FACTS
Cisco Systems reported record quarterly revenue of $18.5 billion on Thursday, Nov. 12, up 24% from a year earlier, and raised its full-year forecast on demand for networking equipment used in artificial intelligence data centers. The Cisco earnings report for the quarter ended Oct. 24 also showed lower gross margins. Cisco shares fell about 6% on Friday, Nov. 13, according to market data compiled by StockTitan.
What the Cisco earnings report showed
Revenue for Cisco’s first quarter of fiscal 2027 was $18.5 billion, the San Jose, California, company said in its earnings release. Product revenue rose 32%, while services revenue rose 1%. Revenue from networking, Cisco’s largest business, rose 43% to $11.1 billion.
Net income under generally accepted accounting principles, or GAAP, rose 59% to $4.6 billion, or $1.14 per share. On an adjusted, or non-GAAP, basis, Cisco earned $5.6 billion, or $1.40 per share, up 40%.
“In Q1, we delivered the strongest revenue and non-GAAP earnings per share growth rates for Cisco in over 15 years,” Chair and CEO Chuck Robbins said in the release. “We are in the very early stages of a multi-year networking supercycle.”
Cisco said it now expects revenue from AI infrastructure sold to hyperscalers, the largest cloud computing companies, to reach $9 billion in fiscal 2027, more than double the total for fiscal 2026.
Raised forecast and payments to shareholders
Cisco said it expects second-quarter revenue of $18.0 billion to $18.2 billion and adjusted earnings of $1.34 to $1.36 per share. For the full fiscal year, it raised its revenue forecast to $74.8 billion to $75.8 billion and its adjusted earnings forecast to $5.47 to $5.53 per share.
Seeking Alpha reported that the adjusted earnings of $1.40 per share were 7 cents above analysts’ estimates and that both the quarterly and full-year forecasts were above consensus.
“Q1 FY27 was another record quarter for Cisco,” Chief Financial Officer Mark Patterson said in the release, with “revenue, non-GAAP operating margin, and non-GAAP EPS all exceeding the high end of our guidance ranges.”
The company declared a quarterly dividend of 42 cents per share, payable Jan. 20, 2027, to shareholders of record on Jan. 4. Cisco said it bought back about 18 million shares for $2.0 billion during the quarter and returned $3.7 billion to shareholders in total through buybacks and dividends.
Margins and the stock move
Cisco’s GAAP gross margin fell to 63.7% from 65.5% a year earlier, and its adjusted gross margin fell to 65.6% from 68.1%, according to the release. Its GAAP product gross margin fell to 61.8% from 64.5%, Seeking Alpha reported.
On the company’s conference call, Patterson attributed the decline in product margins mainly to a higher share of hardware sales and “elevated memory costs,” according to Seeking Alpha.
Cisco shares rose in after-hours trading Thursday but fell about 2% before the market opened Friday, Seeking Alpha reported. The stock closed down 6.24% for the day, according to a market report by StockTitan.
Cisco also reported $46.2 billion in remaining performance obligations, a measure of contracted revenue not yet recognized, up 8% from a year earlier. Its operating cash flow for the quarter was $4.4 billion, up 36%, the company said.
More coverage is in the Stay Current News Business section.
Photo: File photo of Cisco’s headquarters building in San Jose, California. Travis Wise / Wikimedia Commons,_Cisco_San_Jose_Main_Campus.jpg), CC BY 2.0.
