SAN JOSE, Calif., Feb. 12, 2025 /PRNewswire/ —
News Summary:
Broad-based strength in product orders demonstrating growing demand for Cisco technologiesProduct orders up 29% year over year; up 11% excluding SplunkAI Infrastructure orders of more than $350 million, bringing the total for 1HFY25 to approximately $700 millionRevenue of $14.0 billion, above the high end of our guidance rangeStrong profitability:GAAP gross margin of 65.1% and non-GAAP gross margin of 68.7%GAAP EPS of $0.61 and non-GAAP EPS of $0.94, above the high end of our guidance rangeQuarterly dividend increased to $0.41 per share, up 3%, and additional $15 billion authorized for stock repurchasesQ2 FY 2025 Results:Revenue: $14.0 billionIncrease of 9% year over yearEarnings per Share: GAAP: $0.61; Non-GAAP: $0.94GAAP EPS decreased 6% year over yearNon-GAAP EPS increased 8% year over yearQ3 FY 2025 Guidance: Revenue: $13.9 billion to $14.1 billionEarnings per Share: GAAP: $0.57 to $0.61; Non-GAAP: $0.90 to $0.92FY 2025 Guidance:Revenue: $56.0 billion to $56.5 billionEarnings per Share: GAAP: $2.40 to $2.52; Non-GAAP: $3.68 to $3.74
Cisco today reported second quarter results for the period ended January 25, 2025. Cisco reported second quarter revenue of $14.0 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.4 billion or $0.61 per share, and non-GAAP net income of $3.8 billion or $0.94 per share.
“Cisco’s strong quarterly results were driven by accelerating customer demand for our technology,” said Chuck Robbins, chair and CEO of Cisco. “As AI becomes more pervasive, we are well positioned to help our customers scale their network infrastructure, increase their data capacity requirements, and adopt best-in-class AI security.”
“Q2 was another quarter of solid execution which drove revenue and EPS above our guidance ranges. Splunk continues to perform in line with our expectations on the top line, and was accretive to Q2 non-GAAP EPS, earlier than we had planned,” said Scott Herren, CFO of Cisco. “Our strong cash flows have led us to increase our annual dividend again this year, as well as our overall share repurchase authorization.”
GAAP Results
Q2 FY 2025
Q2 FY 2024
Vs. Q2 FY 2024
Revenue
$ 14.0 billion
$ 12.8 billion
9 %
Net Income
$ 2.4 billion
$ 2.6 billion
(8) %
Diluted Earnings per Share (EPS)
$ 0.61
$ 0.65
(6) %
Non-GAAP Results
Q2 FY 2025
Q2 FY 2024
Vs. Q2 FY 2024
Net Income
$ 3.8 billion
$ 3.5 billion
6 %
EPS
$ 0.94
$ 0.87
8 %
Reconciliations between net income, EPS, and other measures on a GAAP and non-GAAP basis are provided in the tables located in the section entitled “Reconciliations of GAAP to non-GAAP Measures.”
Cisco Increases Quarterly Dividend; Stock Repurchase Program Authorization Increased
Cisco has declared a quarterly dividend of $0.41 per common share, a 1-cent increase or up 3% over the previous quarter’s dividend, to be paid on April 23, 2025, to all stockholders of record as of the close of business on April 3, 2025. Future dividends will be subject to Board approval.
Cisco’s board of directors has also approved a $15 billion increase to the authorization of the stock repurchase program. There is no fixed termination date for the repurchase program. The remaining authorized fixed amount for stock repurchases including the additional authorization is approximately $17 billion.
Financial Summary
All comparative percentages are on a year-over-year basis unless otherwise noted.
Q2 FY 2025 Highlights
Revenue — Total revenue was $14.0 billion, up 9%, with product revenue up 11% and services revenue up 6%. Excluding the contribution from Splunk, total revenue was down 1%.
Revenue by geographic segment was: Americas up 9%, EMEA up 11%, and APJC up 8%. Product revenue performance reflected growth in Security up 117%, Observability up 47%, and Collaboration up 1%. Networking was down 3%. Excluding Splunk, Security and Observability grew 4% and 3%, respectively, in the second quarter of fiscal 2025.
Gross Margin — On a GAAP basis, total gross margin, product gross margin, and services gross margin were 65.1%, 63.7%, and 68.9%, respectively, as compared with 64.2%, 62.7%, and 68.2%, respectively, in the second quarter of fiscal 2024.
On a non-GAAP basis, total gross margin, product gross margin, and services gross margin were 68.7%, 67.7%, and 71.6%, respectively, as compared with 66.7%, 65.2%, and 70.5%, respectively, in the second quarter of fiscal 2024.
Total gross margins by geographic segment were: 67.6% for the Americas, 71.3% for EMEA and 68.3% for APJC.
Operating Expenses — On a GAAP basis, operating expenses were $6.0 billion, up 17%, and were 42.9% of revenue. Non-GAAP operating expenses were $4.8 billion, up 10%, and were 34.0% of revenue.
Operating Income — GAAP operating income was $3.1 billion, up 1%, with GAAP operating margin of 22.3%. Non-GAAP operating income was $4.9 billion, up 15%, with non-GAAP operating margin at 34.7%.
Provision for Income Taxes — The GAAP tax provision rate was 15.9%. The non-GAAP tax provision rate was 19.0%.
Net Income and EPS — On a GAAP basis, net income was $2.4 billion, a decrease of 8%, and EPS was $0.61, a decrease of 6%. On a non-GAAP basis, net income was $3.8 billion, an increase of 6%, and EPS was $0.94, an increase of 8%.
Cash Flow from Operating Activities — $2.2 billion for the second quarter of fiscal 2025, an increase of 177%, compared with $0.8 billion for the second quarter of fiscal 2024.
Balance Sheet and Other Financial Highlights
Cash and Cash Equivalents and Investments — $16.9 billion at the end of the second quarter of fiscal 2025, compared with $17.9 billion at the end of fiscal 2024.
Remaining Performance Obligations (RPO) — $41.3 billion, up 16% in total, with 51% of this amount to be recognized as revenue over the next 12 months. Product RPO up 25% and services RPO up 8%.
Deferred Revenue — $27.8 billion, up 8% in total, with deferred product revenue up 12%. Deferred services revenue up 4%.
Capital Allocation — In the second quarter of fiscal 2025, we returned $2.8 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.40 per common share, or $1.6 billion, and repurchased approximately 21 million shares of common stock under our stock repurchase program at an average price of $58.58 per share for an aggregate purchase price of $1.2 billion.
Acquisitions
In the second quarter of fiscal 2025, we closed the acquisition of Deeper Insights AI Ltd., a privately held AI services company.
Guidance
Cisco estimates the following results for the third quarter of fiscal 2025:
Q3 FY 2025
Revenue
$13.9 billion – $14.1 billion
Non-GAAP gross margin
67% – 68%
Non-GAAP operating margin
33% – 34%
Non-GAAP EPS
$0.90 – $0.92
Gross margin guidance includes the estimated impact of proposed tariffs on Mexico, Canada, and China.
Cisco estimates that GAAP EPS will be $0.57 to $0.61 for the third quarter of fiscal 2025.
Cisco estimates the following results for fiscal 2025:
FY 2025
Revenue
$56.0 billion – $56.5 billion
Non-GAAP EPS
$3.68 – $3.74
Gross margin guidance includes the estimated impact of proposed tariffs on Mexico, Canada, and China.
Cisco estimates that GAAP EPS will be $2.40 to $2.52 for fiscal 2025.
Our Q3 FY 2025 guidance assumes an effective tax provision rate of approximately 17% for GAAP and approximately 19% for non-GAAP results. Our FY 2025 guidance assumes an effective tax provision rate of approximately 9% for GAAP and approximately 19% for non-GAAP results.
A reconciliation between the guidance on a GAAP and non-GAAP basis is provided in the tables entitled “GAAP to non-GAAP Guidance” located in the section entitled “Reconciliations of GAAP to non-GAAP Measures.”
Editor’s Notes:
Q2 fiscal year 2025 conference call to discuss Cisco’s results along with its guidance will be held on Wednesday, February 12, 2025 at 1:30 p.m. Pacific Time. Conference call number is 1-888-848-6507 (United States) or 1-212-519-0847 (international).Conference call replay will be available from 4:00 p.m. Pacific Time, February 12, 2025 to 4:00 p.m. Pacific Time, February 18, 2025 at 1-800-395-6236 (United States) or 1-203-369-3270 (international). The replay will also be available via webcast on the Cisco Investor Relations website at https://investor.cisco.com.Additional information regarding Cisco’s financials, as well as a webcast of the conference call with visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, February 12, 2025. Text of the conference call’s prepared remarks will be available within 24 hours of completion of the call. The webcast will include both the prepared remarks and the question-and-answer session. This information, along with the GAAP to non-GAAP reconciliation information, will be available on the Cisco Investor Relations website at https://investor.cisco.com.
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per-share amounts)
(Unaudited)
Three Months Ended
Six Months Ended
January 25, 2025
January 27, 2024
January 25, 2025
January 27, 2024
REVENUE:
Product
$ 10,234
$ 9,232
$ 20,348
$ 20,371
Services
3,757
3,559
7,484
7,088
Total revenue
13,991
12,791
27,832
27,459
COST OF SALES:
Product
3,713
3,443
7,239
7,400
Services
1,167
1,131
2,361
2,285
Total cost of sales
4,880
4,574
9,600
9,685
GROSS MARGIN
9,111
8,217
18,232
17,774
OPERATING EXPENSES:
Research and development
2,299
1,943
4,585
3,856
Sales and marketing
2,672
2,458
5,424
4,964
General and administrative
752
642
1,547
1,314
Amortization of purchased intangible assets
265
66
530
133
Restructuring and other charges
10
12
675
135
Total operating expenses
5,998
5,121
12,761
10,402
OPERATING INCOME
3,113
3,096
5,471
7,372
Interest income
238
324
524
684
Interest expense
(404)
(120)
(822)
(231)
Other income (loss), net
(60)
(139)
(19)
(222)
Interest and other income (loss), net
(226)
65
(317)
231
INCOME BEFORE PROVISION FOR INCOME TAXES
2,887
3,161
5,154
7,603
Provision for income taxes
459
527
15
1,331
NET INCOME
$ 2,428
$ 2,634
$ 5,139
$ 6,272
Net income per share:
Basic
$ 0.61
$ 0.65
$ 1.29
$ 1.55
Diluted
$ 0.61
$ 0.65
$ 1.28
$ 1.54
Shares used in per-share calculation:
Basic
3,981
4,055
3,986
4,056
Diluted
4,005
4,073
4,008
4,079
CISCO SYSTEMS, INC.
REVENUE BY SEGMENT
(In millions, except percentages)
January 25, 2025
Three Months Ended
Six Months Ended
Amount
Y/Y %
Amount
Y/Y %
Revenue:
Americas
$ 8,202
9 %
$ 16,454
— %
EMEA
3,855
11 %
7,444
4 %
APJC
1,934
8 %
3,934
4 %
Total
$ 13,991
9 %
$ 27,832
1 %
Amounts may not sum and percentages may not recalculate due to rounding.
CISCO SYSTEMS, INC.
GROSS MARGIN PERCENTAGE BY SEGMENT
(In percentages)
January 25, 2025
Three Months Ended
Six Months Ended
Gross Margin Percentage:
Americas
67.6 %
68.6 %
EMEA
71.3 %
70.8 %
APJC
68.3 %
67.3 %
CISCO SYSTEMS, INC.
REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES
(In millions, except percentages)
January 25, 2025
Three Months Ended
Six Months Ended
Amount
Y/Y %
Amount
Y/Y %
Revenue:
Networking
$ 6,850
(3) %
$ 13,603
(14) %
Security
2,111
117 %
4,129
108 %
Collaboration
996
1 %
2,081
(1) %
Observability
277
47 %
535
42 %
Total Product
10,234
11 %
20,348
— %
Services
3,757
6 %
7,484
6 %
Total
$ 13,991
9 %
$ 27,832
1 %
Excluding Splunk, Security and Observability grew 4% and 3% year over year, respectively, in the second quarter of fiscal 2025.
Amounts may not sum and percentages may not recalculate due to rounding.
CISCO SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
January 25, 2025
July 27, 2024
ASSETS
Current assets:
Cash and cash equivalents
$ 8,556
$ 7,508
Investments
8,297
10,346
Accounts receivable, net of allowance of $80 at January 25, 2025 and $87 at July 27, 2024
5,669
6,685
Inventories
2,927
3,373
Financing receivables, net
3,074
3,338
Other current assets
6,158
5,612
Total current assets
34,681
36,862
Property and equipment, net
1,992
2,090
Financing receivables, net
3,240
3,376
Goodwill
58,719
58,660
Purchased intangible assets, net
10,139
11,219
Deferred tax assets
6,591
6,262
Other assets
6,013
5,944
TOTAL ASSETS
$ 121,375
$ 124,413
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt
$ 11,413
$ 11,341
Accounts payable
1,902
2,304
Income taxes payable
1,884
1,439
Accrued compensation
3,299
3,608
Deferred revenue
15,999
16,249
Other current liabilities
5,522
5,643
Total current liabilities
40,019
40,584
Long-term debt
19,625
19,621
Income taxes payable
1,756
3,985
Deferred revenue
11,796
12,226
Other long-term liabilities
2,649
2,540
Total liabilities
75,845
78,956
Total equity
45,530
45,457
TOTAL LIABILITIES AND EQUITY
$ 121,375
$ 124,413
CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended
January 25,
2025
January 27,
2024
Cash flows from operating activities:
Net income
$ 5,139
$ 6,272
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other
1,550
823
Share-based compensation expense
1,748
1,463
Provision for receivables
7
12
Deferred income taxes
(382)
(816)
(Gains) losses on divestitures, investments and other, net
(5)
205
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable
969
941
Inventories
441
442
Financing receivables
330
(33)
Other assets
(427)
(403)
Accounts payable
(359)
(476)
Income taxes, net
(2,285)
(4,656)
Accrued compensation
(293)
(763)
Deferred revenue
(555)
293
Other liabilities
24
(125)
Net cash provided by operating activities
5,902
3,179
Cash flows from investing activities:
Purchases of investments
(2,261)
(2,253)
Proceeds from sales of investments
1,791
2,484
Proceeds from maturities of investments
2,703
4,044
Acquisitions, net of cash and cash equivalents acquired and divestitures
(257)
(878)
Purchases of investments in privately held companies
(137)
(50)
Return of investments in privately held companies
94
123
Acquisition of property and equipment
(427)
(304)
Other
(5)
(1)
Net cash provided by investing activities
1,501
3,165
Cash flows from financing activities:
Issuances of common stock
320
349
Repurchases of common stock – repurchase program
(3,243)
(2,504)
Shares repurchased for tax withholdings on vesting of restricted stock units
(655)
(581)
Short-term borrowings, original maturities of 90 days or less, net
1,012
1,398
Issuances of debt
10,406
2,537
Repayments of debt
(11,382)
(750)
Dividends paid
(3,185)
(3,163)
Other
(2)
(7)
Net cash used in financing activities
(6,729)
(2,721)
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
(8)
(32)
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents
666
3,591
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period
8,842
11,627
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
$ 9,508
$ 15,218
Supplemental cash flow information:
Cash paid for interest
$ 769
$ 203
Cash paid for income taxes, net
$ 2,682
$ 6,804
CISCO SYSTEMS, INC.
REMAINING PERFORMANCE OBLIGATIONS
(In millions, except percentages)
January 25, 2025
October 26, 2024
January 27, 2024
Amount
Y/Y%
Amount
Y/Y%
Amount
Y/Y%
Product
$ 20,321
25 %
$ 19,882
24 %
$ 16,249
12 %
Services
20,947
8 %
20,108
7 %
19,407
12 %
Total
$ 41,268
16 %
$ 39,990
15 %
$ 35,656
12 %
We expect 51% of total RPO at January 25, 2025 will be recognized as revenue over the next 12 months.
CISCO SYSTEMS, INC.
DEFERRED REVENUE
(In millions)
January 25, 2025
October 26, 2024
January 27, 2024
Deferred revenue:
Product
$ 13,033
$ 12,941
$ 11,640
Services
14,762
14,561
14,131
Total
$ 27,795
$ 27,502
$ 25,771
Reported as:
Current
$ 15,999
$ 15,615
$ 14,011
Noncurrent
11,796
11,887
11,760
Total
$ 27,795
$ 27,502
$ 25,771
CISCO SYSTEMS, INC.
DIVIDENDS PAID AND REPURCHASES OF COMMON STOCK
(In millions, except per-share amounts)
DIVIDENDS
STOCK REPURCHASE PROGRAM
TOTAL
Quarter Ended
Per Share
Amount
Shares
Weighted-Average
Price per Share
Amount
Amount
Fiscal 2025
January 25, 2025
$ 0.40
$ 1,593
21
$ 58.58
$ 1,236
$ 2,829
October 26, 2024
$ 0.40
$ 1,592
40
$ 49.56
$ 2,003
$ 3,595
Fiscal 2024
July 27, 2024
$ 0.40
$ 1,606
43
$ 46.80
$ 2,002
$ 3,608
April 27, 2024
$ 0.40
$ 1,615
26
$ 49.22
$ 1,256
$ 2,871
January 27, 2024
$ 0.39
$ 1,583
25
$ 49.54
$ 1,254
$ 2,837
October 28, 2023
$ 0.39
$ 1,580
23
$ 54.53
$ 1,252
$ 2,832
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
GAAP TO NON-GAAP NET INCOME
(In millions)
Three Months Ended
Six Months Ended
January 25,
2025
January 27,
2024
January 25,
2025
January 27,
2024
GAAP net income
$ 2,428
$ 2,634
$ 5,139
$ 6,272
Adjustments to cost of sales:
Share-based compensation expense
151
139
282
242
Amortization of acquisition-related intangible assets
335
175
654
356
Acquisition/divestiture-related costs
17
1
36
1
Total adjustments to GAAP cost of sales
503
315
972
599
Adjustments to operating expenses:
Share-based compensation expense
765
662
1,444
1,212
Amortization of acquisition-related intangible assets
265
66
530
133
Acquisition/divestiture-related costs
205
64
490
139
Russia-Ukraine war costs
—
—
—
(2)
Significant asset impairments and restructurings
10
12
675
135
Total adjustments to GAAP operating expenses
1,245
804
3,139
1,617
Adjustments to interest and other income (loss), net:
(Gains) and losses on investments
7
88
(91)
139
Total adjustments to GAAP interest and other income (loss), net
7
88
(91)
139
Total adjustments to GAAP income before provision for income taxes
1,755
1,207
4,020
2,355
Income tax effect of non-GAAP adjustments
(423)
(303)
(899)
(561)
Significant tax matters (1)
—
—
(829)
—
Total adjustments to GAAP provision for income taxes
(423)
(303)
(1,728)
(561)
Non-GAAP net income
$ 3,760
$ 3,538
$ 7,431
$ 8,066
(1) The six months ended January 25, 2025 include a $720 million benefit due to a recent U.S. Tax Court decision regarding the U.S. taxation of deemed foreign dividends in the transition year of the Tax Cuts and Jobs Act.
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
GAAP TO NON-GAAP EPS
Three Months Ended
Six Months Ended
January 25,
2025
January 27,
2024
January 25,
2025
January 27,
2024
GAAP EPS
$ 0.61
$ 0.65
$ 1.28
$ 1.54
Adjustments to GAAP:
Share-based compensation expense
0.23
0.20
0.43
0.36
Amortization of acquisition-related intangible assets
0.15
0.06
0.30
0.12
Acquisition/divestiture-related costs
0.06
0.02
0.13
0.03
Significant asset impairments and restructurings
—
—
0.17
0.03
(Gains) and losses on investments
—
0.02
(0.02)
0.03
Income tax effect of non-GAAP adjustments
(0.11)
(0.07)
(0.22)
(0.14)
Significant tax matters
—
—
(0.21)
—
Non-GAAP EPS
$ 0.94
$ 0.87
$ 1.85
$ 1.98
Amounts may not sum due to rounding.
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET, AND NET INCOME
(In millions, except percentages)
Three Months Ended
January 25, 2025
Product Gross
Margin
Services Gross
Margin
Total Gross
Margin
Operating
Expenses
Y/Y
Operating
Income
Y/Y
Interest and
other income
(loss), net
Net
Income
Y/Y
GAAP amount
$ 6,521
$ 2,590
$ 9,111
$ 5,998
17 %
$ 3,113
1 %
$ (226)
$ 2,428
(8) %
% of revenue
63.7 %
68.9 %
65.1 %
42.9 %
22.3 %
(1.6) %
17.4 %
Adjustments to GAAP amounts:
Share-based compensation expense
65
86
151
765
916
—
916
Amortization of acquisition-related intangible assets
335
—
335
265
600
—
600
Acquisition/divestiture-related costs
3
14
17
205
222
—
222
Significant asset impairments and restructurings
—
—
—
10
10
—
10
(Gains) and losses on investments
—
—
—
—
—
7
7
Income tax effect/significant tax matters
—
—
—
—
—
—
(423)
Non-GAAP amount
$ 6,924
$ 2,690
$ 9,614
$ 4,753
10 %
$ 4,861
15 %
$ (219)
$ 3,760
6 %
% of revenue
67.7 %
71.6 %
68.7 %
34.0 %
34.7 %
(1.6) %
26.9 %
Three Months Ended
January 27, 2024
Product Gross
Margin
Services Gross
Margin
Total Gross
Margin
Operating
Expenses
Operating
Income
Interest and
other income
(loss), net
Net
Income
GAAP amount
$ 5,789
$ 2,428
$ 8,217
$ 5,121
$ 3,096
$ 65
$ 2,634
% of revenue
62.7 %
68.2 %
64.2 %
40.0 %
24.2 %
0.5 %
20.6 %
Adjustments to GAAP amounts:
Share-based compensation expense
58
81
139
662
801
—
801
Amortization of acquisition-related intangible assets
175
—
175
66
241
—
241
Acquisition/divestiture-related costs
1
—
1
64
65
—
65
Significant asset impairments and restructurings
—
—
—
12
12
—
12
(Gains) and losses on investments
—
—
—
—
—
88
88
Income tax effect/significant tax matters
—
—
—
—
—
—
(303)
Non-GAAP amount
$ 6,023
$ 2,509
$ 8,532
$ 4,317
$ 4,215
$ 153
$ 3,538
% of revenue
65.2 %
70.5 %
66.7 %
33.8 %
33.0 %
1.2 %
27.7 %
Amounts may not sum and percentages may not recalculate due to rounding.
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
GROSS MARGINS, OPERATING EXPENSES, OPERATING MARGINS, INTEREST AND OTHER INCOME (LOSS), NET, AND NET INCOME
(In millions, except percentages)
Six Months Ended
January 25, 2025
Product Gross
Margin
Services Gross
Margin
Total Gross
Margin
Operating
Expenses
Y/Y
Operating
Income
Y/Y
Interest and
other income
(loss), net
Net
Income
Y/Y
GAAP amount
$ 13,109
$ 5,123
$ 18,232
$ 12,761
23 %
$ 5,471
(26) %
$ (317)
$ 5,139
(18) %
% of revenue
64.4 %
68.5 %
65.5 %
45.9 %
19.7 %
(1.1) %
18.5 %
Adjustments to GAAP amounts:
Share-based compensation expense
122
160
282
1,444
1,726
—
1,726
Amortization of acquisition-related intangible assets
654
—
654
530
1,184
—
1,184
Acquisition/divestiture-related costs
8
28
36
490
526
—
526
Significant asset impairments and restructurings
—
—
—
675
675
—
675
(Gains) and losses on investments
—
—
—
—
—
(91)
(91)
Income tax effect/significant tax matters
—
—
—
—
—
—
(1,728)
Non-GAAP amount
$ 13,893
$ 5,311
$ 19,204
$ 9,622
10 %
$ 9,582
— %
$ (408)
$ 7,431
(8) %
% of revenue
68.3 %
71.0 %
69.0 %
34.6 %
34.4 %
(1.5) %
26.7 %
Six Months Ended
January 27, 2024
Product Gross
Margin
Services Gross
Margin
Total Gross
Margin
Operating
Expenses
Operating
Income
Interest and
other income
(loss), net
Net
Income
GAAP amount
$ 12,971
$ 4,803
$ 17,774
$ 10,402
$ 7,372
$ 231
$ 6,272
% of revenue
63.7 %
67.8 %
64.7 %
37.9 %
26.8 %
0.8 %
22.8 %
Adjustments to GAAP amounts:
Share-based compensation expense
100
142
242
1,212
1,454
—
1,454
Amortization of acquisition-related intangible assets
356
—
356
133
489
—
489
Acquisition/divestiture-related costs
1
—
1
139
140
—
140
Significant asset impairments and restructurings
—
—
—
135
135
—
135
Russia-Ukraine war costs
—
—
—
(2)
(2)
—
(2)
(Gains) and losses on investments
—
—
—
—
—
139
139
Income tax effect/significant tax matters
—
—
—
—
—
—
(561)
Non-GAAP amount
$ 13,428
$ 4,945
$ 18,373
$ 8,785
$ 9,588
$ 370
$ 8,066
% of revenue
65.9 %
69.8 %
66.9 %
32.0 %
34.9 %
1.3 %
29.4 %
Amounts may not sum and percentages may not recalculate due to rounding.
CISCO SYSTEMS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
EFFECTIVE TAX RATE
(In percentages)
Three Months Ended
Six Months Ended
January 25,
2025
January 27,
2024
January 25,
2025
January 27,
2024
GAAP effective tax rate
15.9 %
16.7 %
0.3 %
17.5 %
Total adjustments to GAAP provision for income taxes
3.1 %
2.3 %
18.7 %
1.5 %
Non-GAAP effective tax rate
19.0 %
19.0 %
19.0 %
19.0 %
GAAP TO NON-GAAP GUIDANCE
Q3 FY 2025
Gross Margin Rate
Operating Margin Rate
Earnings per Share (1)
GAAP
64% – 65%
21% – 22%
$0.57 – $0.61
Estimated adjustments for:
Share-based compensation expense
1.0 %
7.0 %
$0.17 – $0.18
Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs
2.0 %
5.0 %
$0.14 – $0.15
Non-GAAP
67% – 68%
33% – 34%
$0.90 – $0.92
FY 2025
Earnings per Share (1)
GAAP
$2.40 – $2.52
Estimated adjustments for:
Share-based compensation expense
$0.69 – $0.71
Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs
$0.60 – $0.62
Significant asset impairments and restructurings
$0.16 – $0.18
(Gains) and losses on investments
($0.02)
Significant tax matters
($0.21)
Non-GAAP
$3.68 – $3.74
(1) Estimated adjustments to GAAP earnings per share are shown after income tax effects.
Except as noted above, this guidance does not include the effects of any future acquisitions/divestitures, significant asset impairments and restructurings, significant litigation settlements and other contingencies, gains and losses on investments, significant tax matters, or other items, which may or may not be significant.
Forward Looking Statements, Non-GAAP Information and Additional Information
This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as customer demand and our position to help our customers scale their network infrastructure, increase their data capacity requirements, and adopt best-in-class AI security) and the future financial performance of Cisco (including the guidance for Q3 FY 2025 and full year FY 2025) that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; our development and use of artificial intelligence; overall information technology spending; the growth and evolution of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market, cloud, enterprise and other customer markets; the return on our investments in certain key priority areas, and in certain geographical locations, as well as maintaining leadership in Networking and services; the timing of orders and manufacturing and customer lead times; supply constraints; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; our ability to achieve expected benefits of our partnerships; increased competition in our product and services markets, including the data center market; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, other intellectual property, antitrust, stockholder and other matters, and governmental investigations; our ability to achieve the benefits of restructurings and possible changes in the size and timing of related charges; cyber attacks, data breaches or other incidents; vulnerabilities and critical security defects; our ability to protect personal data; evolving regulatory uncertainty; terrorism; natural catastrophic events (including as a result of global climate change); any pandemic or epidemic; our ability to achieve the benefits anticipated from our investments in sales, engineering, service, marketing and manufacturing activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during economic downturns; risks related to the global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws and regulations or adverse outcomes resulting from examinations of our income tax returns; potential volatility in operating results; and other factors listed in Cisco’s most recent reports on Forms 10-Q and 10-K filed on November 19, 2024 and September 5, 2024, respectively. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco’s most recent reports on Forms 10-Q and 10-K as each may be amended from time to time. Cisco’s results of operations for the three and six months ended January 25, 2025 are not necessarily indicative of Cisco’s operating results for any future periods. Any projections in this release are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.
This release includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP interest and other income (loss), net, and non-GAAP net income per share data for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.
These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles (GAAP) and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco’s results of operations in conjunction with the corresponding GAAP measures.
Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations.
For its internal budgeting process, Cisco’s management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, acquisition/divestiture-related costs, significant asset impairments and restructurings, significant litigation settlements and other contingencies, Russia–Ukraine war costs, gains and losses on investments, the income tax effects of the foregoing and significant tax matters. Cisco’s management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results. For additional information on the items excluded by Cisco from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.
About Cisco
Cisco (NASDAQ: CSCO) is the worldwide technology leader that is revolutionizing the way organizations connect and protect in the AI era. For more than 40 years, Cisco has securely connected the world. With its industry leading AI-powered solutions and services, Cisco enables its customers, partners and communities to unlock innovation, enhance productivity and strengthen digital resilience. With purpose at its core, Cisco remains committed to creating a more connected and inclusive future for all. Discover more on The Newsroom and follow us on X at @Cisco.
Copyright © 2025 Cisco and/or its affiliates. All rights reserved. Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. To view a list of Cisco trademarks, go to: www.cisco.com/go/trademarks. Third-party trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.
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SOURCE Cisco Systems, Inc.
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