Cisco Systems(CSCO) - 2025 Q4 - Annual Results

News Summary This section provides an overview of Cisco's financial performance for Q4 and full fiscal year 2025, along with guidance for Q1 and full fiscal year 2026 Q4 FY 2025 Results Highlights Cisco achieved strong Q4 FY2025 results, meeting or exceeding revenue and profitability expectations, with outstanding AI infrastructure orders Key Financial Data for Q4 FY2025 | Metric | Amount/Ratio (Q4 FY2025) | Year-over-Year Growth (YoY) | | :--- | :--- | :--- | | Revenue | $14.7 billion | 8% | | Product Orders | - | 7% | | AI Infrastructure Orders (webscale customers) | >$800 million (Q4) | - | | GAAP Gross Margin | 65.7% | - | | Non-GAAP Gross Margin | 68.4% | - | | GAAP EPS | $0.71 | 31% | | Non-GAAP EPS | $0.99 | 14% | - AI infrastructure orders from webscale customers exceeded $800 million in Q4, bringing the total for FY2025 to over $2 billion, more than double the original $1 billion target[4] FY 2025 Full Year Results Highlights For the full fiscal year 2025, Cisco delivered solid revenue growth and profitability, with particularly strong AI infrastructure order performance Key Financial Data for Full Year FY2025 | Metric | Amount (FY2025) | Year-over-Year Growth (YoY) | | :--- | :--- | :--- | | Revenue | $56.7 billion | 5% | | AI Infrastructure Orders (webscale customers) | >$2 billion | >100% (vs. $1B target) | | GAAP EPS | $2.61 | 3% | | Non-GAAP EPS | $3.81 | 2% | - Total AI infrastructure orders from webscale customers for full year FY2025 exceeded $2 billion, more than double the original $1 billion target[4] Q1 FY 2026 Guidance Cisco anticipates stable revenue for Q1 FY2026, with Non-GAAP EPS projected to be between $0.97 and $0.99 Q1 FY2026 Performance Guidance | Metric | Range | | :--- | :--- | | Revenue | $14.65 billion - $14.85 billion | | GAAP EPS | $0.63 - $0.68 | | Non-GAAP EPS | $0.97 - $0.99 | - Gross margin and EPS guidance include the estimated impact of tariffs under current trade policies[4] FY 2026 Full Year Guidance Cisco projects full year FY2026 revenue growth, with Non-GAAP EPS expected to range from $4.00 to $4.06 Full Year FY2026 Performance Guidance | Metric | Range | | :--- | :--- | | Revenue | $59.0 billion - $60.0 billion | | GAAP EPS | $2.79 - $2.91 | | Non-GAAP EPS | $4.00 - $4.06 | - Gross margin and EPS guidance include the estimated impact of tariffs under current trade policies[4] Management Commentary This section presents statements from Cisco's CEO and CFO regarding the company's recent performance and future outlook CEO Statement CEO Chuck Robbins highlights strong FY2025 performance driven by innovation and execution, noting exceptional AI infrastructure orders and market opportunities - Cisco concluded FY2025 with a strong performance, driven by accelerated innovation and solid execution[6] - AI infrastructure orders from webscale customers in FY2025 were more than double the original target, indicating significant opportunities in the AI era where Cisco will lead architectural transformation and build critical infrastructure[6] CFO Statement CFO Mark Patterson notes Q4 revenue, gross margin, and operating income at the high end of guidance, with EPS exceeding expectations and robust operating cash flow - Q4 revenue, gross margin, and operating income were at the high end of guidance, with EPS exceeding expectations and robust operating cash flow[6] - Entering FY2026, the company remains focused on strategic investments in innovation, driving sustainable profitable growth, and creating shareholder value[6] Detailed Financial Results This section provides an in-depth analysis of Cisco's financial performance for Q4 and full fiscal year 2025, including balance sheet and capital allocation details Q4 FY 2025 Financial Performance Cisco achieved significant revenue and earnings growth in Q4 FY2025, driven by strong product revenue across all geographic regions and product categories, alongside increased operating cash flow Q4 FY2025 GAAP and Non-GAAP Performance | Metric | Q4 FY2025 (GAAP) | Q4 FY2024 (GAAP) | Year-over-Year Growth (GAAP) | Q4 FY2025 (Non-GAAP) | Q4 FY2024 (Non-GAAP) | Year-over-Year Growth (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $14.7 billion | $13.6 billion | 8% | - | - | - | | Net Income | $2.8 billion | $2.2 billion | 31% | $4.0 billion | $3.5 billion | 12% | | Diluted EPS | $0.71 | $0.54 | 31% | $0.99 | $0.87 | 14% | - Product revenue increased by 10%, while service revenue remained flat; Americas revenue grew 9%, EMEA 4%, and APJC 7%[16] - Product revenue growth was primarily driven by 12% growth in Networking, 9% in Security, 4% in Observability, and 2% in Collaboration products[16] Q4 FY2025 Gross Margins | Metric | Q4 FY2025 (GAAP) | Q4 FY2024 (GAAP) | Q4 FY2025 (Non-GAAP) | Q4 FY2024 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Total Gross Margin | 65.7% | 64.4% | 68.4% | 67.9% | | Product Gross Margin | 64.7% | 63.0% | 67.5% | 67.0% | | Service Gross Margin | 68.3% | 67.8% | 70.8% | 70.3% | - Operating expenses were flat on a GAAP basis and increased by 4% on a Non-GAAP basis; GAAP operating income grew 32%, and Non-GAAP operating income grew 13%[18] - Operating cash flow for Q4 FY2025 was $4.2 billion, a 14% year-over-year increase[20] FY 2025 Full Year Financial Performance For full year FY2025, Cisco's total revenue grew by 5%, with GAAP net income and EPS increasing, while Non-GAAP net income remained flat and EPS saw a slight rise, alongside a significant increase in operating cash flow Full Year FY2025 GAAP and Non-GAAP Performance | Metric | FY2025 (GAAP) | FY2024 (GAAP) | Year-over-Year Growth (GAAP) | FY2025 (Non-GAAP) | FY2024 (Non-GAAP) | Year-over-Year Growth (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $56.7 billion | $53.8 billion | 5% | - | - | - | | Net Income | $10.5 billion | $10.3 billion | 1% | $15.2 billion | $15.2 billion | —% | | Diluted EPS | $2.61 | $2.54 | 3% | $3.81 | $3.73 | 2% | - Operating cash flow for full year FY2025 was $14.2 billion, a 30% year-over-year increase[22] Balance Sheet and Capital Allocation As of Q4 FY2025, Cisco's cash and investments slightly increased, with growth in remaining performance obligations and deferred revenue, while consistently returning capital to shareholders through dividends and stock repurchases Cash, Cash Equivalents, and Investments | Period | Amount | | :--- | :--- | | End of Q4 FY2025 | $16.1 billion | | End of Q3 FY2025 | $15.6 billion | | End of FY2024 | $17.9 billion | - Remaining Performance Obligations (RPO) reached $43.5 billion, a 6% year-over-year increase, with 50% expected to be recognized as revenue within the next 12 months; Product RPO grew 8%, and Service RPO grew 5%[23][46] - Total deferred revenue was $28.8 billion, a 1% year-over-year increase, with deferred product revenue up 2% and deferred service revenue flat[24][48] - In Q4 FY2025, the company returned $2.9 billion to shareholders through stock repurchases and dividends, including $1.6 billion in cash dividends of $0.41 per share and $1.3 billion for repurchasing approximately 19 million shares of common stock[25][50] Financial Guidance This section outlines Cisco's financial projections for Q1 and full fiscal year 2026, including expected revenue, profitability, and EPS ranges Q1 FY 2026 Outlook Cisco provides detailed financial guidance for Q1 FY2026, including expected ranges for revenue, gross margin, operating margin, and EPS, noting the inclusion of tariff impacts Q1 FY2026 Performance Guidance | Metric | Range | | :--- | :--- | | Revenue | $14.65 billion - $14.85 billion | | Non-GAAP Gross Margin | 67.5% - 68.5% | | Non-GAAP Operating Margin | 33% - 34% | | Non-GAAP EPS | $0.97 - $0.99 | | GAAP EPS | $0.63 - $0.68 | - Gross margin and EPS guidance include the estimated impact of tariffs under current trade policies[27] - Q1 FY2026 and FY2026 guidance assume a GAAP effective tax rate of approximately 18% and a Non-GAAP effective tax rate of approximately 19%[30] Full Year FY 2026 Outlook Cisco issues full year FY2026 revenue and EPS guidance, projecting revenue between $59.0 billion and $60.0 billion, with Non-GAAP EPS from $4.00 to $4.06 Full Year FY2026 Performance Guidance | Metric | Range | | :--- | :--- | | Revenue | $59.0 billion - $60.0 billion | | Non-GAAP EPS | $4.00 - $4.06 | | GAAP EPS | $2.79 - $2.91 | - Gross margin and EPS guidance include the estimated impact of tariffs under current trade policies[29] - Q1 FY2026 and FY2026 guidance assume a GAAP effective tax rate of approximately 18% and a Non-GAAP effective tax rate of approximately 19%[30] Consolidated Financial Statements This section provides comprehensive consolidated financial statements, including statements of operations, balance sheets, cash flows, and details on revenue, RPO, and deferred revenue Consolidated Statements of Operations The consolidated statements of operations detail Cisco's key financial data for Q4 and full fiscal year 2025, including revenue, costs, gross profit, operating expenses, operating income, and net income Consolidated Statements of Operations Summary (Millions of USD) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :--- | :--- | :--- | :--- | :--- | | Product Revenue | $10,886 | $9,858 | $41,608 | $39,253 | | Service Revenue | $3,787 | $3,784 | $15,046 | $14,550 | | Total Revenue | $14,673 | $13,642 | $56,654 | $53,803 | | Gross Profit | $9,635 | $8,781 | $37,145 | $34,828 | | Operating Expenses | $6,193 | $6,163 | $25,030 | $22,647 | | Operating Income | $3,442 | $2,618 | $12,115 | $12,181 | | Net Income | $2,823 | $2,162 | $10,453 | $10,320 | | Diluted EPS | $0.71 | $0.54 | $2.61 | $2.54 | Revenue by Geographic Segment and Product Group Cisco's revenue is detailed by geographic region (Americas, EMEA, APJC) and product category (Networking, Security, Collaboration, Observability), illustrating growth across segments and product lines Revenue by Geographic Segment (Millions of USD) | Region | Q4 FY2025 Amount | Q4 FY2025 Year-over-Year Growth | FY2025 Amount | FY2025 Year-over-Year Growth | | :--- | :--- | :--- | :--- | :--- | | Americas | $8,822 | 9% | $33,656 | 5% | | EMEA | $3,645 | 4% | $14,824 | 5% | | APJC | $2,206 | 7% | $8,174 | 6% | | Total | $14,673 | 8% | $56,654 | 5% | Revenue by Product Group (Millions of USD) | Product Group | Q4 FY2025 Amount | Q4 FY2025 Year-over-Year Growth | FY2025 Amount | FY2025 Year-over-Year Growth | | :--- | :--- | :--- | :--- | :--- | | Networking | $7,633 | 12% | $28,304 | (3)% | | Security | $1,952 | 9% | $8,094 | 59% | | Collaboration | $1,042 | 2% | $4,154 | 1% | | Observability | $259 | 4% | $1,055 | 26% | | Total Product | $10,886 | 10% | $41,608 | 6% | | Services | $3,787 | —% | $15,046 | 3% | | Total | $14,673 | 8% | $56,654 | 5% | Gross Margin Percentage by Geographic Segment | Region | Q4 FY2025 | FY2025 | | :--- | :--- | :--- | | Americas | 68.0% | 68.2% | | EMEA | 71.7% | 71.1% | | APJC | 64.2% | 66.4% | Condensed Consolidated Balance Sheets The condensed consolidated balance sheets provide a snapshot of Cisco's assets, liabilities, and stockholders' equity at the end of fiscal years 2025 and 2024, reflecting changes in the company's financial position Condensed Consolidated Balance Sheets Summary (Millions of USD) | Metric | July 26, 2025 | July 27, 2024 | | :--- | :--- | :--- | | Total Assets | $122,564 | $124,413 | | Cash and Cash Equivalents | $8,346 | $7,508 | | Investments | $7,764 | $10,346 | | Total Liabilities | $75,448 | $78,956 | | Short-Term Debt | $5,232 | $11,341 | | Long-Term Debt | $22,861 | $19,621 | | Deferred Revenue (Total) | $28,779 | $28,475 | | Total Equity | $47,116 | $45,457 | Consolidated Statements of Cash Flows The consolidated statements of cash flows illustrate Cisco's cash generation and usage from operating, investing, and financing activities for Q4 and full fiscal year 2025 Consolidated Statements of Cash Flows Summary (Millions of USD) | Activity Type | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :--- | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $4,234 | $3,730 | $14,193 | $10,880 | | Net Cash Provided by/(Used in) Investing Activities | $(273) | $(828) | $1,733 | $(20,478) | | Net Cash Used in Financing Activities | $(3,949) | $(4,507) | $(15,815) | $6,844 | | Cash and Cash Equivalents at End of Period | $8,910 | $8,842 | $8,910 | $8,842 | Remaining Performance Obligations and Deferred Revenue Cisco's remaining performance obligations (RPO) and deferred revenue both show growth, indicating future revenue visibility and sustained customer contracts Remaining Performance Obligations (RPO) (Millions of USD) | Metric | July 26, 2025 Amount | Year-over-Year Growth (Y/Y%) | | :--- | :--- | :--- | | Product RPO | $21,572 | 8% | | Service RPO | $21,961 | 5% | | Total RPO | $43,533 | 6% | | Expected to be Recognized as Revenue within Next 12 Months | 50% | - | Deferred Revenue (Millions of USD) | Metric | July 26, 2025 | April 26, 2025 | July 27, 2024 | | :--- | :--- | :--- | :--- | | Product Deferred Revenue | $13,490 | $13,170 | $13,219 | | Service Deferred Revenue | $15,289 | $14,821 | $15,256 | | Total Deferred Revenue | $28,779 | $27,991 | $28,475 | Dividends Paid and Repurchases of Common Stock Cisco consistently returns capital to shareholders through dividend payments and common stock repurchase programs, demonstrating its commitment to shareholder value FY2025 Dividends Paid and Stock Repurchases (Millions of USD, except per share amounts) | Quarter Ended | Dividend Per Share | Dividend Amount | Shares Repurchased (Millions) | Weighted Average Repurchase Price Per Share | Repurchase Amount | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | July 26, 2025 | $0.41 | $1,625 | 19 | $64.65 | $1,252 | $2,877 | | April 26, 2025 | $0.41 | $1,627 | 25 | $59.78 | $1,504 | $3,131 | | January 25, 2025 | $0.40 | $1,593 | 21 | $58.58 | $1,236 | $2,829 | | October 26, 2024 | $0.40 | $1,592 | 40 | $49.56 | $2,003 | $3,595 | - Remaining authorized stock repurchase amount is $14.2 billion, with no termination date[25] Reconciliations of GAAP to Non-GAAP Measures This section provides detailed reconciliations between GAAP and Non-GAAP financial measures, including net income, EPS, gross margins, operating expenses, operating margins, net income, effective tax rates, and guidance GAAP to Non-GAAP Net Income Reconciliation This section reconciles GAAP net income to Non-GAAP net income, detailing adjustments for stock-based compensation, acquisition-related intangible asset amortization, and acquisition/divestiture costs, to clarify core business performance GAAP to Non-GAAP Net Income Reconciliation (Millions of USD) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Income | $2,823 | $2,162 | $10,453 | $10,320 | | Total Cost Adjustments | $396 | $485 | $1,793 | $1,484 | | Total Operating Expense Adjustments | $1,191 | $1,337 | $5,583 | $4,712 | | Total Interest and Other Income (Loss) Net Adjustments | $(115) | $17 | $(187) | $149 | | Income Tax Impact | $(344) | $(470) | $(2,429) | $(1,515) | | Non-GAAP Net Income | $3,951 | $3,531 | $15,213 | $15,150 | - FY2025 includes a $720 million benefit from the August 2024 U.S. Tax Court ruling regarding U.S. taxation of deemed foreign dividends in a transition year under the Tax Cuts and Jobs Act[52] GAAP to Non-GAAP EPS Reconciliation This section reconciles GAAP EPS to Non-GAAP EPS, outlining the impact of adjustments such as stock-based compensation, intangible asset amortization, and tax effects on per-share earnings GAAP to Non-GAAP EPS Reconciliation | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP EPS | $0.71 | $0.54 | $2.61 | $2.54 | | Stock-Based Compensation Expense | $0.24 | $0.20 | $0.90 | $0.75 | | Acquisition-Related Intangible Asset Amortization | $0.12 | $0.15 | $0.55 | $0.40 | | Income Tax Impact | $(0.09) | $(0.08) | $(0.40) | $(0.33) | | Non-GAAP EPS | $0.99 | $0.87 | $3.81 | $3.73 | Gross Margins, Operating Expenses, Operating Margins, and Net Income Reconciliation This section details the reconciliation of GAAP to Non-GAAP gross margins, operating expenses, operating margins, and net income, presenting the quarterly and full-year impact of adjustments on these key financial metrics Q4 FY2025 GAAP to Non-GAAP Gross Margins, Operating Expenses, Operating Margins, and Net Income Reconciliation (Millions of USD) | Metric | GAAP Amount | GAAP % of Revenue | Adjustments | Non-GAAP Amount | Non-GAAP % of Revenue | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Gross Profit | $9,635 | 65.7% | $396 | $10,031 | 68.4% | | Operating Expenses | $6,193 | 42.2% | $(1,191) | $5,002 | 34.1% | | Operating Income | $3,442 | 23.5% | $1,587 | $5,029 | 34.3% | | Net Income | $2,823 | 19.2% | $1,128 | $3,951 | 26.9% | FY2025 GAAP to Non-GAAP Gross Margins, Operating Expenses, Operating Margins, and Net Income Reconciliation (Millions of USD) | Metric | GAAP Amount | GAAP % of Revenue | Adjustments | Non-GAAP Amount | Non-GAAP % of Revenue | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Gross Profit | $37,145 | 65.6% | $1,793 | $38,938 | 68.7% | | Operating Expenses | $25,030 | 44.2% | $(5,583) | $19,447 | 34.3% | | Operating Income | $12,115 | 21.4% | $7,376 | $19,491 | 34.4% | | Net Income | $10,453 | 18.5% | $4,760 | $15,213 | 26.9% | Effective Tax Rate Reconciliation This section provides a reconciliation between GAAP and Non-GAAP effective tax rates, illustrating the impact of various adjustments on the company's tax rate Effective Tax Rate Reconciliation (Percentage) | Metric | Q4 FY2025 | Q4 FY2024 | FY2025 | FY2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP Effective Tax Rate | 15.8% | 9.8% | 8.7% | 15.6% | | Total GAAP Income Tax Provision Adjustments | 2.3% | 6.8% | 9.7% | 2.9% | | Non-GAAP Effective Tax Rate | 18.1% | 16.6% | 18.4% | 18.5% | GAAP to Non-GAAP Guidance Reconciliation This section reconciles GAAP to Non-GAAP guidance for Q1 and full fiscal year 2026, detailing estimated adjustments impacting gross margin, operating margin, and EPS Q1 FY2026 GAAP to Non-GAAP Guidance Reconciliation | Metric | GAAP | Estimated Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Gross Margin | 65% - 66% | Stock-based compensation expense: 1.0%; Intangible asset amortization and acquisition/divestiture costs: 1.5%; Restructuring charges: — | 67.5% - 68.5% | | Operating Margin | 21.5% - 22.5% | Stock-based compensation expense: 6.5%; Intangible asset amortization and acquisition/divestiture costs: 4.0%; Restructuring charges: 1.0% | 33% - 34% | | EPS | $0.63 - $0.68 | Stock-based compensation expense: $0.18 - $0.19; Intangible asset amortization and acquisition/divestiture costs: $0.11 - $0.12; Restructuring charges: $0.02 - $0.03 | $0.97 - $0.99 | FY2026 GAAP to Non-GAAP Guidance Reconciliation | Metric | GAAP | Estimated Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | EPS | $2.79 - $2.91 | Stock-based compensation expense: $0.69 - $0.71; Intangible asset amortization and acquisition/divestiture costs: $0.43 - $0.45; Restructuring charges: $0.03 - $0.05 | $4.00 - $4.06 | - Estimated adjustments to EPS are net of income tax effects[68] - Restructuring charges reflect expenses related to the restructuring plan announced on August 14, 2024, which is expected to be substantially completed by the end of Q2 FY2026[69] Additional Information This section includes cautionary statements regarding forward-looking information, explanations of Non-GAAP financial measures, and an overview of Cisco's mission Forward-Looking Statements, Non-GAAP Information, and Other Disclosures This section contains warnings about forward-looking statements, highlighting inherent risks and uncertainties, and explains the rationale, limitations, and complementary use of Non-GAAP financial measures with GAAP - This press release may contain forward-looking statements subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, involving risks and uncertainties regarding future events and financial performance[71] - Non-GAAP measures are not in accordance with or an alternative for GAAP measures, may differ from Non-GAAP measures used by other companies, and are not based on any comprehensive set of accounting rules or principles[73] - Cisco believes that Non-GAAP measures, when used in conjunction with corresponding GAAP measures, provide useful information to investors and management regarding financial condition and operating results[74] About Cisco Cisco (NASDAQ: CSCO) is a global technology leader dedicated to transforming how organizations connect and secure through AI-driven solutions and services, empowering innovation, productivity, and digital resilience - Cisco is a global technology leader transforming how organizations connect and secure in the AI era[77] - Cisco empowers customers, partners, and communities to unlock innovation, increase productivity, and enhance digital resilience through its industry-leading AI-driven solutions and services[77]