Executive Summary
In the third quarter of fiscal year 2025, Cisco Systems Inc (CSCO) reported a remarkable 11% increase in revenue, reaching $14.1 billion, driven by strong demand for networking, security, and AI infrastructure solutions. Notably, total product orders grew 20% year-over-year, signaling sustained customer investment in technology amid a transitioning market, especially with a focus on AI capabilities. Management reported a strong capital return program, with $3.1 billion returned to shareholders this quarter alone. The company's innovative advancements and robust operational execution underline its optimistic outlook, particularly as it effectively navigates through market uncertainties related to tariffs and competitive pressures.
Key Performance Indicators
Key Insights
\n**Revenue**: $14.1 billion (up 11.39% YoY, 1.13% QoQ)\n**Gross Profit**: $9.3 billion (up 14.63% YoY, 1.83% QoQ)\n**Operating Income**: $3.2 billion (up 15.76% YoY, 2.86% QoQ)\n**Net Income**: $2.5 billion (up 32.08% YoY, 2.59% QoQ)\n**EPS**: $0.63 (up 34.04% YoY, 3.28% QoQ)\n**Gross Margin**: 65.5%\n**Operating Margin**: 22.6%\n**Return on Equity (ROE)**: 5.4%\nTotal Annual Recurring Revenue (ARR): $30.6 billion (up 5% YoY)\nProduct Revenue: $10.4 billion (up 15% YoY)\nService Revenue: $3.8 b...
Financial Highlights
\nRevenue: $14.1 billion (up 11.39% YoY, 1.13% QoQ)\nGross Profit: $9.3 billion (up 14.63% YoY, 1.83% QoQ)\nOperating Income: $3.2 billion (up 15.76% YoY, 2.86% QoQ)\nNet Income: $2.5 billion (up 32.08% YoY, 2.59% QoQ)\nEPS: $0.63 (up 34.04% YoY, 3.28% QoQ)\nGross Margin: 65.5%\nOperating Margin: 22.6%\nReturn on Equity (ROE): 5.4%\nTotal Annual Recurring Revenue (ARR): $30.6 billion (up 5% YoY)\nProduct Revenue: $10.4 billion (up 15% YoY)\nService Revenue: $3.8 billion (up 3% YoY)\nNon-GAAP Gross Margin: 68.6%, Non-GAAP Operating Margin: 34.5%
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
14.15B |
11.39% |
1.13% |
| Gross Profit |
9.28B |
14.63% |
1.83% |
| Operating Income |
3.20B |
15.76% |
2.86% |
| Net Income |
2.49B |
32.08% |
2.59% |
| EPS |
0.63 |
34.04% |
3.28% |
Key Financial Ratios
operatingProfitMargin
22.6%
operatingCashFlowPerShare
$1.02
freeCashFlowPerShare
$1.13
dividendPayoutRatio
65.3%
Management Commentary
1. AI Infrastructure Orders: CEO Chuck Robbins stated, "we received AI infrastructure orders from web-scale customers 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." This signifies strong customer sentiment towards Cisco’s AI and networking solutions.\n
2. Capital Returns: Robbins further noted, "we returned $3.1 billion in capital to our shareholders...totaling $9.6 billion in value returned year-to-date," reflecting a commitment to returning value to investors amidst growth.\n
3. Growth in Product Orders: Robbins highlighted, "Total product orders grew 20% year-over-year...Our public sector orders grew double digits in Q3...demonstrating the valuable outcomes we are delivering for customers in the era of AI."
"We received AI infrastructure orders from web-scale customers in excess of $600 million in Q3... surpassing our original fiscal year '25 AI order target a full quarter early."
— Chuck Robbins
"We returned $3.1 billion in capital to our shareholders... demonstrating our commitment to delivering consistent capital returns."
— Chuck Robbins
Forward Guidance
Management provided an optimistic outlook for the upcoming quarters, expecting revenues to increase between $14.5 billion and $14.7 billion for Q4 2025. They anticipate non-GAAP gross margins ranging from 67.5% to 68.5% and continue to project a disciplined approach towards capital allocation and investment in innovation. With the growing demand for AI infrastructure, Cisco expects to maintain strong order growth, particularly as global shifts toward AI solutions continue. Management emphasizes monitoring global trade dynamics and tariff impacts as they guide for the next quarter.