CISCO SYSTEMS, INC.
For the period ended Jan 24, 2026. Filed Feb 17, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jan 24, 2026 · Filed Feb 17, 2026
CSCO$93.85-2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-10-25; filed 2025-11-18.
0000858877-25-000171
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-01-24; filed 2026-02-17.
0000858877-26-000021
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 159 previous paragraphs and 178 current paragraphs.
109 unchanged; 43 reworded; 16 added; 7 removed; 0 previous and 10 current paragraphs rearranged.
Tables are not compared: 27 previous and 27 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
From a product category perspective, the product revenue increase of 14% was driven by growth in Networking of 21%, particularly within our AI Infrastructure and Campus Networking solutions where we expect to continue to see positive business momentum. We saw a decline in Security of 4%, primarily driven by declines in our prior generation products and our Splunk business where we continued to see a change in how our customers consumed Splunk offerings, shifting from fewer on-premise deals to more cloud subscriptions. We expect this trend to continue in the second half of fiscal 2026.
Current report
Total revenue increased by 9%. Product revenue increased by 12% and services revenue was flat. Our total revenue reflected growth across each of our geographic segments.
Current report
Product revenue in the EMEA segment increased by 19%, with growth across each of our customer markets. From a country perspective, product revenue increased in Germany and the United Kingdom by 23% and 41%, respectively.
Current report
Product revenue in the EMEA segment increased by 13%, with growth across each of our customer markets. From a country perspective, product revenue increased in Germany and the United Kingdom by 12% and 22%, respectively.
Current report
Product revenue in the APJC segment increased by 11%, with growth across each of our customer markets. From a country perspective, product revenue increased in Japan and India by 27% and 2%, respectively, partially offset by declines in Australia and China of 1% and 4%, respectively.
Current report
Revenue from the Security product category decreased by 3%, or $131 million, primarily driven by Threat Intelligence, Detection, and Response offerings and our prior generation products, partially offset by growth in SASE and Duo offerings.
Current report
Revenue from the Collaboration product category increased by 1%, or $28 million, primarily driven by revenue growth in our Collaboration Devices and CPaaS offerings.
Current report
Revenue from Observability product category increased by 3%, or $15 million, primarily driven by growth in ThousandEyes.
Current report
Services revenue decreased by 1% in the second quarter of fiscal 2026 compared with the second quarter of fiscal 2025, with the decline primarily driven by lower revenue from support services, partially offset by higher professional services. Services revenue declined in the Americas segment, partially offset by an increase in the EMEA segment for the second quarter of fiscal 2026. Service revenue in the APJC segment was flat.
Current report
Services revenue was flat in the first six months of fiscal 2026 compared to the first six months of fiscal 2025. Services revenue increased in the EMEA and APJC segments, offset by a decline in the Americas segment.
Current report
Product gross margin increased by 0.2 percentage points primarily driven by productivity improvements and lower amortization of purchased intangible assets, partially offset by negative impacts from product mix and pricing. Productivity benefits were adversely impacted by higher memory costs. The negative impacts from product mix were primarily due to higher Networking revenue and lower Security revenue.
Current report
Our services gross margin percentage decreased by 0.5 percentage points in the second quarter of fiscal 2026 and decreased by 0.1 percentage points in the first six months of fiscal 2026. For each of the second quarter and first six months of fiscal 2026, the decrease in services gross margin was primarily driven by higher headcount costs and mix of service offerings.
Current report
Sales and marketing expenses increased primarily due to higher headcount-related expenses, higher contracted services and higher discretionary spending.
Current report
Provision for Income Taxes
Current report
The provision for income taxes resulted in an effective tax rate of 12.9% for the second quarter of fiscal 2026, compared with an effective tax rate of 15.9% for the second quarter of fiscal 2025. The decrease in the effective tax rate was primarily due to an increase in stock-based compensation windfall benefit.
Current report
The net cash provided by operating activities in the first six months of fiscal 2026 includes our final U.S. transition tax payment of $2.3 billion.
Removed paragraphs (7)
Previous report
NM – Not Meaningful
Previous report
Product revenue in the EMEA segment increased by 6%, with growth across each of our customer markets. From a country perspective, product revenue increased in the Netherlands, United Kingdom and Saudi Arabia by 35%, 6% and 9%, respectively.
Previous report
Services revenue increased 2% in the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025, with the growth driven by higher revenue from professional and support services. Services revenue increased across all of our geographic segments for the first quarter of fiscal 2026.
Previous report
Our services gross margin percentage increased by 0.4 percentage points primarily due to cost efficiencies.
Previous report
Provision for (Benefit from) Income Taxes
Previous report
Transition Tax Payable
Previous report
The income tax payable outstanding as of October 25, 2025 for the U.S. transition tax on accumulated earnings for foreign subsidiaries was $2.3 billion and is payable in the second quarter of fiscal 2026.
Reworded paragraphs (43)
Previous wording
In the first quarter of fiscal 2026, we delivered strong revenue growth across all geographies and solid margins as we saw a positive demand environment. Total revenue increased by 8% compared with the first quarter of fiscal 2025, driven by revenue from Networking, particularly within our AI Infrastructure and Campus Networking solutions. Within total revenue, product revenue increased by 10% and services revenue increased by 2%. In the first quarter of fiscal 2026, total software revenue was $5.7 billion across all product areas and services, an increase of 3%. Total subscription revenue increased 2%.
Current wording
In the second quarter of fiscal 2026, we delivered strong revenue growth and profitability as we saw a continued positive demand environment. Total revenue increased by 10% compared with the second quarter of fiscal 2025. Within total revenue, product revenue increased by 14% and services revenue decreased by 1%. In the second quarter of fiscal 2026, total software revenue was $5.7 billion across all product areas and services, an increase of 2%. Total subscription revenue was flat.
Previous wording
In terms of our geographic segments, revenue from the Americas increased by $0.7 billion, EMEA revenue increased by $0.2 billion and APJC revenue increased by $0.1 billion. From a customer market standpoint, we experienced product revenue growth across all of our customer markets. From a product category perspective, the product revenue increase of 10% was driven by growth in Networking of 15% and Observability of 6%, partially offset by declines in Collaboration of 3% and Security of 2%.
Current wording
In terms of our geographic segments, revenue from the Americas increased by $0.6 billion, EMEA revenue increased by $0.6 billion and APJC revenue increased by $0.1 billion. From a customer market standpoint, we experienced product revenue growth across all of our customer markets.
Previous wording
We continue to operate in a highly competitive environment, and one that is complex especially with respect to tariffs and trade policy. We plan to continue to invest in key priority areas with the objective of driving profitable growth over the long term. We remain focused on delivering innovation across our technologies to assist our customers in executing on their digital transformations and on accelerating innovation across our portfolio. We believe that we are making progress on our strategic priorities.
Current wording
We continue to operate in a highly competitive and complex environment, especially as it relates to memory constraints and costs, and trade policy. Notwithstanding these challenges, we believe that we are making progress on our strategic priorities. We continue to invest in key priority areas with the objective of driving profitable growth over the long term. We remain focused on delivering innovation across our technologies to assist our customers in executing on their digital transformations and on accelerating innovation across our portfolio.
Previous wording
Total gross margin decreased by 0.4 percentage points. Product gross margin decreased by 0.6 percentage points, primarily driven by negative impacts from product mix and pricing, partially offset by productivity improvements and lower amortization of purchased intangible assets. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, decreased by 1.8 percentage points. Operating income as a percentage of revenue increased by 5.6 percentage points primarily driven by lower restructuring and other charges and revenue growth in the first quarter of fiscal 2026. Diluted earnings per share increased 6%, driven by the revenue growth and operating margin improvement, partially offset by the income tax benefit of $720 million we had in the first quarter of fiscal 2025.
Current wording
Total revenue increased 9%, with product revenue increasing 12% and services revenue was flat. Total gross margin decreased 0.3 percentage points, primarily driven by negative impacts from product mix and pricing, partially offset by productivity improvements and lower amortization of purchased intangible assets. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, decreased by 2.0 percentage points. Operating income as a percentage of revenue increased by 3.9 percentage points, primarily driven by higher revenue, lower restructuring and other charges and lower amortization of purchased intangible assets in the first six months of fiscal 2026. Diluted earnings per share increased 18%, driven by revenue growth and operating margin improvement, partially offset by the income tax benefit of $720 million we had in the first six months of fiscal 2025.
Previous wording
The following is a summary of our other key financial measures for the first quarter of fiscal 2026 (in millions):
Current wording
The following is a summary of our other key financial measures for the second quarter of fiscal 2026 (in millions):
Previous wording
Our total provisions for inventory and the liability related to purchase commitments with contract manufacturers and suppliers were $63 million and $201 million for the first quarter of fiscal 2026 and 2025, respectively. If there were to be a sudden and significant decrease in demand for our products, or a higher incidence of inventory obsolescence because of rapidly changing technology or customer requirements, then we could be required to increase our inventory write-downs, and our liability for purchase commitments with contract manufacturers and suppliers, and accordingly our profitability, could be adversely affected. We regularly evaluate our exposure for inventory write-downs and the adequacy of our liability for purchase commitments. For further discussion around the supply chain impacts and risks, see “—Results of Operations—Gross Margin—Supply Chain Impacts and Risks” and “—Liquidity and Capital Resources—Inventory Supply Chain.”
Current wording
Our total provisions for inventory and the liability related to purchase commitments with contract manufacturers and suppliers were $104 million and $357 million for the first six months of fiscal 2026 and 2025, respectively. If there were to be a sudden and significant decrease in demand for our products, or a higher incidence of inventory obsolescence because of rapidly changing technology or customer requirements, then we could be required to increase our inventory write-downs, and our liability for purchase commitments with contract manufacturers and suppliers, and accordingly our profitability, could be adversely affected. We regularly evaluate our exposure for inventory write-downs and the adequacy of our liability for purchase commitments. For further discussion around the supply chain impacts and risks, see “—Results of Operations—Gross Margin—Supply Chain Impacts and Risks” and “—Liquidity and Capital Resources—Inventory Supply Chain.”
Previous wording
In response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairment of goodwill. There was no impairment of goodwill in each of the first quarter of fiscal 2026 and 2025.
Current wording
In response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairment of goodwill. There was no impairment of goodwill in each of the first six months of fiscal 2026 and 2025.
Previous wording
We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective tax rates differ from the statutory rate, primarily due to the tax impact of state taxes, foreign operations, R&D tax credits, foreign-derived intangible income deductions, global intangible low-taxed income, tax audit settlements, nondeductible compensation, and international realignments. Our effective tax rate was a tax provision of 15.7% and a benefit of 19.6% in the first quarter of fiscal 2026 and 2025, respectively.
Current wording
We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective tax rates differ from the statutory rate, primarily due to the tax impact of state taxes, foreign operations, R&D tax credits, foreign-derived intangible income deductions, global intangible low-taxed income, tax audit settlements, nondeductible compensation, and international realignments. Our effective tax rate was 12.9% and 15.9% in the second quarter of fiscal 2026 and 2025, respectively and 14.2% and 0.3% in the first six months of fiscal 2026 and 2025, respectively.
Previous wording
Total revenue increased by 8%. Product revenue increased by 10% and services revenue increased by 2%. Our total revenue reflected growth across each of our geographic segments.
Current wording
Total revenue increased by 10%. Product revenue increased by 14% and services revenue decreased by 1%. Our total revenue reflected growth across each of our geographic segments.
Previous wording
Product revenue in the Americas segment increased by 12%, with growth across each of our customer markets, led by the Service Provider and Cloud customer market which was largely driven by revenue from our AI Infrastructure solutions. From a country perspective, product revenue increased in the United States and Mexico by 13% and 25%, respectively, partially offset by declines in Brazil and Canada of 28% and 3%, respectively.
Current wording
Product revenue in the Americas segment increased by 12%, with growth across each of our customer markets, led by the Service Provider and Cloud customer market which was largely driven by revenue from our AI Infrastructure solutions. From a country perspective, product revenue increased in the United States, Canada and Mexico by 13%, 1%, and 31%, respectively, partially offset by a decline in Brazil of 14%.
Previous wording
Product revenue in the APJC segment increased by 7%, with growth across each of our customer markets. From a country perspective, product revenue increased in Japan, Singapore and China by 12%, 50%, and 15%, respectively, partially offset by a decline in Australia of 11%.
Current wording
Product revenue in the APJC segment increased by 9%, with growth across each of our customer markets. From a country perspective, product revenue increased in Japan, India and China by 19%, 1%, and 5%, respectively, partially offset by a decline in Australia of 6%.
Previous wording
The Networking product category consists of our core networking technologies of switching, routing, wireless, and servers. Revenue from the Networking product category increased by 15%, or $1.0 billion. The increase was primarily driven by double digit revenue growth in Service Provider Routing, particularly within our AI Infrastructure solutions, Data Center Switching, and Enterprise Routing. We also experienced revenue growth in Campus Switching.
Current wording
The Networking product category consists of our core networking technologies of switching, routing, wireless, and servers. Revenue from the Networking product category increased by 21%, or $1.4 billion primarily driven by our AI Infrastructure and Campus Networking solutions. The increase was primarily driven by double digit revenue growth in Service Provider Routing, Data Center Switching, Campus Switching, Enterprise Routing, Wireless and Compute.
Previous wording
The Security product category consists of our Network Security, Identity and Access Management, SASE and Threat Intelligence, Detection, and Response offerings. Revenue in our Security product category decreased by 2%, or $37 million. The decline was driven in part due to a change in how our customers consumed Splunk offerings, shifting from fewer on-premise deals to more cloud subscriptions. We also experienced a revenue decline in our prior generation products. These declines were partially offset by growth in Secure Firewall, Duo, and SASE offerings.
Current wording
The Security product category consists of our Network Security, Identity and Access Management, SASE and Threat Intelligence, Detection, and Response offerings. Revenue in our Security product category decreased by 4%, or $93 million. The decline was primarily driven by our prior generation products and Splunk offerings. We continued to see a change in how our customers consumed Splunk offerings, shifting from fewer on-premise deals to more cloud subscriptions. These declines were partially offset by growth in new and refreshed products.
Previous wording
The Collaboration product category consists of our Webex Suite, Collaboration Devices, Contact Center and CPaaS offerings. Revenue in our Collaboration product category decreased by 3%, or $30 million, primarily driven by declines in our Devices and Webex Suite offerings.
Current wording
The Collaboration product category consists of our Webex Suite, Collaboration Devices, Contact Center and CPaaS offerings. Revenue in our Collaboration product category increased by 6%, or $58 million, primarily driven by double digit revenue growth in our Collaboration Devices, Cloud Contact Center and CPaaS offerings. We also experienced growth in our Webex Suite offerings.
Previous wording
The Observability product category consists of our network assurance, monitoring and analytics and observability suite offerings. Revenue in our Observability product category increased by 6%, or $16 million, primarily driven by growth in ThousandEyes.
Current wording
The Observability product category consists of our network assurance, monitoring and analytics and observability suite offerings. Revenue in our Observability product category was flat, primarily due to growth in ThousandEyes offset by a decline in Splunk offerings.
Previous wording
The following table summarizes the key factors that contributed to the change in product gross margin percentage for the first quarter of fiscal 2026, as compared with the corresponding prior year period:
Current wording
The following table summarizes the key factors that contributed to the change in product gross margin percentage for the second quarter and first six months of fiscal 2026, as compared with the corresponding prior year periods:
Previous wording
Product gross margin decreased by 0.6 percentage points primarily driven by negative impacts from product mix and pricing, partially offset by productivity improvements and lower amortization of purchased intangible assets.
Current wording
Product gross margin decreased by 0.2 percentage points primarily driven by negative impacts from product mix and pricing, partially offset by productivity improvements and lower amortization of purchased intangible assets.
Previous wording
We regularly enter into purchase commitments with contract manufacturers and suppliers and in recent periods have increased such commitments related to manufacturing Cisco Silicon One and other products to meet demand from hyperscalers and other customers. We expect to continue entering into these additional purchase commitments in fiscal 2026. These purchase commitments have in turn significantly increased our supply chain exposure. This exposure includes potential material excess and obsolete or other charges if product demand significantly decreases for a sustained duration, we are unable to generate demand for certain products, or we are otherwise unable to mitigate this exposure. Additionally, while we are exposed to new and proposed tariffs and other trade policies, the extent of such exposure is uncertain but could be significant if the exposure remains and we are unable to mitigate it.
Current wording
We regularly enter into purchase commitments with contract manufacturers and suppliers and in recent periods have increased such commitments related to manufacturing Cisco Silicon One and other products to meet demand from hyperscalers and other customers. We expect to continue entering into these additional purchase commitments in fiscal 2026, including purchase commitments to help secure memory. These purchase commitments have in turn significantly increased our supply chain exposure. This exposure includes potential material excess and obsolete or other charges if product demand significantly decreases for a sustained duration, we are unable to generate demand for certain products, or we are otherwise unable to mitigate this exposure. Additionally, while we are exposed to new and proposed tariffs and other trade policies, the extent of such exposure is uncertain but could be significant if the exposure remains and we are unable to mitigate it.
Previous wording
Gross margin percentage in our EMEA segment increased primarily due to productivity improvements, partially offset by negative impacts from pricing and product mix.
Current wording
Gross margin percentage in our EMEA segment increased primarily due to productivity improvements, partially offset by negative impacts from product mix and pricing.
Previous wording
The increase in the APJC segment gross margin percentage was primarily due to productivity improvements, partially offset by negative impacts from pricing and product mix.
Current wording
The decrease in the APJC segment gross margin percentage was primarily due to negative impacts from product mix and pricing, partially offset by productivity improvements.
Previous wording
R&D expenses increased primarily due to higher headcount-related expenses reflecting our investments in AI and higher share-based compensation expense, partially offset by lower acquisition-related costs.
Current wording
R&D expenses increased primarily due to higher headcount-related expenses reflecting our investments in AI, higher share-based compensation expense and higher discretionary spending, partially offset by lower acquisition-related costs.
Previous wording
Sales and marketing expenses increased primarily due to higher share-based compensation expense, higher contracted services spending, higher headcount-related expenses, and higher discretionary spending.
Current wording
Sales and marketing expenses increased primarily due to higher headcount-related expenses, higher share-based compensation expense, higher contracted services spending, and higher discretionary spending.
Previous wording
In the first quarter of fiscal 2026, foreign currency fluctuations, net of hedging, increased the combined R&D, sales and marketing, and G&A expenses by approximately $36 million, or 0.6%, compared with the first quarter of fiscal 2025.
Current wording
In the second quarter of fiscal 2026, foreign currency fluctuations, net of hedging, increased the combined R&D, sales and marketing, and G&A expenses by approximately $56 million, or 1.0%, compared with the second quarter of fiscal 2025.
Previous wording
For the first quarter of fiscal 2026, the decrease in amortization of purchased intangible assets was primarily due to certain purchased intangible assets that became fully amortized.
Current wording
For each of the second quarter and first six months of fiscal 2026, the decrease in amortization of purchased intangible assets was primarily due to certain purchased intangible assets that became fully amortized and impairment charges of $19 million recognized in the corresponding periods of fiscal 2025. Impairment charges were as a result of declines in estimated fair value resulting from the reductions in or the elimination of expected future cash flows associated with certain technology intangible assets.
Previous wording
In the first quarter of fiscal 2025, we announced a restructuring plan in order to allow us to invest in key growth opportunities and drive more efficiencies in our business. This restructuring plan is expected to impact approximately 7% of our global workforce with estimated pre-tax charges of approximately $1 billion. In connection with this restructuring plan, we incurred charges of $147 million in the first quarter of fiscal 2026. We expect this plan to be completed by the end of the second quarter of fiscal 2026.
Current wording
In the first quarter of fiscal 2025, we announced a restructuring plan in order to allow us to invest in key growth opportunities and drive more efficiencies in our business. In connection with this restructuring plan, we incurred charges of $36 million and$183 million in the second quarter and firstsix months of fiscal 2026. We completed this restructuring plan in the second quarter of fiscal 2026.
Previous wording
Operating income increased by 43%, and operating income as a percentage of revenue increased by 5.6 percentage points. These changes primarily resulted from lower restructuring and other charges and revenue growth in the first quarter of fiscal 2026.
Current wording
Operating income increased by 31%, and operating income as a percentage of revenue increased by 3.9 percentage points. These changes primarily resulted from revenue growth, lower restructuring and other charges and lower amortization of purchased intangible assets in the first six months offiscal 2026.
Previous wording
The decrease in interest income was driven by a lower average balance of cash and available-for-sale debt investments and lower interest rates. The decrease in interest expense was driven by a lower average balance of debt outstanding and lower effective interest rate on commercial paper during the period.
Current wording
For the second quarter and first six months of fiscal 2026, the decrease in interest income was driven by a lower average balance of cash and available-for-sale debt investments and lower interest rates. The decrease in interest expense was driven by a lower average balance of debt outstanding and lower effective interest rate on commercial paper during the respective periods.
Previous wording
The change in our other income (loss), net was primarily driven by higher unrealized gains on privately held investments.
Current wording
For each of the second quarter and first six months of fiscal 2026, the change in our other income (loss), net was primarily driven by higher gains on privately held investments.
Previous wording
The provision for (benefit from) income taxes resulted in an effective tax rate of 15.7% for the first quarter of fiscal 2026, compared with an effective tax rate of (19.6)% for the first quarter of fiscal 2025. The increase in the effective tax rate was primarily due to a $720 million tax benefit related to the U.S. Tax Court opinion issued during the first quarter of fiscal 2025 regarding the U.S. taxation of deemed foreign dividends in the transition year of the Tax Cut and Job Act (“Tax Act”) (our fiscal 2018).
Current wording
The provision for income taxes resulted in an effective tax rate of 14.2% for the first six months of fiscal 2026, compared with an effective tax rate of 0.3% for the first six months of fiscal 2025. The increase in the effective tax rate was primarily due to a $720 million tax benefit related to the U.S. Tax Court opinion issued during the first quarter of fiscal 2025 regarding the U.S. taxation of deemed foreign dividends in the transition year of the Tax Cut and Job Act (our fiscal 2018).
Previous wording
The net decrease in cash and cash equivalents and investments in the first quarter of fiscal 2026 was primarily driven by cash returned to stockholders in the form of cash dividends of $1.6 billion and repurchases of common stock of $2.0 billion, and capital expenditures of $0.3 billion. These uses of cash were partially offset by net cash provided by operating activities of $3.2 billion and the release to us of approximately $0.6 billion of restricted cash previously held in escrow.
Current wording
The net decrease in cash and cash equivalents and investments in the first six months of fiscal 2026 was primarily driven by cash returned to stockholders in the form of repurchases of common stock of $3.4 billion and cash dividends of $3.2 billion, shares repurchased for tax withholdings on vesting of restricted stock units of $1.1 billion and capital expenditures of $0.6 billion. These uses of cash were partially offset by net cash provided by operating activities of $5.0 billion, $2.0 billion net issuance of commercial paper, and the release to us of approximately $0.6 billion of restricted cash previously held in escrow.
Previous wording
On November 12, 2025, our Board of Directors declared a quarterly dividend of $0.41 per common share to be paid on January 21, 2026, to all stockholders of record as of the close of business on January 2, 2026. Future dividends will be subject to the approval of our Board of Directors.
Current wording
On February 11, 2026, our Board of Directors declared a quarterly dividend of $0.42 per common share to be paid on April 22, 2026, to all stockholders of record as of the close of business on April 2, 2026. Future dividends will be subject to the approval of our Board of Directors.
Previous wording
The remaining authorized amount for stock repurchases under this program is approximately $12.2 billion, with no termination date.
Current wording
As of January 24, 2026, the remaining authorized amount for stock repurchases under this program is approximately $10.8 billion, with no termination date.
Previous wording
Our accounts receivable net, as of October 25, 2025 decreased by approximately 28%, as compared with the end of fiscal 2025, primarily due to timing and amount of product and service billings in the first quarter of fiscal 2026 compared with the fourth quarter of fiscal 2025.
Current wording
Our accounts receivable net, as of January 24, 2026 decreased by approximately 1%, as compared with the end of fiscal 2025, primarily due to timing and amount of product and service billings in the second quarter of fiscal 2026 compared with the fourth quarter of fiscal 2025.
Previous wording
Inventory as of October 25, 2025 increased by 7% and inventory purchase commitments with contract manufacturers and suppliers increased by 10% from our balances at the end of fiscal 2025. The combined increase of 9% in our inventory and inventory purchase commitments as compared with the end of fiscal 2025 was primarily related to commitments with contract manufacturers and suppliers related to manufacturing Cisco Silicon One and other products to meet the demand from hyperscalers and other customers. We expect our inventory balances may increase in future quarters as we work to fulfill this demand.
Current wording
Inventory as of January 24, 2026 increased by 24% and inventory purchase commitments with contract manufacturers and suppliers increased by 32% from our balances at the end of fiscal 2025. The combined increase of 30% in our inventory and inventory purchase commitments as compared with the end of fiscal 2025 was primarily related to commitments with contract manufacturers and suppliers related to manufacturing Cisco Silicon One and other products, and helping to secure memory, to meet the demand from hyperscalers and other customers. We expect our inventory balances may increase in future quarters as we work to fulfill this demand.
Previous wording
In recent periods, we have increased our levels of inventory and purchase commitments with contract manufacturers and suppliers primarily related to Cisco Silicon One. The increases were primarily due to arrangements to secure supply and pricing for certain product components and commitments with contract manufacturers to meet customer demand and help manage lead times. Our risks of future material excess and obsolete inventory and related losses are further outlined in the Result of Operations—Product Gross Margin section.
Current wording
In recent periods, we have increased our levels of inventory and purchase commitments with contract manufacturers and suppliers primarily related to Cisco Silicon One. In the second quarter of fiscal 2026, we increased our purchase commitments with suppliers to help secure memory. The increases during the first six months of fiscal 2026 were primarily due to arrangements to secure supply and pricing for certain product components, including memory, and commitments with contract manufacturers to meet customer demand and help manage lead times. Our risks of future material excess and obsolete inventory and related losses are further outlined in the Result of Operations—Product Gross Margin section.
Previous wording
Financing Receivables Our financing arrangements include loans and leases. Our loan receivables include customer financing for purchases of our hardware, software and services (including technical support and advanced services), and also may include additional funds for other costs associated with network installation and integration of our products and services. Lease receivables include sales-type leases. Arrangements related to leases are generally collateralized by a security interest in the underlying assets. Financing receivables increased by 4% as compared with the end of fiscal 2025.
Current wording
Financing Receivables Our financing arrangements include loans and leases. Our loan receivables include customer financing for purchases of our hardware, software and services (including technical support and advanced services), and also may include additional funds for other costs associated with network installation and integration of our products and services. Lease receivables include sales-type leases. Arrangements related to leases are generally collateralized by a security interest in the underlying assets. Financing receivables increased by 2% as compared with the end of fiscal 2025.
Previous wording
The volume of channel partner financing was $6.7 billion and $6.0 billion for the first quarter of fiscal 2026 and 2025, respectively. These financing arrangements facilitate the working capital requirements of the channel partners, and in some cases, we guarantee a portion of these arrangements. The balance of the channel partner financing subject to guarantees was $1.5 billion and $1.3 billion as of October 25, 2025 and July 26, 2025, respectively. We could be called upon to make payments under these guarantees in the event of nonpayment by the channel partners. Historically, our payments under these arrangements have been immaterial. Where we provide a guarantee, we defer the revenue associated with the channel partner financing arrangement in accordance with revenue recognition policies, or we record a liability for the fair value of the guarantees. In either case, the deferred revenue is recognized as revenue when the guarantee is removed. As of October 25, 2025, the total maximum potential future payments related to these guarantees was approximately $134 million, of which approximately $17 million was recorded as deferred revenue.
Current wording
The volume of channel partner financing was $14.0 billion and $12.2 billion for the first six months of fiscal 2026 and 2025, respectively. These financing arrangements facilitate the working capital requirements of the channel partners, and in some cases, we guarantee a portion of these arrangements. The balance of the channel partner financing subject to guarantees was $1.3 billion as of each of January 24, 2026 and July 26, 2025. We could be called upon to make payments under these guarantees in the event of nonpayment by the channel partners. Historically, our payments under these arrangements have been immaterial. Where we provide a guarantee, we defer the revenue associated with the channel partner financing arrangement in accordance with revenue recognition policies, or we record a liability for the fair value of the guarantees. In either case, the deferred revenue is recognized as revenue when the guarantee is removed. As of January 24, 2026, the total maximum potential future payments related to these guarantees was approximately $126 million, of which approximately $13 million was recorded as deferred revenue.
Previous wording
Senior Notes The following table summarizes the principal amount of our senior notes (in millions):
Current wording
Senior Fixed-Rate Notes The following table summarizes the principal amount of our senior fixed-rate notes (in millions):
Previous wording
Commercial Paper We have a short-term debt financing program in which up to $15.0 billion is available through the issuance of commercial paper notes. We use the proceeds from the issuance of commercial paper notes for general corporate purposes. We had $3.5 billion in commercial paper notes outstanding as of each of October 25, 2025 and July 26, 2025.
Current wording
Commercial Paper We have a short-term debt financing program in which up to $15.0 billion is available through the issuance of commercial paper notes. We use the proceeds from the issuance of commercial paper notes for general corporate purposes. We had $5.5 billion and $3.5 billion in commercial paper notes outstanding as of January 24, 2026 and July 26, 2025, respectively.
Previous wording
Total remaining performance obligations as of October 25, 2025 decreased 2% compared to the end of fiscal 2025. Remaining performance obligations for product increased by 2% compared to the end of fiscal 2025, of which long-term product RPO was $11.8 billion, up 3%. Remaining performance obligations for services decreased 5%.
Current wording
Total remaining performance obligations as of January 24, 2026 were flat compared to the end of fiscal 2025. Remaining performance obligations for product increased by 2% compared to the end of fiscal 2025, of which long-term product RPO was $11.8 billion, up 3%. Remaining performance obligations for services decreased 2%.
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Current report — wording carried from elsewhere
Total gross margin decreased by 0.1 percentage points. Product gross margin increased by 0.2 percentage points, primarily driven by productivity improvements and lower amortization of purchased intangible assets, partially offset by negative impacts from product mix and pricing. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, decreased by 2.3 percentage points. Operating income as a percentage of revenue increased by 2.3 percentage points, primarily driven by revenue growth and lower amortization of purchased intangible assets in the second quarter of fiscal 2026. Diluted earnings per share increased 31%, driven by revenue growth and operating margin improvement.
Current report — wording carried from elsewhere
Product revenue in the Americas segment increased by 12%, with growth across each of our customer markets, led by the Service Provider and Cloud customer market which was largely driven by revenue from our AI Infrastructure solutions. From a country perspective, product revenue increased in the United States, Canada, Mexico and Brazil by 12%, 5%, 36%, and 6%, respectively.
Current report — wording carried from elsewhere
Revenue from the Networking product category increased by 18%, or $2.5 billion. The increase was primarily driven by double digit revenue growth in Service Provider Routing, particularly within our AI Infrastructure solutions, Data Center Switching and Enterprise Routing. We also experienced revenue growth in Campus Switching and Wireless.
Current report — wording carried from elsewhere
We experienced a gross margin percentage decrease in our Americas segment due to negative impacts from product mix, pricing and lower services gross margin, partially offset by positive impacts from productivity improvements.
Current report — wording carried from elsewhere
The decrease in the APJC segment gross margin percentage was primarily due to product mix and pricing, partially offset by productivity improvements.
Current report — wording carried from elsewhere
Gross margin percentage in our EMEA segment increased primarily due to productivity improvements, partially offset by negative impacts from product mix and pricing.
Current report — wording carried from elsewhere
R&D expenses increased primarily due to higher headcount-related expenses reflecting our investments in AI and higher discretionary spending, partially offset by lower acquisition-related costs.
Current report — wording carried from elsewhere
G&A expenses decreased primarily due to lower headcount-related expenses and lower acquisition-related costs.
Current report — wording carried from elsewhere
In the first six months of fiscal 2026, foreign currency fluctuations, net of hedging, increased the combined R&D, sales and marketing, and G&A expenses by approximately $91 million, or 0.8%, compared with the first six months of fiscal 2025.
Current report — wording carried from elsewhere
Operating income increased by 21%, and operating income as a percentage of revenue increased by 2.3 percentage points. These changes primarily resulted from revenue growth and lower amortization of purchased intangible assets in the second quarter of fiscal 2026.