Cisco Q1 Recap & Q2 2025 Earnings: Stock Analysis

Q1 FY2025 Financial Performance Overview

For Q1 FY2025, Cisco Systems reported revenue of $13.8 billion, marking a 6% decline compared to last year. The company’s product revenue was $6.75 billion, down 23% year-over-year due to a drop in networking hardware sales amid evolving market demand. In contrast, services revenue increased by 6% to reach $7.8 billion, driven by subscription-based offerings and a growing recurring income stream.

Earnings per share (EPS) figures reflected divergent trends. Cisco’s non-GAAP EPS came in at $0.91, surpassing guidance of $0.86–$0.88, while GAAP EPS registered at $0.68, a 24% decline year-over-year. GAAP gross margin improved from 65.2% to 65.9%, and non-GAAP gross margin reached 69.3% — the highest in over 20 years — helped by the integration of Splunk. Operating cash flow rose by 54% year-over-year to $3.7 billion.

Additionally, Cisco reported a 20% year-over-year increase in product orders, with enterprise orders up 33% and cloud/webscale orders rising by 28%. The Annualized Recurring Revenue (ARR) climbed 22% year-over-year to $29.9 billion, a key metric for investors who rely on stock analysis websites to monitor recurring revenue trends.

Revenue Breakdown by Segment

Cisco’s revenue is segmented across several key areas, each reflecting different trends in Q1 FY2025:

Networking:

• Revenue: $6.75 billion
• Change: 23% year-over-year decline due to backlog normalization and reduced enterprise spending.

Security:

• Revenue: Approximately $3.89 billion
• Change: Revenue doubled compared to the previous year, driven by enhanced threat intelligence from the Splunk integration.

Observability:

• Revenue: $1.1 billion
• Change: Increased 36% year-over-year, reflecting strong market adoption of integrated analytics tools.

Collaboration:

• Revenue: $1.3 billion
• Change: Decreased by 3% year-over-year, impacted by lower on-premise Webex and hardware sales.