Cisco's Q4 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Down

Core Insights - Cisco Systems (CSCO) reported fourth-quarter fiscal 2025 non-GAAP earnings of 99 cents per share, exceeding the Zacks Consensus Estimate by 2.06% and reflecting a year-over-year increase of 13.8% [1] - Revenues reached $14.67 billion, surpassing the Zacks Consensus Estimate by 0.47% and showing a year-over-year growth of 7.6% [1] - Total Annual Recurring Revenues (ARR) were $31.1 billion, up 5%, with product ARR growth of 8% [1] Financial Performance - Fourth-quarter revenues from Networking were $7.63 billion, up 12% year over year; Security revenues were $1.95 billion, up 9%; Collaboration revenues were $1.04 billion, up 2%; and Observability revenues were $259 million, up 4% [4] - Total Product revenues in Q4 were $10.89 billion, accounting for 74.2% of total revenues, with a year-over-year increase of 10%; Service Revenues were $3.79 billion, flat year over year [5] - Operating expenses totaled $5 billion, up 3.6% year over year, but as a percentage of revenues, they declined by 130 basis points; non-GAAP operating income was $5.03 billion, up 13.3% year over year, with an operating margin of 34.3% [10] Regional Performance - Americas' revenues increased 9% year over year to $8.82 billion; EMEA revenues climbed 4% to $3.65 billion; APJC revenues rose 7% to $2.21 billion [6] AI Infrastructure and Partnerships - AI Infrastructure orders from webscale customers exceeded $800 million, contributing to total revenues of $2 billion in fiscal 2025, which is double the original expectation [6][9] - Cisco's partnership with NVIDIA is enhancing its offerings, particularly in AI infrastructure, with the integration of Cisco Nexus switches and NVIDIA's Spectrum-X architecture [7] Balance Sheet and Shareholder Returns - As of July 26, 2025, cash and cash equivalents and investments totaled $16.1 billion, up from $15.6 billion; total debt decreased to $28.1 billion from $29.2 billion [11] - Remaining performance obligations (RPO) were $43.5 billion, up 6%, with 50% expected to be recognized as revenues in the next 12 months; Cisco returned $2.9 billion to stockholders through share buybacks and dividends [12] Guidance - For Q1 fiscal 2026, Cisco expects non-GAAP earnings between 97 cents and 99 cents per share, with revenues projected between $14.65 billion and $14.85 billion [13] - For fiscal 2026, non-GAAP earnings are expected to be between $4 and $4.06 per share, with revenues anticipated between $59 billion and $60 billion [14]