 12, 2025. Cited figures are marked; the original filing is the authoritative source.

Cisco reported fiscal second quarter 2025 (ended January 25, 2025) revenue of $14.0 billiona, up 9% year over year, beating the high end of its guidance range.

GAAP EPS was $0.61b, down 6%, while non-GAAP EPS was $0.94, up 8% and also above the top of guidance. The headline growth is heavily influenced by the Splunk acquisition: excluding Splunk, total revenue declined 1%, and Networking fell 3%. Security (up 117%, or 4% excluding Splunk) and Observability (up 47%, or 3% excluding Splunk) drove the reported gains, while Collaboration grew 1%.

Product orders rose 29% year over year and 11% excluding Splunk, and AI infrastructure orders exceeded $350 millionc in the quarter, bringing the first-half total to roughly $700 million. Profitability and cash generation were strong. Non-GAAP gross margin was 68.7% and non-GAAP operating margin was 34.7%.

GAAP operating expenses rose 17%, largely due to acquisition-related amortization and share-based compensation, and GAAP operating margin was 22.3%. Operating cash flow was $2.2 billiond, up 177%. Remaining performance obligations reached $41.3 billion, up 16%, with product RPO up 25%.

Cisco returned $2.8 billion to shareholders in the quarter through dividends and buybacks, raised the quarterly dividend 3% to $0.41, and added $15 billion to its repurchase authorization, leaving roughly $17 billion available. Forward guidance calls for Q3 FY25 revenue of $13.9 to $14.1 billion and non-GAAP EPS of $0.90 to $0.92, with FY25 revenue of $56.0 to $56.5 billion and non-GAAP EPS of $3.68 to $3.74.

Management noted that gross margin guidance includes the estimated impact of proposed tariffs on Mexico, Canada, and China. Investors should weigh the strong order momentum and AI demand against the flat organic top line, the widening gap between GAAP and non-GAAP earnings, and the tariff headwind.

02—Key points

Key Highlights

  1. Q2 FY25 revenue of $14.0 billion rose 9% year over year and exceeded the high end of guidance, but excluding Splunk, revenue declined 1%.
  2. Non-GAAP EPS of $0.94 rose 8% and beat the top of guidance, while GAAP EPS of $0.61 fell 6% year over year.
  3. Product orders grew 29% (11% excluding Splunk), and AI infrastructure orders exceeded $350 million in the quarter, about $700 million for the first half.
  4. Non-GAAP gross margin was 68.7% and non-GAAP operating margin was 34.7%, while GAAP operating expenses rose 17% to $6.0 billion.
  5. Remaining performance obligations reached $41.3 billion (up 16%), and operating cash flow rose 177% to $2.2 billion.
  6. Cisco raised its quarterly dividend 3% to $0.41 and added $15 billion to its buyback authorization, leaving about $17 billion available.
  7. FY25 guidance of $56.0–$56.5 billion in revenue and $3.68–$3.74 in non-GAAP EPS, with gross margin guidance factoring in tariffs on Mexico, Canada, and China.

03—Questions

Frequently Asked Questions

  1. Why did Cisco's reported revenue grow 9% if its underlying business was down?

    The 9% growth was driven by the Splunk acquisition. Excluding Splunk's contribution, total revenue declined 1%, and Networking fell 3%. Security and Observability growth was far more modest excluding Splunk, at 4% and 3% respectively.

  2. Why did GAAP EPS fall while non-GAAP EPS rose?

    Non-GAAP results exclude items such as share-based compensation ($765 million in operating expenses this quarter), amortization of acquisition-related intangibles ($265 million in operating expenses, plus $335 million in cost of sales), and acquisition-related costs. These acquisition and stock-compensation charges grew substantially after the Splunk deal, so GAAP EPS declined 6% while non-GAAP EPS rose 8%.

  3. How strong are Cisco's AI and order trends?

    Product orders rose 29% year over year, or 11% excluding Splunk, and AI infrastructure orders exceeded $350 million in the quarter, bringing the first-half total to about $700 million. Remaining performance obligations of $41.3 billion, up 16%, provide added revenue visibility.

  4. What is the outlook, and what risks does it carry?

    Q3 FY25 guidance calls for revenue of $13.9–$14.1 billion and non-GAAP EPS of $0.90–$0.92. FY25 guidance is $56.0–$56.5 billion in revenue and $3.68–$3.74 in non-GAAP EPS. Gross margin guidance includes the estimated impact of proposed tariffs on Mexico, Canada, and China, which is a key risk to monitor.

04—Continue

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