TLDR
- Cisco beat earnings expectations by one penny with 99 cents per share and revenue of $14.7 billion slightly above forecasts
- Networking segment revenue jumped 12% to $7.63 billion, driven by AI data center demand from major web companies
- AI infrastructure orders from webscale customers reached $2 billion for fiscal 2025, more than double the original target
- Full-year guidance for fiscal 2026 came in line with Wall Street estimates at $4-$4.06 per share earnings
- Stock dropped 2.8% in after-hours trading despite the earnings beat and strong AI order momentum
Cisco Systems posted a narrow earnings beat for its fiscal fourth quarter but saw shares decline in after-hours trading. The networking giant reported adjusted earnings of 99 cents per share, edging past analyst expectations of 98 cents.
Revenue came in at $14.7 billion for the quarter ending July 26, slightly above the $14.6 billion consensus estimate. This represented a 7.6% year-over-year increase for the company.
Net income climbed to $2.82 billion, or 71 cents per share, compared to $2.16 billion, or 54 cents per share, in the same quarter last year. The results showed steady growth across key business segments.
AI Infrastructure Orders Drive Growth
Cisco’s networking segment delivered strong performance with revenue of $7.63 billion, marking a 12% increase from the prior year. Analysts had projected networking revenue of $7.34 billion for the quarter.
CEO Chuck Robbins highlighted the company’s success in capturing AI-related business. AI infrastructure orders from webscale customers reached $800 million in the fourth quarter alone.
For the full fiscal 2025 year, these AI infrastructure orders totaled over $2 billion. This figure more than doubled Cisco’s original target for the year.
About $1 billion of those annual orders were specifically for back-end networks connecting graphics processing units. These systems are critical for AI data center operations.
Robbins expressed confidence in the AI opportunity during the earnings call. “I don’t feel like AI’s a fleeting trend,” he said.
The security segment generated $1.95 billion in revenue, up 9% year-over-year. However, this fell short of the StreetAccount estimate of $2.11 billion.
Forward Guidance Meets Expectations
Looking ahead, Cisco provided first-quarter guidance of 97 to 99 cents in adjusted earnings per share. Revenue is expected to range from $14.65 billion to $14.85 billion.
These projections align with analyst estimates of 97 cents per share and $14.62 billion in revenue. The guidance suggests continued steady performance in the coming quarter.
For fiscal 2026, management forecasts earnings between $4 and $4.06 per share. Revenue is projected in the $59 billion to $60 billion range.
Wall Street had been expecting earnings of $4.03 per share and revenue of $59.4 billion for the full year. The company’s outlook essentially matched these consensus estimates.
CFO Mark Patterson acknowledged ongoing challenges during the analyst call. “While we have some clarity on tariffs, we are still operating in a complex environment,” he said.
Despite the positive earnings results, Cisco shares fell 2.8% in after-hours trading. The stock has gained 19% year-to-date through Wednesday’s close, outpacing the S&P 500’s 10% gain.
Cisco has been actively expanding its AI capabilities through partnerships and new product launches. The company joined BlackRock, Microsoft, and others in an AI infrastructure collaboration during the quarter.
Robbins mentioned that Cisco is working on sovereign infrastructure projects but hasn’t taken orders yet. “We’ve been in the planning phases with them. They’re obviously working through getting the licenses for the GPUs,” he explained.
The company’s AI infrastructure sales pipeline from enterprise customers currently sits in the hundreds of millions of dollars. This represents another potential growth avenue beyond the webscale customer segment.
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