Cisco Systems (CSCO) Q3 2026 earnings summary

Executive summary

• Q3 revenue reached a record $15.8 billion, up 12% year-over-year, with non-GAAP EPS up 10% to $1.06, both exceeding guidance.

• Product orders surged 35% year-over-year, with broad-based strength across all geographies, customer markets, and hyperscaler demand.

• Significant AI infrastructure momentum, 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.

• Operating efficiencies and execution enabled strong profitability despite higher memory costs.

Financial highlights

• Non-GAAP net income was $4.23 billion, up 10% year-over-year; GAAP net income was $3.4 billion, up 35%.

• Product revenue grew 17% to $12.1 billion; services revenue was $3.7 billion, down 1%.

• Non-GAAP gross margin was 66%, down 260 bps year-over-year; GAAP gross margin was 63.6%.

• Non-GAAP operating margin was 34.2%; GAAP operating margin was 25.0%.

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

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

Outlook and guidance

• Q4 FY26 revenue guidance: $16.7–$16.9 billion; non-GAAP EPS: $1.16–$1.18; GAAP EPS: $0.80–$0.85.

• FY26 revenue guidance: $62.8–$63.0 billion; non-GAAP EPS: $4.27–$4.29; GAAP EPS: $3.16–$3.21.

• Guidance includes estimated impact of tariffs, effective tax rates of 15% (GAAP) and 19% (non-GAAP), and up to $1 billion in pre-tax restructuring charges.

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