CSCO · Q4 2025 Earnings

Bullish

Cisco

Reported August 13, 2025

30-second summary

Q4 revenue grew 8% YoY to $14.67B with non-GAAP EPS of $0.99, beating the prior-quarter guide on both lines, and AI infrastructure orders stepped up to >$800M (FY25 total >$2B, 2x the original target). Non-GAAP gross margin landed at 68.4% — the high end of the 67.5–68.5% guide and up 50bps YoY — confirming tariff/mix headwinds are being absorbed without margin damage. The FY26 guide of $59.0–60.0B (~4–6% growth) and management's "strongest year yet" framing sit against a Q1 guide that's essentially flat sequentially — implying the strong opening quarter (~7% growth implied) decelerates to mid-single-digits across Q2–Q4 as campus refresh and sovereign AI build through 2H. Management attributed the shape to year-over-year comp timing (Splunk lap dynamics), not demand softness.

Headline numbers

EPS

Q4 FY2025

$0.99

Revenue

Q4 FY2025

$14.67B

+8.0% YoY

Gross margin

Q4 FY2025

65.7%

Operating margin

Q4 FY2025

23.5%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$14.67B	+8.0%	$14.10B	+4.1%
EPS	$0.99	—	$0.96	+3.1%
Gross margin	65.7%	—	65.6%	+10bps
Operating margin	23.5%	—	22.6%	+90bps

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	Q4 FY2025	$14.5 billion to $14.7 billion	$14.673 billion	within guide range; 8% YoY growth	Beat
Non-GAAP EPS	Q4 FY2025	$0.96 to $0.98	$0.99	+$0.01 above guide high	Beat
GAAP EPS	Q4 FY2025	$0.62 to $0.67	$0.71	+$0.04 above guide high	Beat
Non-GAAP Gross Margin	Q4 FY2025	67.5% to 68.5%	65.7%	below guide range; reported as non-GAAP gross margin	Met
Non-GAAP Operating Margin	Q4 FY2025	33.5% to 34.5%	34.3%	within guide range, near midpoint	Beat
Revenue	FY2025	$56.5 billion to $56.7 billion	$56.654 billion	within guide range; 5% YoY growth	Beat
Non-GAAP EPS	FY2025	$3.77 to $3.79	$3.81	+$0.02 above guide high	Beat
GAAP EPS	FY2025	$2.53 to $2.58	$2.823 implied	—	Beat

New guidance

Metric	Period	Guide	YoY
Revenue	Q1 FY2026	$14.65 billion to $14.85 billion	—
Non-GAAP EPS	Q1 FY2026	$0.97 to $0.99	—
Non-GAAP Gross Margin	Q1 FY2026	67.5% to 68.5%	—

Product revenue

Q4 FY2025

Segment	Q4 FY2025	YoY
Networking	$7.633B	+12.0%
Security	$1.952B	+9.0%
Collaboration	$1.042B	+2.0%
Observability	$0.259B	+4.0%
Services	$3.787B	—

Geographic mix

Q4 FY2025

Segment	Q4 FY2025	YoY
Americas	$8.822B	+9.0%
EMEA	$3.645B	+4.0%
APJC	$2.206B	+7.0%

Management tone

Customer optimization hangover → AI experiments → AI-driven re-acceleration → Network refresh as multi-year operating model

The AI framing has hardened from "opportunity" to "core demand driver" with a structural three-pillar architecture. Last quarter management led with crossing the $1B AI order target a quarter early; this quarter the framing is fully operationalized: training infrastructure, enterprise inference clouds, and network connectivity for agents. From the call: "As we look holistically at the AI opportunity for Cisco, we frame it into three distinct but connected pillars." The shift signals AI has graduated from a headline orders metric into Cisco's narrative spine — the basis for how management wants investors to forecast the business going forward.

Enterprise AI has moved from speculative future demand to actively ramping pipeline. Three quarters ago enterprise AI was a TAM slide; last quarter Wi-Fi 7 triple-digit growth hinted at adjacency demand; this quarter it's concrete: "while still early, AI orders are ramping, and we have a growing pipeline in the hundreds of millions as these customers look to Cisco to provide simple, scalable, and secure solutions for the AI era." The "hundreds of millions" anchor is new. This matters because cloud AI orders are concentrated in a handful of web-scalers — enterprise diversification is the credibility test for the durability of the AI thesis.

Sovereign AI shifted from "possible" to "core system provider in 2H FY26." Last quarter Humane (Saudi) was framed as zero current orders, hundreds of billions of forward TAM. This quarter: "Our newly forged Middle East strategic partnerships...are all progressing as planned, and we expect the sovereign AI opportunity to build momentum in the second half of fiscal year 26. We believe Cisco will be a core system provider for these significant AI training and inference cluster buildouts." The "core system provider" language is competitive positioning, not aspiration — and it explains why the FY26 guide implies back-half acceleration.

Security is being re-architected as a network attribute, not a product line. Two quarters ago security was Splunk-driven optics; last quarter the HyperShield+N9300 bundle introduced security-as-fabric framing; this quarter it's a competitive moat claim: "We believe that agentic AI can only be secured by fusing security deep into the network, and that only Cisco can deliver this capability." This is unusually exclusionary language for Cisco — and the path to validating the 15–17% long-term security growth target depends on customers buying that framing rather than continuing to source security from pure-plays.

Network traffic framing went from linear-growth to "compounded" under agent autonomy. "As we move into the next phase of AI, with agents autonomously conducting tasks alongside humans, the capacity requirements of the network will be compounded to accommodate both unprecedented levels of network traffic and an increasing threat landscape." This is the multi-year refresh thesis in one sentence — agents talking to agents requires sustained-high network capacity, not bursty peaks. If the thesis holds, campus refresh is a multi-year tailwind; if agentic deployments lag, the FY26 back-half ramp doesn't materialize.

Recurring themes management leaned on this quarter:

AI infrastructure dominance across web-scale (>$2B fiscal orders, 4 consecutive quarters triple-digit growth)Transition to agentic AI as inflection point requiring network infrastructure refresh and embedded securityThree-pillar AI strategy: training infrastructure, enterprise inference clouds, network connectivity for agentsCampus switching refresh cycle as multi-year opportunity enabled by AI-native CAT 9K powered by Silicon OneSovereign and neocloud providers as emerging high-value demand pillar (Middle East partnerships)Operating leverage and capital returns ($12.4B FY25, 94% of FCF) fueling shareholder confidence

Risks management surfaced:

Complex environment and tariff uncertainty (China 30%, Mexico 25%, Canada 35%, with mitigation through supply chain agility)Public sector orders declining 6% YoY after strong FY24 comparisonEnterprise AI adoption still early-stage despite pipeline growth in hundreds of millionsThreat landscape expansion requiring security investment alongside network capacityForward-looking statements subject to risks detailed in SEC filings (10-K, 10-Q)

Q&A highlights

Erin Rakers · Wells Fargo

Guidance implies growth deceleration from ~7% in Q1 to ~4.5% in remaining quarters. Does this reflect conservatism or a change in demand environment?

Management attributes deceleration to year-over-year comps, not demand weakness. CAT 9K in year 8 of transition; customers take time to evaluate before deploying. Campus refresh expected to drive growth in next fiscal year.

CAT 9K in year eight of transitionCampus refresh expected to kick in next fiscal yearGrowth deceleration driven by comp timing, not demand changes

Meena Marshall · Morgan Stanley

How is security business performing post-Splunk anniversary? What are new CFO priorities?

Security more optimistic: new/refreshed products (SASE, XDR, HyperShield, AI Defense) saw 20%+ order growth. Ex-US Federal, rest of world security grew double digits. 80 new HyperShield customers, 480+ new SSE customers. CFO priorities: funded for success, durable profitable growth, financial discipline, shareholder returns.

20%+ order growth in new/refreshed security productsDouble-digit security order growth ex-US Federal80 new HyperShield customers480+ new SSE customers

Simon Leopold · Raymond James

Are customers pull-forwarding orders due to tariffs/budget concerns? What is expected composition trend for AI business (systems vs optics)?

No evidence of material pull-forwards. Management monitors multiple signals: field feedback, linearity, software activation timing, requested ship dates, pipeline. Current 2/3 systems, 1/3 optics split expected to remain stable based on cloud provider conversations.

No customer reports of pull-forward orders in last 6 monthsLinearity appeared normal month-to-monthSoftware activation timing showed no stretch-outNo unusual ship date slippage

Samak Chatterjee · JPMorgan

How will networking growth sustain in FY26 given two quarters of recovery? Where do you land on 2-5% medium-term range, particularly for campus upgrades?

AI driving network modernization across cloud, enterprise, and telco segments. Campus upgrade hasn't started yet; CAT 9K in year 8 with tens of billions of legacy install base to address. Routing refresh, data center growth (mid-teens orders), Wi-Fi 7 (triple-digit growth) support confidence in maintaining Analyst Day range.

Data center networking grew mid-teens orders in enterpriseWi-Fi 7 grew triple digits year-over-yearTens of billions of pre-CAT 9K install base addressableAI driving modernization across cloud, enterprise, telco

Michael Eng · Goldman Sachs

Did >$2B AI orders translate to revenue in FY25? How to think about FY26 revenue impact? What were Q4 orders by subsegment (campus, data center, wireless, routing)?

~$1B in revenue recognized from AI infrastructure orders in FY25. Four cloud customers grew triple digits; two customers each placed >$1B orders in FY25. Greater than $800M AI orders in Q4 alone. Management declines to provide subsegment order breakdown.

~$1 billion in FY25 revenue from AI infrastructure orders>$2 billion in AI orders for full FY25, >2x original target>$800 million AI orders in Q4Four cloud customers grew triple digits in Q4

Answers to last quarter's watch list

Q4 AI infrastructure orders vs. $600M Q3 run-rate — >$800M booked in Q4, a clear step-up; FY25 finished at >$2B (2x original target) with four cloud customers at triple-digit growth and two customers each placing >$1B in orders for the year. Conversion to revenue is the next test: ~$1B of FY25 orders converted in FY25, ~$1B+ carries into FY26 as backlog. Status: Resolved positively

Q4 non-GAAP gross margin vs. 67.5–68.5% guide — Landed at 68.4%, at the high end of the range and up 50bps YoY. Tariff impact in the quarter came in slightly favorable vs. the estimate baked into guide. The Q1 FY26 guide reaffirms the same 67.5–68.5% range — a range Cisco just hit at the high end, not missed. Status: Resolved positively

G200 capacity build commentary — No specific capacity expansion timing disclosure on the call; management noted current AI business runs ~2/3 systems / ~1/3 optics and expects that mix to remain stable. The "customers would buy more if we had capacity" framing from Q3 was not repeated. Status: Continue monitoring

Splunk organic growth disclosure — Q4 product orders grew 7% YoY on a fully-lapped Splunk base — this is now clean organic. Security revenue +9% YoY is the lapped reported read; total Q4 security orders grew mid-single-digits, with new/refreshed products (SASE, XDR, HyperShield, AI Defense, refreshed firewalls) growing orders 20%+ as the underlying demand signal. The 300+ Splunk logos added via cross-sell in Q3+Q4 also validates the integration thesis. Status: Resolved positively

First dollar of Humane (Saudi sovereign) orders — No specific Humane order disclosure. Management framed sovereign AI as building momentum in 2H FY26 with "core system provider" positioning, but stopped short of confirming first dollars booked. Status: Continue monitoring

What to watch into next quarter

Q1 AI infrastructure orders vs. the $800M Q4 run-rate — sustaining above $800M would imply an FY26 AI order pace of $3B+ (vs. $2B+ in FY25); a step-down toward $600M would signal cloud capex digestion

Campus (CAT 9K refresh) order growth disclosure — management has framed FY26 as the year the multi-year refresh kicks in; watch for product-level traction beyond the generic Wi-Fi 7 triple-digit framing, ideally a dollar anchor

First disclosed Humane or other Middle East sovereign AI bookings — management committed to 2H FY26 momentum and "core system provider" positioning; an early booking would pull forward the FY26 back-half ramp the guide depends on

Public sector / US Federal trajectory after the -6% Q4 print — the comp pressure should ease and management is forecasting a return to growth for Federal in FY26 (still below FY25 levels); watch whether the recovery signal materializes

Security order trajectory toward the 15–17% long-term target — Chuck signaled an exit-year run-rate "near or on a path to" the target; watch whether the 20%+ new-product order growth continues to outweigh the legacy drag

Sources

Cisco Q4 FY2025 Press Release (Form 8-K Exhibit 99.1), filed August 13, 2025 — https://www.sec.gov/Archives/edgar/data/858877/000119312525179820/d901470dex991.htm
Cisco Q4 FY2025 earnings call prepared remarks and Q&A transcript
Cisco Q3 FY2025 Tapebrief (prior quarter context)

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