Cisco Systems has raised its revenue forecast for the full fiscal year 2025 (FY25), citing increased demand for networking infrastructure driven by AI. The company’s second quarter (Q2) earnings report exceeded market expectations, with orders for AI-related infrastructure surpassing $350m in the quarter. The company now anticipates full-year revenue between $56bn and $56.5bn, an increase from its previous projection of $55.3bn to $56.3bn. Adjusted earnings per share (EPS) for the year have also been revised upward to a range of $3.68 to $3.74, compared to the earlier estimate of $3.6 to $3.66.
For the third quarter, revenue is forecasted between $13.9bn and $14.1bn, while adjusted EPS is expected to range from $0.9 to $0.92. The company stated that the cost of proposed tariffs has been accounted for in its margin expectations for the quarter.
Q2 FY25 performance surpasses estimates
Cisco reported second-quarter revenue of $14bn, reflecting a 9% increase from the same period a year earlier and exceeding analyst expectations of $13.87bn. This also marks growth from the company’s previous estimate of $13.75bn to $13.95bn issued in November 2024. Adjusted net income rose to $3.8bn, or $0.94 per share, up from $3.5bn, or $0.87 per share, in the previous year. On a GAAP basis, net income declined by 8% to $2.4bn, with GAAP EPS down 6% to $0.61. “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,” said Cisco’s chair and CEO Chuck Robbins.
Total product orders grew 29% year-over-year (YoY), or 11% when excluding contributions from Splunk. AI infrastructure orders for the first half of the fiscal year reached approximately $700m. The networking division generated $6.85bn in revenue, a 3% decline from the previous year but above analysts’ projections of $6.67bn. The security unit, bolstered by the acquisition of Splunk, reported revenue of $2.11bn, marking a 117% YoY increase.
Gross margin for the quarter was 65.1% on a GAAP basis and 68.7% on an adjusted basis. Operating income stood at $3.1bn under GAAP, with an operating margin of 22.3%. Adjusted operating income was $4.9bn, with a margin of 34.7%. “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 Cisco’s chief financial officer Scott Herren.
Cisco’s board of directors has approved an additional $15bn for share repurchases, bringing the total authorised buyback amount to $17bn. The company also increased its quarterly dividend by 3% to $0.41 per share. Following the earnings report, Cisco’s shares climbed nearly 7% in extended trading.
The company continues to expand its AI initiatives. Earlier this week, it announced a partnership with French AI firm Mistral to develop an AI agent designed to automate tasks and streamline workflows. In January, Cisco launched AI Defense, a security tool aimed at protecting enterprises from AI-related risks. Additionally, the company completed its acquisition of Deeper Insights AI during the second quarter, further strengthening its AI capabilities.
Read more: Cisco cuts thousands more jobs despite strong demand for network products
