Executive Summary

Q4 FY25 delivered revenue at $14.67B (+8% y/y) and non-GAAP EPS at $0.99, with gross margin and operating margin at the high end of guidance and EPS above guidance; product orders rose 7% y/y as web-scale AI infrastructure orders exceeded $800M in the quarter .
Results modestly beat S&P Global consensus: revenue by ~$0.05B (+0.34%) and EPS by ~$0.01 (+1.3%) on strong execution and slightly favorable tariff effects versus guidance estimates* .
Guidance introduced for Q1 FY26 (revenue $14.65–$14.85B; non-GAAP EPS $0.97–$0.99) and FY26 (revenue $59.0–$60.0B; non-GAAP EPS $4.00–$4.06), both including tariff impacts and tax assumptions (GAAP ~18%, non-GAAP ~19%) .
Stock-catalyst narrative centers on accelerating AI demand (>$2B FY25 AI orders vs $1B initial target), margin discipline, and visibility from RPO/ARR growth; near-term concerns include services growth flattening and U.S. federal softness in security offset by strength ex-Fed .

What Went Well and What Went Wrong

What Went Well

AI momentum: Web-scale AI infrastructure orders >$800M in Q4, >$2B in FY25 (more than double target); revenue recognition ~$1B in FY25 from these orders .
Margins and profitability: Non-GAAP gross margin 68.4% and operating margin 34.3% at high end of guidance; EPS above guidance range (non-GAAP $0.99) .
Management conviction and execution: “We delivered a strong close to fiscal 2025, driven by our accelerated innovation and solid execution” — CEO Chuck Robbins; focus on durable, profitable growth — CFO Mark Patterson .

What Went Wrong

Services revenue was flat y/y in Q4 (vs +3% in Q3), with services growth decelerating over several quarters; management expects improvement as product growth sustains .
Security headline growth modest in Q4 (+9% revenue); U.S. Federal softness impacted security orders, though ex-Fed security orders were up double digits .
Telco/public sector volatility: Public sector orders down 6% y/y in Q4 compared to strong Q4 FY24 baseline; federal expected to return to growth in FY26 but below FY25 levels .

Financial Results

Headline metrics vs prior quarters

Metric	Q2 FY25	Q3 FY25	Q4 FY25
Revenue ($USD Billions)	$13.99	$14.15	$14.67
Diluted EPS - GAAP ($)	$0.61	$0.62	$0.71
Diluted EPS - Non-GAAP ($)	$0.94	$0.96	$0.99
Gross Margin % - GAAP	65.1%	65.6%	65.7%
Gross Margin % - Non-GAAP	68.7%	68.6%	68.4%
Operating Margin % - GAAP	22.3%	22.6%	23.5%
Operating Margin % - Non-GAAP	34.7%	34.5%	34.3%
Cash from Operations ($USD Billions)	$2.20	$4.10	$4.23

Results vs S&P Global Consensus (Q4 FY25)

Metric	Consensus	Actual	Beat/Miss
Revenue ($USD Billions)	$14.62*	$14.67	+$0.05B (≈+0.34%)*
Non-GAAP EPS ($)	$0.977*	$0.99	+$0.013 (≈+1.3%)*
# of EPS Estimates	19*	—	—
# of Revenue Estimates	18*	—	—

Values retrieved from S&P Global.*

Segment breakdown (Product groups + Services)

Segment Revenue ($USD Billions)	Q2 FY25	Q3 FY25	Q4 FY25
Networking	$6.85	$7.07	$7.63
Security	$2.11	$2.01	$1.95
Collaboration	$1.00	$1.03	$1.04
Observability	$0.28	$0.26	$0.26
Total Product	$10.23	$10.37	$10.89
Services	$3.76	$3.78	$3.79
Total Revenue	$13.99	$14.15	$14.67

Geographic revenue

Geography ($USD Billions)	Q2 FY25	Q3 FY25	Q4 FY25
Americas	$8.20	$8.38	$8.82
EMEA	$3.86	$3.74	$3.65
APJC	$1.93	$2.03	$2.21
Total	$13.99	$14.15	$14.67

KPIs and balance sheet highlights

KPI	Q2 FY25	Q3 FY25	Q4 FY25
Total ARR ($USD Billions)	$30.1	$30.6	$31.1
Total RPO ($USD Billions)	$41.27	$41.67	$43.53
Deferred Revenue ($USD Billions)	$27.80	$27.99	$28.78
Cash & Investments ($USD Billions)	$16.9	$15.6	$16.1
Dividend per Share ($)	$0.41 (declared)	$0.41 (declared)	$0.41 (declared)
Share Repurchases ($USD Billions)	$1.24 @ $58.58 avg	$1.50 @ $59.78 avg	$1.25 @ $64.65 avg

Guidance Changes

Q4 FY25 guidance vs actual outcomes

Metric	Period	Previous Guidance (Q3 Issued)	Actual	Change
Revenue ($B)	Q4 FY25	$14.5–$14.7	$14.67	Met high end
Non-GAAP Gross Margin (%)	Q4 FY25	67.5–68.5	68.4	High end
Non-GAAP Operating Margin (%)	Q4 FY25	33.5–34.5	34.3	High end
Non-GAAP EPS ($)	Q4 FY25	$0.96–$0.98	$0.99	Beat
GAAP EPS ($)	Q4 FY25	$0.62–$0.67	$0.71	Beat
Non-GAAP Tax Rate (%)	Q4 FY25	~18	18.1	Inline

New guidance issuance (first issuance vs N/A)

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($B)	Q1 FY26	N/A	$14.65–$14.85	New
Non-GAAP Gross Margin (%)	Q1 FY26	N/A	67.5–68.5	New
Non-GAAP Operating Margin (%)	Q1 FY26	N/A	33–34	New
Non-GAAP EPS ($)	Q1 FY26	N/A	$0.97–$0.99	New
GAAP EPS ($)	Q1 FY26	N/A	$0.63–$0.68	New
Revenue ($B)	FY26	N/A	$59.0–$60.0	New
Non-GAAP EPS ($)	FY26	N/A	$4.00–$4.06	New
Tax Provision Rate (%)	Q1/FY26	N/A	GAAP ~18; Non-GAAP ~19	New
Dividend ($/share)	Next pay date	N/A	$0.41 declared for Oct 22, 2025	Maintained

Note: Q1/FY26 guidance includes estimated tariff impacts under current trade policy .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
Web-scale AI orders	Q2: ~$350M in quarter; YTD ~$700M; strong triple-digit growth among top web-scalers ; Q3: >$600M in quarter; YTD >$1B; systems ~2/3 of mix	Q4: >$800M in quarter; FY25 >$2B; revenue recognized ~$1B	Accelerating; broadening across customers
Enterprise AI demand	Early ramps; pilots and AI PODs; hundreds of millions in pipeline	Growing pipeline “hundreds of millions”; expect ramp in 2H FY26; NVIDIA partnership milestones forthcoming	Building; 2H ramp expected
Security + Splunk synergies	Q2: security orders doubled; large Splunk wins; >1,000 customers across Secure Access & XDR	Ex-Fed security orders up double digits; 300+ new Splunk logos in Q3/Q4; 750 new customers added across new products in Q4	Improving ex-Fed; product refresh gaining traction
Tariffs and margins	Q2/Q3 guidance embedded tariff scenarios; mitigation via supply chain	Q4 tariff impact slightly favorable vs estimate; Q1/FY26 guidance assumes current tariffs; detailed regional rates	Managed headwind; execution mitigating
Campus refresh, Wi-Fi 7	Q2: double-digit campus orders; Wi-Fi 7 sequential triple-digit growth	Campus refresh cycle opportunity with C9000 Smart Switches; security embedded into network fabric	Positive cycle emerging
RPO/ARR visibility	Q2: RPO $41.27B; ARR $30.1B	Q4: RPO $43.53B (+6% y/y); ARR $31.1B; 50% of RPO recognized in 12 months	Strengthening visibility
Public sector/Federal	Q2: Federal demand stable; overall public sector up	Q4: Public sector down 6% y/y; federal expected to return to growth in FY26 but below FY25	Mixed; gradual recovery expected

Management Commentary

Chuck Robbins (CEO): “The AI infrastructure orders we received from web-scale 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.”
Mark Patterson (CFO): “We remain focused on making strategic investments in innovation, driving durable, profitable growth and delivering shareholder value.”
Strategic positioning: Three AI pillars — training infrastructure (Silicon One, optics), enterprise inference stacks (Nexus + NVIDIA Spectrum-X; Secure AI Factory), and AI network connectivity to modernize, secure, and automate operations .

Q&A Highlights

Estimates trajectory and deceleration concerns: Management attributes modeled deceleration to comps; no demand change signaled; campus refresh expected to kick in next year .
Pull-forward risk: No pervasive pull-forward observed across partners, activation timing, linearity, or requested ship dates .
Security trajectory: Ex-Fed security orders up double digits; new/refreshed products grew >20%; ~80 new HyperShield customers with bundling to N9300 Smart Switch .
AI revenue recognition: ~$1B recognized in FY25 from AI backend orders; orders nonlinear; backlog and capacity will drive FY26 monetization .
Tariffs: Guidance embeds current tariff regimes (China 30% with exemptions; Mexico 25%; Canada 35% for non-USMCA eligible; small metals tariffs); supply chain agility to mitigate .

Estimates Context

Q4 FY25 actual vs consensus: revenue $14.673B vs $14.623B (+$0.05B); non-GAAP EPS $0.99 vs $0.977 (+$0.013). Estimate counts: EPS 19; revenue 18.*
Values retrieved from S&P Global.*

Where estimates may adjust: modest upward revisions for AI-related networking and margin assumptions given high-end margin performance and continued order strength; services growth trajectory could be reassessed given recent flat quarter .

Key Takeaways for Investors

AI is an accelerating multi-year driver: FY25 AI orders >$2B with ~$1B revenue recognized; web-scale orders robust and enterprise AI pipeline building — supports revenue and mix durability .
Margin discipline intact despite tariffs: High-end delivery on gross/operating margins and EPS above guidance suggests operating leverage and supply chain execution .
Visibility improving: RPO $43.53B (+6% y/y), 50% due within 12 months; ARR up to $31.1B underpins recurring revenues .
Security turning a corner ex-Fed: New/refreshed products showing >20% order growth; Splunk cross-sell synergies adding new logos, supporting medium-term 15–17% target trajectory .
Near-term trading setup: Modest beat vs consensus, high-end margins, and strong AI narrative are positive catalysts; monitor services growth and federal recovery pacing .
Medium-term thesis: Multi-year campus refresh and AI network modernization (Silicon One, C9000 Smart Switches, Wi-Fi 7) can sustain Networking growth within targeted ranges; sovereign/NeoCloud opportunities likely to emerge in 2H FY26 .

Non-GAAP notes: Q4 EPS excludes share-based comp, amortization of acquisition-related intangibles, acquisition/divestiture costs, restructuring, investment gains/losses, and associated tax effects **[858877_0001193125-25-179820_d901470dex991.htm:6]** **[858877_0001193125-25-179820_d901470dex991.htm:10]**.

CISCO SYSTEMS, INC. (CSCO)·Q4 2025 Earnings Summary