Cisco Systems (CSCO) Q3 2026 earnings summary

Executive summary

• Q3 revenue reached a record $15.8 billion, up 12% year-over-year, with double-digit growth in both top and bottom lines, exceeding guidance.

• GAAP net income rose 35% to $3.4 billion; GAAP EPS increased 37% to $0.85; non-GAAP EPS up 10% to $1.06, both above guidance.

• Product revenue grew 17% year-over-year, led by robust demand for AI infrastructure and campus networking; services revenue declined 1%.

• Product orders surged 35% year-over-year, with hyperscaler AI orders expected to reach $9 billion and revenue $4 billion in FY26.

• Major multi-year, multi-billion-dollar campus networking refresh cycle underway, with campus networking orders up over 25% year-over-year.

Financial highlights

• Non-GAAP net income was $4.2 billion, and non-GAAP EPS was $1.06, both up 10% year-over-year.

• GAAP gross margin was 63.6%; non-GAAP gross margin was 66.0%, down year-over-year due to product mix and higher memory costs.

• Operating cash flow was $3.8 billion, down 7% year-over-year; cash and investments totaled $16.6 billion at quarter end.

• Returned $2.9 billion to shareholders in Q3 via dividends and share repurchases.

• Inventory increased significantly and purchase commitments with suppliers rose sharply to secure AI and memory supply.

Outlook and guidance

• Q4 FY26 revenue guidance: $16.7–$16.9 billion; non-GAAP EPS: $1.16–$1.18; non-GAAP gross margin: 65.5%–66.5%; operating margin: 34%–35%.

• FY26 revenue guidance raised to $62.8–$63.0 billion; non-GAAP EPS: $4.27–$4.29.

• Guidance includes estimated impact of tariffs and up to $1 billion in restructuring charges.

• AI infrastructure orders from hyperscalers expected to reach $9 billion in FY26, with $4 billion recognized as revenue.