Cisco Systems 2026 Q1 Earnings Beats Expectations with 5.5% Net Income Growth

Cisco Systems (CSCO) reported Q1 2026 earnings that exceeded expectations, with revenue rising 7.5% to $14.88 billion and non-GAAP EPS climbing 5.9% to $1.00. The company raised full-year revenue guidance to $60.2–$61.0 billion and Q2 revenue to $15.0–$15.2 billion, reflecting confidence in sustained demand for its AI infrastructure and networking solutions.

Revenue

Cisco’s Q1 revenue totaled $14.88 billion, driven by robust performance across its product portfolio. Networking led the charge with $7.77 billion in revenue, while Security and Collaboration segments contributed $1.98 billion and $1.05 billion, respectively. The Total Product segment, encompassing hardware and software, accounted for $11.08 billion. Observability, the smallest segment, generated $274 million. Services revenue reached $3.81 billion, rounding out the total.

Earnings/Net Income

The company’s non-GAAP EPS surged to $1.00, surpassing the $0.98 consensus estimate. Net income grew by 5.5% to $2.86 billion, with GAAP EPS at $0.72. The EPS growth outpaced net income, reflecting improved operational efficiency and cost management.

Price Action

Cisco’s stock price climbed 2.86% in the latest trading day, 2.58% for the week, and 9.64% month-to-date. The post-earnings rally followed the company’s guidance upgrades and strong demand for its AI infrastructure offerings.

Post-Earnings Price Action Review

Cisco’s Q1 performance underscored its strong demand for products and services, with total product orders rising 13% year-over-year and AI infrastructure orders from hyperscalers reaching $1.3 billion. Despite valuation ratios nearing historical highs and 11 insider sell transactions in the past three months, backtesting suggests that buying Cisco when revenue misses and holding for 30 days has historically yielded positive returns. The company’s Altman Z-Score of 3.05 and Beneish M-Score of -2.62 further reinforce its financial stability and low risk of manipulation.

CEO Commentary

CEO Charles Robbins highlighted Q1’s success, driven by AI infrastructure and campus networking, with revenue up 8% and non-GAAP EPS up 10%. He emphasized strategic investments in AI partnerships (e.g., NVIDIA, G42) and new products like Cisco Unified Edge. Robbins expressed confidence in the guidance, calling it “the strongest year yet.”

Guidance

CFO Mark Patterson outlined Q2 revenue guidance of $15.0–$15.2 billion (vs. $14.64B consensus) and FY2026 revenue of $60.2–$61.0 billion (vs. $59.68B consensus). Non-GAAP EPS guidance for Q2 is $1.01–$1.03, and FY2026 is $4.08–$4.14. The tax rate is projected at 19%.

Additional News

Recent developments include Fox Run Management L.L.C. acquiring a $609,000 stake in Cisco during Q2. Insider selling continued, with EVP Thimaya K. Subaiya and Deborah L. Stahlkopf offloading shares totaling $1.16 million in September. The company also announced a $0.41 quarterly dividend, yielding 2.3%, and raised FY2026 guidance following strong Q1 results.