Q4 2025 Cisco Systems Inc Earnings Call Transcript
Key Points
- Cisco Systems Inc (CSCO) delivered revenue and gross margin at the high end of guidance ranges for Q4, with earnings per share above expectations.
- The company generated solid growth in annualized recurring revenue, remaining performance obligations, and subscription revenue, providing a strong foundation for future performance.
- AI infrastructure orders from web-scale customers exceeded $800 million in Q4, bringing the total for fiscal year '25 to over $2 billion, more than double the original target.
- Product orders from service provider and cloud customers were up 49% year over year, driven by triple-digit order growth in web scale for the fourth consecutive quarter.
- Cisco Systems Inc (CSCO) returned $2.9 billion in capital to shareholders in Q4 through share repurchases and dividends, totaling $12.4 billion for fiscal '25, or 94% of free cash flow.
- Public sector orders were down 6% year over year in Q4, compared to a strong fourth quarter in FY24.
- Services revenue was flat year over year at $3.8 billion, indicating a deceleration in growth over the past five quarters.
- Security orders, excluding U.S. Federal, showed slower growth, with the need for acceleration to meet long-term growth targets.
- Concerns were raised about potential pull-forward of orders due to budget cuts and tariff implications, although Cisco Systems Inc (CSCO) did not find significant evidence of this.
- The guidance for fiscal year 2026 suggests a deceleration in growth, with revenue expected to be in the range of $59 billion to $60 billion, reflecting potential conservatism.
Welcome to Cisco's fourth-quarter and fiscal year 2025 financial results conference call. At the request of Cisco, today's conference is being recorded. If you have any objections, you may disconnect.
Now I would like to introduce Sami Badri, Head of Investor Relations. Sir, you may begin.
Good afternoon, everyone. This is Sami Badri, Cisco's Head of Investor Relations, and I'm joined by Chuck Robbins, our Chair and CEO; and Mark Patterson, our CFO. Cisco's earnings press release and supplemental information, including GAAP to non-GAAP reconciliations are available on our Investor Relations website.
Following this call, we will also make the recorded webcast and slides available on the website. Throughout today's call, we'll be referencing both GAAP and non-GAAP financial results. We will discuss product results in terms of revenue and geographic and customer results in terms of product orders, unless stated otherwise.
All comparisons will be made on a year-over-year basis.
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