Cisco's Q1 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Rise

Cisco Systems CSCO reported first-quarter fiscal 2026 non-GAAP earnings of $1 per share, beating the Zacks Consensus Estimate by 2.04%. The figure increased 9.9% year over year.Revenues of $14.88 billion surpassed the Zacks Consensus Estimate by 0.71%. The top line increased 7.5% year over year. Total Annual Recurring Revenues (ARR) were $31.4 billion, up 5% with product ARR growth of 7%. Total subscription revenues were $8 billion and represented 54% of Cisco’s total revenues. Total software revenue was up 3% year over year to $5.7 billion.Cisco shares were up 5.73% at the time of writing this article. In the trailing 12-month period, CSCO shares have appreciated 24.9%, underperforming the Zacks Computer & Technology sector’s return of 26.9%.CSCO’s Q1 Top-Line DetailsRevenues from Networking in the first quarter of fiscal 2026 were $7.77 billion, up 15% on a year-over-year basis. Security revenues were $1.98 billion, down 2% year over year. Collaboration revenues were $1.06 billion, down 3% year over year. Observability revenues were $274 million, up 6% year over year.Total Product revenues in the first quarter of fiscal 2026 were $11.08 billion, comprising 74.4% of Cisco’s total revenues. On a year-over-year basis, product revenues increased 9.5%. Service Revenues were $3.81 billion, comprising 25.6% of Cisco’s total revenues and up 2.1% on a year-over-year basis. Cisco Systems, Inc. Price, Consensus and EPS Surprise Cisco Systems, Inc. price-consensus-eps-surprise-chart | Cisco Systems, Inc. Quote Region-wise, the Americas’ revenues increased 9% year over year to $8.99 billion. EMEA (Europe, Middle East and Africa) revenues climbed 5% year over year to $3.78 billion. APJC (Asia Pacific Japan China) revenues climbed 5% year over year to $2.11 billion. In the first quarter of fiscal 2026, AI Infrastructure orders from webscale customers exceeded $1.3 billion.CSCO’s Q1 Operating DetailsFirst-quarter fiscal 2026 non-GAAP gross margin was 68.1%, which expanded 120 basis points (bps) year over year. On a non-GAAP basis, the product gross margin decreased 30 bps on a year-over-year basis to 50%. Service gross margin decreased 90 bps to 18.1%.In the first quarter of fiscal 2026, Cisco reported total non-GAAP operating expenses of $5.02 billion, up 3% year over year. As a percentage of revenues, operating expenses declined 150 bps year over year.Consequently, CSCO reported a non-GAAP operating income of $5.12 billion, up 8.4% year over year. Operating margin expanded 30 bps year over year to 34.4%.CSCO’s Balance Sheet DetailsAs of Oct. 25, 2025, cash and cash equivalents and investments totaled $15.7 billion, which decreased from $16.1 billion as of July 26.Total debt was $28.1 billion as of Oct. 25, 2025, compared with $28.1 billion as of July 26.The remaining performance obligations (RPO) at the end of the first quarter of fiscal 2026 were $42.9 billion, up 7%. Product RPO was up 10%, and services RPO was up 4%.In the first quarter of fiscal 2026, CSCO returned $3.6 billion to stockholders through share buybacks ($2 billion) and dividends ($1.6 billion).CSCO Offers Positive GuidanceFor the second quarter of fiscal 2026, Cisco expects non-GAAP earnings between $1.01 per share and $1.03 per share. Revenues are expected to be in the range of $15 billion-$15.2 billion. Non-GAAP gross margins are expected to be between 67.5% and 68.5%. Non-GAAP operating margin is anticipated to be between 33.5% and 34.5%. For fiscal 2026, Cisco expects non-GAAP earnings between $4.08 per share and $4.14 per share. The company expects revenues between $60.2 billion and $61 billion.  Zacks Rank & Stocks to ConsiderCisco currently has a Zacks Rank #3 (Hold).Amphenol APH, Digital Turbine APPS and Advanced Energy Industries AEIS are some better-ranked stocks in the broader sector. Each of the three stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Long-term earnings growth rate for Amphenol, Digital Turbine and ASML Holding is currently pegged at 26.83%, 42.42% and 20.87%, respectively. Shares of Amphenol, Digital Turbine and Advanced Energy Industries have appreciated 98.8%, 270.4% and 33.41%, respectively.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report Amphenol Corporation (APH): Free Stock Analysis Report Advanced Energy Industries, Inc. (AEIS): Free Stock Analysis Report Digital Turbine, Inc. (APPS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks