Key Notes
- Cisco’s quarterly revenue rose 24% to $18.5 billion and adjusted earnings reached $1.40 a share.
- The company raised its fiscal 2027 AI infrastructure revenue forecast to $9 billion from $7.5 billion.
- Full-year revenue guidance increased to $74.8 billion to $75.8 billion.
Cisco (Nasdaq: CSCO) beat Wall Street’s quarterly earnings estimates and raised its annual outlook on Thursday, with surging networking sales helping the company deliver its fastest revenue growth in more than 15 years.
The company now expects $9 billion in fiscal 2027 AI infrastructure revenue from hyperscale customers, up from its August forecast of $7.5 billion. That lifts the target by 20% and puts the business on course to more than double last year’s roughly $4 billion in sales.
Cisco’s Earnings Beat
Cisco reported adjusted earnings of $1.40 a share for its fiscal first quarter, ahead of the $1.32 estimate. Revenue rose 24% to $18.5 billion, exceeding the $18.13 billion forecast. The quarter ended October 24, 2026.
GAAP earnings reached $1.14 a share, compared with 72 cents a year earlier. Networking revenue jumped 43% to $11.1 billion, accounting for about 60% of total sales. Security revenue grew 7%, while services sales increased just 1%.
Chief executive Chuck Robbins described the company as being in the early stages of a “multi-year networking supercycle.” The higher AI target gives CSCO shareholders a larger revenue opportunity to weigh against the costs of supplying that growth.
A Higher Outlook for Fiscal 2027
For the second quarter, Cisco forecast adjusted earnings of $1.34 to $1.36 a share, comfortably above the $1.23 estimate. Its revenue range of $18 billion to $18.2 billion also cleared the $17.85 billion forecast.
Full-year revenue guidance rose to $74.8 billion to $75.8 billion from $72.2 billion to $73.4 billion. Cisco now expects adjusted earnings of $5.47 to $5.53 a share, up from $5.05 to $5.11.
Margins and Cash Returns
The sales acceleration came with a squeeze on gross profitability. Adjusted gross margin was 65.6%, matching expectations but down from 68.1% a year earlier. Operating efficiency helped offset that decline: adjusted operating margin reached a record 37.8%, with adjusted operating expenses rising just 2%.
Cisco has been redirecting resources toward AI, including through a restructuring announced earlier this year. The latest results show earnings growing faster than sales even as gross margins narrow.
Operating cash flow rose 36% to $4.4 billion. Cisco returned $3.7 billion to shareholders through dividends and buybacks and declared another quarterly dividend of 42 cents a share, payable January 20 to shareholders of record on January 4.
