Here's our initial take on Cisco Systems' (NASDAQ: CSCO) third-quarter financial report.
Key Metrics
| Metric |
Q3 2024 |
Q3 2025 |
Change |
vs. Expectations |
| Revenue |
$12.7 billion |
$14.1 billion |
11% |
Beat |
| Earnings per share |
$0.88 |
$0.96 |
9% |
Beat |
| Gross margin |
65.1% |
65.6% |
50 bp |
n/a |
| Security revenue |
$1.3 billion |
$2.0 billion |
54% |
n/a |
Cisco Posts Strong Growth on AI, Security Gains
Cisco posted solid year-over-year growth and topped Wall Street expectations while also issuing guidance for the final three months of its fiscal year that were ahead of what analysts had expected.
Sales of security equipment led the way, up 54% from a year ago, and Cisco is increasingly proving its relevance in the AI conversation. The company said it took more than $600 million in AI infrastructure orders in the quarter, surpassing its $1 billion target for the full fiscal year one quarter ahead of schedule.
In March, the company rolled out its Webex AI agent for customer service applications.
Cisco is also doing a good job of controlling costs, reporting flat operating expenses from a year ago. Overall gross margin inched up slightly, fueling a solid increase in operating income.
Management is forecasting $0.96 to $0.98 in earnings per share for the fiscal fourth quarter on revenue of $14.5 billion to $14.7 billion, offering some upside to the consensus $0.95 per share on $14.5 billion in sales.
Immediate Market Reaction
Cisco shares were flat for the year coming into earnings, but that follows a big post-Liberation Day plunge and slow recovery in recent weeks. Investors were encouraged by the results, sending Cisco shares up 4% in aftermarket trading on Wednesday following the release but ahead of the company's conference call with investors.
What to Watch
The AI story and Cisco's role in that story as a provider of secure switches and other necessary products is likely to continue to build steam. Ahead of its earnings announcement, Cisco made headlines as part of a group partnering with Saudi Arabia's newly formed AI company, Humain AI.
The stock has been choppy this year in large part due to concerns about the impact of tariffs and trade restrictions, and although those worries have begun to ease, expect management to be asked about trade tensions on the postearnings call.
The bottom line is that Cisco, one of the darlings of the late 1990s tech explosion, remains as relevant as ever in the AI era.
Helpful Resources
Should you invest $1,000 in Cisco Systems right now?
Before you buy stock in Cisco Systems, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Cisco Systems wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $613,951!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $796,353!*
Now, it’s worth noting Stock Advisor’s total average return is 948% — a market-crushing outperformance compared to 170% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of May 12, 2025
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems. The Motley Fool has a disclosure policy.
