Cisco Q2 Earnings Beat, Raises Forecast
Cisco Q2 earnings beat as AI networking orders lifted revenue to $15.3 billion and prompted a FY26 guide raise, pressuring shares.
KEY TAKEAWAYS
- Q2 revenue was $15.3 billion and non-GAAP EPS was $1.04.
- Raised FY26 revenue guidance to $61.2-$61.7 billion and Q3 revenue to $15.4-$15.6 billion.
- Networking revenue rose 21% and AI hyperscaler orders totaled $2.1 billion.
HIGH POTENTIAL TRADES SENT DIRECTLY TO YOUR INBOX
Add your email to receive our free daily newsletter. No spam, unsubscribe anytime.
Cisco Systems Inc. (CSCO) reported fiscal second-quarter results on Feb. 11, 2026, with revenue of $15.3 billion. Strong AI-driven networking demand helped the company raise its full-year FY26 outlook, despite weaker operating cash flow and mixed segment performance.
Results and Outlook
The company said in a press release on Feb. 11, 2026, that non-GAAP net income for the quarter was $4.1 billion, or $1.04 a share, while GAAP net income was $3.2 billion, or $0.80 a share, for the period ended Jan. 24, 2026. Non-GAAP earnings per share rose 11% year-over-year, and GAAP profit climbed 31%. Management said the adjusted per-share result exceeded analysts’ expectations. CEO Chuck Robbins said the quarter demonstrated “the power of our portfolio and the fundamental role we continue to play in connecting and protecting customers.”
Cisco forecasted third-quarter revenue between $15.4 billion and $15.6 billion and raised full-year FY26 revenue guidance to $61.2 billion to $61.7 billion. GAAP and non-GAAP earnings per share were provided as ranges, with the non-GAAP figures excluding special items and the outlook reflecting an estimated tariff impact. The company reported a GAAP gross margin of 65.0% and a non-GAAP gross margin of 67.5%, with GAAP operating margin at 24.6% and non-GAAP operating margin at 34.6%.
AI Demand and Capital Returns
Product revenue rose 14% year-over-year, while services revenue declined 1%. Networking revenue surged 21%, shifting the company’s mix toward hardware and systems. Security revenue fell 4%, while Collaboration revenue increased 6%, reflecting uneven segment trends beneath the overall growth.
Cisco highlighted $2.1 billion in AI infrastructure orders from hyperscalers. Product orders grew 18% year-over-year, and networking orders increased more than 20%. Management identified these large, concentrated AI-related orders as key drivers of the quarter’s product strength and the basis for the raised full-year outlook.
Operating cash flow declined 19% year-over-year to $1.8 billion. The company returned about $3.0 billion to shareholders, including roughly $1.6 billion in dividends at the prior $0.41 per-share level and $1.4 billion in share repurchases covering approximately 18 million shares. Cisco raised its quarterly dividend 2% to $0.42 a share, payable April 22, 2026, with a record date of April 2, 2026. This reflects a balance between an expanded capital-return program and near-term cash generation challenges.
Overall, Cisco’s results show a clear shift toward AI-driven product and networking sales supporting the raised full-year guidance, even as weaker security and services results and lower cash flow temper near-term momentum.
