To The Moon

$Cisco(CSCO)$ is scheduled to report its Q1 Fiscal Year 2026 financial results (for the period ending October 2025) on Wednesday, November 12, 2025, after the close of the market (AMC).

Consensus Expectations

Based on analyst forecasts, the consensus for Q1 FY2026 is generally positive:

Consensus EPS (Non-GAAP): Approximately $0.80 (ranging from $0.74 to $0.83).

Note: This is an estimated increase compared to the reported EPS of $0.75 in the same quarter last year (Q1 FY2025).

Revenue Consensus: Forecasts for revenue are around $14.78 billion.

Note: This would represent year-over-year growth of about 6.76%, according to some estimates.

The overall sentiment is cautiously optimistic, driven by the company's strategic focus areas.

Cisco Systems (CSCO) Fiscal Q4 2025 Earnings Summary

Cisco reported its Fiscal Q4 2025 earnings on August 13, 2025, delivering results that largely met or slightly exceeded Wall Street consensus, fueled by strong demand for its networking products, particularly those related to Artificial Intelligence (AI).

Key Financial Highlights

Performance Drivers & Strategic Metrics

AI Infrastructure Boom: This was the biggest surprise. AI infrastructure orders from webscale customers exceeded $800 million in the quarter, bringing the full FY2025 total to over $2 billion—more than double the original $1 billion target. This demonstrated Cisco's significant, though still early, relevance in the AI data center buildout.

Networking Strength: Networking revenue was up 12% YoY, showing robust demand for core enterprise networking upgrades (e.g., Cat9k campus refresh cycle) and cloud-related infrastructure.

Recurring Revenue Growth: The move to a subscription model continued to show progress.

Remaining Performance Obligations (RPO): $43.5 Billion, up 6% YoY.

Product RPO (a key indicator of future product subscription recognition) was up 8% YoY.

Security Momentum (Including Splunk): The Security segment saw revenue up 9% YoY, reflecting the initial integration and impact of the Splunk acquisition.

Lesson Learned from Q4 FY2025 Guidance

While the Q4 performance was strong, the guidance provided for Q1 FY2026 and the full FY2026 revealed several key expectations and investor takeaways that set the current market context:

1. The Power of the "AI Hype" vs. Reality

The Lesson: AI is a massive catalyst, but it's a multi-year buildout that coexists with traditional cycles.

Guidance Details: Management issued Q1 FY2026 guidance (the quarter you are currently analyzing) for revenue of $14.65 billion to $14.85 billion and non-GAAP EPS of $0.97 to $0.99. They also provided a strong Full-Year FY2026 outlook of $59.0 billion to $60.0 billion in revenue (a 4-6% increase YoY) and non-GAAP EPS of $4.00 to $4.06.

Investor Interpretation: Despite the significant AI order beat in Q4 2025, the full-year revenue growth projection of 4-6% suggested a growth deceleration compared to the 8% growth rate just reported. This tempered investor enthusiasm, leading to a slight dip in the stock post-earnings, as the market realized that the multi-billion dollar AI orders, while impressive, still represent a relatively small portion of Cisco's massive overall revenue base and wouldn't lead to a sudden, huge re-acceleration of the entire business immediately.

2. Focus on Transition and Execution

The Lesson: The market is willing to accept slower near-term growth if the long-term strategic transition (to subscription/software) is confirmed.

Guidance Details: Management emphasized that the apparent deceleration was due to challenging year-over-year comparisons from a very strong FY2025, and not a decline in core demand. They highlighted that the campus refresh cycle and the full integration of the Splunk security portfolio would be the major drivers in FY2026.

Investor Focus: The primary focus shifts from simple growth to quality of revenue. In the upcoming Q1 report, investors will be scrutinizing the growth in Product RPO and Security/Observability revenue to see if this strategic shift towards high-margin, predictable software is materializing as promised.

3. The Enterprise Campus Refresh is Key

The Lesson: The cyclical refresh of core enterprise networking equipment remains a vital, large-scale driver.

Guidance Commentary: Cisco talked about its new family of Cat9k switches and how this marks the start of a major, multi-year campus refresh opportunity, as enterprises modernize their networks to handle AI-level traffic.

Investor Implication: The Q1 2026 report needs to show continued positive product order trends in the Networking segment to validate that this refresh cycle is taking hold, providing a stable counter-balance to the more volatile webscale AI orders.

The Q4 2025 report confirmed Cisco is a major beneficiary of the AI buildout and is successfully transitioning to a software-centric model (higher RPO). The key lesson from the guidance was that investors should expect steady, profitable growth in FY2026 (4-6% range) driven by both AI and the core enterprise refresh cycle, rather than a massive, immediate growth spike from AI alone.

Key Metrics Investors Should Watch

Beyond the headline numbers (EPS and Total Revenue), the following metrics will be crucial for assessing the health and future direction of Cisco's business:

1. Growth in Strategic Segments

Security Revenue: This is a high-growth area, especially following the Splunk acquisition. Investors will be looking for significant acceleration in Security revenue (both products and services) to validate the acquisition's value and the company's shift toward recurring software/subscription revenue.

Networking Revenue & AI Momentum: While core networking revenue has faced some cyclical slowdowns (e.g., from service providers), commentary on AI-related orders is critical. Look for management comments on the build-out of infrastructure for AI data centers and whether Cisco is capturing a meaningful share of this high-growth spending.

Observability Revenue: Growth in this newer category, which includes AppDynamics, is key to Cisco's software strategy and stickiness with enterprise customers.

2. Remaining Performance Obligations (RPO) & Subscriptions

RPO: This metric represents the total contract value of future revenue under contract. An increase in RPO (especially in the product segment) indicates strong future demand and the successful transition to a subscription-based model. A high RPO provides better revenue visibility.

Software and Subscription Revenue Mix: Investors want to see an increasing percentage of total revenue coming from subscriptions and software, as this implies more predictable, high-margin, recurring revenue streams.

3. Profitability and Margin

Non-GAAP Gross Margin: Investors will scrutinize gross margin to see if product mix changes (e.g., higher-margin software/security products) and supply chain normalization are continuing to boost profitability.

Non-GAAP Operating Margin and Operating Expenses (OpEx): Maintaining or improving operating margin will show that the company is managing its costs effectively while integrating new acquisitions like Splunk.

4. Management Guidance

Q2 FY2026 and Full-Year FY2026 Outlook: This is often the most important part of the earnings report. Any reaffirmation, or especially an increase, in the full-year revenue and EPS guidance will be a strong positive catalyst. Conversely, a reduction in guidance, particularly due to macroeconomic uncertainty or competitive pressures, could lead to a sharp sell-off.

Cisco Systems (CSCO) Price Target

Based on 18 analysts from Tiger Brokers offering 12 month price targets for Cisco Systems in the last 3 months. The average price target is $77.33 with a high forecast of $88.00 and a low forecast of $62.50. The average price target represents a 7.27% change from the last price of $72.09.

Short-Term Trading Opportunities Post-Earnings

Trading around earnings is inherently risky and often sees high volatility. For a short-term trade post-earnings, consider the following opportunities:

Key Trading Considerations:

Implied Volatility (IV): Options prices typically factor in a large expected move (high IV) before earnings. This makes buying options (straddles/strangles) expensive. If the move is less than the market expected, option buyers can lose money even if they guessed the direction correctly.

CSCO implied volatility (IV) is 31.9, which is in the 91% percentile rank. This means that 91% of the time the IV was lower in the last year than the current level. The current IV (31.9) is -0.8% below its 20 day moving average (32.1) indicating implied volatility is trending lower.

Historical Moves: CSCO has a history of beating EPS estimates. Review the typical magnitude of its price move on earnings day to gauge what a "surprising" move might look like.

Focus on Guidance: Cisco is a mature tech company, and its stock price is often more sensitive to the forward-looking guidance (Q2 and full-year outlook) than the actual quarterly numbers.

Technical Analysis - Exponential Moving Average (EMA)

Even though we have seen a significant pullback last week, CSCO bulls manage to hold the upside and continue to trade above the 26-EMA and 50-EMA while maintaining the positive RSI momentum.

So investors might be looking to see if Cisco bookings would improve significantly due to the demand from AI, and also the guidance for the full-year would be much significant as there would be potential increase in demand for Cisco products and services.

Summary

Cisco is set to report its Fiscal Q1 2026 earnings on November 12, 2025, with the market focused on its transformation into a growth-oriented, software-centric company.

Key Expectations

Consensus Forecast: Analysts anticipate Non-GAAP EPS of $0.98 on Revenue of $14.78 billion. This is generally in line with the guidance previously provided by management, suggesting a moderate growth expectation for the quarter (approx. 6.8% YoY for revenue).

Guidance is Paramount: The most significant market driver will be the management's commentary on the Full-Year FY2026 outlook. Any revision (up or down) to the previously given revenue range of $59.0B–$60.0B will heavily influence short-term trading.

Key Metrics to Watch

AI Order Momentum: The pace of AI infrastructure orders, particularly following the $2 billion secured in FY2025, will be critical. Strong momentum here validates a new growth vector.

Recurring Revenue & RPO: Growth in Remaining Performance Obligations (RPO) and the Security revenue segment (boosted by Splunk integration) confirms the high-margin, predictable subscription business is accelerating.

Core Networking: Evidence of the expected Campus Refresh Cycle taking hold in the core Networking segment will provide stable, traditional revenue support.

Short-Term Trading Thesis

Trading opportunities will depend on the Guidance/Segment Surprise. A "Beat and Raise" (beating Q1 estimates and raising FY2026 guidance) would likely prompt a strong bullish reaction, driven by confirmation of the AI/Security strategy. Conversely, if segment growth or RPO disappoints, or if the full-year outlook is lowered, a bearish reaction is likely, regardless of a minor EPS beat.

Appreciate if you could share your thoughts in the comment section whether you think CSCO could provide a stronger bookings and positive guidance and we could see a beat and raise post earnings release.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.