Cisco Systems 2025 Q3 Earnings Beats Expectations with Net Income Rising 32%

Cisco Systems (CSCO), ranking 37th by market capitalization, reported its fiscal 2025 Q3 earnings on May 20th, 2025. Cisco's earnings surpassed analyst expectations with revenue reaching $14.15 billion, compared to the anticipated $14.05 billion. The company also raised its full-year revenue guidance to between $56.5 billion and $56.7 billion, reflecting robust operational performance and market conditions. The EPS guidance was similarly increased, indicating confidence in continued earnings growth for the remainder of the fiscal year.

Revenue

Cisco's total revenue for the third quarter of fiscal 2025 rose by 11.4% to $14.15 billion from $12.70 billion in the same quarter of the previous year. This growth was driven by the product segment, which accounted for $10.37 billion. Within the product segment, networking generated $7.07 billion, while security brought in $2.01 billion. The collaboration segment contributed $1.03 billion, and observability added $261 million. Meanwhile, services revenue totaled $3.77 billion, reflecting consistent performance across all business segments.

Earnings/Net Income

Cisco's EPS increased by 34.0% to $0.63 in Q3 2025 from $0.47 in Q3 2024. The company's net income improved significantly, up 32.1% to $2.49 billion from $1.89 billion in the previous year, indicating strong profitability.

Price Action

The stock price of Cisco Systems edged down by 0.49% during the latest trading day, increased 2.65% over the most recent full trading week, and has jumped 13.74% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing Cisco stock following a revenue beat and holding for 30 days yielded moderate returns but involved considerable volatility and risk. Although the strategy achieved a return of 54.38%, it lagged behind the benchmark by 33.86%. The maximum drawdown reached -38.84%, and a Sharpe ratio of 0.38 underscored the challenging risk-return profile of this approach. This highlights the importance of effective risk management strategies, especially in volatile market conditions.

CEO Commentary

Chuck Robbins, Chair and CEO of Cisco Systems, highlighted the robust quarterly performance driven by strong demand for Cisco's technologies. He reported a 20% increase in product orders year-over-year and noted substantial growth across all customer markets. Robbins emphasized the momentum in AI, fueled by Cisco's secure networking portfolio and global partnerships. He expressed confidence in Cisco's strategic execution and reiterated the company's commitment to delivering shareholder value through effective capital allocation.

Guidance

Cisco anticipates fourth-quarter revenue to range between $14.5 billion and $14.7 billion, with adjusted earnings per share expected between $0.96 and $0.98. For fiscal year 2025, the company raised its revenue guidance to $56.5 billion to $56.7 billion and adjusted EPS guidance to $3.77 to $3.79, reflecting strong operational performance and a positive market environment.

Additional News

In recent weeks, Cisco Systems has made headlines with its acquisition of SnapAttack, a privately held threat detection and engineering platform company, enhancing its cybersecurity portfolio. Additionally, Cisco declared a quarterly dividend of $0.41 per share, payable on July 23, 2025, to shareholders of record as of July 3, 2025, continuing its practice of returning value to shareholders. Furthermore, Cisco has actively engaged in stock buybacks, repurchasing approximately 25 million shares at an average price of $59.78 per share, totaling $1.5 billion. These actions underscore Cisco's strategic focus on strengthening its position in the cybersecurity space and maintaining shareholder confidence.