Analyst(s): Krista Case, Fernando Montenegro
Publication Date: May 15, 2025
Cisco delivered strong quarterly results as demand for AI-powered infrastructure and integrated security solutions accelerated. Continued growth in orders and recurring revenue signals solid traction across the enterprise and public sector segments.
What is Covered in this Article:
- Cisco’s Q3 FY 2025 financial results
- AI infrastructure order momentum across webscale and enterprise
- Security growth driven by Splunk, new product uptake, and AI-led enhancements
- Networking rebound led by Wi-Fi 7, industrial IoT, and data center switching
- Strategic partnerships and product launches supporting sovereign and enterprise AI
- Outlook for FY 2025 amid tariff impact and software-led business resilience
The News: Cisco Systems (NASDAQ: CSCO) reported its Q3 FY 2025 financial results with revenue of $14.15 billion, up 11% year-on-year (YoY) and above the consensus estimate of $14.05 billion. Product revenue rose 15% YoY, while services revenue increased 3% YoY. Non-GAAP operating income grew 12% YoY to $4.9 billion, with a non-GAAP operating margin of 34.5%, up from 34% in Q3 FY 2025. Non-GAAP net income stood at $3.8 billion, up 8% YoY, and non-GAAP diluted earnings per share (EPS) reached $0.96, up 9% YoY and 4% above street estimates. Total product orders rose 20% YoY (9% ex-Splunk), and AI infrastructure orders from webscale customers exceeded $600 million, pushing year-to-date AI orders beyond $1 billion, ahead of Cisco’s full-year target. Remaining performance obligations (RPO) increased 7% YoY to $41.7 billion.
“We are seeing clear demand for our technology across our customer markets,” said Chuck Robbins, CEO of Cisco. “Our innovation pipeline continues to accelerate as we fuse security deep into our networking products, and our strong performance is fueling our capital allocation model, returning significant value to our shareholders.”
Cisco Q3 FY 2025 Sees 20% Order Growth, AI Demand Hits Key Milestone
Analyst Take: Cisco’s Q3 FY 2025 performance reflected broad-based execution across AI infrastructure, security, and core networking, with total product orders rising 20% YoY and total revenue growing at a double-digit pace. Strong demand from webscale, enterprise, and public sector customers supported the upside, with momentum seen in AI systems and security offerings. Notably, Cisco surpassed its full-year AI infrastructure order target a quarter early, while recurring and software revenue continued to scale. The integration of Splunk has also begun to show real go-to-market synergy, reinforcing Cisco’s shift toward a more resilient, software-led model.
AI Infrastructure Momentum Accelerates With Broad Webscale Adoption
Cisco’s AI strategy delivered another strong quarter. Webscale AI infrastructure orders exceeded $600 million in Q3, bringing the year-to-date total to over $1 billion and beating Cisco’s full-year target one quarter early. AI-related order strength was led by triple-digit growth from three of the top six webscalers, with most orders concentrated in systems, over two-thirds of the total, with the rest in optics. Cisco’s G200 chip, a 51.2Tbps Silicon One processor, formed the backbone of these systems, and demand remains constrained by available capacity, not market interest.
Cisco emphasized that enterprise AI opportunities are also gaining pace, with orders in the hundreds of millions and continued traction expected as new joint solutions with NVIDIA roll out over the next 60 days. Cisco’s expanded partnerships – including sovereign AI infrastructure projects in Saudi Arabia and involvement in the multi-company AI Infrastructure Partnership with Microsoft, NVIDIA, xAI, and BlackRock – further validate its strategic relevance in the AI value chain. This momentum confirms that Cisco is meeting near-term AI infrastructure demand and, importantly, entrenching itself as a foundational partner in next-generation AI deployments across both hyperscaler and sovereign ecosystems.
Security Segment Scales with Splunk Synergy and Hypershield Uptake
Security continued to outperform, with revenue up 54% YoY – its highest growth rate across product lines – driven by demand in SASE, XDR, and the Splunk portfolio. Orders grew at a high double-digit rate, supported by Cisco’s largest-ever Splunk deal with a major financial services firm, won from a direct competitor. The combined Cisco-Splunk sales force played an important role in driving this deal, highlighting progress in cross-selling. New product traction was also evident, with over 370 new customers adopting Secure Access, XDR, and Hypershield during the quarter. Notably, many Hypershield customers are choosing to implement it alongside Cisco’s N9300 Smart Switch, signifying demand for integrated networking-security use cases.
AI-driven enhancements to Cisco XDR and Splunk, including agentic AI-based threat correlation and a new integration with ServiceNow, aim to strengthen operational efficiency for security teams and simplify cross-platform incident response. Cisco also announced “Foundation AI,” a dedicated initiative to develop open-source security tools and reasoning models. The combined capabilities position Cisco as a credible strategic security partner as customers modernize security architectures alongside AI rollouts.
Networking Returns to Growth with Wi-Fi 7 and Campus Refresh Momentum
Networking revenue rose 8% YoY, reflecting renewed growth as product cycles ramp. Growth was led by switching, enterprise routing, and industrial IoT, with high single-digit order growth in campus switching and triple-digit sequential growth in Wi-Fi 7 orders. Cisco noted that enterprise customers are actively modernizing infrastructure to support agentic AI deployments, which demand low-latency, energy-efficient networks. Industrial IoT remained a bright spot, with rugged Catalyst orders up 35% YoY, and Data center switching orders grew double digits year-to-date. Cisco’s upcoming systems, combining NVIDIA Spectrum silicon with its own OS, reflect rising customer demand for hybrid interoperability in high-performance data centres. Overall, the combination of targeted product innovation and expanding industrial demand signals that Cisco’s networking portfolio remains well-positioned despite a maturing core market.
Guidance and Final Thoughts: Outlook Raised Amid Tariff Risks; Execution Holds Strong
Cisco raised its full-year revenue guidance to a range of $56.5-$56.7 billion (prior: $56-$56.5 billion) and non-GAAP EPS to $3.77-$3.79 (prior: $3.68-$3.74), reflecting an expectation of continued demand strength and margin resilience despite visible tariff-related headwinds. The Q4 outlook incorporates the full estimated impact of new reciprocal tariffs, including provisions for country-specific rates and exemptions under the current trade policy.
The company’s FY 2025 trajectory reflects a durable mix of high-growth AI infrastructure, integrated security, and rising software and subscription contributions. Cisco’s ability to drive upper-teens growth in observability and security, while navigating the maturity of its core networking business, underpins a goal of sustained revenue expansion and enhanced earnings visibility. The acceleration of enterprise AI, increased cybersecurity interest, and sovereign cloud projects position Cisco well for sustained momentum through FY 2026 and beyond.
See the full press release on Cisco’s Q3 FY 2025 financial results on the Cisco website.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
Other insights from Futurum:
Cisco Q2 FY 2025 Earnings Benefit from AI Infrastructure & Security Growth
Cisco and NVIDIA Simplify Enterprise AI Adoption – Six Five Media at NVIDIA GTC
Cisco AI Defense: Checking the Reckless Charge Toward AI
Author Information
With a focus on data security, protection, and management, Krista has a particular focus on how these strategies play out in multi-cloud environments. She brings approximately 15 years of experience providing research and advisory services and creating thought leadership content. Her vantage point spans technology and vendor portfolio developments; customer buying behavior trends; and vendor ecosystems, go-to-market positioning, and business models. Her work has appeared in major publications including eWeek, TechTarget and The Register.
Prior to joining The Futurum Group, Krista led the data protection practice for Evaluator Group and the data center practice of analyst firm Technology Business Research. She also created articles, product analyses, and blogs on all things storage and data protection and management for analyst firm Storage Switzerland and led market intelligence initiatives for media company TechTarget.
Fernando Montenegro serves as the Vice President & Practice Lead for Cybersecurity at The Futurum Group. In this role, he leads the development and execution of the Cybersecurity research agenda, working closely with the team to drive the practice's growth. His research focuses on addressing critical topics in modern cybersecurity. These include the multifaceted role of AI in cybersecurity, strategies for managing an ever-expanding attack surface, and the evolution of cybersecurity architectures toward more platform-oriented solutions.
Before joining The Futurum Group, Fernando held senior industry analyst roles at Omdia, S&P Global, and 451 Research. His career also includes diverse roles in customer support, security, IT operations, professional services, and sales engineering. He has worked with pioneering Internet Service Providers, established security vendors, and startups across North and South America.
Fernando holds a Bachelor’s degree in Computer Science from Universidade Federal do Rio Grande do Sul in Brazil and various industry certifications. Although he is originally from Brazil, he has been based in Toronto, Canada, for many years.
