Live: Cisco (CSCO) Drops And Then Rebounds After Q4 Earnings

Cisco was trading at -3% after its initial earnings release; however, it’s now slightly positive. As of 5:55 p.m. ET, shares are up .5%. 

What caused the turnaround?

Most the gains happened between 5:00 and 5:10 p.m. ET., It’s hard to pinpoint exactly what was said, but that was about the time that Cisco ended its prepared remarks and moved to analyst questions.

Initial analyst questions largely focused around Cisco’s AI opportunity. We’ll continue digging in to understand why this turnaround happened, but it is a very large change in reaction after the initial earnings release.

Here’s our summary what Wall Street was asking about during Cisco’s call:

What analysts pressed on (Q&A themes)

1. Growth cadence vs guide: Why FY26 growth moderates despite AI tailwinds? Mgmt: mostly year-over-year comps, not a demand change; campus refresh ramps through FY26.

2. AI orders → revenue timing & mix: ~$1B AI revenue recognized in FY25; web-scale AI order mix ~⅔ systems / ~⅓ optics; mix seen stable. Enterprise AI “few hundred million” orders so far; pipeline “hundreds of millions”; POCs for agentic AI expected to proliferate 2H FY26.

3. Pull-forward risk (tariffs/Fed): Mgmt cites no evidence (normal linearity, activation timing, ship-date requests, channel feedback).

4. Security trajectory vs long-term 15–17% (Security+Observability): New/refresh portfolio >20% order growth; ex-Fed double-digit growth; expect improving growth through FY26; don’t change the long-term target.

5. Segment confidence ranking for FY26: 1) Service Provider/Cloud, 2) Enterprise, 3) Public Sector (U.S. Federal expected to return to growth but below FY25).

6. Silicon & architecture roadmap: Silicon One share in switches expected to rise quickly (half of switch ASICs in ~3 years “not too far off”). Long-term Ethernet-based scale-up possible; Cisco building roadmaps.

7. Meraki–Catalyst integration: Should expand openness to Catalyst via cloud management (now ~35M devices cloud-managed).

8. Services decel: Flat this quarter after prior growth; expected to re-accelerate as product growth flows into ratable services.

Cisco’s earnings call is over, we’re compiling our notes and will post some areas we think are the most important for investors shortly.

We’re on Cisco’s earnings call right now, and one area of focus is their disclosures around AI.

We highlighted earlier how the company disclosed greater than $2 billion in AI orders, but the word to watch there is orders. Wall Street wants to know how that translates into actual revenue. 

Here’s the key exchange to watch on the company’s call:

Michael Ng Goldman Sachs Group, Inc., Research Division

I just have 2 as well. First on AI, I was wondering if you could talk about the greater than $2 billion AI orders this year. Did that translate into revenue in the year? And how should we think about that translating into revenue for next — and then second, just on networking. I was wondering if you could talk a little bit about the orders in the quarter by subsegment, campus and data center switching, wireless, routing, and any kind of notable inflections that you would call out in any of those product categories?

Charles Robbins Chief Executive Officer

Sure, Michael. Let me take some comments first on the — I want to just give a clarity on the web scale business and what it looked like, and then Mark can talk about the revenue in FY ’25 related to their AI infrastructure orders. So I just want to make sure everybody understands our webscale business. First of all, we sell technology into the back end. We sell technology into the front end or the traditional cloud networks, and we sell our enterprise portfolio to these customers as well. And if you look at our entire portfolio, these customers in aggregate grew triple digits 4 quarters in a row from an orders perspective. . We had 4 of them that grew triple digit in Q4 by themselves. And as I said in my prepared remarks, we had 2 of these customers across the portfolio that placed orders in excess of $1 billion each in fiscal year ’25. So — if you think back 5 years ago, when we were talking about our strategy in this space, this was definitely not the case. So we feel good about the progress we made. And then I think you understood on the AI infrastructure, we had greater than $800 million in orders during the quarter and we have greater than $2 billion on the year, more than double our original target. Mark, do you want to talk a little bit about the revenue?

Mark Patterson Chief Financial Officer

Sure. Yes. In terms of revenue and shipments related to those AI orders, those really just progressed and ramped like we expected during FY ’25. So for the full year, we recognized right about $1 billion in revenue related to those.

Charles Robbins Chief Executive Officer

So we recognize roughly $1 billion of revenue on the AI back-end orders that we’ve taken from the web scale customers during fiscal year ’25. .

Cisco’s earnings call started at 4:30 ET, we’ll post notes on this live blog.

“AI Infrastructure orders taken from webscale customers exceeded $800 million, bringing the FY 2025 total to over $2 billion, more than double the original $1 billion target.”

Expect far more discussion on this during the company’s conference call, but definitely a bright spot for the quarter.

As of 4:20 p.m. ET, shares are down 2.7%.

As we noted earlier, full-year guidance for next Fiscal Year’s revenue is likely weighing on shares.

Here’s the guidance sections from Cisco’s press release.

Here’s what’s important. Guidance for next quarter is above expectations on the revenue side but looks lighter on GAAP EPS.

Guidance

Cisco estimates the following results for the first quarter of fiscal 2026:

Margin and EPS guidance includes the estimated impact of tariffs based on current trade policy.

Cisco estimates that GAAP EPS will be $0.63 to $0.68 for the first quarter of fiscal 2026. Fiscal 2026 revenue midpoint is slightly below Wall Street expectations of $59.55 billion.

That’s likely what’s dragging the stock lower after hours.

Cisco estimates the following results for fiscal 2026:

Margin and EPS guidance includes the estimated impact of tariffs based on current trade policy.

Cisco estimates that GAAP EPS will be $2.79 to $2.91 for fiscal 2026.

Our Q1 FY 2026 and FY 2026 guidance assumes an effective tax provision rate of approximately 18% for GAAP and approximately 19% for non-GAAP results.

CISCO | Cisco Systems Q4’25 Earnings Highlights:

• Adj. EPS: $0.99 [✅]
• Revenue: $14.7B (Est. $14.7B) [✅]
• Comparable Sales: ➖
• Adj. Gross Margin: 68.4% [✅]
• Net Income: $2.8B [✅
• Operating Income: $3.4B [✅]
• Operating Cash Flow: $4.2B

Outlook:

• Revenue: $14.65B – $14.85B [✅]
  • Guidance reflects continued strong demand across all geographies.
  • Expectations for AI infrastructure orders to remain robust, contributing to growth.

Q4 Segment Performance:

• Americas Revenue: $8.8B (Est. $8.8B) [✅]; [UP] +9% YoY
• EMEA Revenue: $3.6B (Est. $3.6B) [✅]; [UP] +4% YoY
• APJC Revenue: $2.2B (Est. $2.2B) [✅]; [UP] +7% YoY
• Product Revenue: $10.9B (Est. $10.9B) [✅]; [UP] +10% YoY
• Services Revenue: $3.8B (Est. $3.8B) [✅]; [FLAT] 0% YoY

Other Key Q4 Metrics:

• Adj. Operating Income: $5.0B (Est. $5.0B) [✅]; [UP] +13% YoY
• Adj. Operating Expenses: $5.0B (Est. $5.0B) [✅]; [UP] +4% YoY
• R&D Expenses: $2.4B; [UP] +9% YoY
• Effective Tax Rate: 15.8% (vs. 9.8% YoY)
• Free Cash Flow: $14.2B; [UP] +30% YoY
• Remaining Performance Obligations: $43.5B; [UP] +6% YoY
• Deferred Revenue: $28.8B; [UP] +1% YoY

CEO Commentary:

• Chuck Robbins: “We delivered a strong close to fiscal 2025, driven by our accelerated innovation and solid execution. The AI infrastructure orders we received from webscale customers in fiscal 2025 were more than double our original target, indicating a massive opportunity ahead as we lead the required architectural shift and build the critical infrastructure needed for the AI era.”

CFO Commentary:

• Mark Patterson: “In Q4, revenue, gross margin and operating margin were at the high end of our guidance ranges, earnings per share was above the guidance range and we delivered solid operating cash flow. As we enter fiscal 2026, we remain focused on making strategic investments in innovation, driving durable, profitable growth and delivering shareholder value.”

The initial reaction to Cisco’s results is a 2% drop – we’re digging into guidance and will post a detailed earnings summary next.

EPS of $.99 barely beats expectations.

Revenue of $14.67 billion also slightly ahead of expetations of $14.62.

The market has closed and we’re on the lookout for Cisco earnings. As soon as they’re released we’ll be updating this live blog.

It’s almost time for Cisco’s Fiscal Q4 earnings. A few helpful reminders before they’re announced:

1. This earnings blog will provide updates automatically. If you simply leave this page open, new updates should appear as they’re published.
2. We expect Cisco’s earnings very short after the bell. Probably by around 4:05 p.m. ET. The moment the earnigns go live we’ll begin providing analysis. We expect 5 to 10 updates reacting to share price movements and highlighting key figures from Cisco’s earnings report in the half hour after their earnings hit the newswires.

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Cisco has beat EPS estimates for four straight quarters, but stock reactions have been mixed — muted or slightly negative near-term, with a stronger follow-through 7–14 days later.