Cisco Systems, Inc. Q2 FY2026 Earnings: Revenue Hits $15.3 Billion

Cisco delivered a record-breaking Q2 FY2026, posting revenue of $15.3 billion (+10% YoY) and non-GAAP EPS of $1.04 (+11% YoY), both exceeding the high end of management guidance. GAAP EPS surged 31% to $0.80. Despite the beat-and-raise quarter, shares fell approximately 10–12% in after-hours and next-day trading as investors reacted to margin headwinds from rising memory costs and Q3 EPS guidance that merely met consensus expectations.

About Cisco Systems, Inc.

Cisco Systems, Inc. (NASDAQ: CSCO) is a global technology leader headquartered in San Jose, California, founded in 1984 by Leonard Bosack and Sandy Lerner. The company designs and sells networking hardware, software, and services that securely connect enterprises, service providers, governments, and hyperscalers worldwide. Cisco’s portfolio spans networking, security, collaboration, and observability solutions, with an increasing focus on AI-era infrastructure.

As of mid-February 2026, Cisco carries a market capitalization of approximately $304 billion, a trailing P/E ratio of ~27, and a dividend yield of ~2.1%. The company has over 90,000 employees globally and is a component of the NASDAQ-100, Dow Jones Industrial Average, S&P 100, and S&P 500 indices. For FY2026, Cisco is on track to deliver its strongest revenue year ever, with full-year guidance of $61.2–$61.7 billion in revenue.

Top Financial Highlights

1. Total Revenue: $15.3 billion, up 10% year-over-year — a new quarterly record.
2. GAAP Net Income: $3.2 billion, up 31% YoY
3. GAAP EPS: $0.80, up 31% YoY
4. Non-GAAP EPS: $1.04, up 11% YoY
5. Product Revenue: $11.6 billion, up 14% YoY
6. Services Revenue: $3.7 billion, down 1% YoY
7. GAAP Gross Margin: 65.0%; Non-GAAP Gross Margin: 67.5%
8. GAAP Operating Margin: 24.6%; Non-GAAP Operating Margin: 34.6% — both above the high end of guidance
9. Non-GAAP Operating Income: $5.3 billion, up 9% YoY
10. Cash Flow from Operations: $1.8 billion, a decrease of 19% YoY
11. Cash and Investments: $15.8 billion (cash $7.5B + investments $8.3B)
12. Product Orders: Up 18% YoY, with networking orders accelerating to over 20% growth
13. AI Infrastructure Orders (from Hyperscalers): $2.1 billion, a significant acceleration
14. Quarterly Dividend: Raised 2% to $0.42 per share
15. Q3 FY2026 Guidance: Revenue $15.4B–$15.6B; Non-GAAP EPS $1.02–$1.04
16. FY2026 Guidance: Revenue $61.2B–$61.7B; Non-GAAP EPS $4.13–$4.17

Segment Revenue Breakdown (Q2 FY2026)

Geographic Revenue Breakdown (Q2 FY2026)

Beat or Miss?

Cisco’s Q2 FY2026 results exceeded both its own guidance and Wall Street consensus estimates. Analysts polled by LSEG had expected EPS of $1.02 and revenue of $15.1 billion. The company delivered $1.04 in adjusted EPS on $15.3 billion in revenue, a clear beat on both metrics. Networking revenue of $8.3 billion also comfortably surpassed the StreetAccount estimate of $7.9 billion.

However, the Q3 FY2026 guidance of $1.02–$1.04 in non-GAAP EPS merely matched the analyst expectation of $1.03, and GAAP EPS guidance of $0.73–$0.77 implies sequential profit compression, which disappointed growth-focused investors.

What Leadership Is Saying?

“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. 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.” – CEO Chuck Robbins — Strategic Vision

“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. 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.” – CFO Mark Patterson — Financial Discipline

Historical Performance — Cisco YoY Comparison

The table below compares Cisco’s Q2 FY2026 results with Q2 FY2025 (the same quarter in the prior fiscal year, which ended January 25, 2025).

Revenue and earnings accelerated sharply, but gross margins contracted slightly (non-GAAP down 120 bps) due to rising memory costs — a 120-basis-point headwind flagged by management. Operating cash flow declined 19% YoY, driven by higher tax payments and working capital movements including increased inventory build ($3.9B vs. $3.2B) to support AI infrastructure demand.

Historical Performance — Competitor YoY Comparison

Cisco operates in the enterprise networking space alongside key competitors Arista Networks and HPE’s Intelligent Edge/Networking segment (which now includes Juniper Networks post-acquisition). Note: Juniper Networks was acquired by HPE in 2025 and no longer reports independently.

Arista Networks (NYSE: ANET) — Q4 CY2025 vs. Q4 CY2024

Arista’s most recently reported quarter (Q4 CY2025, reported February 2025) provides the closest comparable period.

HPE Networking Segment (includes Juniper Networks) — Q4 FY2025

HPE’s Networking segment revenue surged due to the Juniper Networks acquisition closing in 2025.

Competitive Context

Arista is growing faster organically, fueled by hyperscaler and AI networking demand, and commands a higher operating margin. HPE Networking’s 150% growth is largely acquisition-driven from the Juniper deal. Cisco remains the revenue giant of the group, with the broadest portfolio spanning networking, security, collaboration, and observability.

How the Market Reacted?

Despite beating expectations on both revenue and EPS and raising full-year guidance, Cisco shares fell sharply following the earnings release on February 11, 2026. The stock dropped approximately 10–12% in after-hours and the following trading session, declining from a close of ~$85.54 to the low-to-mid $70s range. By February 14, shares were trading around $74.64, recovering slightly to $76.72 by February 16.

The sell-off was driven by two primary concerns: (1) margin pressure from rising memory costs, which created a 120-basis-point headwind to gross margins and prompted Cisco to flag proactive pricing and supply-chain measures; and (2) Q3 EPS guidance that only met consensus, signaling potential sequential profit declines despite revenue growth. Multiple analysts nevertheless raised their price targets post-earnings — UBS to $95, Citigroup to $90, BNP Paribas to $87 — maintaining buy/outperform ratings and reflecting confidence in Cisco’s AI infrastructure trajectory and campus networking refresh cycle.