Executive Summary
Cisco's QQ2 2025 results reflect steady top-line performance with meaningful margin resilience and robust cash generation. Revenue reached $13.991 billion, up 2.56% year-over-year and 1.08% quarter-over-quarter, underpinned by a favorable mix toward higher-margin software, security and services within a mature product portfolio. The gross margin stood at 65.12%, with operating margin at 22.25% and net margin at 17.35%, evidencing continued operating efficiency and scale benefits amid ongoing competitive pressures in the networking hardware market. Net income of $2.429 billion, up 12.30% year-over-year but down 10.44% quarter-over-quarter, alongside EPS of $0.61 (YoY +12.96%, QoQ -10.29%), illustrates Cisco's ability to convert revenue strength into earnings power, albeit with periodic quarterly volatility likely tied to seasonality, tax timing, and non-operating items.
Free cash flow (FCF) amounted to $2.031 billion, supported by $2.241 billion of operating cash flow and a capital expenditure run-rate of ~$0.21 billion. Cash and short-term investments totaled $16.853 billion, while total debt stood at $31.037 billion and net debt was $22.481 billion, signaling meaningful leverage for a large cap tech hardware company with a diversified software/services mix. The balance sheet remains structurally solid, and Cisco continues to generate significant FCF to support dividends, buybacks, and deleveraging opportunities over time. Given the current earnings profile and operating cash generation, the near-term outlook remains constructive, with upside potential driven by software and security adjacencies and continued efficiency gains; valuation remains at a premium relative to broader markets, reflecting Cisco’s enduring profitability and cash flow durability.
Looking ahead, without explicit forward guidance in the provided materials, investors should monitor demand cycles in enterprise IT, ongoing secular tailwinds for secure networking, and the cadence of software revenue growth as Cisco accelerates its transition toward higher-margin, recurring-revenue streams. Overall, Cisco presents a steady, dividend-friendly exposure within the technology hardware sector, with a favorable cash-outlook and a disciplined balance sheet position that supports a constructive long-term thesis.
Key Performance Indicators
QoQ: -10.44% | YoY:12.30%
QoQ: -10.29% | YoY:12.96%
Key Insights
Revenue: $13.991B; YoY growth: 2.56%; QoQ growth: 1.08%
Gross Profit: $9.111B; Gross Margin: 65.12% (YoY +3.76%, QoQ -0.11%)
Operating Income: $3.113B; Operating Margin: 22.25% (YoY +18.91%, QoQ +32.02%)
Net Income: $2.428B; Net Margin: 17.35% (YoY +12.30%, QoQ -10.44%)
EPS: $0.61; EPS YoY: +12.96%; EPS QoQ: -10.29%
EBITDA: $4.052B; EBITDARatio: 28.96%
Cash Flow: Operating cash flow $2.241B; Free cash flow $2.031B; Capex $0.21B; Free cash flow per share $0.51
Balance Sheet: Total assets $121.375...
Financial Highlights
Revenue: $13.991B; YoY growth: 2.56%; QoQ growth: 1.08%
Gross Profit: $9.111B; Gross Margin: 65.12% (YoY +3.76%, QoQ -0.11%)
Operating Income: $3.113B; Operating Margin: 22.25% (YoY +18.91%, QoQ +32.02%)
Net Income: $2.428B; Net Margin: 17.35% (YoY +12.30%, QoQ -10.44%)
EPS: $0.61; EPS YoY: +12.96%; EPS QoQ: -10.29%
EBITDA: $4.052B; EBITDARatio: 28.96%
Cash Flow: Operating cash flow $2.241B; Free cash flow $2.031B; Capex $0.21B; Free cash flow per share $0.51
Balance Sheet: Total assets $121.375B; Total liabilities $75.845B; Total equity $45.53B; Cash & equivalents $8.556B; Short-term investments $8.297B; Total cash & investments $16.853B
Debt & Liquidity: Total debt $31.037B; Net debt $22.481B; Current ratio 0.867x; Quick ratio 0.793x; Cash ratio 0.214x; Interest coverage 7.71x
Capital Allocation: Dividends paid and buybacks contributing to a payout ratio of 65.6%; Dividend yield 0.64%; Price-to-earnings 25.51x; Price-to-sales 17.71x; Price-to-free-cash-flows 121.98x; Enterprise value multiple 66.69x
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
13.99B |
2.56% |
1.08% |
| Gross Profit |
9.11B |
3.76% |
-0.11% |
| Operating Income |
3.11B |
18.91% |
32.02% |
| Net Income |
2.43B |
12.30% |
-10.44% |
| EPS |
0.61 |
12.96% |
-10.29% |
Key Financial Ratios
operatingProfitMargin
22.3%
operatingCashFlowPerShare
$0.56
freeCashFlowPerShare
$0.51
dividendPayoutRatio
65.6%
Management Commentary
Transcript data not provided. No management quotes available in the supplied material. Pending delivery of the earnings call transcript to extract themes and quotes by management, including emphasis on strategy, operations, market conditions, and execution.
Not available in the provided transcript data.
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Not available in the provided transcript data.
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Forward Guidance
No explicit forward guidance contained in the provided materials. Based on the quarter’s results, a qualitative view would suggest continued focus on reinforcing recurring software revenue, expanding security offerings, and delivering operating leverage through portfolio optimization and cost discipline. Key considerations for the next quarters include: progression of software and subscription mix, enterprise IT capex demand trends, channel and regional mix, supply chain stability, and currency/FX effects for CIS.DE listing. Investors should monitor Cisco’s pipeline in security, cloud networking, and collaboration products, as well as any changes to capital allocation policy (dividends, buybacks) in relation to FCF generation.