Analyst(s): Futurum Research
Publication Date: November 14, 2025
Cisco’s Q1 FY 2026 showed stronger demand for AI infrastructure and campus networking, supported by broad-based order growth across geographies and customer segments. Security performance reflected a portfolio transition as Splunk-related revenue shifted to cloud subscriptions, expanding recurring revenue visibility.
What is Covered in this Article:
- Cisco’s Q1 FY 2026 financial results
- AI infrastructure momentum and hyperscaler demand
- Enterprise campus refresh and edge readiness
- Security and Splunk’s cloud transition dynamics
- Guidance and Final Thoughts
The News: Cisco Systems (NASDAQ: CSCO) reported Q1 FY 2026 results. Revenue was $14.9 billion, up 8% year over year (YoY), versus the Wall Street consensus of $14.8 billion. Product revenue was $11.1 billion, up 10% YoY, and services revenue was $3.8 billion, up 2% YoY. By group, Networking was $7.8 billion (+15% YoY), Security $2.0 billion (-2% YoY), Collaboration $1.1 billion (-3% YoY), and Observability $274 million (+6% YoY). Non-GAAP operating income was $5.1 billion (+8% YoY) with a non-GAAP operating margin of 34.4% (Q1 FY 2025: 34.1%). Non-GAAP net income was $4.0 billion and non-GAAP EPS was $1.00, up 9% and 10% YoY, respectively.
“We had a solid start to fiscal 2026, and Cisco is on track to deliver our strongest year yet,” said Chuck Robbins, chair and CEO of Cisco. “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.”
Cisco Q1 FY 2026: AI Demand Lifts Outlook and Orders
Analyst Take: Cisco’s Q1 FY 2026 featured healthy top-line growth, margin discipline, and notable order strength tied to AI infrastructure and a broadening campus refresh. Hyperscaler AI orders accelerated, and Cisco expects meaningful AI revenue contribution in FY 2026, while enterprise networks and industrial IoT showed durable momentum. Security remains in portfolio transition, with legacy declines offset by adoption of next-gen offerings and a shift toward cloud subscriptions, including Splunk. Recurring metrics—ARR and RPO—improved, providing multi-quarter visibility into growth and mix quality heading into H2 FY 2026.
AI Infrastructure Orders Accelerate
AI infrastructure orders from hyperscalers reached $1.3 billion in Q1, balanced between Silicon One systems and pluggable optics, with Cisco expecting roughly $3.0 billion in AI infrastructure revenue from hyperscalers in FY 2026. Management cited four major hyperscalers with triple-digit growth and four distinct use case wins, indicating expanding AI networking adoption beyond initial training clusters. The new Cisco 8223 Router, powered by Silicon One P200 at 51.2 Tbps, targets scale-across traffic between data centers, broadening Cisco’s AI adjacency. Pluggable optics demand is rising across hyperscalers, with Acacia’s coherent optics positioned for cost and power efficiency at scale. Cisco also expects to ship its one-millionth Silicon One chip in Q2 FY 2026, underscoring production maturity and market reach. These dynamics suggest Cisco is well-placed to capture AI-driven network spend across training, inference, and interconnect use cases.
Enterprise Campus Refresh and Edge Readiness
Networking product orders grew at a high-teens rate, marking a fifth consecutive quarter of double-digit order growth across switching, routing, wireless, industrial IoT, and servers. Early Catalyst generations (4K/6K) nearing the end of support are catalyzing upgrades to Cat 9K, while smart switches, secure routers, and Wi‑Fi 7 products are ramping faster than prior launches. Industrial IoT orders increased more than 25% YoY, supported by on-shoring trends, edge AI workloads, and emerging physical AI requirements. Cisco introduced Unified Edge, a converged platform integrating compute, networking, and storage for real-time inferencing at the edge. With agentic AI generating up to 25x more network traffic than chatbots, campus and edge architectures are becoming critical to performance and reliability. The setup points to a multi-year campus refresh cycle that strengthens Cisco’s enterprise pipeline.
Security And Splunk: Cloud Transition Dynamics
Security revenue declined 2% YoY as legacy platforms softened and Splunk shifted toward cloud subscriptions, changing revenue timing but increasing ARR potential. Approximately 3,000 customers adopted new or refreshed security products, with mid-teens growth in next-generation firewalls and growth in Duo and SASE. Splunk’s ARR and product RPO rose double digits, and Q1 saw one of Splunk’s largest deals to date via joint Cisco-Splunk sales motions. Total ARR reached $31.4 billion (+5%), with product ARR up 7%, while total RPO was $42.9 billion (+7%) and long-term product RPO was $11.8 billion (+13%). The mix shift to cloud subscriptions for Splunk is expected to support greater expansion and faster innovation delivery over time. Overall, the transition is expected to enhance the quality of recurring revenue, even as near-term reported revenue moderates.
Guidance and Final Thoughts
Q2 FY 2026 guidance calls for revenue of $15.0–$15.2 billion, non-GAAP gross margin of 67.5%–68.5%, non-GAAP operating margin of 33.5%–34.5%, and non-GAAP EPS of $1.01–$1.03. FY 2026 guidance calls for revenue of $60.2–$61.0 billion and non-GAAP EPS of $4.08–$4.14. Management noted that tighter supply and higher pricing in memory, PCB, and optics are incorporated into the outlook. AI demand visibility is broadening beyond hyperscalers to sovereign, neocloud, and enterprise customers, with a pipeline in excess of $2.0 billion for high-performance networking. Capital returns remain active, with $3.6 billion returned in Q1 and $12.2 billion remaining under the repurchase authorization. Overall, the guidance underscores solid growth momentum, expanding AI-driven demand, and sustained capital returns, positioning the company for resilient execution through FY 2026.
See the full press release on Cisco’s Q1 FY 2026 financial results on the company website.
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