Q2 2026 Cisco Systems Inc Earnings Call Transcript
Key Points
- Cisco Systems Inc (CSCO) reported a strong Q2 with double-digit growth in both revenue and earnings per share, exceeding the high end of guidance ranges.
- The company achieved record revenue in Q2, driven by a 14% increase in product revenue, particularly from AI infrastructure and campus networking solutions.
- Cisco Systems Inc (CSCO) returned $3 billion in capital to shareholders in Q2, with a total of $6.6 billion returned year-to-date, and announced an increase in its dividend.
- The company saw a significant increase in AI infrastructure orders, with expectations to take AI orders in excess of $5 billion and recognize over $3 billion in AI infrastructure revenue from hyperscalers in FY26.
- Cisco Systems Inc (CSCO) reported strong demand across its networking portfolio, with double-digit growth in data center switching, campus switching, wireless, servers, and industrial IoT products.
- Cisco Systems Inc (CSCO) faced challenges with legacy infrastructure not designed for AI's performance, speed, and security needs.
- The company experienced a decline in security revenue by 4%, impacted by the transition of its Splunk business from on-premise deals to cloud subscriptions.
- Non-GAAP gross margin decreased by 120 basis points year over year, primarily due to negative impacts from product mix and higher memory costs.
- Operating cash flow was down 19% due to a final transition tax payment and continued investments to meet growing demand, particularly for AI infrastructure.
- Cisco Systems Inc (CSCO) noted that the nonlinear nature of the hyperscale business creates uncertainty relative to historical numbers, impacting revenue predictability.
Welcome to Cisco's second quarter of 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 Sammy Badry, head of investor relations. Sir, you may begin.
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Good afternoon, everyone. This is Sammy 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'll 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 custom results in terms of product orders unless stated otherwise. All comparisons will be
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