A maker of the networking gear that connects the internet, Cisco designs and sells switches, routers, wireless systems, and security, collaboration, and observability software — including the Webex video suite and Splunk data tools — used by businesses, governments, and service providers. It was founded in 1984 by Stanford computer scientists Leonard Bosack and Sandy Lerner, who built routers to link their campus networks. The name comes from the last five letters of San Francisco, and the original logo was a stylized Golden Gate Bridge, inspired by a drive the founders took past the landmark.
Networking product revenue rose 25% to $8.8B, lifting Q3 FY2026 revenue 12% to $15.8B.
Networking growth carried the quarter. rose 12% to $15.8B and rose 37% to $0.85 as Networking product revenue increased 25% to $8.8B, while fell 1.9 points to 63.6% on memory costs and product mix. The underlying business has returned to growth, but and have nearly doubled against the risk of excess.
Key takeaways
Networking product rose 25% to $8.8B, led by and Campus Switching, driving total revenue up 12% to $15.8B with product revenue up 17% and services down 1%.
Product fell 2.5 points to 61.9% due to unfavorable mix from higher Networking and memory component costs, partly offset by productivity gains, pulling total gross margin down 1.9 points to 63.6%.
expanded 2.4 points to 25.0% as the 12% increase outpaced a 2% rise in combined R&D, sales, and G&A expenses.
Section summaries
Management's Discussion and Analysis
Cisco Q3 FY2026 revenue grew 12% to $15.8B, driven by 25% Networking growth, while gross margin fell 2 pts on product mix and memory costs.
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Total rose 12% to $15.8B, with product revenue up 17% and services down 1%.
rose 35.4% to $3,373M and rose 37.1% to $0.85; rose 23.7% to $3,960M.
and rose 93% combined versus fiscal 2025 year-end, driven by and memory supply commitments for hyperscaler demand.
was $3,757M for the quarter, down 7.4% , and was $3,343M, down 11.9%; year-to-date free cash flow was $7.8B with $4.6B in buybacks and $4.9B in dividends returned.
What changed
Q3 FY2025 flagged that FY2026 excluding Splunk would show if the underlying business grows after Splunk-inflated comparisons; this quarter Networking rose 25% and total revenue rose 12%, with the year-ago quarter already including a full quarter of Splunk, indicating underlying growth.
Q2 FY2026 flagged Networking after a 21% rise to confirm it holds; Q3 Networking rose 25% to $8.8B, extending the increase.
Q2 FY2026 flagged combined and after a 30% increase from fiscal 2025-end; Q3 shows a 93% combined increase versus fiscal 2025-end, accelerating the build.
Q2 FY2026 flagged after a 24.2% decline to $1.5B; Q3 free cash flow was $3,343M, down 11.9% , a smaller decline than Q2.
Security product , which fell 4% in Q2 FY2026, was flat in Q3, while Collaboration declined 1% versus a 4% rise a year earlier.
A restructuring plan initiated in Q4 FY2026, expected to complete by end of FY2027, appears in the risk factors as new versus the prior annual report's completed plan.
What to watch
Combined and after the 93% Q3 increase versus fiscal 2025-end for future excess or obsolescence charges
Product after the 2.5-point drop to 61.9% as memory costs persist
Networking product next quarter to confirm the 25% rise holds as hyperscaler demand continues
Restructuring charges from the Q4 FY2026 plan initiated and expected to complete by end of FY2027
Networking product surged 25% to $8.8B, led by and Campus Switching, while Security was flat and Collaboration declined 1%.
Product fell 2.5 pts to 61.9% due to unfavorable mix (higher Networking) and memory costs, partly offset by productivity gains.
expanded 2.4 pts to 25.0% as growth outpaced a 2% rise in combined R&D, sales, and G&A expenses.
was $8.8B YTD; was $7.8B, with $4.6B in buybacks and $4.9B in dividends returned to shareholders.
and purchase commitments surged 93% combined vs. FY2025-end, driven by and memory supply commitments for hyperscaler demand.
Quantitative and Qualitative Disclosures About Market Risk
Interest rate risk arises from $23.0B fixed-rate debt and $6.6B financing receivables; equity risk from $2.9B non-marketable investments; currency risk is hedged with forwards.
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A 50 rate change would alter the of fixed-rate debt by ~$0.7B and financing by ~$0.1B, with no impact on for fixed-rate debt.
Marketable equity securities totaled $377M; non-marketable equity securities were $2.9B, with startup-stage investments carrying risk of total loss.
Foreign exchange forward contracts had notional amounts of $4.2B purchased and $4.7B sold as of April 25, 2026, used to hedge operating expenses and /.
is primarily USD-denominated, but a stronger dollar could indirectly reduce demand by raising costs for non-U.S. customers.
In the first nine months of fiscal 2026, foreign currency fluctuations, net of , increased operating expenses by $181M, or 1.0%, versus the prior year.
For a description of our pending legal proceedings, see Note 14, “Commitments and Contingencies—(f) Legal Proceedings” in the Notes to Consolidated Financial Statements. 58 Table of Contents
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For a description of our pending legal proceedings, see Note 14, “Commitments and Contingencies—(f) Legal Proceedings” in the Notes to Consolidated Financial Statements.
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Supply chain constraints, especially memory costs, and macroeconomic uncertainty are materially pressuring margins and revenue predictability.
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Memory component cost increases and related purchase commitments have negatively impacted product in Q3 FY2026 and are expected to continue.
A restructuring plan initiated in Q4 FY2026, expected to complete by end of FY2027, may not yield intended efficiencies and could harm results.
Sales to service provider and cloud customers remain volatile with large, sporadic orders and high customer concentration risk.
Intense competition, including price-focused rivals from Asia and 'white box' hardware, threatens growth and margins.
Rapid AI advances increase cybersecurity risks, including faster exploitation of vulnerabilities and more sophisticated attacks on our solutions and IT environment.