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.