Cisco Systems, Inc.

Cisco said Q4 revenue was a record $17.3 billion, up 18% year over year. Non-GAAP net income was a record $4.9 billion and non-GAAP EPS was $1.22, up 23%. For FY2026, revenue was a record $63.3 billion, up 12%, and non-GAAP EPS was $4.33, up 14%; non-GAAP operating margin improved to 34.8% for the year. Q4 non-GAAP gross margin was 66.3%, down 210 basis points year over year, and product gross margin was 64.8%, down 270 basis points. Looking ahead, Cisco guided Q1 FY27 revenue to $18.0 billion to $18.2 billion, non-GAAP EPS to $1.32 to $1.34, gross margin to 65% to 66%, and operating margin to 35.5% to 36.5%. For FY27, revenue guidance was $72.2 billion to $73.4 billion and EPS guidance was $5.05 to $5.11.

Chuck Robbins framed the quarter as proof that Cisco is in the early stages of a multiyear networking super cycle driven by agentic AI, infrastructure refreshes, and security demand. He emphasized Cisco’s differentiated stack across silicon, optics, systems, security, and observability, and said the company is well positioned to support AI deployments across cloud, on-premise, edge, and scale-across use cases. His tone was highly confident and optimistic, repeatedly saying the opportunity is still early and that Cisco is only at the beginning of the cycle.

Mark Patterson focused on operating leverage, record profitability, and cash return. He cited Q4 revenue of $17.3 billion, non-GAAP EPS of $1.22, gross margin of 66.3%, and operating margin of 35.9%, along with operating cash flow of $5.4 billion and cash/investments of $15.9 billion. He said Cisco returned $3.2 billion in Q4 and $12.7 billion in FY26, including $6.6 billion in dividends and $6.1 billion in buybacks, and noted $8.1 billion remained under the repurchase authorization. He also said FY27 gross margin should face a slight headwind from a higher hardware mix, while operating margin should still reach about 35% for the full year.

Analysts focused on whether the FY27 guide implies a peak in the cycle, especially given the jump in AI-related revenue and order growth. Management pushed back, saying the networking super cycle is still early, the core business should still grow about 10% excluding hyperscale AI revenue, and the FY27 AI revenue target of $7.5 billion is a prudent revenue guide rather than an order target. Questions also centered on gross margin pressure, order linearity, and supply; Cisco said margin pressure reflects higher hardware mix and memory costs, order growth will likely remain strong but compare against tougher comps, and it does not see meaningful lead-time problems or supply constraints. Analysts also probed security and enterprise budget sustainability, and management said enterprise customers are reprioritizing budgets toward AI readiness, Mythos readiness, quantum readiness, and cybersecurity-like spending, rather than seeing budgets broadly stretch.