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    CSCO
    Earnings call· Jul 2026(Q4 FY26)

    CISCO SYSTEMS Q4 FY26 earnings call CSCO

    Aug 12, 2026 Source

    Executive summary

    Cisco Q4 FY26 — Record Revenue and Strong AI Momentum

    Cisco closed FY26 with record revenue and EPS, fueled by robust demand across all segments and accelerating AI adoption. The company is experiencing a networking super cycle, driven by hyperscaler investments and enterprise modernization, leading to significant operating leverage and strong cash flow generation. Management is confident in continued growth and profitability for FY27, despite some gross margin headwinds from hardware mix.

    Highlights

    5

    • Fiscal Year 2026 revenue exceeded $63 billion, growing 12% year-over-year, marking a record year for Cisco.

    • Record Q4 revenue of $17.3 billion, up 18% year-over-year, with product revenue up an impressive 24%.

    • Non-GAAP EPS grew 23% in Q4 to $1.22 and 14% for the full year to $4.33, both record highs.

    • Total product orders increased 35% year-over-year in Q4, driven by triple-digit growth in hyperscale orders.

    • AI infrastructure orders from hyperscalers reached $4 billion in Q4, bringing the total for FY26 to $9.3 billion.

    Concerns

    1

    • Non-GAAP gross margin decreased 210 basis points year-over-year in Q4 to 66.3%, primarily due to a higher hardware mix and increased memory costs.

    Guidance & targets

    12
    CategoryTargetConfidence
    Revenue
    $18.0B-$18.2B
    high materiality
    High
    Non-GAAP Gross Margin
    65%-66%
    medium materiality
    High
    Non-GAAP Operating Margin
    35.5%-36.5%
    medium materiality
    High
    Non-GAAP EPS
    $1.32-$1.34
    high materiality
    High
    Non-GAAP Effective Tax Rate
    approximately 18.5%
    low materiality
    High
    Revenue
    $72.2B-$73.4B
    high materiality
    High
    Non-GAAP EPS
    $5.05-$5.11
    high materiality
    High
    AI infrastructure revenue (hyperscalers)
    $7.5B
    high materiality
    High
    Security and Observability revenue growth
    high single-digits
    medium materiality
    Medium
    Services revenue growth
    low single-digit growth
    low materiality
    Medium
    AI orders (hyperscalers)
    meaningfully higher than FY26
    high materiality
    Medium
    Silicon One rollout
    comprehensively across high-performance networking systems
    medium materiality
    High

    Segment performance

    11
    SegmentRevenueYoYQoQMargin
    Product
    Led by networking growth.
    		$13.5B24%——
    Services
    Flat year-over-year.
    		$3.8B0%——
    Networking
    Revenue growth accelerated, driven by AI infrastructure, data center switching, and campus networking.
    		—28%——
    Security
    Strong quarter reflecting strength in Splunk, network security, and SASE.
    		—14%——
    Collaboration
    Solid growth in Webex Devices and Contact Center.
    		—12%——
    Americas
    Strong product order growth.
    Product orders: up 44% YoY
    		—44%——
    EMEA
    Strong product order growth.
    Product orders: up 25% YoY
    		—25%——
    APJC
    Strong product order growth.
    Product orders: up 19% YoY
    		—19%——
    Service Provider and Cloud
    Led overall customer market growth.
    Product orders: up 95% YoY
    		—95%——
    Public Sector
    Accelerated growth, driven by U.S. Federal.
    Product orders: up 30% YoY
    		—30%——
    Enterprise
    Accelerated product order growth.
    Product orders: up 21% YoY
    		—21%——

    Operational metrics

    47
    Revenue
    $17.3B
    Q4 FY26

    Record revenue for the quarter.

    Revenue Growth YoY
    18%YoY
    Q4 FY26

    Impressive year-over-year growth.

    Revenue
    $63.3B
    FY26

    Record revenue for the full fiscal year.

    Revenue Growth YoY
    12%YoY
    FY26

    Full fiscal year growth.

    Non-GAAP Net Income
    $4.9B
    Q4 FY26

    Record non-GAAP net income for the quarter.

    Non-GAAP EPS
    $1.22
    Q4 FY26

    Record non-GAAP EPS for the quarter.

    Non-GAAP EPS Growth YoY
    23%YoY
    Q4 FY26

    Non-GAAP EPS growth outpacing revenue growth.

    Non-GAAP Net Income
    $17.2B
    FY26

    Record non-GAAP net income for the full fiscal year.

    Non-GAAP EPS
    $4.33
    FY26

    Record non-GAAP EPS for the full fiscal year.

    Non-GAAP EPS Growth YoY
    14%YoY
    FY26

    Non-GAAP EPS growth outpacing revenue growth for the full year.

    Ex-Hyperscale Product Orders Growth YoY
    25%YoY
    Q4 FY26

    Product orders excluding hyperscale customers.

    Networking Product Orders Growth YoY
    40%YoY
    Q4 FY26

    Driven by service provider routing, Acacia optics, data center switching, compute, campus switching, wireless, enterprise routing, and industrial IoT products.

    Acacia Orders
    $1B
    Q4 FY26

    Another very strong quarter for Acacia business.

    400-gig coherent pluggable optics shipped
    Over 850,000
    to date

    Cumulative shipments of 400-gig coherent pluggable optics.

    800-gig coherent pluggable optics shipped
    Over 75,000
    to date

    Cumulative shipments of 800-gig coherent pluggable optics.

    AI Infrastructure Orders (Neocloud, Sovereign, Enterprise)
    Over $400M
    Q4 FY26

    Orders from neocloud, sovereign, and enterprise customers.

    AI Infrastructure Orders (Neocloud, Sovereign, Enterprise)
    Over $1B
    FY26

    Total orders from neocloud, sovereign, and enterprise customers for the full fiscal year.

    Nexus switch orders tagged for AI deployments (Enterprise)
    Up more than 85%sequentially
    Q4 FY26

    Sequential growth in enterprise AI-tagged switch orders.

    Data Center Networking Orders Growth YoY
    More than 35%YoY
    Q4 FY26

    Overall data center networking orders growth.

    Campus Networking Product Orders Growth YoY
    20%YoY
    Q4 FY26

    Strong demand for campus networking solutions.

    Wi-Fi 7 orders as % of total wireless orders
    More than 50%
    Q4 FY26

    Rapid ramp of next-generation wireless products.

    Industrial IoT Product Orders Growth YoY (consecutive quarters)
    9 consecutive quarters
    Q4 FY26

    Continued acceleration driven by deployments in manufacturing, utilities, and data center facilities.

    Core Security New Products Customers
    Over 1,500
    Q4 FY26

    Customers purchasing new products including Secure Access, XDR, Hypershield, and AI Defense.

    Core Security New Products Customers (since launch)
    Over 6,400
    since launch

    Total net new customers for core security products.

    Firewall Orders Growth YoY
    Over 30%YoY
    Q4 FY26

    Strong growth in firewall orders.

    Splunk New Logos
    More than 280
    Q4 FY26

    New logos added to Splunk's customer base.

    Splunk New Logos (FY26 total)
    Over 1,000
    FY26

    Exceeded target for new Splunk logos for the fiscal year.

    Collaboration Order Growth YoY
    Double-digitYoY
    Q4 FY26

    Best quarterly performance in 7 years for collaboration business.

    Video Devices Growth YoY
    40%YoY
    Q4 FY26

    Strong growth in video devices.

    Cisco Cloud Control Sign-ups
    Nearly 4,500
    since launch

    Enterprises signed up for Cisco Cloud Control.

    Cisco IQ Resilient Infrastructure Services Customers
    Over 8,600
    now

    Current customer count for Resilient Infrastructure Services.

    AI-resolved support cases
    145,000
    FY26

    Support cases resolved entirely by AI with zero human intervention.

    Circuit AI assistant prompts
    Over 75M
    Q4 FY26

    Prompts handled by Cisco's on-prem proprietary AI assistant.

    Non-GAAP Gross Margin
    66.3%down 210 bps YoY, up 30 bps QoQ
    Q4 FY26

    Gross margin performance for the quarter.

    Non-GAAP Product Gross Margin
    64.8%down 270 bps YoY
    Q4 FY26

    Product gross margin performance.

    Non-GAAP Services Gross Margin
    71.6%up 80 bps YoY
    Q4 FY26

    Services gross margin performance.

    Non-GAAP Operating Margin
    35.9%
    Q4 FY26

    Reflecting strong execution and operational efficiency.

    Non-GAAP Operating Margin
    34.8%up 40 bps YoY
    FY26

    Full fiscal year operating margin, demonstrating continuing operating leverage.

    Non-GAAP Tax Rate
    18.8%
    Q4 FY26

    Effective tax rate for the quarter.

    Cash and investments balance
    $15.9B
    Q4 FY26

    Total cash, cash equivalents and investments.

    Share Repurchases
    $1.5B
    Q4 FY26

    Amount of share repurchases during the quarter.

    Dividends
    $1.7B
    Q4 FY26

    Quarterly cash dividend paid.

    Share Repurchases
    $6.1B
    FY26

    Total share repurchases for the full fiscal year.

    Dividends
    $6.6B
    FY26

    Total cash dividends for the full fiscal year.

    AI infrastructure revenue as % of total revenue
    6%up from <2% in FY25
    FY26

    Contribution of AI infrastructure revenue from hyperscalers to total revenue.

    Price increase impact on revenue growth
    5 points
    Q4 FY26

    Impact of price increases on top line revenue growth.

    Price increase impact on revenue growth
    4 to 5 points
    FY27

    Expected impact of price increases on top line revenue growth for the full fiscal year.

    Industry KPIs

    9
    MetricValueDetails
    Capital return$12.7BUSD
    Backlog order book$46.7BUSD
    Orders backlog quality8th consecutive quarter
    Product orders order growth35%%
    Ai cloud infrastructure orders$4BUSD
    Recurring software service revenue48%%
    Revenue mix by product customer typeAmericas up 44%, EMEA up 25%, APJC up 19%%
    Design wins product cycle transitions3new design wins
    Front end vs back end scale up vs scale across m14x

    Orderbook & backlog

    5
    Total RPO$46.7BQ4 FY26 end

    up 7% YoY

    Product RPOup 9%Q4 FY26 end

    up 9% YoY

    Total ARR$32.1BQ4 FY26 end

    up 3% YoY

    Product ARRup 5%Q4 FY26 end

    up 5% YoY

    AI Infrastructure Orders (Hyperscalers)$9.3BFY26 total

    approximately 4.5x FY25 total

    Mix was approximately 60% Silicon One-based systems and 40% optics.

    Product announcements

    3
    ProductTypeDetails
    Cisco Cloud Controllaunch
    Antareslaunch
    Resilient Infrastructure Serviceslaunch

    Deals & partnerships

    2
    Galileo Technologies, Inc.Acquisition to expand observability offerings.

    Closed in Q4 FY26.

    Astrix Securities Ltd.Acquisition to expand security offerings.

    Closed in Q4 FY26.

    Risks & headwinds

    1
    Gross Margin Headwind from Hardware Mix and Memory CostsFY27

    Non-GAAP gross margin down 210 bps YoY in Q4 to 66.3%

    Mitigation: Operating margin is a better indicator of profitability; strong operating leverage with bottom line growing faster than top line; strategic investments in organic innovation and disciplined spend management.

    What to watch in Q1 FY27

    5

    AI Infrastructure Revenue (Hyperscalers)

    Q1 FY27 results (November 2026)
    Current$7.5B (FY27 guidance)
    TargetProgress towards $7.5B, with gradual increases Q1-Q4

    Why it matters

    This is a key driver of overall revenue growth and central to the networking super cycle thesis.

    Overall, our hyperscale business continues to show great momentum with AI infrastructure revenue projected to grow to $7.5 billion in fiscal year '27, supported by demand growth and market share gains.

    Q&A highlights

    6

    The FY27 revenue guide implies 15% growth (10% ex-AI), significantly higher than the long-term model. What drives the durability of this growth, and is this the peak of the cycle? Also, details on the $7.5 billion AI revenue target, scale-across opportunity, and multi-rail solutions.

    Chuck emphasized the networking super cycle, enabled by Cisco's integrated stack (systems, silicon, optics, security, observability) across hyperscalers, telcos, and enterprises preparing for AI, Mythos, and quantum. He noted the 14x traffic increase for AI-based scale-across, highlighting P200 wins, Acacia optics, and upcoming multi-rail systems as key drivers.

    “I think this super cycle is really -- it's enabled because we uniquely have our systems, our silicon, our optics, security, observability and really being able to integrate that into a stack for our customers.”

    asked by Amit Daryanani · answered by Charles Robbins

    2 min read5 chapters

    Detailed Narrative

    01

    AI Networking Super Cycle

    Cisco is experiencing a multi-year networking super cycle, driven by the accelerating adoption of agentic AI. This trend is fueling increased demand for networking, security, and observability solutions across cloud, on-premise, and edge environments. The company believes it is uniquely positioned to capitalize on this opportunity due to its integrated stack of systems, silicon, optics, security, and observability, which addresses the complex needs of AI workloads and infrastructure modernization.

    02

    Hyperscaler AI Momentum and Design Wins

    The company reported strong momentum with hyperscalers, securing $4 billion in AI infrastructure orders in Q4, contributing to a total of $9.3 billion for FY26. These orders were approximately 60% Silicon One-based systems and 40% optics. Cisco announced three new hyperscaler design wins in Q4, including for its P200-powered system for scale-across use cases, bringing the total to three such wins. The company also highlighted its market leadership in coherent pluggable optics, having shipped over 850,000 400-gig and 75,000 800-gig units.

    03

    Enterprise and Public Sector Strength

    Enterprise product order growth accelerated to 21% year-over-year in Q4, with double-digit growth across all product categories and geographies. Public sector orders also saw significant acceleration, growing 30% year-over-year, driven by U.S. Federal demand. Data center networking orders increased more than 35% year-over-year, and campus networking orders grew 20% year-over-year, supported by infrastructure modernization and rapid adoption of Wi-Fi 7, which represented over 50% of total wireless orders.

    04

    Security Portfolio and Splunk Integration

    Cisco's entire security portfolio, including Splunk, achieved double-digit order growth in Q4. The core security business added over 1,500 new customers for new products like Secure Access, XDR, Hypershield, and AI Defense, totaling over 6,400 since launch. Firewall orders grew over 30% in Q4. Splunk added more than 280 new logos, exceeding its FY26 target of 1,000, benefiting from integration into Cisco's broader security offerings and contributing to whole portfolio agreements.

    05

    Innovation and Operational Productivity

    Cisco introduced Cloud Control, a unified management plane for its products, with nearly 4,500 enterprises signing up. AI Canvas, a component of Cloud Control, is already demonstrating significant productivity gains for network engineers. Internally, the company leveraged generative AI and agentic systems to resolve 145,000 support cases entirely by AI in FY26, and its proprietary AI assistant, Circuit, handled over 75 million prompts in Q4, showcasing operational efficiency and AI integration.

    AI-generated summary of the company’s earnings call. Not investment advice.