Cisco Systems (CSCO) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 revenue of $15.3 billion, up 10% year-over-year, with double-digit growth in both top and bottom lines, exceeding guidance.

• GAAP net income rose 31% to $3.2 billion; non-GAAP net income increased 10% to $4.1 billion.

• Product orders grew 18% year-over-year, with networking product orders up over 20% and strong AI infrastructure demand, including $2.1 billion in hyperscaler orders.

• Dividend increased by 2% to $0.42 per share, with $3 billion returned to shareholders in Q2.

• Growth was driven by AI infrastructure and campus networking, while Security revenue declined due to shifts in customer consumption and product mix.

Financial highlights

• Q2 revenue: $15.3 billion, up 10% year-over-year; product revenue up 14%, services revenue down 1%.

• Non-GAAP net income: $4.1 billion, up 10%; GAAP net income: $3.2 billion, up 31%.

• Non-GAAP EPS: $1.04, up 11%; GAAP EPS: $0.80, up 31%.

• Gross margin: 67.5% (non-GAAP), 65.0% (GAAP); operating margin: 34.6% (non-GAAP), 24.6% (GAAP).

• Cash and investments at quarter-end: $15.8 billion; operating cash flow: $1.8 billion.

Outlook and guidance

• Q3 FY26 revenue guidance: $15.4–$15.6 billion; non-GAAP EPS: $1.02–$1.04; GAAP EPS: $0.73–$0.77.

• FY26 revenue guidance: $61.2–$61.7 billion; non-GAAP EPS: $4.13–$4.17; GAAP EPS: $3.00–$3.08.

• Guidance includes estimated impact of tariffs and assumes effective tax rates of 16% (GAAP) and 19% (non-GAAP).

• Management expects continued positive momentum in AI infrastructure and campus networking, but Security revenue is expected to remain under pressure.

• Inventory and purchase commitments are expected to remain elevated to meet demand, especially for memory and silicon components.