Cisco Systems (CSCO) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 revenue of $15.3 billion, up 10% year-over-year, with double-digit growth in both top and bottom lines, exceeding guidance.

• GAAP net income rose 31% to $3.2 billion; non-GAAP net income increased 10% to $4.1 billion; non-GAAP EPS up 11% to $1.04.

• Robust demand for AI infrastructure and campus networking drove product revenue up 14% year-over-year, with AI orders from hyperscalers reaching $2.1 billion in Q2.

• Returned $3 billion to shareholders in Q2, including $1.6 billion in dividends and $1.4 billion in share repurchases; dividend increased to $0.42 per share.

• Product orders grew 18% year-over-year, with networking product orders up over 20%.

Financial highlights

• Q2 revenue was $15.3 billion, up 10% year-over-year; non-GAAP net income was $4.1 billion, up 10%; GAAP net income was $3.2 billion, up 31%.

• Non-GAAP EPS was $1.04, up 11% year-over-year; GAAP EPS was $0.80, up 31%.

• Product revenue was $11.6 billion, up 14%; services revenue was $3.7 billion, down 1%.

• Non-GAAP gross margin was 67.5%, GAAP gross margin 65.0%; non-GAAP operating margin 34.6%, GAAP 24.6%.

• Operating cash flow was $1.8 billion, down 19% year-over-year; cash and investments at quarter-end totaled $15.8 billion.

Outlook and guidance

• Q3 FY26 revenue guidance: $15.4–$15.6 billion; non-GAAP EPS: $1.02–$1.04; GAAP EPS: $0.73–$0.77.

• FY26 revenue guidance: $61.2–$61.7 billion; non-GAAP EPS: $4.13–$4.17; GAAP EPS: $3.00–$3.08.

• Guidance includes estimated impact of tariffs and assumes effective tax rates of 16% (GAAP) and 19% (non-GAAP).

• Management expects continued positive momentum in AI Infrastructure and Campus Networking.

• Security revenue is expected to remain under pressure as customers shift from on-premise to cloud subscriptions.