Executive Summary

Cisco delivered a clean beat: revenue $14.15B (+11% y/y) and non-GAAP EPS $0.96, both above the high end of guidance; GAAP EPS $0.62 (+35% y/y) . Q3 also exceeded S&P Global consensus on revenue ($14.06B est.) and EPS ($0.917 est.) with upside of ~+0.6% and ~+4.7%, respectively (Values retrieved from S&P Global).*
Product orders rose 20% y/y (9% ex-Splunk) with broad-based strength; AI infrastructure orders from webscale customers exceeded $600M in Q3, pushing YTD AI orders well above the $1B FY25 target one quarter early .
Guidance raised at the FY level: FY25 revenue to $56.5–$56.7B (prior $56.0–$56.5B) and non-GAAP EPS to $3.77–$3.79 (prior $3.68–$3.74); Q4 guided to $14.5–$14.7B revenue and $0.96–$0.98 non-GAAP EPS; margins reflect tariff headwinds but are actively mitigated .
Stock reaction catalysts: accelerating AI momentum (orders >$600M in Q3; 2/3 systems mix, G200 ramp), networking recovery (Networking +8% y/y; Wi-Fi 7 orders up triple-digit sequentially), and FY raise despite tariff uncertainty .

What Went Well and What Went Wrong

What Went Well
- AI momentum: “AI infrastructure orders…in excess of $600 million in Q3…surpassing our…$1 billion target a full quarter early,” with 2/3 mix in systems; customers would buy more if capacity allows .
- Broad demand and orders: Total product orders +20% y/y (9% ex-Splunk) with Enterprise +22%, Service Provider/Cloud +32%, Public Sector +8%; U.S. Federal orders grew double digits .
- Security traction and Splunk synergy: High-double-digit security orders; “largest deal ever for Splunk” via combined go-to-market; 370+ new customers across Secure Access, XDR, and Hypershield .
What Went Wrong
- Tariffs a headwind to margins: Q4 non-GAAP GM guide (67.5%–68.5%) embeds tariff impact; sequential op margin step down is “really a full quarter of the tariffs…reflected [without] mitigation” .
- Networking still rebuilding from prior softness: While up 8% y/y in Q3, investors flagged growth vs easier comps; mgmt noted AI revenue conversion is just beginning and ramps H2/Q4 .
- Organic disclosures narrowing: Integration of Splunk limits ongoing organic vs inorganic breakouts; reduces granularity for some segment trend analyses .

Financial Results

Sequential trend (Q1 → Q3 FY25)

Metric	Q1 FY25	Q2 FY25	Q3 FY25
Revenue ($USD Billions)	$13.841	$13.991	$14.149
GAAP EPS ($)	$0.68	$0.61	$0.62
Non-GAAP EPS ($)	$0.91	$0.94	$0.96
GAAP Gross Margin %	65.9%	65.1%	65.6%
Non-GAAP Gross Margin %	69.3%	68.7%	68.6%
Non-GAAP Operating Margin %	34.1%	34.7%	34.5%

Year-over-year (Q3 FY24 vs Q3 FY25)

Metric	Q3 FY24	Q3 FY25	y/y
Revenue ($USD Billions)	$12.702	$14.149	+11%
GAAP EPS ($)	$0.46	$0.62	+35%
Non-GAAP EPS ($)	$0.88	$0.96	+9%
GAAP Gross Margin %	65.1%	65.6%	+50 bps
Non-GAAP Gross Margin %	68.3%	68.6%	+30 bps

Actual vs S&P Global Consensus (Q3 FY25)

Metric	Actual	Consensus	Surprise
Revenue ($USD Billions)	$14.149	$14.058*	+$0.091B / +0.6% (Values retrieved from S&P Global).
Non-GAAP EPS ($)	$0.96	$0.917*	+$0.043 / +4.7% (Values retrieved from S&P Global).

Segment revenue (groups of similar products/services)

($USD Millions)	Q1 FY25	Q2 FY25	Q3 FY25	Q3 y/y
Networking	$6,753	$6,850	$7,068	+8%
Security	$2,017	$2,111	$2,013	+54%
Collaboration	$1,085	$996	$1,031	+4%
Observability	$258	$277	$261	+24%
Services	$3,727	$3,757	$3,775	+3%
Total	$13,841	$13,991	$14,149	+11%

Geographic revenue

($USD Millions)	Q1 FY25	Q2 FY25	Q3 FY25	Q3 y/y
Americas	$8,252	$8,202	$8,380	+14%
EMEA	$3,588	$3,855	$3,736	+8%
APJC	$2,001	$1,934	$2,034	+9%
Total	$13,841	$13,991	$14,149	+11%

KPIs and cash/returns (Q3 FY25)

KPI	Q3 FY25
ARR ($B)	$30.6 (Total); Product ARR +8% y/y
Subscription Revenue ($B, % of total)	$7.9; 56% of total revenue
Software Revenue ($B, y/y)	$5.6; +25% y/y
RPO ($B; ST RPO)	$41.7; ST RPO $21.1 (+5% y/y)
Deferred Revenue ($B)	$28.0 (+2% y/y)
CFO ($B)	$4.1 (+2% y/y)
Cash & Investments ($B)	$15.6
Capital Return ($B)	$3.1 (Dividends $1.6; Buybacks $1.5; ~25M shares at $59.78)

Non-GAAP reconciliation (per share, Q3 FY25)

Item	EPS Impact
GAAP EPS	$0.62
+ SBC	+$0.23
+ Amortization of intangibles	+$0.13
+ Acq/divestiture costs	+$0.05
+ Restructuring/impairments	+$0.01
+/– Gains/Losses on investments	$0.00
– Tax effects & significant tax matters	–$0.09
Non-GAAP EPS	$0.96

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q4 FY25	—	$14.5–$14.7B	New
Non-GAAP Gross Margin	Q4 FY25	—	67.5%–68.5%	New
Non-GAAP Operating Margin	Q4 FY25	—	33.5%–34.5%	New
Non-GAAP EPS	Q4 FY25	—	$0.96–$0.98	New
GAAP EPS	Q4 FY25	—	$0.62–$0.67	New
Effective Tax Rate (GAAP/Non-GAAP)	Q4 FY25	—	~17% / ~18%	New
FY Revenue	FY25	$56.0–$56.5B	$56.5–$56.7B	Raised
FY Non-GAAP EPS	FY25	$3.68–$3.74	$3.77–$3.79	Raised
FY GAAP EPS	FY25	$2.40–$2.52	$2.53–$2.58	Raised
Dividend	Next Payable	—	$0.41 declared; payable 7/23/25 (rec. 7/3/25)	Maintained
Tariff Assumptions	Q4 FY25	Proposed tariffs referenced	Guide reflects full tariff impact; exemptions noted	Detailed/Updated

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1, Q2 FY25)	Current Period (Q3 FY25)	Trend
AI/Technology initiatives	Q1: Customers preparing for AI ; Q2: >$350M AI orders; ~$700M 1H total	>$600M AI orders in Q3; YTD >$1B target achieved early; 2/3 systems mix; G200 ramp; NVIDIA partnership deepens; sovereign AI/cloud opportunities (HUMAIN KSA, G42, AIP)	Accelerating
Supply chain / Tariffs / Macro	Q2 margin guide included proposed tariffs	Detailed Q4 tariff assumptions; sequential margin impact; active mitigation; no broad pull-forward detected	Headwind manageable
Product performance (Networking)	Q1: –23% y/y ; Q2: –3% y/y	+8% y/y; Wi-Fi 7 orders up triple-digit seq.; campus/routing strength; DC switching improving	Recovering
Security & Observability	Q1: Security +100% y/y; Obs +36% ; Q2: Security +117%; Obs +47%	Security +54% y/y; largest Splunk deal; 370+ new Hypershield/XDR/Secure Access customers	Strong; moderating vs comps
Regional trends	Q1: Americas –9% ; Q2: Americas +9%	Americas +14%, EMEA +8%, APJC +9%	Broad-based improvement
Regulatory/Gov’t	—	Meraki for Government achieved FedRAMP; U.S. Federal orders double-digit growth	Positive

Management Commentary

“AI infrastructure orders…in excess of $600 million in Q3…bringing our year-to-date total to well over $1 billion, surpassing our original fiscal year '25 AI order target a full quarter early.” — Chuck Robbins, CEO .
“We…returned $3.1 billion in capital…with a total of $9.6 billion…year-to-date.” — Chuck Robbins .
“Total product orders grew 20% y/y (9% ex-Splunk) with Enterprise +22%, Public Sector +8%, Service Provider/Cloud +32%…3 of the top 6 web scalers grew orders triple digits.” — Chuck Robbins .
“Q4 margins reflect a full quarter of tariffs…we reflected the full cost without mitigation.” — Scott Herren, CFO .
“No notable pull-ahead…channel inventory down; web scaler on-hand inventory down; linearity normal; no spike in orders with future ship dates.” — Scott Herren .

Q&A Highlights

AI orders durability and capacity: Orders are “nonlinear”; if Cisco could increase capacity, hyperscalers “would buy more.” G200 is central to systems wins (2/3 of $600M were systems) .
Sovereign AI: HUMAIN (Saudi Arabia) opportunity not in current $600M; timing early; could be as big as major U.S. web scalers over time; Cisco to provide networking, compute, security, observability .
Tariffs and margins: Q4 margin step-down vs Q3 driven by full-quarter tariffs; guide assumes current structure and exemptions; mitigation levers exist; no broad evidence of pull-forward behavior .
Networking cycle: Strength across enterprise switching/routing; Wi-Fi 7 orders up triple-digit sequentially; campus refresh seen as 12–18 month cycle; embedding security into network a key driver .
Security/Splunk: Largest Splunk deal to date via combined sales force; high-double-digit security orders .

Estimates Context

Q3 FY25 results beat S&P Global consensus: revenue $14.149B vs $14.058B est.; non-GAAP EPS $0.96 vs $0.917 est. (Values retrieved from S&P Global).*
Consensus trends and actuals

Period	Revenue Est. ($B)	Revenue Actual ($B)	Primary EPS Est. ($)	EPS Actual ($)
Q1 FY25	13.771*	13.841	0.871*	0.91
Q2 FY25	13.874*	13.991	0.909*	0.94
Q3 FY25	14.058*	14.149	0.917*	0.96

Values retrieved from S&P Global.*

Implications: Modest top-line upside and consistent EPS beats suggest near-term estimate risk to the upside in networking and AI-linked systems; FY25 guide raise (revenue and EPS) likely drives upward revisions to street models .

Key Takeaways for Investors

AI momentum is now a tangible revenue driver: >$600M Q3 AI orders, YTD >$1B (systems-led, G200 ramp), expanding NVIDIA partnership, and sovereign AI pipeline (KSA HUMAIN, G42, AIP) are catalysts for multi-year growth .
Networking recovery is underway: Networking +8% y/y; triple-digit sequential Wi‑Fi 7 orders; campus/routing strength supports sustained cycle over next 12–18 months .
Security flywheel turning with Splunk synergy: High double-digit security orders; largest Splunk deal ever; 370+ new customers across new security SKUs; cross-sell into installed base supports ARR growth .
Tariffs are a near-term margin headwind but quantified: Q4 guide embeds full tariff impact; mitigation levers and supply chain agility help defend margin structure .
Quality of earnings remains strong: Non-GAAP GM ~68.6%, Op margin ~34.5%, CFO $4.1B; cash/investments $15.6B; continued capital returns (dividend $0.41; buybacks) .
FY25 raised: Revenue to $56.5–$56.7B and non-GAAP EPS to $3.77–$3.79, signaling confidence despite macro and tariff uncertainty .
Watch list: Capacity adds for AI systems, timing/scale of sovereign AI orders, tariff policy updates, and campus refresh durability.

Additional Context and Materials

Q3 FY25 8‑K and press release detail revenue, margins, EPS, guidance, cash flow, RPO, deferred revenue, and capital returns .
Q3 FY25 earnings call provides color on AI orders, hyperscaler mix, campus momentum, tariffs, and Splunk synergies .
Relevant Q3 press releases: AI Infrastructure Partnership (AIP) collaboration ; expanded AI initiatives in Saudi Arabia (HUMAIN) ; G42 strategic partnership .
Prior quarters for trend: Q2 FY25 revenue $14.0B, non-GAAP EPS $0.94; AI orders >$350M in Q2; Q1 FY25 revenue $13.8B, non-GAAP EPS $0.91 .

Footnote: Primary EPS and Revenue consensus data marked with an asterisk (*) are Values retrieved from S&P Global.

CISCO SYSTEMS, INC. (CSCO)·Q3 2025 Earnings Summary