Cisco's Q3 2025 Earnings Call: Navigating Contradictions in Tariffs, AI Orders, and Federal Spending

Tariffs and customer buying behavior, AI orders and revenue impact, federal government spending and impact, AI orders translation to revenue, tariff impact on Q4 guidance are the key contradictions discussed in Cisco's latest 2025Q3 earnings call.



Revenue and Financial Performance:
- Cisco's revenue for Q3 2025 was $14.1 billion, up 11% year-over-year.
- The growth was driven by strong order growth across various segments, including networking, security, and collaboration, as well as strategic investments in innovation and software solutions.

Product Orders and Demand:
- Total product orders grew 20% year-over-year or 9% on an organic basis, excluding Splunk.
- Demand was supported by double-digit growth in enterprise product orders, strong public sector orders, and significant growth in service provider and cloud sectors, particularly from web-scale customers.

AI Infrastructure and Innovation:
- Cisco surpassed its fiscal year '25 AI order target a quarter early, with orders exceeding $600 million in Q3, bringing the year-to-date total to over $1 billion.
- The growth is attributed to AI infrastructure orders from web-scale customers and strategic partnerships, such as the one announced with HUMAIN in Saudi Arabia.

Innovation and Product Pipeline:
- Cisco announced significant advancements in its innovation pipeline, including the Quantum Network Entanglement Chip and Gen AI applications.
- These innovations are designed to deliver cutting-edge solutions for security, customer experience, and complex industries, positioning Cisco to drive future growth.

Leadership and Organizational Changes:
- Cisco announced the appointment of Mark Patterson as the new Chief Financial Officer, replacing Scott Herren who will retire at the end of fiscal year '25.
- The transition is part of Cisco's strategic planning to ensure leadership continuity and leverage Mark's extensive experience in finance, strategy, and operations to drive growth.