Cisco Systems (NASDAQ:CSCO) reported what executives repeatedly described as a “very strong” second quarter of fiscal 2026, highlighted by record revenue, double-digit growth in both revenue and earnings per share, and accelerating demand tied to AI infrastructure and campus networking upgrades.
Q2 results top guidance; networking drives product growth
Chief Executive Officer Chuck Robbins said Q2 revenue and non-GAAP EPS both grew double digits and finished “above the high end” of Cisco’s guidance ranges. Chief Financial Officer Mark Patterson reported total revenue of $15.3 billion, up 10% year over year, with product revenue of $11.6 billion up 14% and services revenue of $3.7 billion down 1%. Non-GAAP net income was $4.1 billion, up 10%, and non-GAAP EPS was $1.04, up 11%.
Cisco also highlighted its recurring revenue profile. Patterson said total subscription revenue was $7.8 billion, representing 51% of total revenue, while total software revenue was $5.7 billion, up 2%. Total RPO was $43.4 billion, up 5%, and total ARR ended the quarter at $31 billion, up 3% (product ARR up 6%).
Orders accelerate; hyperscaler AI demand remains “nonlinear”
Robbins said total product orders increased 18% year over year, on top of double-digit growth in the comparable quarter last year. Excluding hyperscalers, Cisco said product orders rose 10%, which management described as evidence of broad-based demand.
By customer type, the company reported product order growth of 8% in enterprise, 11% in public sector, and 65% in service provider and cloud, driven by triple-digit order growth among hyperscalers. Cisco also said combined telco and cable orders were up “almost 20%.”
Geographically, Patterson said product orders were up double digits in all regions: Americas +23%, EMEA +11%, and APJC +15%.
In Q&A, executives cautioned that hyperscaler ordering patterns are “nonlinear” and “lumpy,” noting that a small number of large customers can drive variability. Patterson added that the “nonlinear nature of the hyperscaler business” introduces more uncertainty versus historical seasonality patterns.
AI infrastructure ramps; Silicon One and optics highlighted
Robbins said AI infrastructure orders from hyperscalers were $2.1 billion in Q2, up from $1.3 billion in the prior quarter and equal to the total orders taken in all of fiscal 2025. He said Cisco shipped its 1 millionth Silicon One chip in Q2 and plans to deploy the Silicon One architecture across high-performance networking systems by fiscal 2029.
At Cisco Live Amsterdam, the company introduced its 102.4 terabit-per-second G300 chip and launched four new systems powered by it, including Cisco 8000 and Nexus 9K 102.4 Tbps systems with air-cooled and liquid-cooled options. Cisco also announced two new pluggable optics products: a 1.6 Tbps OSFP and an 800 gig LPO, built with Cisco silicon photonics.
Robbins said Acacia posted its “strongest quarter to date,” with triple-digit growth in bookings, and that major hyperscalers are deploying its coherent pluggable optics for data center interconnect and “scale-across” use cases. He also said Cisco is seeing growth in both 400G and 800G coherent optics and transponder shipments, with 800G pluggables “ramping significantly.”
Given the demand backdrop, Cisco raised its expectations for fiscal 2026, stating it now expects to take AI orders in excess of $5 billion and recognize over $3 billion in AI infrastructure revenue from hyperscalers in FY26. In Q&A, management noted that the $5 billion figure does not include the recently announced P200 products, the G300, or the optics solutions introduced at Cisco Live EMEA. Executives also said the recent AI-order mix has been “reasonably consistent” at about 60% systems and 40% optics.
Outside hyperscalers, Robbins said Cisco took $350 million in AI orders in Q2 from NeoCloud, Sovereign, and Enterprise customers, with a pipeline “in excess of $2.5 billion” for its high-performance AI infrastructure portfolio. He also cited plans to form a joint venture with AMD and HUMAIN aimed at delivering up to 1 gigawatt of AI infrastructure by 2030, with an initial plan to build out 100 megawatts in Saudi Arabia as phase one.
Security transition continues; new products add customers as Splunk shifts to cloud
Management said orders are growing across newer and refreshed security products—including Secure Access, XDR, Hypershield, AI Defense, and refreshed firewalls—even as older products decline. Robbins said these new and refreshed offerings represent roughly one-third of Cisco’s security portfolio, and that excluding refreshed firewalls, over 1,000 new customers bought these products in Q2, representing “more than 100%” quarter-over-quarter growth and bringing total net new customers since launch to roughly 4,000. Cisco also cited three consecutive quarters of double-digit growth in the number of firewalls ordered.
For Secure Access, Robbins said Cisco booked over 2.5 million users in Q2 and that more than 50% of added customers were new logos.
On Splunk, Robbins said the company again saw acceleration toward cloud subscriptions and fewer on-premise deals. He said the shift is expected to remain a revenue growth drag in the second half of FY26, though management said cloud subscriptions improve adoption and innovation delivery. Robbins added that Splunk reached 500 new logos in the first half of FY26 and remains on track to add 1,000 new logos for the year.
Margins, memory costs, capital returns, and outlook
Cisco’s non-GAAP gross margin was 67.5%, down 120 basis points year over year. Patterson attributed the decline primarily to mix and higher memory costs, partially offset by productivity improvements. Non-GAAP operating margin was 34.6%, above the high end of guidance, and the non-GAAP tax rate was 19%.
Robbins addressed “significant increases in memory prices” and said Cisco is responding with price increases, adjustments to contractual terms with partners and customers, and supply-chain and scale advantages. In Q&A, Patterson said Cisco’s advanced purchase commitments were up $1.8 billion in the last 90 days and up about 73% year over year, with “a big chunk” related to memory.
On capital returns, Cisco returned $3 billion to shareholders in Q2, including $1.6 billion in dividends and $1.4 billion in share repurchases. Cisco ended the quarter with $15.8 billion in cash, cash equivalents, and investments, and had $10.8 billion remaining under its repurchase authorization. The company also announced a dividend increase of $0.01 to $0.42 per quarter.
For fiscal Q3, Cisco guided for revenue of $15.4 billion to $15.6 billion and non-GAAP EPS of $1.02 to $1.04, with non-GAAP gross margin of 65.5% to 66.5% and non-GAAP operating margin of 33.5% to 34.5%. For fiscal 2026, Cisco guided to revenue of $61.2 billion to $61.7 billion and non-GAAP EPS of $4.13 to $4.17, noting the outlook assumes current tariffs and exemptions remain in place through the end of fiscal 2026.
About Cisco Systems (NASDAQ:CSCO)
Cisco Systems, Inc is a global technology company that designs, manufactures and sells networking hardware, software and telecommunications equipment. Its core business focuses on enabling enterprise and service-provider networks through products such as routers, switches, network security appliances and wireless systems. Over time Cisco has broadened its portfolio to emphasize software-defined networking, cybersecurity, cloud infrastructure and edge computing solutions that help organizations build and manage modern IT environments.
In addition to hardware, Cisco offers a growing range of software platforms and subscription services for network management, security, analytics and collaboration.
