Q1 2026 Cisco Systems Inc Earnings Call Transcript
Key Points
- Cisco Systems Inc (CSCO) reported record Q1 revenue, with an 8% year-over-year increase, driven by strong demand for AI infrastructure and campus networking solutions.
- The company achieved a 10% growth in non-GAAP EPS, indicating effective cost management and operational efficiency.
- Cisco Systems Inc (CSCO) returned $3.6 billion to shareholders through dividends and share repurchases, representing 125% of free cash flow in Q1.
- Product orders grew 13% year over year, with significant growth across all geographies and customer markets, particularly in service provider and cloud sectors.
- The company is well-positioned to capitalize on AI infrastructure opportunities, with a strong pipeline and strategic partnerships, including an expanded partnership with NVIDIA.
- Security revenue declined by 2% due to a shift to cloud subscriptions in the Splunk business and declines in prior generation products.
- Non-GAAP gross margin decreased by 120 basis points year over year, impacted by mix and pricing challenges.
- Operating cash flow was down 12% due to investments to meet growing customer demand for AI infrastructure.
- The transition to cloud subscriptions for Splunk negatively impacted security revenue growth in Q1, although it is expected to be a timing issue.
- There are concerns about the sustainability of growth in non-AI segments, with some analysts questioning the overall growth rate excluding AI-related revenues.
Welcome to Cisco's first-quarter in fiscal year 2026 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 am 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
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