CSCO · Q1 2026 Earnings

Bullish

Cisco

Reported November 12, 2025

30-second summary

Q1 revenue grew 8% YoY to $14.9B with non-GAAP EPS of $1.00, both beating the prior-quarter guide, and AI infrastructure orders accelerated to $1.3B in the quarter alone — already approaching three-quarters of the entire FY25 total in a single period. Management raised FY26 revenue guidance by $1.1B at the midpoint (to $60.2–61.0B) and non-GAAP EPS by $0.08, and disclosed for the first time that FY26 hyperscale AI infrastructure revenue will be ~$3B with orders expected to at least double vs FY25. The print resolves the central question from last quarter's brief — whether the $800M Q4 AI order pace was a peak or a floor — decisively in favor of the latter.

Headline numbers

EPS

Q1 FY2026

$1.00

Revenue

Q1 FY2026

$14.90B

+8.0% YoY

Gross margin

Q1 FY2026

65.5%

Free cash flow

Q1 FY2026

$2.89B

Operating margin

Q1 FY2026

22.6%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$14.90B	+8.0%	$14.67B	+1.5%
EPS	$1.00	—	$0.99	+1.0%
Gross margin	65.5%	—	65.7%	-20bps
Operating margin	22.6%	—	23.5%	-90bps
Free cash flow	$2.89B	—	—	—

Guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q1 FY2026	$14.65 billion to $14.85 billion	$14.9 billion	+$0.05 billion above guide high end	Beat
Non-GAAP EPS	Q1 FY2026	$0.97 to $0.99	$1.00	+$0.01 above guide high end	Beat
GAAP EPS	Q1 FY2026	$0.63 to $0.68	$0.72	+$0.04 above guide high end	Beat
Non-GAAP Gross Margin	Q1 FY2026	67.5% to 68.5%	68.1%	in-line (upper-middle of range)	Beat
Non-GAAP Operating Margin	Q1 FY2026	33% to 34%	34.4%	+0.4 percentage points above guide high end	Beat

New guidance

Metric	Period	Guide	YoY
Revenue	Q2 FY2026	$15.0 billion to $15.2 billion	—
Non-GAAP EPS	Q2 FY2026	$1.01 to $1.03	—
GAAP EPS	Q2 FY2026	$0.69 to $0.74	—
Non-GAAP Gross Margin	Q2 FY2026	67.5% to 68.5%	—
Non-GAAP Operating Margin	Q2 FY2026	—	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue	FY2026	$59.0 billion to $60.0 billion	$60.2 billion to $61.0 billion	+$1.0–1.2 billion (low: +$1.2B, high: +$1.0B midpoint: +$1.1B)	Raised
Non-GAAP EPS	FY2026	$4.00 to $4.06	$4.08 to $4.14	+$0.08 (low: +$0.08, high: +$0.08, midpoint: +$0.08)	Raised
GAAP EPS	FY2026	$2.79 to $2.91	$2.87 to $2.98	+$0.08 (low: +$0.08, high: +$0.07, midpoint: +$0.07)	Raised

Product revenue

Q1 FY2026

Segment	Q1 FY2026	YoY
Networking	$7.768B	+15.0%
Security	$1.98B	-2.0%
Collaboration	$1.055B	-3.0%
Observability	$0.274B	+6.0%
Services	$3.806B	+2.0%

Geographic mix

Q1 FY2026

Segment	Q1 FY2026	YoY
Americas	$8.989B	+9.0%
EMEA	$3.784B	+5.0%
APJC	$2.111B	+5.0%

Management tone

Customer optimization hangover → AI experiments → AI-driven re-acceleration → Network refresh as operating model → AI infrastructure as quantified revenue engine

AI has fully transitioned from order-momentum metric to disclosed forward revenue. Three quarters ago Cisco was crossing $1B in cumulative AI orders ahead of schedule; two quarters ago the FY25 total cleared $2B with conversion roughly $1B; this quarter management volunteered an FY26 hyperscale AI revenue number — "We expect to recognize roughly $3 billion in AI infrastructure revenue from hyperscalers in fiscal year 26" — and committed to at least 2x FY26 orders vs FY25. The shift signals management is willing to be measured on AI revenue, not just bookings — a step that anchors the FY26 raise rather than letting it float on backlog optics.

Enterprise AI moved from "pipeline in the hundreds of millions" to a specific $2B annualized pipeline with $200M Q1 bookings. Last quarter the enterprise AI framing was "ramping, hundreds of millions"; this quarter it's "$2 billion+ enterprise neocloud sovereign pipeline for rest of fiscal year… $200 million enterprise orders booked in Q1." The diversification thesis — that AI demand isn't a four-customer story — now has its own dollar anchor independent of the hyperscale figure.

Campus refresh framing intensified from "multi-year tailwind beginning to build" to "multiple product families ramping faster than historical launches." Last quarter the CAT 9K analogy was offered as a 5-7 year transition precedent in qualitative terms; this quarter management was explicit: "Three new product families (enterprise routing, Wi-Fi 7, campus switches) ramping faster than historical launches" with CAT 4K/6K end-of-support pulling customers forward. The Q&A pressure on whether base business growth was decelerating was rebutted with a concrete 9% orders growth ex-hyperscale — a number that wasn't available to disclose previously.

Silicon One went from "powering ~2/3 of system orders" to a cumulative production milestone. Last quarter the silicon framing was capacity-constrained customer demand; this quarter management telegraphed the 1 millionth chip shipping in Q2 and a full-portfolio rollout target of FY29. The shift signals the silicon program has moved from a strategic asset to a discrete operational achievement — the kind of milestone disclosure Cisco historically reserves for franchises rather than emerging programs.

On Splunk-driven security weakness, management traded near-term revenue framing for long-term cohort framing. Last quarter security grew +9% on a clean lapped basis; this quarter security is -2% and management was explicit that the cause is mix shift to cloud subscriptions creating 606 timing drag: "While this shift negatively impacted security revenue growth in Q1, it is purely a timing issue. We are actually pleased to see more cloud subscriptions for Splunk." The reframing is defensible — double-digit ARR and RPO growth back the story — but it does push the path to the 15-17% long-term security growth target out by at least a quarter or two.

Recurring themes management leaned on this quarter:

AI infrastructure demand acceleration from hyperscalersMulti-year campus networking refresh cycle beginningEdge AI and agentic workload proliferation driving network traffic intensitySovereign and NeoCloud infrastructure partnerships expandingOperating leverage and earnings growth outpacing revenue growthStrategic shift from on-premise to cloud subscription models

Risks management surfaced:

Tariff uncertainties affecting guidance assumptionsCustomer infrastructure readiness gap for AI (only one-third feel prepared)Prior-generation product declines in security and collaborationOperating cash flow declined 12% due to AI infrastructure investmentsExecution risks on simultaneous product launches and geographic expansion

Q&A highlights

Erin Rakers · Wells Fargo

Clarification on the $3 billion AI revenue number from hyperscale customers and diversity of use cases (super spine, scale across). Follow-up on enterprise neocloud/sovereign cloud pipeline of $2 billion and $200 million in Q1 orders progression.

The $3 billion is revenue (not orders); $1.3 billion in new orders from same customers/products as last year. Expecting at least 2x orders in FY26 vs FY25. Enterprise pipeline of $2B+ for remaining three quarters with $200M booked in Q1. New use cases expanding: training models, scale out, P200 router, pluggable optics (all hyperscalers now customers), and inferencing wins. Four major hyperscalers grew triple digits with one meaningful use case win each.

$3 billion FY26 hyperscale AI revenue$1.3 billion new orders in Q1 from same customersAt least 2x orders expected in FY26 vs FY25$2 billion+ enterprise neocloud sovereign pipeline for rest of fiscal year

Tal Leone · Bank of America

Why is the non-AI base business (majority at $55B) growing only 3.6% when Wi-Fi, campus, and security should drive stronger growth?

Normalizing out hyperscaler growth in Q1, rest of business grew 9% from orders perspective. Q1-Q2 prior year comps were -6% and +9% respectively, but Q3-Q4 comps are much tougher at +11% and +8%, explaining modest revenue guidance.

Rest of business orders grew 9% in Q1 (excluding hyperscaler growth)Q3-Q4 year-ago comps are +11% and +8% respectively (significantly tougher comparisons)Q1-Q2 prior year comps were -6% and +9%

Ben Reitzes · Mizulio Research

Elaborate on multi-year cycle commentary mentioned by management. What gives confidence in multi-year cycles and which key cycles are being referenced?

Enterprise routing, Wi-Fi 7, and campus switches all ramping faster than historical launches. CAT 4K/6K end-of-support driving refresh. Customers aggressively modernizing infrastructure for AI/inferencing workloads. New switching platforms enabling integrated security fused into network resonating with customers preparing for agentic workflows. Historical precedent: CAT 9K transition lasted 5-7 years.

Three new product families (enterprise routing, Wi-Fi 7, campus switches) ramping faster than historical launchesCAT 4K and CAT 6K approaching end of supportCAT 9K transition lasted 5-7 years (2017 launch example)Customers preparing network infrastructure for AI and agentic workflows

James Fish · Piper Sandler

What is Silicon One penetration into product portfolio and why is it gaining traction with hyperscalers vs custom solutions and Broadcom chips? Follow-up on Splunk's cloud shift and impact on security growth.

Silicon One will be fully rolled across entire portfolio by end of FY29 (2.5 years). Currently in data center switching and hyperscaler products. Traction driven by performance, programmability, low power, and desire for multiple silicon sources plus custom engagements. Splunk saw meaningful mix shift to cloud (from 50-50 to one-third on-prem in Q1). Cloud transition positive long-term but caused revenue timing issue due to ASC 606. Double-digit ARR and RPO growth shows underlying health; expect more revenue recognition over time as cloud offerings are stickier.

Silicon One full portfolio rollout targeted by end of FY29Splunk on-prem revenue dropped to one-third of total (from ~50%)Double-digit ARR growth for SplunkDouble-digit RPO growth for Splunk

David Vogt · UBS

What is driving faster campus next-gen solution ramp compared to prior launches? Is it competitive, better products, or disruption from smaller players? How does government/public sector end-of-life upgrade opportunity play out given current DC dynamics?

Faster ramps driven by: CAT 4K/6K end-of-support, confusion in marketplace (especially Wi-Fi), AI preparation, and belief that security must be in network. Cisco uniquely owns both security and networking (vs competitors with separate vendor partnerships). U.S. federal business grew high single digits in Q1 despite government shutdown. Significant pressure building to update end-of-support equipment in federal government for cyber hygiene/risk. Expect upside when government reopens.

U.S. federal business grew high single digits in Q1 despite shutdownMarketplace confusion about Wi-Fi (benefit to Cisco)Cisco is only vendor with integrated security and networkingCompetitors relying on partnership integrations which are hard to execute

Answers to last quarter's watch list

Q1 AI infrastructure orders vs. the $800M Q4 run-rate — $1.3B in Q1 alone, ~60% above the Q4 run-rate, with FY26 hyperscale AI revenue framed at ~$3B and orders expected to at least 2x vs FY25 (implying a $4B+ FY26 order pace vs ~$2B in FY25). This is a decisive step-function up, not just sustained momentum. Status: Resolved positively

Campus (CAT 9K refresh) order growth disclosure — Management confirmed three product families (enterprise routing, Wi-Fi 7, campus switches) are ramping faster than historical launches, CAT 4K/6K end-of-support is the explicit forcing function, and the CAT 9K analogy was offered as a 5-7 year precedent. No discrete dollar anchor for campus alone, but the 9% ex-hyperscale orders growth (with campus switching and wireless cited as the strength) is the closest proxy disclosed. Status: Resolved positively

First disclosed Humane or other Middle East sovereign AI bookings — Management disclosed a $2B+ enterprise neocloud/sovereign pipeline for the rest of FY26 with $200M booked as orders in Q1, but did not specifically attribute dollars to Humane or name the Middle East customers. The disclosure validates the back-half ramp thesis at a category level without resolving the specific Humane question. Status: Continue monitoring

Public sector / US Federal trajectory after the -6% Q4 print — U.S. federal business grew high single digits in Q1 despite the government shutdown — a clean reversal from the Q4 decline. Management flagged building pressure for end-of-support equipment replacements in federal as an upside catalyst when government reopens. Status: Resolved positively

Security order trajectory toward the 15–17% long-term target — Security revenue printed -2% YoY, explicitly attributed to Splunk's cloud mix shift creating ASC 606 timing impact rather than demand weakness; underlying Splunk ARR and RPO both grew double digits. The 15-17% target path is pushed out by the mix transition, though management frames the cloud shift as strategically positive. Status: Continue monitoring

What to watch into next quarter

Q2 AI infrastructure orders vs. the $1.3B Q1 run-rate — sustaining above $1.3B would put FY26 orders on pace for $5B+ (vs. management's "at least 2x FY25" / ~$4B+ floor); a step-down toward $800M would signal Q1 was a lumpy peak rather than a new floor

First quarter of growth (or contraction) in the Splunk-impacted security line as ASC 606 timing normalizes — management framed the -2% as purely timing; watch whether Q2 returns to growth or whether the cloud-mix drag persists into a second quarter

Whether the Q2 guide's implied non-AI base growth holds the 9% ex-hyperscale Q1 orders pace — the bull case depends on the underlying business growing 9%+ even as hyperscale AI normalizes; Q2 product orders disclosure ex-hyperscale will be the key tell

First named Humane (Saudi sovereign) or specific Middle East booking disclosure — the $2B+ enterprise neocloud/sovereign pipeline is now anchored; the next test is whether sovereign AI moves from category-level pipeline to named customer bookings

Operating cash flow recovery — Q1 OCF was -12% YoY against AI infrastructure investments; watch whether FCF/OCF re-accelerate in Q2 or whether the working capital build continues as AI revenue ramps

Sources

Cisco Q1 FY2026 Press Release (Form 8-K Exhibit 99.1), filed November 12, 2025 — https://www.sec.gov/Archives/edgar/data/858877/000119312525277624/d484663dex991.htm
Cisco Q1 FY2026 earnings call prepared remarks and Q&A (as reflected in extraction inputs)
Cisco Q4 FY2025 Tapebrief (prior quarter context)
Cisco Q3 FY2025 Tapebrief (multi-quarter trajectory context)

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