Cisco Systems (CSCO) Q3 2025 earnings summary

Executive summary

• Q3 FY25 revenue rose 11% year-over-year to $14.1 billion, surpassing guidance high end, with product revenue up 15% and services up 3%.

• GAAP net income was $2.5 billion (up 32%), with GAAP EPS at $0.62 (up 35%); non-GAAP net income was $3.8 billion (up 8%), with non-GAAP EPS at $0.96 (up 9%).

• Product orders grew 20% year-over-year, with AI infrastructure orders from webscale customers exceeding $600 million in Q3 and surpassing $1 billion year-to-date.

• Returned $3.1 billion to shareholders in Q3 and $9.6 billion year-to-date through dividends and share repurchases.

• Strong profitability with margins and EPS above guidance, supported by robust cash flows and major AI partnerships.

Financial highlights

• Product revenue was $10.4 billion (up 15%), services revenue $3.8 billion (up 3%), and total Q3 revenue $14.1 billion (up 11%).

• Non-GAAP gross margin was 68.6%; GAAP gross margin was 65.6%.

• Non-GAAP operating margin was 34.5%; GAAP operating margin was 22.6%.

• Annualized Recurring Revenue (ARR) reached $30.6 billion (up 5%); Remaining Performance Obligations (RPO) at $41.7 billion (up 7%).

• Cash and investments at quarter end totaled $15.6 billion; operating cash flow was $4.1 billion (up 2% year-over-year).

Outlook and guidance

• Q4 FY25 revenue guidance: $14.5–$14.7 billion; GAAP EPS $0.62–$0.67; non-GAAP EPS $0.96–$0.98.

• FY25 revenue guidance: $56.5–$56.7 billion; GAAP EPS $2.53–$2.58; non-GAAP EPS $3.77–$3.79.

• Guidance includes estimated tariff impacts and assumes effective tax rates of ~17% (GAAP) and ~18% (non-GAAP) for Q4.

• Approximately 51% of RPO ($41.7 billion) expected to be recognized as revenue over the next 12 months.

• Management expects continued investment in innovation and digital transformation.