By Brian Nelson, CFA
On November 12, Cisco (CSCO) reported better than expected first quarter fiscal 2026 results with revenue and non-GAAP earnings per share exceeding the consensus forecasts. Revenue increased 8% year-over-year, while non-GAAP earnings per share of $1.00 increased 10% year-over-year, above the high end of its guidance range. Non-GAAP gross margin of 68.1% and non-GAAP operating margin of 34.4% were both above the high end of its guidance ranges. Cash flow from operating activities fell to $3.2 billion in the first quarter of fiscal 2026, a decline of 12% compared to the mark in the same period last year.
Management had the following to say about the quarter:
We had a solid start to fiscal 2026, and Cisco is on track to deliver our strongest year yet. The widespread demand for our technologies highlights the critical role of secure networking and the value of our portfolio as customers move quickly to unlock the potential of AI.
We delivered a strong quarter, with top and bottom-line performance exceeding our guidance, as well as solid margins and operating cash flow. Our relevance in AI continues to build and we have a multi-year, multi-billion-dollar campus refresh opportunity starting to ramp, with strong demand for our refreshed networking products. Looking ahead, you can expect a continued focus on profitable growth, capital returns, and strategic investments to capture the significant opportunities ahead.
In the first quarter of fiscal 2026, Cisco’s product orders increased 13%, with double-digit growth in Networking product orders. AI Infrastructure orders taken from hyperscaler customers totaled $1.3 billion, revealing accelerated growth. Looking to the second quarter of fiscal 2026, revenue is targeted in the range of $15-$15.2 billion on non-GAAP earnings per share of $1.01-$1.03. For all of fiscal 2026, revenue is expected in the range of $60.2-$61 billion, with non-GAAP earnings per share of $4.08-$4.14. Cisco ended the quarter with $15.7 billion of cash and cash equivalents and $28.1 billion in short- and long-term debt. Shares yield 2.2% at the time of this writing.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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