Cisco Stock Soars on Strong Q4 Earnings, AI Infrastructure Orders Double Expectations

Cisco Systems, Inc. recently disclosed its financial performance for the fourth quarter and the full fiscal year ending July 26, 2025, reporting a robust finish to the year. Cisco's revenues for the fourth quarter were recorded at $14.7 billion, marking an 8% increase compared to the corresponding quarter of the previous year. The company's net income, measured according to generally accepted accounting principles (GAAP), stood at $2.8 billion, equating to $0.71 per share, reflecting a substantial year-over-year increase of 31%. On a non-GAAP basis, the firm reported a net income of $4.0 billion or $0.99 per share, which exceeded their guided range.

For the entirety of fiscal year 2025, Cisco's revenue tallied at $56.7 billion, representing a 5% increase from the previous fiscal year. The company's GAAP net income for FY 2025 was $10.5 billion, marking a 1% rise from FY 2024, with an earnings per share of $2.61, up by 3% year over year. On the non-GAAP side, Cisco's net income held steady at $15.2 billion compared to the previous year, while its non-GAAP earnings per share rose 2% to $3.81.

The company observed robust performance in its product orders, which grew by 7% year over year in the fourth quarter, underscoring strong demand across all geographical regions for its portfolio of technologies. Notably, AI infrastructure orders from webscale customers surpassed $800 million in the fourth quarter alone, raising the total for fiscal year 2025 to over $2 billion, exceeding the original target of $1 billion.

Cisco's fourth-quarter revenue was reported at $14.7 billion, with an 8% increase from the previous year. An analysis of the revenue by geographic region showed growth in the Americas of 9%, in Europe, the Middle East, and Africa (EMEA) of 4%, and in Asia Pacific, Japan, and China experiencing a 7% increase. Product revenue climbed 10%, indicating robust demand across all industry segments for Cisco's technological offerings, with Networking up 12%, Security up 9%, Observability up 4%, and Collaboration up 2%. For the fiscal year 2025, the company reported a revenue of $56.7 billion, a 5% year-over-year growth.

Cisco's Q4 GAAP gross margin stood at 65.7%, surpassing the previous year's 64.4%. The non-GAAP gross margin was at an increased 68.4% compared to 67.9%. Additionally, Cisco's GAAP earnings per share (EPS) for Q4 was $0.71, indicating a 31% annual growth, whereas the non-GAAP EPS saw a 14% year-over-year growth to $0.99.

CEO Chuck Robbins highlighted the achievement as a culmination of vigorous innovation and solid execution throughout the fiscal year. He further emphasized the company’s outsized performance in AI infrastructure orders from webscale customers, exceeding their original fiscal 2025 target by more than double to reach over $2 billion, which marks a significant opportunity for the company as it steers towards the infrastructure needs of the AI era.

Looking ahead, Cisco has provided guidance for fiscal 2026 with revenue estimated to range between $59.0 billion and $60.0 billion. The projected non-GAAP EPS for FY 2026 is between $4.00 and $4.06 and GAAP EPS guidance is set at $2.79 to $2.91. For the first quarter of fiscal 2026, Cisco predicts revenue between $14.65 billion and $14.85 billion and GAAP EPS of $0.63 to $0.68. The non-GAAP EPS is anticipated to be in the realm of $0.97 to $0.99. These projections take into consideration the current trade policy's estimated tariff impact.

Cisco’s financial strategy for durability and growth consists of strategic investments aimed at bolstering innovation to deliver value to shareholders. The company's CFO, Mark Patterson, reiterated Cisco's commitment to this strategy, citing solid operational execution in the fourth quarter, with revenue, gross margin, operating margin, and earnings per share meeting or exceeding guided expectations.

In terms of financial operations, Cisco's Q4 operating cash flow was robust at $4.2 billion, up 14% compared to the same quarter last year. For the fiscal year, operating cash flow rose by 30%, amounting to $14.2 billion from the preceding year's $10.9 billion.

Cisco has also declared a quarterly dividend of $0.41 per common share, scheduled for disbursement on October 22, 2025, to shareholders of record as of October 3, 2025, with subsequent dividends contingent upon board approval.

In fourth-quarter fiscal 2025, Cisco returned $2.9 billion to shareholders through share buybacks and dividends. This includes a cash dividend payout amounting to $1.6 billion for $0.41 per common share and repurchasing approximately 19 million shares under its stock repurchase program for a cumulative cost of $1.3 billion.

Analysts predict that Cisco's results highlight a strategic focus on key growth areas, although they noted that the firm has set modest guidance targets. Achieving these projections could establish a solid foundation for Cisco as it continues to drive innovations in AI infrastructure and other areas, contributing to sustainable and profitable growth amidst global market dynamics.