Mirror Review
May 15th, 2025
Summary:
- Cisco Systems (NASDAQ: CSCO) recently released its Cisco Q3 2025 earnings report for the period ending April 26, 2025, revealing impressive growth that exceeded market expectations.
- The company saw strong revenue and profit, driven by rising demand for its networking hardware and substantial gains in the artificial intelligence (AI) sector.
- These results reflect growing confidence in Cisco’s ability to thrive in the evolving tech landscape.
Here are 10 key takeaways from the Cisco Q3 2025 Earnings report:
1. Strong Overall Performance Exceeding Expectations
Cisco reported third-quarter revenue of $14.1 billion. This marks an impressive 11% increase year-over-year and has surpassed the higher end of their guidance range.
Moreover, adjusted earnings per share (EPS) stood at $0.96. This too exceeded expectations and marked a 9% increase from the previous year. Even the GAAP EPS saw a significant lift, climbing 35% year-over-year to $0.62.
2. AI Momentum Surpasses Targets
Cisco achieved a major milestone in AI infrastructure by securing over $600 million in AI infrastructure orders from major web-scale customers in Q3 alone.
What’s even more impressive is that they’ve already blown past their $1 billion target for the whole year, with over $1.25 billion in AI infrastructure orders. And they still have a whole quarter to go!
CEO Chuck Robbins highlighted this achievement, saying, “The momentum we are seeing with AI is fueled by the power of our secure networking portfolio, our trusted global partnerships, and the value we bring to our customers.”
3. Robust Product Order Growth
Cisco’s report also highlighted a huge 20% year-over-year increase in product orders. Even when factoring out the impact of their Splunk acquisition, product orders still grew by a healthy 9%.
This expansion proves the demand for Cisco’s foundational offerings across all geographies and customer markets.
4. Positive Future Guidance
Cisco has shared an optimistic outlook for both the fourth quarter and the full fiscal year 2025.
- For Q4 2025, the company anticipates revenue falling between $14.5 billion and $14.7 billion, with non-GAAP earnings per share (EPS) expected to land somewhere from $0.96 to $0.98.
- Projecting out to the end of fiscal year 2025, Cisco forecasts revenue in the range of $56.5 billion to $56.7 billion, with non-GAAP EPS projected at $3.77 to $3.79.
These forecasts are notably higher than Wall Street’s predictions, highlighting Cisco’s confidence in its continued growth.
5. Strong Performance Across Key Product Categories
Most of Cisco’s product categories aren’t just growing; they are thriving. Security revenue surged by an impressive 54%, Observability saw a 24% increase, Networking grew by a solid 8%, and Collaboration rose by 4%.
Cisco’s largest business segment, Networking revenue, reached $7.07 billion, comfortably surpassing analyst expectations.
6. Healthy Margins and Profitability
Cisco demonstrated its ability to maintain strong profitability along with growth. Their non-GAAP total gross margin stood at a healthy 68.6% for Q3.
Also, Non-GAAP operating income climbed 12% to $4.9 billion. This results in a strong non-GAAP operating margin of 34.5%.
Scott Herren, Cisco CFO, highlighted the execution, saying, “Another quarter of solid execution in Q3 drove revenue, margins, and EPS above our guidance ranges.”
7. Leadership Transition: New CFO Announced
The report also included a significant leadership announcement. CFO Scott Herren will be retiring on July 26. He will be succeeded by Mark Patterson, currently Cisco’s chief strategy officer and a familiar face, having been a company veteran for nearly 25 years. A new chapter for the finance leadership, indeed!
8. Shareholder Returns Continue
Cisco continues to return value to its shareholders. In Q3 2025, Cisco returned $3.1 billion to stockholders through both share buybacks and dividends. Moreover, a quarterly dividend of $0.41 per common share was declared.
Cisco further repurchased approximately. 25 million shares of common stock for an aggregate purchase price of $1.5 billion.
9. Macroeconomic Factors and Tariffs
Cisco has highlighted the potential impact of tariffs in its guidance, with CEO Chuck Robbins acknowledging the uncertain macroeconomic environment.
He stated, “We’ll continue to leverage our world-class supply-chain teams to help mitigate the impact appropriately through the flexibility and agility we have built into our operations over the last few years.”
Despite these concerns, Cisco reported no significant changes in customer purchasing behavior related to potential tariffs.
10. Strategic Acquisitions and Innovation
Cisco continued to strengthen its portfolio with strategic acquisitions. In the third quarter, it completed the acquisition of SnapAttack, a threat detection and engineering platform.
The company also showcased its commitment to innovation by unveiling a chip prototype designed to make quantum networks scalable.
Additionally, the integration of Splunk, acquired in March 2024, is ongoing and has already contributed to the growth of Cisco’s security segment.
Conclusion
The positive Cisco Q3 2025 Earnings report and strong guidance have been well-received, have been well-received, leading to positive after-hours movement in Cisco stock (CSCO).
The company’s focus on high-growth areas like AI and security, combined with the steady performance of its core networking business, positions it well for sustained growth.
Evercore ISI analysts also noted that Cisco “should benefit from a cyclical networking recovery with some product refresh tailwinds also kicking in over the next twelve months.”
In conclusion, the ongoing Cisco Earnings demonstrate a company effectively capitalizing on current technology trends and shareholder value.
