CISCO REPORTS FIRST QUARTER EARNINGS
CISCO SYSTEMS, INC. (CSCO) filed an SEC Form 8-K — Results of Operations and Financial Condition. Press Contact: Investor Relations Contact: Britt Stagnaro Sami Badri Cisco Cisco 1 (408) 761-1821 1 (469) 420-4834 media_pr@external.cisco.com sambadri@cisco.com CISCO REPORTS FIRST QUARTER EARNINGS News Summary: • Record revenue of $18.5 billion, up 24% year over year, record GA
How this was made
The 30-second read
Why it matters
The raised FY27 revenue and non‑GAAP EPS guidance signals stronger demand for Cisco's AI‑infrastructure portfolio, likely supporting the stock price.
Market read
Cisco's strong quarter and raised outlook may lift the broader tech sector and reinforce investor confidence in AI‑related hardware.
What to watch
Higher operating expenses and potential margin compression could temper gains.
Cisco reports record Q1 FY2027 revenue of $18.5 billion (+24%) and record non-GAAP EPS of $1.40 (+40%), and raises FY27 revenue and non-GAAP EPS guidance
Revenue grew 24% year over year with product revenue up 32% and Networking up 43%. GAAP operating income rose 66% and non-GAAP operating margin reached 37.8%. Operating cash flow rose 36%, RPO grew 8%, and the company raised FY27 revenue and non-GAAP EPS guidance. Offsetting points are lower GAAP and non-GAAP gross margins, services revenue up only 1%, and a slight decline in cash and investments.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue (Q1 FY2027)GAAP | $18.52B | – | 24% |
| Product revenue (Q1 FY2027)GAAP | $14.67B | – | 32% |
| Services revenue (Q1 FY2027)GAAP | $3.85B | – | 1% |
| Total cost of sales (Q1 FY2027)GAAP | $6.73B | – | – |
| Product cost of sales (Q1 FY2027)GAAP | $5.61B | – | – |
| Services cost of sales (Q1 FY2027)GAAP | $1.12B | – | – |
| Gross margin, total (Q1 FY2027)GAAP | $11.79B | – | – |
| Gross margin percentage, total (Q1 FY2027)GAAP | 63.7% | – | – |
| Gross margin percentage, product (Q1 FY2027)GAAP | 61.8% | – | – |
| Gross margin percentage, services (Q1 FY2027)GAAP | 70.9% | – | – |
| Gross margin percentage, total (Q1 FY2027)non-GAAP | 65.6% | – | – |
| Gross margin percentage, product (Q1 FY2027)non-GAAP | 63.7% | – | – |
| Gross margin percentage, services (Q1 FY2027)non-GAAP | 72.9% | – | – |
| Research and development (Q1 FY2027)GAAP | $2.42B | – | – |
| Sales and marketing (Q1 FY2027)GAAP | $2.83B | – | – |
| General and administrative (Q1 FY2027)GAAP | $717M | – | – |
| Amortization of purchased intangible assets (Q1 FY2027)GAAP | $191M | – | – |
| Restructuring and other charges (Q1 FY2027)GAAP | $28M | – | – |
| Total operating expenses (Q1 FY2027)GAAP | $6.19B | – | (3)% |
| Operating expenses as % of revenue (Q1 FY2027)GAAP | 33.4% | – | – |
| Total operating expenses (Q1 FY2027)non-GAAP | $5.14B | – | 2% |
| Operating expenses as % of revenue (Q1 FY2027)non-GAAP | 27.8% | – | – |
| Operating income (Q1 FY2027)GAAP | $5.60B | – | 66% |
| Operating margin (Q1 FY2027)GAAP | 30.2% | – | – |
| Operating income (Q1 FY2027)non-GAAP | $7.01B | – | 37% |
| Operating margin (Q1 FY2027)non-GAAP | 37.8% | – | – |
| Interest income (Q1 FY2027)GAAP | $234M | – | – |
| Interest expense (Q1 FY2027)GAAP | −$368M | – | – |
| Interest and other income (loss), net (Q1 FY2027)GAAP | −$103M | – | – |
| Interest and other income (loss), net (Q1 FY2027)non-GAAP | −$176M | – | – |
| Income before provision for income taxes (Q1 FY2027)GAAP | $5.50B | – | – |
| Provision for income taxes (Q1 FY2027)GAAP | $943M | – | – |
| Effective tax rate (Q1 FY2027)GAAP | 17.2% | – | – |
| Effective tax rate (Q1 FY2027)non-GAAP | 18.5% | – | – |
| Net income (Q1 FY2027)GAAP | $4.55B | – | 59% |
| Net income (Q1 FY2027)non-GAAP | $5.57B | – | 39% |
| Net income as % of revenue (Q1 FY2027)non-GAAP | 30.1% | – | – |
| Diluted EPS (Q1 FY2027)GAAP | $1.14 | – | 58% |
| Basic EPS (Q1 FY2027)GAAP | $1.15 | – | – |
| EPS (Q1 FY2027)non-GAAP | $1.40 | – | 40% |
| Net cash provided by operating activities (Q1 FY2027)GAAP | $4.36B | – | 36% |
| Remaining performance obligations, total (October 24, 2026)other | $46.17B | – | 8% |
| Remaining performance obligations, product (October 24, 2026)other | $23.40B | – | 7% |
| Remaining performance obligations, services (October 24, 2026)other | $22.77B | – | 9% |
| Deferred revenue, total (October 24, 2026)other | $30.06B | – | 7% |
| Deferred revenue, product (October 24, 2026)other | $14.01B | – | 6% |
| Deferred revenue, services (October 24, 2026)other | $16.05B | – | 9% |
| Cash, cash equivalents and investments (October 24, 2026)other | $15.8B | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Americas (revenue)Geographic revenue as reported. Americas gross margin percentage was 64.1% (GAAP). The filing does not give a prior-year gross margin for this segment. | $11.51B | – | 28% |
| EMEA (revenue)Geographic revenue as reported. EMEA gross margin percentage was 68.9% (GAAP). The filing does not give a prior-year gross margin for this segment. | $4.46B | – | 18% |
| APJC (revenue)Geographic revenue as reported. APJC gross margin percentage was 66.5% (GAAP). The filing does not give a prior-year gross margin for this segment. | $2.56B | – | 21% |
| Networking (product revenue)Product group revenue as reported. The filing states that Networking was up 43% and does not give a cause. | $11.13B | – | 43% |
| Security (product revenue)Product group revenue as reported. The filing states that Security was up 7%. | $2.12B | – | 7% |
| Collaboration (product revenue)Product group revenue as reported. The filing states that Collaboration was up 8%. | $1.14B | – | 8% |
| Observability (product revenue)Product group revenue as reported. The filing states that Observability was up 2%. | $279M | – | 2% |
Q2 FY2027 outlook
- Revenue$18.0 billion - $18.2 billion
- Gross marginNon-GAAP 65% - 66%; GAAP 63% - 64%
- Tax rateApproximately 14.5% for GAAP and approximately 18.5% for non-GAAP
- NoteNon-GAAP operating margin 36% - 37%
- NoteNon-GAAP EPS $1.34 - $1.36
- NoteGAAP operating margin 27% - 28%
- NoteGAAP EPS $1.07 - $1.09
- NoteFY2027 revenue $74.8 billion - $75.8 billion
- NoteFY2027 non-GAAP EPS $5.47 - $5.53
- NoteFY2027 GAAP EPS $4.38 - $4.44
- NoteFY2027 effective tax rate approximately 16% for GAAP and approximately 18.5% for non-GAAP
- NoteCompany expects AI infrastructure revenue from hyperscalers of $9B in FY2027, more than double the FY2026 total (per headline)
Capital returns
- Total returned to stockholders in Q1 FY2027: $3.7 billion through share buybacks and dividends (text). Stock repurchase program line in the schedule: $2,002 million, against $2,001 million in the quarter ended October 25, 2025.
- Dividend declared and paid of $0.42 per common share, or $1.7 billion (text), totalling $1,654 million in the schedule. Prior-year quarter dividend was $0.41 per share ($1,617 million).
- Approximately 18 million shares repurchased at a weighted-average price of $112.38 per share, against 29 million shares at $68.28 in the quarter ended October 25, 2025.
- Remaining authorized amount for stock repurchases is $6.1 billion, with no termination date.
- Quarterly dividend of $0.42 per common share declared, payable January 20, 2027, to holders of record at the close of business on January 4, 2027. Future dividends subject to Board approval.
- Cash flow statement: repurchases of common stock under the repurchase program $(1,997) million (prior year $(1,992) million); shares repurchased for tax withholdings $(414) million (prior year $(284) million).
What drove it
- The company states that its results reflect broad-based high demand across all geographies and customer markets, with double-digit growth in each.
- The company states that its results reflect focused execution and operating efficiency, and that operating leverage is enabling earnings to grow faster than revenue.
- The company states that it sees the start of a multi-year networking supercycle and raised its expectation for AI infrastructure revenue from hyperscalers to $9B in FY2027.
- The company states that Q1 revenue, non-GAAP operating margin and non-GAAP EPS all exceeded the high end of its guidance ranges.
- Product revenue growth of 32% against services growth of 1%. Networking was up 43%, while Security was up 7%, Collaboration up 8% and Observability up 2%.
Concerns
- GAAP total gross margin was 63.7% against 65.5% in the prior-year quarter, and GAAP product gross margin was 61.8% against 64.5%. Non-GAAP total gross margin was 65.6% against 68.1%, and non-GAAP product gross margin was 63.7% against 67.2%.
- Services revenue was up 1%, and services remaining performance obligations were up 9% against product remaining performance obligations up 7%.
- Cash and investments were $15.8 billion, against $15.9 billion at the end of fiscal 2026. Short-term debt rose to $10,425 million from $10,161 million.
- Inventories rose to $6,384 million from $5,694 million at July 25, 2026, and accounts receivable fell to $5,928 million from $7,470 million.
- Free cash flow is not reported in the filing. Operating cash flow of $4,357 million was accompanied by acquisition of property and equipment of $(502) million, and the filing does not print a free cash flow figure.
What to watch
- Whether Q2 FY2027 results land within the guided revenue range of $18.0 billion to $18.2 billion and the non-GAAP gross margin range of 65% to 66%, given the lower gross margin in Q1.
- Progress of the hyperscaler AI infrastructure revenue, which the company expects at $9B in FY2027.
- Services revenue growth, which was 1% in Q1 against 9% growth in services remaining performance obligations.
- Trend in cash and investments and in debt levels, given the decline in cash and investments and the repayments and issuances of debt in the quarter.
- Completion of the restructuring plan announced May 13, 2026, which the company expects to be substantially complete by the end of fiscal 2027.
Balance sheet and cash flow
- Cash and cash equivalents $7,778 million at October 24, 2026 (July 25, 2026: $7,218 million).
- Investments $8,067 million at October 24, 2026 (July 25, 2026: $8,700 million).
- Short-term debt $10,425 million (July 25, 2026: $10,161 million). Long-term debt $19,374 million (July 25, 2026: $19,372 million).
- Total assets $129,458 million (July 25, 2026: $129,637 million). Total equity $51,607 million (July 25, 2026: $50,285 million). Total liabilities $77,851 million (July 25, 2026: $79,352 million).
- Inventories $6,384 million (July 25, 2026: $5,694 million). Accounts receivable, net $5,928 million (July 25, 2026: $7,470 million).
- Net cash provided by operating activities $4,357 million (prior year $3,212 million), described in the text as up 36%.
- Acquisition of property and equipment $(502) million (prior year $(323) million). Acquisitions, net of cash acquired, $(113) million (prior year $(7) million). The filing states that the company closed the acquisition of WideField Security Inc.
- Net cash used in financing activities $(3,786) million (prior year $(3,863) million). Issuances of debt $5,186 million; repayments of debt $(6,013) million.
- Cash paid for interest $600 million (prior year $616 million). Cash paid for income taxes, net $624 million (prior year $634 million).
Analysis
Cisco reported first quarter fiscal 2027 revenue of $18,517 million, up 24% from $14,883 million, with product revenue of $14,667 million (up 32%) and services revenue of $3,850 million (up 1%). Networking product revenue was $11,132 million, up 43%, and the company describes Networking growth as the driver of the quarter's product strength. Geographically, Americas revenue was $11,506 million (up 28%), EMEA $4,456 million (up 18%) and APJC $2,556 million (up 21%). The company states that demand was broad-based with double-digit growth in every geography and customer market.
Profitability showed a split pattern. GAAP operating income rose 66% to $5,598 million and the GAAP operating margin reached 30.2%, against 22.6% a year earlier. Non-GAAP operating income was $7,007 million (up 37%) with a 37.8% margin, against 34.4%. GAAP operating expenses fell 3% to $6,190 million, while non-GAAP operating expenses rose 2% to $5,140 million. Gross margins moved the other way: GAAP total gross margin was 63.7% against 65.5%, and non-GAAP total gross margin was 65.6% against 68.1%. Product gross margin declined on both bases while services gross margin improved, with non-GAAP services gross margin at 72.9% against 70.7%. The filing does not explain the product margin change beyond the figures themselves.
Earnings growth outpaced revenue growth. GAAP diluted EPS was $1.14, up 58% from $0.72, and non-GAAP EPS was $1.40, up 40% from $1.00. GAAP net income was $4,552 million (up 59%) and non-GAAP net income was $5,567 million (up 39%). The GAAP effective tax rate was 17.2% and the non-GAAP rate was 18.5%. The company attributes the gap between revenue and earnings growth to operating leverage. Net cash provided by operating activities was $4,357 million, up 36% from $3,212 million.
Forward indicators were mixed in volume and supportive in direction. Remaining performance obligations were $46,169 million, up 8%, with product RPO up 7% and services RPO up 9%. Deferred revenue was $30,058 million, up 7%. Cash and investments ended at $15.8 billion, against $15.9 billion at the end of fiscal 2026. The company returned $3.7 billion to stockholders, including $1.7 billion in dividends and $2.0 billion in buybacks at an average price of $112.38. Management raised FY2027 revenue guidance to $74.8 billion to $75.8 billion and FY2027 non-GAAP EPS guidance to $5.47 to $5.53. The Q2 FY2027 revenue guide is $18.0 billion to $18.2 billion, with non-GAAP gross margin of 65% to 66% and non-GAAP EPS of $1.34 to $1.36. Because the prior outlook figures are not in the documents provided, the size of the raise cannot be measured from this filing.
Management, verbatim
We are in the very early stages of a multi-year networking supercycle, and we're confident in our ability to continue capturing the multi-billion-dollar opportunity it represents for Cisco.
Chuck Robbins, Chair and CEO, Cisco
The strength of our Q1 performance gives us confidence to raise our revenue and non-GAAP EPS guidance for FY27
Mark Patterson, CFO, Cisco
As our business continues to scale, we are unlocking significant operating leverage which is enabling us to grow earnings much faster than revenue.
Mark Patterson, CFO, Cisco
Not in the filing
stated, not guessed- Prior-year and prior-quarter figures for total gross margin in dollars, product cost of sales change, and yoy percentage changes for cost of sales lines were not printed.
- Year-over-year percentage changes for R&D, sales and marketing, general and administrative, and restructuring were not printed.
- Year-over-year change in basis points for gross margin and operating margin percentages was not printed.
- Geographic and product group gross margin percentages for the prior year were not printed.
- Prior-year and prior-quarter figures for geographic and product group revenue in dollars were not printed; only year-over-year percentages were printed.
- Free cash flow was not reported and no figure is printed for it.
- Quarter-over-quarter changes for revenue, margin and EPS were not printed.
- Q2 FY2027 operating expense guidance was not provided.
- The prior-quarter (July 25, 2026) figure for cash and investments is given as a rounded text figure only; no balance sheet subtotal is printed.
- Prior outlook figures were not provided, so vs_prior_guidance could not be evaluated.
- Total debt is not printed as a single figure; short-term and long-term debt are printed separately.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Cisco filed a Form 8‑K reporting its Q1 FY27 results and updated guidance.
Ticker impact
Cisco reported record Q1 revenue and raised FY27 revenue and non‑GAAP EPS guidance.
likely upward pressure as investors price in higher revenue and earnings outlook
The company posted 24% YoY revenue growth, record margins and explicitly raised FY27 guidance, a clear catalyst for buying.
Market effects
Boosts outlook for networking, security and AI‑infrastructure segments.
Positive for US technology equities.
Reinforces global demand for AI‑related networking equipment.
Counterpoint
Valuation may already reflect growth expectations, limiting upside.
Key entities
- CompanyCisco Systems, Inc.
US‑listed networking and security firm.
