Cisco ((CSCO)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Cisco’s recent Q4 earnings call highlighted a strong financial performance, marked by significant growth in AI infrastructure orders and robust overall product orders. While the company showcased impressive innovation and strategic partnerships, challenges such as a decline in public sector orders and stagnant services revenue tempered the positive results. Despite these hurdles, Cisco’s strategic positioning and focus on AI integration suggest a promising outlook for future growth.
Strong Financial Performance
Cisco reported a total revenue of $14.7 billion for Q4, marking an 8% increase year-over-year. The company also saw a 12% rise in non-GAAP net income, reaching $4 billion, and a 14% increase in non-GAAP earnings per share, which stood at $0.99. These figures underscore Cisco’s robust financial health and its ability to generate substantial returns for shareholders.
Record AI Infrastructure Orders
The company achieved record AI infrastructure orders from webscale customers, exceeding $800 million in Q4. This brought the fiscal year total to over $2 billion, more than doubling the original $1 billion target. This surge in AI infrastructure orders highlights Cisco’s successful penetration into the AI market and its capacity to capitalize on emerging technological trends.
Robust Product Orders Growth
Total product orders in Q4 grew by 7% year-over-year, with particularly strong growth observed among service provider and cloud customers, which increased by 49% year-over-year. This growth reflects Cisco’s effective strategies in expanding its product offerings and capturing market share in key segments.
Strong Cash Flow and Shareholder Return
Cisco returned $2.9 billion to shareholders in Q4 through share repurchases and dividends, totaling $12.4 billion for fiscal year 2025. This represents 94% of the company’s free cash flow, demonstrating Cisco’s commitment to delivering value to its shareholders and maintaining strong cash flow management.
Continued Innovation and AI Integration
At Cisco Live U.S., the company introduced over 20 new offerings designed to support AI-ready data centers and workplaces, including integrations with NVIDIA. This commitment to innovation and AI integration positions Cisco as a leader in the evolving tech landscape, ready to meet the demands of modern enterprises.
Decline in Public Sector Orders
Despite sequential growth in line with normal seasonality, public sector orders were down 6% year-over-year in Q4. This decline presents a challenge for Cisco, indicating potential areas for strategic reassessment and targeted growth initiatives.
Flat Services Revenue
Services revenue remained flat at $3.8 billion year-over-year, with a deceleration trend observed over the last five quarters. This stagnation suggests a need for Cisco to explore new avenues for growth within its services segment to enhance revenue streams.
Security Growth Challenges
Security orders showed mid-single-digit growth, with older product lines not being major investment areas, impacting overall growth rates. Addressing these challenges will be crucial for Cisco to strengthen its position in the security market and drive future growth.
Forward-Looking Guidance
Looking ahead to fiscal year 2026, Cisco provided guidance with expected revenue in the range of $59 billion to $60 billion and a non-GAAP earnings per share between $4 and $4.06. For the first quarter of fiscal year 2026, revenue is anticipated to range from $14.65 billion to $14.85 billion, with a non-GAAP operating margin expected between 33% and 34%. The company also emphasized its focus on leveraging AI opportunities, expecting significant contributions from AI infrastructure, enterprise clouds, and AI network connectivity to drive growth.
In summary, Cisco’s Q4 earnings call reflected a strong financial performance with notable growth in AI infrastructure orders and product orders. While challenges remain in certain segments, the company’s strategic focus on innovation and AI integration positions it well for future growth. Investors and stakeholders can remain optimistic about Cisco’s potential to navigate market challenges and capitalize on emerging opportunities.