Key Takeaways
- Cisco delivered Q4 adjusted earnings of $1.22 per share on $17.3 billion in revenue, surpassing projections of $1.17 EPS and $16.8 billion
- The networking division generated $9.79 billion, representing a 28% year-over-year jump and exceeding the $9.66 billion forecast
- AI infrastructure orders for the entire fiscal 2026 reached $9.3 billion, exceeding the firm’s revised $9 billion projection
- For fiscal 2027, revenue guidance of $72.2-$73.4 billion and EPS outlook of $5.05-$5.11 surpassed Street consensus
- Shares declined approximately 4% in after-hours trading despite positive results, as gross margins contracted to 66.3% from 68.4% year-over-year
Cisco Systems delivered its fiscal fourth-quarter financial performance that exceeded Wall Street’s top and bottom line projections, yet shares experienced a decline during extended trading hours.
The technology giant posted adjusted earnings of $1.22 per share against revenue totaling $17.3 billion. Wall Street consensus had anticipated $1.17 per share with revenue of $16.8 billion.
Top-line performance reflected an 18% year-over-year expansion. Product revenue alone soared 24% versus the comparable prior-year period.
The networking business unit emerged as a standout performer, generating $9.79 billion in revenue. This represented a 28% year-over-year gain and surpassed analyst forecasts of $9.66 billion.
During the fourth quarter specifically, Cisco secured $4 billion worth of AI infrastructure orders. This performance elevated the company’s complete fiscal 2026 AI order volume to $9.3 billion, exceeding its previously elevated target of $9 billion.
To put this in perspective, Cisco had initially set a $5 billion AI order goal at the start of the fiscal year. The company increased this benchmark to $9 billion in May, yet managed to surpass even that revised figure.
Overall product orders experienced a robust 35% surge during the quarter.
Forward Outlook Significantly Exceeds Projections
Looking ahead to fiscal 2027, Cisco projected revenue in the range of $72.2 billion to $73.4 billion. This substantially exceeded analyst expectations clustered around $69.1 billion.
The company’s non-GAAP earnings per share outlook of $5.05 to $5.11 similarly outpaced the Street consensus of $4.83.
Operating cash flow demonstrated strength with a 27% year-over-year increase to $5.4 billion. Cisco distributed $3.2 billion to shareholders through a combination of $1.7 billion in dividend payments and $1.5 billion allocated to share repurchases.
Understanding the After-Hours Selloff
Notwithstanding the impressive performance metrics throughout the report, CSCO shares retreated approximately 4% in after-hours trading following an initial brief uptick.
Margin compression appears to be the primary concern weighing on sentiment. Overall gross margin registered at 66.3%, representing a decline from the 68.4% recorded in the year-ago quarter. Escalating expenses for AI hardware components, particularly memory, likely contributed to this contraction.
CSCO shares had already appreciated more than 61% year-to-date entering the earnings announcement, potentially establishing elevated expectations.
CEO Chuck Robbins stated: “With the breadth and depth of our portfolio and our competitive differentiation in secure networking, Cisco is well positioned to support our customers however or wherever they decide to deploy AI.”
During this period, Cisco finalized the acquisitions of Galileo Technologies and Astrix Securities, broadening its capabilities in network security and automated observability solutions.
As of this reporting, CSCO stock has appreciated more than 50% year-to-date.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
