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- **AI Infrastructure Growth**: Q1 hyperscale orders reached $1.3B, with FY26 pipeline >$3B. All hyperscalers now use Cisco optics.
- **Financial Strength**: Non-GAAP EPS of $1.01 beat estimates, with $3.2B operating cash flow.
- **Strategic Shifts**: Unified Edge platform targets edge AI in retail, healthcare, and manufacturing. Security cloud subscriptions grow 50%, offsetting legacy product declines.
- **Partnership Expansion**: New partner program incentivizes AI, security, and campus refresh. Sovereign cloud pipeline exceeds $2B for FY26.

**【CEO Summary Section】**
- Cisco reported Q1 revenue of $14.9 billion, up 8% year-over-year, driven by AI infrastructure orders from hyperscalers and strong demand for campus networking solutions. AI infrastructure orders reached $1.3 billion in Q1, with a pipeline exceeding $3 billion for FY26.
- The company emphasized the acceleration of product launches, including the Cisco 822 router and Wi-Fi 7 wireless products, targeting enterprise AI deployments. Public sector orders grew 12% YoY, while service provider revenue increased 45%.
- Cisco's Unified Edge platform, integrating compute, networking, and storage, is positioned to capture edge AI use cases in retail, healthcare, and manufacturing.

**【CFO Financial Commentary】
- Non-GAAP EPS of $1.01 exceeded expectations, with operating cash flow of $3.2 billion and $3.6 billion returned to shareholders via dividends and buybacks.
- Gross margin was 68.1%, with product margin under pressure from mix shifts but services margin improving to 70.7%.
- The company expects Q2 revenue of $15-15.2 billion, with non-GAAP EPS of $1.01-$1.03.

**【Q&A Key Highlights】
- Hyperscale orders doubled YoY, with all major hyperscalers now customers of Cisco's pluggable optics. Neocloud and sovereign cloud pipeline exceeds $2 billion for FY26.
- Security revenue declined 2% due to legacy product declines, but ARR and RPO growth offset by cloud subscription shifts. Splunk cloud adoption accelerated, impacting short-term revenue but enhancing long-term stickiness.
- Cisco's partner program is being restructured to focus on AI, security, and campus refresh, with incentives for partner expertise in emerging technologies.

Cisco Systems, Inc. (CSCO) Q1 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

CSCO

CSCO fundamentals

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