Here's our initial take on Cisco Systems' (CSCO 5.73%) 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.
