01—Abstract
Summary
Summary of the 8-K filed February 11, 2026. Cited figures are marked; the original filing is the authoritative source.
Cisco reported fiscal second quarter 2026 (ended January 24, 2026) results that beat the high end of its own guidance on both top and bottom line.
Revenue rose 10% year over year to a record $15.3 billiona, GAAP EPS climbed 31% to $0.80, and non-GAAP EPS rose 11% to $1.04. Product revenue grew 14%, led by Networking at +21%, while Services was down 1% and Security fell 4%. Product orders were up 18% year over year, with networking orders accelerating to more than 20%, and hyperscaler AI infrastructure orders reached $2.1 billion.
Management highlighted a multi-year, multi-billion-dollar campus networking refresh cycle as underway. Profitability was strong but mixed beneath the headline. Non-GAAP gross margin declined about 120 basis points year over year to 67.5%b, and GAAP gross margin fell to 65.0% from 65.1%.
Non-GAAP operating margin was 34.6%, while GAAP operating cash flow fell 19% to $1.8 billionc. Cash and investments dropped to $15.8 billion from $16.1 billion at fiscal year-end, and short-term debt rose sharply to $8.7 billion from $5.2 billion. Deferred revenue grew 2% and total RPO grew 5%, signaling moderating forward visibility relative to product order momentum.
Looking ahead, Cisco guided fiscal Q3 2026 revenue to $15.4d–$15.6 billion and non-GAAP EPS to $1.02–$1.04, with GAAP EPS of $0.73–$0.77. For full-year FY2026 it guided revenue to $61.2–$61.7 billion and non-GAAP EPS to $4.13–$4.17, with GAAP EPS of $3.00–$3.08.
Guidance includes the estimated impact of tariffs under current trade policy. The quarterly dividend was raised 2% to $0.42 per share, and the company returned $3.0 billion to shareholders in the quarter.
02—Key points
Key Highlights
- Record quarterly revenue of $15.3 billion, up 10% year over year, with product revenue up 14% and EMEA up 15%.
- GAAP EPS of $0.80 (up 31%) and non-GAAP EPS of $1.04 (up 11%), both above the high end of guidance.
- Networking revenue grew 21% and product orders rose 18%, with networking orders accelerating above 20%; hyperscaler AI infrastructure orders totaled $2.1 billion.
- Non-GAAP gross margin declined to 67.5% from 68.7%, and GAAP gross margin was 65.0% versus 65.1%, a watch item for investors.
- Security revenue fell 4% and Services revenue fell 1%, with Observability flat.
- Operating cash flow fell 19% to $1.8 billion; short-term debt rose to $8.7 billion while cash and investments declined to $15.8 billion.
- FY2026 non-GAAP EPS guidance of $4.13–$4.17 and revenue guidance of $61.2–$61.7 billion; quarterly dividend raised 2% to $0.42.
03—Questions
Frequently Asked Questions
Did Cisco beat its own guidance this quarter?
Yes. Management reported that revenue, non-GAAP and GAAP EPS, and both GAAP and non-GAAP operating margins all exceeded the high end of the company's guidance range for the quarter.
Why did gross margin decline despite strong revenue growth?
Non-GAAP product gross margin fell to 66.4% from 67.7% and services gross margin to 70.9% from 71.6%. Mix shift toward lower-margin product sales, and the impact of tariffs embedded in guidance, are the likely contributors; the filing does not attribute the decline to a single cause.
What does the AI infrastructure order figure signal for the outlook?
Hyperscaler AI infrastructure orders of $2.1 billion, described as a significant acceleration, indicate growing demand from large cloud customers. However, the filing does not disclose the revenue timing of these orders, and total RPO grew only 5%, so the near-term revenue contribution remains uncertain.
Is Cisco's balance sheet or cash generation a concern?
Operating cash flow fell 19% in the quarter, and short-term debt increased to $8.7 billion from $5.2 billion at fiscal year-end while cash and investments declined. Investors should monitor debt maturities and whether cash generation recovers in the second half of the fiscal year.
How does the guidance compare to the GAAP-to-non-GAAP gap?
The gap is largely driven by share-based compensation (about $0.70–$0.72 per share for FY2026) and acquisition-related amortization and costs (about $0.43–$0.45). GAAP FY2026 EPS is guided to $3.00–$3.08 versus non-GAAP EPS of $4.13–$4.17, so investors should evaluate both measures.
04—Continue