Cisco Reports Strong Q2 Earnings
Cisco reported second-quarter earnings that exceeded guidance, featuring double-digit growth in both revenue and profit. The company highlighted that its earnings per share grew at a faster rate than revenue. The strong results are expected to be received favorably by investors and will be used as a benchmark for competitors.
- Despite the strong earnings report, Cisco's stock fell as its guidance for the next quarter only met expectations and it warned of declining gross margins. The company projects third-quarter gross margins to fall to a range of 65.5% to 66.5%, down from 67.5% in the second quarter, citing product mix and rising memory costs. - The company's Networking division was a standout performer, with revenue surging 21% year-over-year to $8.3 billion, driven by AI infrastructure and campus networking refreshes. However, this growth was contrasted by a 4% decline in the Security segment and a 1% drop in Services revenue. - A key driver of growth was a significant increase in AI-related business, with Cisco reporting $2.1 billion in AI infrastructure orders from hyperscale customers during the quarter. The company raised its forecast for full-year AI infrastructure orders to exceed $5 billion. - Total product orders grew 18% year-over-year, showing accelerated demand across all geographic regions and customer markets. Revenue grew 8% in the Americas, 15% in EMEA, and 8% in the APJC region. - For its full fiscal year 2026, Cisco raised its forecast and now expects revenue to be in the range of $61.2 billion to $61.7 billion with non-GAAP earnings per share between $4.13 and $4.17. - During the quarter, the company returned $3.0 billion to its stockholders through a combination of share buybacks and dividends.
