CISCO REPORTS THIRD QUARTER EARNINGS

CISCO REPORTS THIRD QUARTER EARNINGS SAN JOSE, Calif., May 13, 2026 /PRNewswire/ --

News Summary:

(1) EPS guidance includes the estimated impact of tariffs based on current trade policy.

Cisco (NASDAQ: CSCO) today reported third quarter results for the period ended April 25, 2026. Cisco reported third quarter revenue of $15.8 billion, net income on a generally accepted accounting principles (GAAP) basis of $3.4 billion or $0.85 per share, and non-GAAP net income of $4.2 billion or $1.06 per share.

"Cisco delivered record quarterly revenue in Q3 and we saw very strong, broad-based demand for our products, demonstrating the relevance of our technology for connecting and securing AI," said Chuck Robbins, chair and CEO of Cisco. "Cisco is well-positioned as the critical infrastructure for the AI era, building on our technology leadership and customer trust, while innovating at the speed and scale that our dynamic world demands."

"In Q3, we once again delivered double-digit growth on both the top and bottom lines which exceeded the high end of our guidance, coupled with record non-GAAP operating income," said Mark Patterson, CFO of Cisco. "Our record results demonstrate great execution and financial discipline by our teams, enabling us to deliver shareholder value while we pursue the significant opportunities we see ahead."

GAAP Results

Q3 FY 2026

Q3 FY 2025

vs. Q3 FY 2025

Revenue

15.8 billion

14.1 billion

12 %

Net Income

3.4 billion

2.5 billion

35 %

Diluted Earnings per Share (EPS)

0.85

0.62

37 %

Non-GAAP Results

Q3 FY 2026

Q3 FY 2025

vs. Q3 FY 2025

Net Income

4.2 billion

3.8 billion

10 %

EPS

1.06

0.96

10 %

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 Declares Quarterly Dividend

Cisco has declared a quarterly dividend of $0.42 per common share to be paid on July 22, 2026, to all stockholders of record as of the close of business on July 6, 2026. Future dividends will be subject to Board approval.

Financial Summary

All comparative percentages are on a year-over-year basis unless otherwise noted.

Q3 FY 2026 Highlights

Revenue -- Total revenue was $15.8 billion, up 12%, with product revenue up 17% and services revenue down 1%.

Revenue by geographic segment was: Americas up 14%, EMEA up 9%, and APJC up 9%. Product revenue performance reflected growth in Networking, up 25% and Observability up 3%. Collaboration was down 1%. Security was flat.

Gross Margin -- On a GAAP basis, total gross margin, product gross margin, and services gross margin were 63.6%, 61.9%, and 69.2%, respectively, as compared with 65.6%, 64.4%, and 68.7%, respectively, in the third quarter of fiscal 2025.

On a non-GAAP basis, total gross margin, product gross margin, and services gross margin were 66.0%, 64.3%, and 71.6%, respectively, as compared with 68.6%, 67.6%, and 71.3%, respectively, in the third quarter of fiscal 2025.

Total gross margins by geographic segment were: 63.7% for the Americas, 71.3% for EMEA and 66.1% for APJC.

Operating Expenses -- On a GAAP basis, operating expenses were $6.1 billion, up 1% year over year, and were 38.6% of revenue. Non-GAAP operating expenses were $5.0 billion, up 5%, and were 31.9% of revenue.

Operating Income -- GAAP operating income was $4.0 billion, up 24%, with GAAP operating margin of 25.0%. Non-GAAP operating income was $5.4 billion, up 11%, with non-GAAP operating margin at 34.2%.

Provision for Income Taxes -- The GAAP tax provision rate was 16.5%. The non-GAAP tax provision rate was 19.0%.

Net Income and EPS -- On a GAAP basis, net income was $3.4 billion, an increase of 35%, and EPS was $0.85, an increase of 37%. On a non-GAAP basis, net income was $4.2 billion, an increase of 10%, and EPS was $1.06, an increase of 10%.

Cash Flow from Operating Activities -- $3.8 billion for the third quarter of fiscal 2026, a decrease of 7%, compared with $4.1 billion for the third quarter of fiscal 2025.

Balance Sheet and Other Financial Highlights

Cash and Cash Equivalents and Investments -- $16.6 billion at the end of the third quarter of fiscal 2026, compared with $16.1 billion at the end of fiscal 2025.

Remaining Performance Obligations (RPO) -- $43.5 billion, up 4% in total. Product RPO was up 6%, of which long-term RPO was $11.7 billion, up 6%. Services RPO was up 2%.

Deferred Revenue -- $28.6 billion, up 2% in total, with deferred product revenue up 2% and deferred services revenue up 2%.

Capital Allocation -- In the third quarter of fiscal 2026, we returned $2.9 billion to stockholders through share buybacks and dividends. We declared and paid a cash dividend of $0.42 per common share, or $1.7 billion, and repurchased approximately 16 million shares of common stock under our stock repurchase program at an average price of $80.28 per share for an aggregate purchase price of $1.3 billion. The remaining authorized amount for stock repurchases under the program is $9.6 billion with no termination date.

Guidance

Cisco expects to achieve the following results for the fourth quarter of fiscal 2026:

Q4 FY 2026

Revenue

$16.7 billion - $16.9 billion

Non-GAAP gross margin

65.5% - 66.5%

Non-GAAP operating margin

34% - 35%

Non-GAAP EPS

$1.16 - $1.18

Cisco estimates that GAAP EPS will be $0.80 to $0.85 for the fourth quarter of fiscal 2026.

Cisco expects to achieve the following results for fiscal 2026:

FY 2026

Revenue

$62.8 billion - $63.0 billion

Non-GAAP EPS

$4.27 - $4.29

Cisco estimates that GAAP EPS will be $3.16 to $3.21 for fiscal 2026.

Margin and EPS guidance includes the estimated impact of tariffs based on current trade policy.

Our Q4 FY 2026 guidance assumes an effective tax provision rate of approximately 16% for GAAP and approximately 19% for non-GAAP results. Our FY 2026 guidance assumes an effective tax provision rate of approximately 15% 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:

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per-share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

April 25,

2026

April 26,

2025

April 25,

2026

April 26,

2025

REVENUE:

Product

$ 12,117

$ 10,374

$ 34,836

$ 30,722

Services

3,724

3,775

11,237

11,259

Total revenue

15,841

14,149

46,073

41,981

COST OF SALES:

Product

4,613

3,688

12,752

10,927

Services

1,148

1,183

3,524

3,544

Total cost of sales

5,761

4,871

16,276

14,471

GROSS MARGIN

10,080

9,278

29,797

27,510

OPERATING EXPENSES:

Research and development

2,377

2,335

7,132

6,920

Sales and marketing

2,855

2,724

8,607

8,148

General and administrative

661

739

2,082

2,286

Amortization of purchased intangible assets

228

244

690

774

Restructuring and other charges

(1)

182

709

Total operating expenses

6,120

6,076

18,693

18,837

OPERATING INCOME

3,960

3,202

11,104

8,673

Interest income

214

250

646

774

Interest expense

(377)

(403)

(1,097)

(1,225)

Other income (loss), net

242

(102)

423

(121)

Interest and other income (loss), net

(255)

(28)

(572)

INCOME BEFORE PROVISION FOR INCOME TAXES

4,039

2,947

11,076

8,101

Provision for income taxes

666

456

1,668

471

NET INCOME

$ 3,373

$ 2,491

$ 9,408

$ 7,630

Net income per share:

Basic

$ 0.85

$ 0.63

$ 2.38

$ 1.92

Diluted

$ 0.85

$ 0.62

$ 2.36

$ 1.91

Shares used in per-share calculation:

Basic

3,952

3,972

3,954

3,981

Diluted

3,982

4,002

3,987

4,004

CISCO SYSTEMS, INC.

REVENUE BY SEGMENT

(In millions, except percentages)

April 25, 2026

Three Months Ended

Nine Months Ended

Amount

Y/Y %

Amount

Y/Y %

Revenue:

Americas

$ 9,569

14 %

$ 27,403

10 %

EMEA

4,054

9 %

12,262

10 %

APJC

2,218

9 %

6,409

7 %

Total

$ 15,841

12 %

$ 46,073

10 %

Amounts may not sum and percentages may not recalculate due to rounding.

CISCO SYSTEMS, INC.

GROSS MARGIN PERCENTAGE BY SEGMENT

(In percentages)

April 25, 2026

Three Months Ended

Nine Months Ended

Gross Margin Percentage:

Americas

63.7 %

65.4 %

EMEA

71.3 %

71.7 %

APJC

66.1 %

66.3 %

CISCO SYSTEMS, INC.

REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES

(In millions, except percentages)

April 25, 2026

Three Months Ended

Nine Months Ended

Amount

Y/Y %

Amount

Y/Y %

Revenue:

Networking

$ 8,815

25 %

$ 24,877

20 %

Security

2,008

— %

6,006

(2) %

Collaboration

1,024

(1) %

3,133

1 %

Observability

269

3 %

820

3 %

Total Product

12,117

17 %

34,836

13 %

Services

3,724

(1) %

11,237

— %

Total

$ 15,841

12 %

$ 46,073

10 %

Amounts may not sum and percentages may not recalculate due to rounding.

CISCO SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

April 25, 2026

July 26, 2025

ASSETS

Current assets:

Cash and cash equivalents

$ 7,083

$ 8,346

Investments

9,557

7,764

Accounts receivable, net of allowance of $73 at April 25, 2026 and $69 at July 26, 2025

6,480

6,701

Inventories

4,708

3,164

Financing receivables, net

2,936

3,061

Other current assets

5,795

5,950

Total current assets

36,559

34,986

Property and equipment, net

2,577

2,113

Financing receivables, net

3,642

3,466

Goodwill

59,292

59,136

Purchased intangible assets, net

7,850

9,175

Deferred tax assets

7,558

7,356

Other assets

8,068

6,059

TOTAL ASSETS

$ 125,546

$ 122,291

LIABILITIES AND EQUITY

Current liabilities:

Short-term debt

$ 11,932

$ 5,232

Accounts payable

2,970

2,528

Income taxes payable

173

1,857

Accrued compensation

3,290

3,611

Deferred revenue

16,446

16,416

Other current liabilities

4,730

5,420

Total current liabilities

39,541

35,064

Long-term debt

19,371

22,861

Income taxes payable

2,304

2,165

Deferred revenue

12,153

12,363

Other long-term liabilities

3,316

2,995

Total liabilities

76,685

75,448

Total equity

48,861

46,843

TOTAL LIABILITIES AND EQUITY

$ 125,546

$ 122,291

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Three Months Ended

Nine Months Ended

April 25,

2026

April 26,

2025

April 25,

2026

April 26,

2025

Cash flows from operating activities:

Net income

$ 3,373

$ 2,491

$ 9,408

$ 7,630

Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation, amortization, and other

637

626

1,902

2,176

Share-based compensation expense

914

945

2,903

2,693

Provision for receivables

Deferred income taxes

(153)

(410)

(217)

(792)

(Gains) losses on divestitures, investments and other, net

(263)

(500)

Change in operating assets and liabilities, net of effects of acquisitions

and divestitures:

Accounts receivable

133

437

187

1,406

Inventories

(788)

100

(1,549)

541

Financing receivables

175

(34)

505

Other assets

(89)

(602)

(516)

Accounts payable

208

349

444

(10)

Income taxes, net

161

283

(2,342)

(2,002)

Accrued compensation

(212)

(138)

(332)

(431)

Deferred revenue

149

(141)

(524)

Other liabilities

(530)

(810)

(347)

(786)

Net cash provided by operating activities

3,757

4,057

8,791

9,959

Cash flows from investing activities:

Purchases of investments

(3,139)

(805)

(7,367)

(3,066)

Proceeds from sales of investments

439

437

1,884

2,228

Proceeds from maturities of investments

1,508

1,282

3,811

3,985

Acquisitions, net of cash and cash equivalents acquired and divestitures

—

(34)

(46)

(291)

Purchases of non-marketable equity securities

(634)

(128)

(699)

(265)

Return of investments in non-marketable equity securities

168

223

108

Acquisition of property and equipment

(414)

(261)

(1,020)

(688)

Other

—

(6)

(5)

Net cash provided by (used in) investing activities

(2,070)

505

(3,220)

2,006

Cash flows from financing activities:

Issuances of common stock

—

354

320

Repurchases of common stock - repurchase program

(1,250)

(1,505)

(4,605)

(4,748)

Shares repurchased for tax withholdings on vesting of restricted stock units

(294)

(255)

(1,362)

(910)

Short-term borrowings, original maturities of 90 days or less, net

(338)

(1,491)

412

(479)

Issuances of debt

6,399

6,982

10,640

17,388

Repayments of debt

(4,862)

(7,163)

(7,854)

(18,545)

Dividends paid

(1,660)

(1,627)

(4,894)

(4,812)

Other

(34)

(78)

(32)

(80)

Net cash used in financing activities

(2,039)

(5,137)

(7,341)

(11,866)

Effect of foreign currency exchange rate changes on cash, cash equivalents,

restricted cash and restricted cash equivalents

(24)

(15)

(57)

(23)

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted

cash equivalents

(376)

(590)

(1,827)

Cash, cash equivalents, restricted cash and restricted cash equivalents,

beginning of period

7,459

9,508

8,910

8,842

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of

period

$ 7,083

$ 8,918

$ 7,083

$ 8,918

Supplemental cash flow information:

Cash paid for interest

$ 604

$ 601

$ 1,305

$ 1,370

Cash paid for income taxes, net

$ 659

$ 583

$ 4,228

$ 3,265

CISCO SYSTEMS, INC.

REMAINING PERFORMANCE OBLIGATIONS

(In millions, except percentages)

April 25, 2026

January 24, 2026

April 26, 2025

Amount

Y/Y%

Amount

Y/Y%

Amount

Y/Y%

Product (1)

$ 22,058

6 %

$ 21,977

8 %

$ 20,752

10 %

Services

21,404

2 %

21,429

2 %

20,915

5 %

Total

$ 43,462

4 %

$ 43,406

5 %

$ 41,667

7 %

(1)

As of the end of the third quarter of fiscal 2026, long-term product RPO was $11.7 billion, up 6% year over year.

CISCO SYSTEMS, INC.

DEFERRED REVENUE

(In millions)

April 25,

2026

January 24,

2026

April 26,

2025

Deferred revenue:

Product

$ 13,461

$ 13,371

$ 13,170

Services

15,138

15,032

14,821

Total

$ 28,599

$ 28,403

$ 27,991

Reported as:

Current

$ 16,446

$ 16,199

$ 16,081

Noncurrent

12,153

12,204

11,910

Total

$ 28,599

$ 28,403

$ 27,991

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

Weighted-

Average Price

per Share

Amount

Fiscal 2026

April 25, 2026

$ 0.42

$ 1,660

$ 80.28

$ 1,252

$ 2,912

January 24, 2026

$ 0.41

$ 1,617

$ 76.29

$ 1,351

$ 2,968

October 25, 2025

$ 0.41

$ 1,617

$ 68.28

$ 2,001

$ 3,618

Fiscal 2025

July 26, 2025

$ 0.41

$ 1,625

$ 64.65

$ 1,252

$ 2,877

April 26, 2025

$ 0.41

$ 1,627

$ 59.78

$ 1,504

$ 3,131

January 25, 2025

$ 0.40

$ 1,593

$ 58.58

$ 1,236

$ 2,829

October 26, 2024

$ 0.40

$ 1,592

$ 49.56

$ 2,003

$ 3,595

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP NET INCOME

(In millions)

Three Months Ended

Nine Months Ended

April 25,

2026

April 26,

2025

April 25,

2026

April 26,

2025

GAAP net income

$ 3,373

$ 2,491

$ 9,408

$ 7,630

Adjustments to cost of sales:

Share-based compensation expense

150

152

451

434

Amortization of acquisition-related intangible assets

221

263

682

917

Acquisition/divestiture-related costs

Supplier component remediation charge (adjustment)

—

(7)

—

(7)

Total adjustments to GAAP cost of sales

378

425

1,154

1,397

Adjustments to operating expenses:

Share-based compensation expense

764

778

2,430

2,222

Amortization of acquisition-related intangible assets

228

244

690

774

Acquisition/divestiture-related costs

197

282

687

Significant asset impairments and restructurings

(1)

182

709

Total adjustments to GAAP operating expenses

1,074

1,253

3,584

4,392

Adjustments to interest and other income (loss), net:

(Gains) and losses on investments

(273)

(529)

(72)

Total adjustments to GAAP interest and other income (loss), net

(273)

(529)

(72)

Total adjustments to GAAP income before provision for income

taxes

1,179

1,697

4,209

5,717

Income tax effect of non-GAAP adjustments

(325)

(357)

(1,104)

(1,256)

Significant tax matters

—

(132)

(829)

Total adjustments to GAAP provision for income taxes

(325)

(357)

(1,236)

(2,085)

Non-GAAP net income

$ 4,227

$ 3,831

$ 12,381

$ 11,262

CISCO SYSTEMS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

GAAP TO NON-GAAP EPS

Three Months Ended

Nine Months Ended

April 25,

2026

April 26,

2025

April 25,

2026

April 26,

2025

GAAP EPS

$ 0.85

$ 0.62

$ 2.36

$ 1.91

Adjustments to GAAP:

Share-based compensation expense

0.23

0.72

0.66

Amortization of acquisition-related intangible assets

0.11

0.13

0.34

0.42

Acquisition/divestiture-related costs

0.02

0.05

0.08

0.18

Significant asset impairments and restructurings

—

0.01

0.05

0.18

(Gains) and losses on investments

(0.07)

—

(0.13)

(0.02)

Income tax effect of non-GAAP adjustments

(0.08)

(0.09)

(0.28)

(0.31)

Significant tax matters

—

(0.03)

(0.21)

Non-GAAP EPS

$ 1.06

$ 0.96

$ 3.11

$ 2.81

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

April 25, 2026

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

$ 7,504

$ 2,576

$ 10,080

$ 6,120

1 %

$ 3,960

24 %

$ 79

$ 3,373

35 %

% of revenue

61.9 %

69.2 %

63.6 %

38.6 %

25.0 %

0.5 %

21.3 %

Adjustments to GAAP amounts:

Share-based compensation expense

150

764

914

—

914

Amortization of acquisition-related intangible assets

221

—

221

228

449

—

449

Acquisition/divestiture-related costs

—

Significant asset impairments and restructurings

—

(1)

—

(1)

(Gains) and losses on investments

—

(273)

Income tax effect/significant tax matters

—

(325)

Non-GAAP amount

$ 7,791

$ 2,667

$ 10,458

$ 5,046

5 %

$ 5,412

11 %

$ (194)

$ 4,227

10 %

% of revenue

64.3 %

71.6 %

66.0 %

31.9 %

34.2 %

(1.2) %

26.7 %

Three Months Ended

April 26, 2025

Product

Gross

Margin

Services

Gross

Margin

Total

Gross

Margin

Operating

Expenses

Operating

Income

Interest

and other

income

(loss), net

Net

Income

GAAP amount

$ 6,686

$ 2,592

$ 9,278

$ 6,076

$ 3,202

$ (255)

$ 2,491

% of revenue

64.4 %

68.7 %

65.6 %

42.9 %

22.6 %

(1.8) %

17.6 %

Adjustments to GAAP amounts:

Share-based compensation expense

152

778

930

—

930

Amortization of acquisition-related intangible assets

263

—

263

244

507

—

507

Acquisition/divestiture-related costs

197

214

—

214

Supplier component remediation charge (adjustment)

(7)

—

(7)

—

(7)

—

(7)

Significant asset impairments and restructurings

—

(Gains) and losses on investments

—

Income tax effect/significant tax matters

—

(357)

Non-GAAP amount

$ 7,013

$ 2,690

$ 9,703

$ 4,823

$ 4,880

$ (236)

$ 3,831

% of revenue

67.6 %

71.3 %

68.6 %

34.1 %

34.5 %

(1.7) %

27.1 %

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)

Nine Months Ended

April 25, 2026

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

$ 22,084

$ 7,713

$ 29,797

$ 18,693

(1) %

$ 11,104

28 %

$ (28)

$ 9,408

23 %

% of revenue

63.4 %

68.6 %

64.7 %

40.6 %

24.1 %

(0.1) %

20.4 %

Adjustments to GAAP amounts:

Share-based compensation expense

195

256

451

2,430

2,881

—

2,881

Amortization of acquisition-related intangible assets

682

—

682

690

1,372

—

1,372

Acquisition/divestiture-related costs

282

303

—

303

Significant asset impairments and restructurings

—

182

—

182

(Gains) and losses on investments

—

(529)

Income tax effect/significant tax matters

—

(1,236)

Non-GAAP amount

$ 22,967

$ 7,984

$ 30,951

$ 15,109

5 %

$ 15,842

10 %

$ (557)

$ 12,381

10 %

% of revenue

65.9 %

71.1 %

67.2 %

32.8 %

34.4 %

(1.2) %

26.9 %

Nine Months Ended

April 26, 2025

Product

Gross

Margin

Services

Gross

Margin

Total

Gross

Margin

Operating

Expenses

Operating

Income

Interest

and other

income

(loss), net

Net

Income

GAAP amount

$ 19,795

$ 7,715

$ 27,510

$ 18,837

$ 8,673

$ (572)

$ 7,630

% of revenue

64.4 %

68.5 %

65.5 %

44.9 %

20.7 %

(1.4) %

18.2 %

Adjustments to GAAP amounts:

Share-based compensation expense

189

245

434

2,222

2,656

—

2,656

Amortization of acquisition-related intangible assets

917

—

917

774

1,691

—

1,691

Acquisition/divestiture-related costs

687

740

—

740

Supplier component remediation charge (adjustment)

(7)

—

(7)

—

(7)

—

(7)

Significant asset impairments and restructurings

—

709

—

709

(Gains) and losses on investments

—

(72)

Income tax effect/significant tax matters

—

(2,085)

Non-GAAP amount

$ 20,906

$ 8,001

$ 28,907

$ 14,445

$ 14,462

$ (644)

$ 11,262

% of revenue

68.0 %

71.1 %

68.9 %

34.4 %

(1.5) %

26.8 %

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

Nine Months Ended

April 25,

2026

April 26,

2025

April 25,

2026

April 26,

2025

GAAP effective tax rate

16.5 %

15.5 %

15.1 %

5.8 %

Total adjustments to GAAP provision for income taxes

2.5 %

2.0 %

3.9 %

12.7 %

Non-GAAP effective tax rate

19.0 %

17.5 %

19.0 %

18.5 %

GAAP TO NON-GAAP GUIDANCE

Q4 FY 2026

Gross Margin

Rate

Operating Margin

Rate

Earnings per

Share (1)

GAAP

63.5% - 64.5%

23% - 24%

$0.80 - $0.85

Estimated adjustments for:

Share-based compensation expense

1.0 %

5.0 %

$0.14 - $0.15

Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs

1.0 %

3.0 %

$0.10 - $0.11

Significant asset impairments and restructurings (2)

—

3.0 %

$0.09 - $0.10

Non-GAAP

65.5% - 66.5%

34% - 35%

$1.16 - $1.18

FY 2026

Earnings per

Share (1)

GAAP

$3.16 - $3.21

Estimated adjustments for:

Share-based compensation expense

$0.67 - $0.68

Amortization of acquisition-related intangible assets and acquisition/divestiture-related costs

$0.43 - $0.44

Significant asset impairments and restructurings (2)

$0.12 - $0.13

(Gains) and losses on investments

($0.11)

Significant tax matters

($0.03)

Non-GAAP

$4.27 - $4.29

(1) Estimated adjustments to GAAP earnings per share are shown after income tax effects.

(2) On May 13, 2026, Cisco announced a restructuring plan in order to allow it to invest in key growth opportunities including silicon, optics, security and AI. In connection with this restructuring plan, Cisco currently estimates that it will recognize pre-tax charges of up to $1 billion consisting of severance and other one-time termination benefits, and other costs. Cisco expects to recognize approximately $450 million of these charges in the fourth quarter of fiscal 2026 with the remaining amount expected to be recognized during fiscal 2027.

Margin and EPS guidance includes the estimated impact of tariffs based on current trade policy.

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 being well positioned for the AI era, the significant momentum and raised expectations of AI infrastructure from hyperscalers, the major multi-year, multi-billion-dollar campus networking refresh, the speed and scale of our innovation, the significant opportunities that lie ahead, and the timing and size of the restructuring) and the future financial performance of Cisco (including the guidance for Q4 FY 2026 and full year FY 2026) that involve risks and uncertainties, such as the actual impact of tariffs on our guidance for Q4 FY 2026 and full year FY 2026. 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 February 17, 2026 and September 3, 2025, 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 nine months ended April 25, 2026 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, 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.

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SOURCE Cisco Systems, Inc.