CISCO REPORTS SECOND QUARTER EARNINGS

SAN JOSE, Calif., Feb. 11, 2026 /PRNewswire/ --

News Summary:

(1)

EPS guidance includes the estimated impact of tariffs based on current trade policy.

Cisco (NASDAQ: CSCO) today reported second quarter results for the period ended January 24, 2026. Cisco reported second quarter revenue of $15.3 billion, net income on a generally accepted accounting principles (GAAP) basis of $3.2 billion or $0.80 per share, and non-GAAP net income of $4.1 billion or $1.04 per share.

"Cisco's strong second quarter and first half of fiscal 2026 demonstrate both the power of our portfolio and the fundamental role we continue to play in connecting and protecting customers in a rapidly evolving landscape," said Chuck Robbins, chair and CEO of Cisco. "With over 40 years of customer trust, global scale, and a relentless focus on innovation, we believe Cisco is uniquely positioned to deliver the trusted infrastructure needed to securely and confidently power the AI-era."

"In Q2, we delivered double-digit growth on both the top and bottom lines which exceeded the high end of our guidance and puts us on track to deliver our strongest revenue year yet in fiscal 2026," said Mark Patterson, CFO of Cisco. "Operating margin was also above the high end of guidance, as we continue to drive profitability by exercising financial discipline. We see strong, broad-based demand for our technology solutions and remain focused on capturing the significant opportunities we see ahead."

GAAP Results

Q2 FY 2026

Q2 FY 2025

vs. Q2 FY 2025

Revenue

$ 15.3 billion

$ 14.0 billion

10 %

Net Income

$ 3.2 billion

$ 2.4 billion

31 %

Diluted Earnings per Share (EPS)

$ 0.80

$ 0.61

31 %

Non-GAAP Results

Q2 FY 2026

Q2 FY 2025

vs. Q2 FY 2025

Net Income

$ 4.1 billion

$ 3.8 billion

10 %

EPS

$ 1.04

$ 0.94

11 %

Reconciliations between net income, EPS, and other measures on a GAAP and non-GAAP basis are provided in the tables located in the section entitled "Reconciliations of GAAP to non-GAAP Measures."

Cisco Increases Quarterly Dividend

Cisco has declared a quarterly dividend of $0.42 per common share, a 1-cent increase or up 2% over the previous quarter's dividend, to be paid on April 22, 2026, to all stockholders of record as of the close of business on April 2, 2026. Future dividends will be subject to Board approval.

Financial Summary

All comparative percentages are on a year-over-year basis unless otherwise noted.

Q2 FY 2026 Highlights

Revenue -- Total revenue was $15.3 billion, up 10%, with product revenue up 14% and services revenue down 1%.

Revenue by geographic segment was: Americas up 8%, EMEA up 15%, and APJC up 8%. Product revenue performance reflected growth in Networking, up 21%, and Collaboration, up 6%. Security was down 4%. Observability was flat.

Gross Margin -- On a GAAP basis, total gross margin, product gross margin, and services gross margin were 65.0%, 63.9%, and 68.4%, respectively, as compared with 65.1%, 63.7%, and 68.9%, respectively, in the second quarter of fiscal 2025.

On a non-GAAP basis, total gross margin, product gross margin, and services gross margin were 67.5%, 66.4%, and 70.9%, respectively, as compared with 68.7%, 67.7%, and 71.6%, respectively, in the second quarter of fiscal 2025.

Total gross margins by geographic segment were: 65.8% for the Americas, 71.7% for EMEA and 65.8% for APJC.

Operating Expenses -- On a GAAP basis, operating expenses were $6.2 billion, up 3% year over year, and were 40.3% of revenue. Non-GAAP operating expenses were $5.0 billion, up 6%, and were 32.9% of revenue.

Operating Income -- GAAP operating income was $3.8 billion, up 21%, with GAAP operating margin of 24.6%. Non-GAAP operating income was $5.3 billion, up 9%, with non-GAAP operating margin at 34.6%.

Provision for Income Taxes -- The GAAP tax provision rate was 12.9%. The non-GAAP tax provision rate was 19.0%.

Net Income and EPS -- On a GAAP basis, net income was $3.2 billion, an increase of 31%, and EPS was $0.80, an increase of 31%. On a non-GAAP basis, net income was $4.1 billion, an increase of 10%, and EPS was $1.04, an increase of 11%.

Cash Flow from Operating Activities -- $1.8 billion for the second quarter of fiscal 2026, a decrease of 19%, compared with $2.2 billion for the second quarter of fiscal 2025.

Balance Sheet and Other Financial Highlights

Cash and Cash Equivalents and Investments -- $15.8 billion at the end of the second quarter of fiscal 2026, compared with $16.1 billion at the end of fiscal 2025.

Remaining Performance Obligations (RPO)-- $43.4 billion, up 5% in total. Product RPO was up 8%, of which long-term RPO was $11.8 billion, up 11%. Services RPO was up 2%.

Deferred Revenue -- $28.4 billion, up 2% in total, with deferred product revenue up 3% and deferred services revenue up 2%.

Capital Allocation -- In the second quarter of fiscal 2026, we returned $3.0 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.41 per common share, or $1.6 billion, and repurchased approximately 18 million shares of common stock under our stock repurchase program at an average price of $76.29 per share for an aggregate purchase price of $1.4 billion. The remaining authorized amount for stock repurchases under the program is $10.8 billion with no termination date.

Acquisitions

In the second quarter of fiscal 2026, we closed the following acquisitions:

Guidance

Cisco estimates the following results for the third quarter of fiscal 2026:

Q3 FY 2026

Revenue

$15.4 billion - $15.6 billion

Non-GAAP gross margin

65.5% - 66.5%

Non-GAAP operating margin

33.5% - 34.5%

Non-GAAP EPS

$1.02 - $1.04

Cisco estimates that GAAP EPS will be $0.73 to $0.77 for the third quarter of fiscal 2026.

Cisco estimates the following results for fiscal 2026:

FY 2026

Revenue

$61.2 billion - $61.7 billion

Non-GAAP EPS

$4.13 - $4.17

Cisco estimates that GAAP EPS will be $3.00 to $3.08 for fiscal 2026.

Margin and EPS guidance includes the estimated impact of tariffs based on current trade policy.

Our Q3 FY 2026 guidance assumes an effective tax provision rate of approximately 17% for GAAP and approximately 19% for non-GAAP results. Our FY 2026 guidance assumes an effective tax provision rate of approximately 16% for GAAP and approximately 19% for non-GAAP results.

A reconciliation between the guidance on a GAAP and non-GAAP basis is provided in the tables entitled "GAAP to non-GAAP Guidance" located in the section entitled "Reconciliations of GAAP to non-GAAP Measures."

Editor's Notes:

CISCO SYSTEMS, INC

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per-share amounts)

(Unaudited)

Three Months Ended

Six Months Ended

January 24,

2026

January 25,

2025

January 24,

2026

January 25,

2025

REVENUE:

Product

$ 11,642

$ 10,234

$ 22,719

$ 20,348

Services

3,707

3,757

7,513

7,484

Total revenue

15,349

13,991

30,232

27,832

COST OF SALES:

Product

4,205

3,713

8,139

7,239

Services

1,172

1,167

2,376

2,361

Total cost of sales

5,377

4,880

10,515

9,600

GROSS MARGIN

9,972

9,111

19,717

18,232

OPERATING EXPENSES:

Research and development

2,355

2,299

4,755

4,585

Sales and marketing

2,881

2,672

5,752

5,424

General and administrative

688

752

1,421

1,547

Amortization of purchased intangible assets

231

265

462

530

Restructuring and other charges

183

675

Total operating expenses

6,191

5,998

12,573

12,761

OPERATING INCOME

3,781

3,113

7,144

5,471

Interest income

210

238

432

524

Interest expense

(370)

(404)

(720)

(822)

Other income (loss), net

(60)

181

(19)

Interest and other income (loss), net

(135)

(226)

(107)

(317)

INCOME BEFORE PROVISION FOR INCOME TAXES

3,646

2,887

7,037

5,154

Provision for income taxes

471

459

1,002

NET INCOME

$ 3,175

$ 2,428

$ 6,035

$ 5,139

Net income per share:

Basic

$ 0.80

$ 0.61

$ 1.53

$ 1.29

Diluted

$ 0.80

$ 0.61

$ 1.51

$ 1.28

Shares used in per-share calculation:

Basic

3,955

3,981

3,955

3,986

Diluted

3,984

4,005

3,987

4,008

CISCO SYSTEMS, INC

REVENUE BY SEGMENT

(In millions, except percentages)

January 24, 2026

Three Months Ended

Six Months Ended

Amount

Y/Y %

Amount

Y/Y %

Revenue:

Americas

$ 8,845

8 %

$ 17,834

8 %

EMEA

4,425

15 %

8,208

10 %

APJC

2,080

8 %

4,191

7 %

Total

$ 15,349

10 %

$ 30,232

9 %

Amounts may not sum and percentages may not recalculate due to rounding.

CISCO SYSTEMS, INC

GROSS MARGIN PERCENTAGE BY SEGMENT

(In percentages)

January 24, 2026

Three Months Ended

Six Months Ended

Gross Margin Percentage:

Americas

65.8 %

66.3 %

EMEA

71.7 %

71.8 %

APJC

65.8 %

66.4 %

CISCO SYSTEMS, INC

REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES

(In millions, except percentages)

January 24, 2026

Three Months Ended

Six Months Ended

Amount

Y/Y %

Amount

Y/Y %

Revenue:

Networking

$ 8,294

21 %

$ 16,061

18 %

Security

2,018

(4) %

3,998

(3) %

Collaboration

1,054

6 %

2,109

1 %

Observability

277

— %

550

3 %

Total Product

11,642

14 %

22,719

12 %

Services

3,707

(1) %

7,513

— %

Total

$ 15,349

10 %

$ 30,232

9 %

Amounts may not sum and percentages may not recalculate due to rounding.

CISCO SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

January 24, 2026

July 26, 2025

ASSETS

Current assets:

Cash and cash equivalents

$ 7,458

$ 8,346

Investments

8,319

7,764

Accounts receivable, net of allowance of $76 at January 24, 2026 and $69 at July 26, 2025

6,606

6,701

Inventories

3,920

3,164

Financing receivables, net

2,944

3,061

Other current assets

5,884

5,950

Total current assets

35,131

34,986

Property and equipment, net

2,351

2,113

Financing receivables, net

3,698

3,466

Goodwill

59,234

59,136

Purchased intangible assets, net

8,307

9,175

Deferred tax assets

7,399

7,356

Other assets

7,251

6,059

TOTAL ASSETS

$ 123,371

$ 122,291

LIABILITIES AND EQUITY

Current liabilities:

Short-term debt

$ 8,719

$ 5,232

Accounts payable

2,762

2,528

Income taxes payable

195

1,857

Accrued compensation

3,494

3,611

Deferred revenue

16,199

16,416

Other current liabilities

5,417

5,420

Total current liabilities

36,786

35,064

Long-term debt

21,367

22,861

Income taxes payable

2,124

2,165

Deferred revenue

12,204

12,363

Other long-term liabilities

3,167

2,995

Total liabilities

75,648

75,448

Total equity

47,723

46,843

TOTAL LIABILITIES AND EQUITY

$ 123,371

$ 122,291

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Three Months Ended

Six Months Ended

January 24,

2026

January 25,

2025

January 24,

2026

January 25,

2025

Cash flows from operating activities:

Net income

$ 3,175

$ 2,428

$ 6,035

$ 5,139

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization, and other

659

761

1,265

1,550

Share-based compensation expense

934

921

1,989

1,748

Provision for receivables

Deferred income taxes

(89)

(101)

(64)

(382)

(Gains) losses on divestitures, investments and other, net

(59)

(237)

(5)

Change in operating assets and liabilities, net of effects of acquisitions and divestitures:

Accounts receivable

(1,803)

(1,258)

969

Inventories

(527)

212

(761)

441

Financing receivables

192

157

(120)

330

Other assets

(50)

(237)

(642)

(427)

Accounts payable

344

(90)

236

(359)

Income taxes, net

(2,375)

(1,479)

(2,503)

(2,285)

Accrued compensation

419

461

(120)

(293)

Deferred revenue

433

416

(290)

(555)

Other liabilities

557

(13)

183

Net cash provided by operating activities

1,822

2,241

5,034

5,902

Cash flows from investing activities:

Purchases of investments

(2,244)

(486)

(4,228)

(2,261)

Proceeds from sales of investments

176

301

1,445

1,791

Proceeds from maturities of investments

1,081

1,539

2,303

2,703

Acquisitions, net of cash and cash equivalents acquired and divestitures

(39)

(40)

(46)

(257)

Purchases of investments in privately held companies

(47)

(95)

(65)

(137)

Return of investments in privately held companies

Acquisition of property and equipment

(283)

(210)

(606)

(427)

Other

(4)

(8)

(5)

Net cash provided by (used in) investing activities

(1,306)

1,022

(1,150)

1,501

Cash flows from financing activities:

Issuances of common stock

354

320

354

320

Repurchases of common stock - repurchase program

(1,363)

(1,240)

(3,355)

(3,243)

Shares repurchased for tax withholdings on vesting of restricted stock units

(784)

(490)

(1,068)

(655)

Short-term borrowings, original maturities of 90 days or less, net

(510)

944

750

1,012

Issuances of debt

2,682

4,674

4,241

10,406

Repayments of debt

(204)

(6,561)

(2,992)

(11,382)

Dividends paid

(1,617)

(1,593)

(3,234)

(3,185)

Other

(2)

Net cash used in financing activities

(1,439)

(3,945)

(5,302)

(6,729)

Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted

cash and restricted cash equivalents

(19)

(18)

(33)

(8)

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash

equivalents

(942)

(700)

(1,451)

666

Cash, cash equivalents, restricted cash and restricted cash equivalents,

beginning of period

8,401

10,208

8,910

8,842

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period

$ 7,459

$ 9,508

$ 7,459

$ 9,508

Supplemental cash flow information:

Cash paid for interest

$ 85

$ 224

$ 701

$ 769

Cash paid for income taxes, net

$ 2,935

$ 2,039

$ 3,569

$ 2,682

CISCO SYSTEMS, INC.

REMAINING PERFORMANCE OBLIGATIONS

(In millions, except percentages)

January 24, 2026

October 25, 2025

January 25, 2025

Amount

Y/Y%

Amount

Y/Y%

Amount

Y/Y%

Product (1)

$ 21,977

8 %

$ 21,904

10 %

$ 20,321

25 %

Services

21,429

2 %

20,969

4 %

20,947

8 %

Total

$ 43,406

5 %

$ 42,873

7 %

$ 41,268

16 %

(1)

As of the end of the second quarter of fiscal 2026, long-term product RPO was $11.8 billion, up 11% year over year.

CISCO SYSTEMS, INC.

DEFERRED REVENUE

(In millions)

January 24, 2026

October 25, 2025

January 25, 2025

Deferred revenue:

Product

$ 13,371

$ 13,252

$ 13,033

Services

15,032

14,717

14,762

Total

$ 28,403

$ 27,969

$ 27,795

Reported as:

Current

$ 16,199

$ 15,801

$ 15,999

Noncurrent

12,204

12,168

11,796

Total

$ 28,403

$ 27,969

$ 27,795

CISCO SYSTEMS, INC.

DIVIDENDS PAID AND REPURCHASES OF COMMON STOCK

(In millions, except per-share amounts)

DIVIDENDS

STOCK REPURCHASE PROGRAM

TOTAL

Quarter Ended

Per Share

Amount

Weighted-

Average Price

per Share

Amount

Fiscal 2026

January 24, 2026

$ 0.41

$ 1,617

$ 76.29

$ 1,351

$ 2,968

October 25, 2025

$ 0.41

$ 1,617

$ 68.28

$ 2,001

$ 3,618

Fiscal 2025

July 26, 2025

$ 0.41

$ 1,625

$ 64.65

$ 1,252

$ 2,877

April 26, 2025

$ 0.41

$ 1,627

$ 59.78

$ 1,504

$ 3,131

January 25, 2025

$ 0.40

$ 1,593

$ 58.58

$ 1,236

$ 2,829

October 26, 2024

$ 0.40

$ 1,592

$ 49.56

$ 2,003

$ 3,595

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP NET INCOME

(In millions)

Three Months Ended

Six Months Ended

January 24,

2026

January 25,

2025

January 24,

2026

January 25,

2025

GAAP net income

$ 3,175

$ 2,428

$ 6,035

$ 5,139

Adjustments to cost of sales:

Share-based compensation expense

151

301

282

Amortization of acquisition-related intangible assets

228

335

461

654

Acquisition/divestiture-related costs

Total adjustments to GAAP cost of sales

385

503

776

972

Adjustments to operating expenses:

Share-based compensation expense

782

765

1,666

1,444

Amortization of acquisition-related intangible assets

231

265

462

530

Acquisition/divestiture-related costs

205

199

490

Significant asset impairments and restructurings

183

675

Total adjustments to GAAP operating expenses

1,145

1,245

2,510

3,139

Adjustments to interest and other income (loss), net:

(Gains) and losses on investments

(61)

(256)

(91)

Total adjustments to GAAP interest and other income (loss), net

(61)

(256)

(91)

Total adjustments to GAAP income before provision for income taxes

1,469

1,755

3,030

4,020

Income tax effect of non-GAAP adjustments

(442)

(423)

(779)

(899)

Significant tax matters

(59)

—

(132)

(829)

Total adjustments to GAAP provision for income taxes

(501)

(423)

(911)

(1,728)

Non-GAAP net income

$ 4,143

$ 3,760

$ 8,154

$ 7,431

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP EPS

Three Months Ended

Six Months Ended

January 24,

2026

January 25,

2025

January 24,

2026

January 25,

2025

GAAP EPS

$ 0.80

$ 0.61

$ 1.51

$ 1.28

Adjustments to GAAP:

Share-based compensation expense

0.23

0.49

0.43

Amortization of acquisition-related intangible assets

0.12

0.15

0.23

0.30

Acquisition/divestiture-related costs

0.03

0.06

0.05

0.13

Significant asset impairments and restructurings

0.01

—

0.05

0.17

(Gains) and losses on investments

(0.02)

—

(0.06)

(0.02)

Income tax effect of non-GAAP adjustments

(0.11)

(0.20)

(0.22)

Significant tax matters

(0.01)

—

(0.03)

(0.21)

Non-GAAP EPS

$ 1.04

$ 0.94

$ 2.05

$ 1.85

Amounts may not sum due to rounding.

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET, AND NET INCOME

(In millions, except percentages)

Three Months Ended

January 24, 2026

Product

Gross

Margin

Services

Gross

Margin

Total

Gross

Margin

Operating

Expenses

Y/Y

Operating

Income

Y/Y

Interest

and

other

income

(loss),

net

Net

Income

Y/Y

GAAP amount

$ 7,437

$ 2,535

$ 9,972

$ 6,191

3 %

$ 3,781

21 %

$ (135)

$ 3,175

31 %

% of revenue

63.9 %

68.4 %

65.0 %

40.3 %

24.6 %

(0.9) %

20.7 %

Adjustments to GAAP amounts:

Share-based compensation expense

151

782

933

—

933

Amortization of acquisition-related intangible assets

228

—

228

231

459

—

459

Acquisition/divestiture-related costs

102

—

102

Significant asset impairments and restructurings

—

(Gains) and losses on investments

—

(61)

Income tax effect/significant tax matters

—

(501)

Non-GAAP amount

$ 7,730

$ 2,627

$ 10,357

$ 5,046

6 %

$ 5,311

9 %

$ (196)

$ 4,143

10 %

% of revenue

66.4 %

70.9 %

67.5 %

32.9 %

34.6 %

(1.3) %

27.0 %

Three Months Ended

January 25, 2025

Product

Gross

Margin

Services

Gross

Margin

Total

Gross

Margin

Operating

Expenses

Operating

Income

Interest

and other

income

(loss), net

Net

Income

GAAP amount

$ 6,521

$ 2,590

$ 9,111

$ 5,998

$ 3,113

$ (226)

$ 2,428

% of revenue

63.7 %

68.9 %

65.1 %

42.9 %

22.3 %

(1.6) %

17.4 %

Adjustments to GAAP amounts:

Share-based compensation expense

151

765

916

—

916

Amortization of acquisition-related intangible assets

335

—

335

265

600

—

600

Acquisition/divestiture-related costs

205

222

—

222

Significant asset impairments and restructurings

—

(Gains) and losses on investments

—

Income tax effect/significant tax matters

—

(423)

Non-GAAP amount

$ 6,924

$ 2,690

$ 9,614

$ 4,753

$ 4,861

$ (219)

$ 3,760

% of revenue

67.7 %

71.6 %

68.7 %

34.0 %

34.7 %

(1.6) %

26.9 %

Amounts may not sum and percentages may not recalculate due to rounding.

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET, AND NET INCOME

(In millions, except percentages)

Six Months Ended

January 24, 2026

Product

Gross

Margin

Services

Gross

Margin

Total

Gross

Margin

Operating

Expenses

Y/Y

Operating

Income

Y/Y

Interest

and

other

income

(loss),

net

Net

Income

Y/Y

GAAP amount

$ 14,580

$ 5,137

$ 19,717

$ 12,573

(1) %

$ 7,144

31 %

$ (107)

$ 6,035

17 %

% of revenue

64.2 %

68.4 %

65.2 %

41.6 %

23.6 %

(0.4) %

20.0 %

Adjustments to GAAP amounts:

Share-based compensation expense

131

170

301

1,666

1,967

—

1,967

Amortization of acquisition-related intangible assets

461

—

461

462

923

—

923

Acquisition/divestiture-related costs

199

213

—

213

Significant asset impairments and restructurings

—

183

—

183

(Gains) and losses on investments

—

(256)

Income tax effect/significant tax matters

—

(911)

Non-GAAP amount

$ 15,176

$ 5,317

$ 20,493

$ 10,063

5 %

$ 10,430

9 %

$ (363)

$ 8,154

10 %

% of revenue

66.8 %

70.8 %

67.8 %

33.3 %

34.5 %

(1.2) %

27.0 %

Six Months Ended

January 25, 2025

Product

Gross

Margin

Services

Gross

Margin

Total

Gross

Margin

Operating

Expenses

Operating

Income

Interest

and other

income

(loss), net

Net

Income

GAAP amount

$ 13,109

$ 5,123

$ 18,232

$ 12,761

$ 5,471

$ (317)

$ 5,139

% of revenue

64.4 %

68.5 %

65.5 %

45.9 %

19.7 %

(1.1) %

18.5 %

Adjustments to GAAP amounts:

Share-based compensation expense

122

160

282

1,444

1,726

—

1,726

Amortization of acquisition-related intangible assets

654

—

654

530

1,184

—

1,184

Acquisition/divestiture-related costs

490

526

—

526

Significant asset impairments and restructurings

—

675

—

675

(Gains) and losses on investments

—

(91)

Income tax effect/significant tax matters

—

(1,728)

Non-GAAP amount

$ 13,893

$ 5,311

$ 19,204

$ 9,622

$ 9,582

$ (408)

$ 7,431

% of revenue

68.3 %

71.0 %

69.0 %

34.6 %

34.4 %

(1.5) %

26.7 %

Amounts may not sum and percentages may not recalculate due to rounding.

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

EFFECTIVE TAX RATE

(In percentages)

Three Months Ended

Six Months Ended

January 24,

2026

January 25,

2025

January 24,

2026

January 25,

2025

GAAP effective tax rate

12.9 %

15.9 %

14.2 %

0.3 %

Total adjustments to GAAP provision for income taxes

6.1 %

3.1 %

4.8 %

18.7 %

Non-GAAP effective tax rate

19.0 %

GAAP TO NON-GAAP GUIDANCE

Q3 FY 2026

Gross Margin

Rate

Operating Margin

Rate

Earnings per

Share (1)

GAAP

63% - 64%

24% - 25%

$0.73 - $0.77

Estimated adjustments for:

Share-based compensation expense

1.0 %

6.0 %

$0.17 - $0.18

Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs

1.5 %

3.5 %

$0.10 - $0.11

Non-GAAP

65.5% - 66.5%

33.5% - 34.5%

$1.02 - $1.04

FY 2026

Earnings per

Share (1)

GAAP

$3.00 - $3.08

Estimated adjustments for:

Share-based compensation expense

$0.70 - $0.72

Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs

$0.43 - $0.45

Significant asset impairments and restructurings

$0.04

(Gains) and losses on investments

($0.05)

Significant tax matters

($0.03)

Non-GAAP

$4.13 - $4.17

(1)

Estimated adjustments to GAAP earnings per share are shown after income tax effects.

Margin and EPS guidance includes the estimated impact of tariffs based on current trade policy.

Except as noted above, this guidance does not include the effects of any future acquisitions/divestitures, significant asset impairments and restructurings, significant litigation settlements and other contingencies, gains and losses on investments, significant tax matters, or other items, which may or may not be significant.

Forward Looking Statements, Non-GAAP Information and Additional Information

This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as our belief in our unique position to deliver the trusted infrastructure needed to securely and confidently power the AI-era, continuing to drive profitability by exercising financial discipline, and the strong, broad-based demand for our technology solutions as we remain focused on capturing the significant opportunities ahead) and the future financial performance of Cisco (including the guidance for Q3 FY 2026 and full year FY 2026) that involve risks and uncertainties, such as the actual impact of tariffs on our guidance for Q3 FY 2026 and full year FY 2026. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; our development and use of artificial intelligence; overall information technology spending; the growth and evolution of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market, cloud, enterprise and other customer markets; the return on our investments in certain key priority areas, and in certain geographical locations, as well as maintaining leadership in Networking and services; the timing of orders and manufacturing and customer lead times; supply constraints; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; our ability to achieve expected benefits of our partnerships; increased competition in our product and services markets, including the data center market; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, other intellectual property, antitrust, stockholder and other matters, and governmental investigations; our ability to achieve the benefits of restructurings and possible changes in the size and timing of related charges; cyber attacks, data breaches or other incidents; vulnerabilities and critical security defects; our ability to protect personal data; evolving regulatory uncertainty; terrorism; natural catastrophic events (including as a result of global climate change); any pandemic or epidemic; our ability to achieve the benefits anticipated from our investments in sales, engineering, service, marketing and manufacturing activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during economic downturns; risks related to the global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws and regulations or adverse outcomes resulting from examinations of our income tax returns; potential volatility in operating results; and other factors listed in Cisco's most recent reports on Forms 10-Q and 10-K filed on November 18, 2025 and September 3, 2025, respectively. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco's most recent reports on Forms 10-Q and 10-K as each may be amended from time to time. Cisco's results of operations for the three and six months ended January 24, 2026 are not necessarily indicative of Cisco's operating results for any future periods. Any projections in this release are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.

This release includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share data for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles (GAAP) and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco's results of operations in conjunction with the corresponding GAAP measures.

Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations.

For its internal budgeting process, Cisco's management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition/divestiture-related costs, significant asset impairments and restructurings, significant litigation settlements and other contingencies, gains and losses on investments, the income tax effects of the foregoing and significant tax matters. Cisco's management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results. For additional information on the items excluded by Cisco from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

About Cisco

Cisco (NASDAQ: CSCO) is the worldwide technology leader that is revolutionizing the way organizations connect and protect in the AI era. For more than 40 years, Cisco has securely connected the world. With its industry leading AI-powered solutions and services, Cisco enables its customers, partners and communities to unlock innovation, enhance productivity and strengthen digital resilience. With purpose at its core, Cisco remains committed to creating a more connected and inclusive future for all. Discover more on The Newsroom and follow us on X at @Cisco.

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SOURCE Cisco Systems, Inc.