Cisco Systems (CSCO) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue was $13.8B, down 6% year-over-year but at the high end of guidance, with strong annualized recurring revenue and 57% of total revenue from subscriptions.

• Non-GAAP EPS was $0.91 (down 18%), GAAP EPS was $0.68 (down 24%), and GAAP net income was $2.7B (down 25%).

• Product orders grew 20% year-over-year (9% excluding Splunk), with security revenue doubling and observability up 36%.

• Gross margin improved to 65.9% GAAP and 69.3% non-GAAP, the highest in over 20 years, aided by Splunk integration and favorable product mix.

• Returned $3.6B to shareholders via $1.6B in dividends and $2B in share repurchases.

Financial highlights

• Product revenue was $10.1B (down 9%), services revenue $3.7B (up 6%), security revenue $2.0B (up 100%), and observability $258M (up 36%).

• Non-GAAP net income was $3.7B (down 19%); operating cash flow was $3.7B, up 54%.

• GAAP gross margin was 65.9%, non-GAAP gross margin 69.3%; product gross margin 68.9%, services 70.3%.

• Americas revenue was $8.25B (down 9%), EMEA $3.59B (down 2%), APJC $2.00B (up 1%).

• Cash and investments totaled $18.7B at quarter end.

Outlook and guidance

• Q2 FY25 revenue guidance: $13.75B–$13.95B; non-GAAP EPS $0.89–$0.91; non-GAAP gross margin 68–69%.

• FY25 revenue guidance: $55.3B–$56.3B; non-GAAP EPS $3.60–$3.66; assumes a 19% non-GAAP effective tax rate.

• Continued investment in AI infrastructure and digital transformation, with $1B in AI orders targeted for FY25.