Cisco Systems(US:CSCO)2025-11-12 21:15Financial Performance - Q1 FY 2026 revenue reached $14.9 billion, an 8% increase year over year, with product revenue up 10% and services revenue up 2%[5] - GAAP EPS was $0.72, a 6% increase year over year, while Non-GAAP EPS was $1.00, up 10% year over year[6] - For the three months ended October 25, 2025, total revenue was $9.745 billion, a 6% increase year-over-year from $9.121 billion[54] - Non-GAAP net income for the same period was $4.011 billion, reflecting a 9% increase from $3.671 billion year-over-year[54] - Net income for the three months ended October 25, 2025, was $2.86 billion, an increase of 5.5% compared to $2.71 billion for the same period in 2024[40] Guidance and Projections - Cisco's Q2 FY 2026 guidance estimates revenue between $15.0 billion and $15.2 billion, with GAAP EPS projected at $0.69 to $0.74[23][24] - For FY 2026, Cisco projects revenue between $60.2 billion and $61.0 billion, with GAAP EPS expected to be between $2.87 and $2.98[25][26] - The company expects Q2 FY 2026 GAAP earnings per share to be between $0.69 and $0.74, with non-GAAP EPS projected between $1.01 and $1.03[59] Orders and Backlog - Product orders increased by 13% year over year, with double-digit growth in Networking product orders for the fifth consecutive quarter[5] - AI Infrastructure orders from hyperscaler customers totaled $1.3 billion, indicating significant growth acceleration[5] - Remaining Performance Obligations (RPO) totaled $42.9 billion, a 7% increase, with product RPO up 10%[19] - Total remaining performance obligations (RPO) reached $42.87 billion, reflecting a year-over-year growth of 7% from $39.99 billion[42] - Long-term product RPO was $11.8 billion, reflecting a 13% increase year-over-year[42] Cash Flow and Returns - The company returned $3.6 billion to stockholders in Q1 FY 2026 through share buybacks and dividends, including a cash dividend of $0.41 per share[21] - Cash flows from operating activities amounted to $3.21 billion, down from $3.66 billion in the prior year, indicating a decrease of 12.3%[40] - The company repurchased $2.00 billion worth of common stock during the quarter, with a weighted average price of $68.28 per share[46] Assets and Liabilities - Total cash and cash equivalents at the end of Q1 FY 2026 were $15.7 billion, down from $16.1 billion at the end of FY 2025[19] - Total assets decreased to $121.1 billion as of October 25, 2025, down from $122.3 billion on July 26, 2025, representing a decline of 1%[38] - Total liabilities decreased to $74.23 billion, down from $75.45 billion, a reduction of 1.6%[38] Profitability Metrics - GAAP gross margin was 65.5%, while non-GAAP gross margin was 68.1%, indicating a slight improvement in profitability[54] - The company reported a gross margin of 68.9% for its services segment, indicating strong performance in that area[54] - The effective tax rate for GAAP was 15.7%, compared to a negative 19.6% in the prior year, with a non-GAAP effective tax rate remaining stable at 19.0%[57] Operating Expenses - Cisco's operating expenses for the three months ended October 25, 2025, were $6.382 billion, a decrease from $6.763 billion in the prior year[54] Strategic Initiatives - Cisco closed the acquisition of Aura Asset Intelligence, enhancing its asset and risk intelligence capabilities[22] - The company is focused on capital returns and strategic investments to capture significant opportunities in the AI sector[61]