Cisco's Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise

Core Insights - Cisco Systems (CSCO) reported strong second-quarter fiscal 2025 results, with non-GAAP earnings of 94 cents per share, exceeding estimates by 3.3% and reflecting an 8% year-over-year increase [1] - Revenues reached $14 billion, surpassing the consensus estimate by 0.9% and showing a 9.4% year-over-year growth [2] Financial Performance - Total product revenues were $10.11 billion, accounting for 73.1% of total revenues, with an 11% year-over-year increase [5] - Service revenues amounted to $3.76 billion, representing 26.9% of total revenues, and increased by 5.6% year over year [5] - Annualized Recurring Revenues (ARR) for the quarter were $30.1 billion, up 22% year over year, with product ARR growth of 41% [5] Revenue Breakdown - Networking revenues were $6.85 billion, down 3% year over year [4] - Security revenues surged to $2.11 billion, marking a 117% year-over-year increase [4] - Collaboration revenues increased by 1% to $996 million, while observability revenues grew by 47% to $277 million [4] Regional Performance - Americas' revenues rose by 9% year over year to $8.20 billion [6] - EMEA revenues jumped 11% year over year to $3.86 billion [6] - APJC revenues climbed 8% year over year to $1.93 billion [6] Operating Metrics - Non-GAAP gross margin improved to 68.7%, up 200 basis points year over year [7] - Non-GAAP operating income was reported at $4.86 billion, reflecting a 15.3% year-over-year increase, with an operating margin of 34.7% [8] Balance Sheet and Shareholder Returns - Cash and cash equivalents totaled $16.9 billion, down from $18.67 billion [9] - Total debt was $31.03 billion, slightly decreased from $31.99 billion [9] - Cisco returned $2.8 billion to shareholders through buybacks and dividends, repurchasing approximately 21 million shares [10] Guidance - For Q3 fiscal 2025, Cisco expects non-GAAP earnings between 90 cents and 92 cents per share, with revenues projected between $13.9 billion and $14.1 billion [11] - For the full fiscal 2025, non-GAAP earnings are anticipated to be between $3.68 and $3.74 per share, with revenues expected in the range of $56 billion to $56.5 billion [12]