Broad-Based Growth at Cisco: Double-Digit Revenue Increase and AI Momentum Drive Strong Q3 Results

Robust Financial Performance, Increased Demand for Secure Networking, and Continued Shareholder Returns

Cisco’s Q3 FY2025 earnings report, released on May 14, revealed a solid set of financial and operational achievements. The company reported double-digit revenue growth, significant profitability improvement, and strong momentum in strategic sectors such as cybersecurity and artificial intelligence. Alongside these positive trends, Cisco maintained a disciplined capital return policy and a solid financial foundation.

Record Revenues and Profitability Expansion

Cisco reported $14.1 billion in revenue for the third fiscal quarter of 2025, marking an 11% increase year-over-year. Growth was recorded across all operating segments, with product revenue up 15% and services revenue up 3%. Regionally, the Americas saw a 14% revenue increase, EMEA rose 8%, and Asia-Pacific grew by 9%.

On a GAAP basis, net income reached $2.5 billion, up 32% from the previous year. Earnings per share (EPS) rose by 35% to $0.62. On a non-GAAP basis, net income stood at $3.8 billion, with EPS of $0.96, reflecting 9% growth.

AI Infrastructure: Surpassing 2025 Targets Ahead of Schedule

One of the quarter’s highlights was the performance of Cisco’s AI infrastructure business. The company reported over $600 million in orders from Webscale customers – exceeding its $1 billion annual goal well ahead of schedule. This early milestone reflects growing demand for Cisco’s secure and scalable AI-driven networking solutions.

According to Chairman and CEO Chuck Robbins:

“Our strong Q3 performance underscores the sustained demand for our technologies and the trust our customers place in us. AI continues to accelerate, and our strength lies in our ability to combine secure networking, broad global partnerships, and continuous innovation. We are well-positioned to lead in the AI era.”

Segment Highlights: Cybersecurity and Observability Lead Growth

From a segment perspective, cybersecurity revenue surged by 54%, establishing itself as a core growth engine amid rising global cyber threats. The observability business also posted a notable 24% increase. Collaboration grew modestly by 4%, while Cisco’s foundational networking segment expanded by 8%.

Operational Discipline and Cost Efficiency

Cisco demonstrated strong cost management, maintaining GAAP operating expenses at $6.1 billion (or 42.9% of revenue) and slightly increasing non-GAAP operating expenses to $4.8 billion (or 34.1% of revenue). Operating margins stood at 22.6% (GAAP) and 34.5% (non-GAAP), reflecting enhanced operational efficiency.

Solid Cash Flow and Shareholder Returns

Operating cash flow reached $4.1 billion, up 2% year-over-year. The company ended the quarter with $15.6 billion in cash and investments.

Cisco returned capital to shareholders through a $0.41 per share dividend, totaling $1.6 billion, and repurchased approximately 25 million shares worth $1.5 billion. Total capital return for the quarter reached $3.1 billion.

Strategic Acquisitions: Strengthening the Security Portfolio

During the quarter, Cisco completed the acquisition of SnapAttack, a private firm offering threat detection and security engineering solutions. The acquisition aligns with Cisco’s strategy to deepen its cybersecurity capabilities and broaden its end-to-end threat management offerings.

Outlook for Q4 FY2025: Continued Growth Expected

For the fourth quarter of fiscal 2025, Cisco expects revenue between $14.5 billion and $14.7 billion, with non-GAAP EPS projected between $0.96 and $0.98. Full-year guidance was reaffirmed, with expected total revenue of $56.5 billion to $56.7 billion, and non-GAAP EPS between $3.77 and $3.79.

According to CFO Scott Herren:

“Our Q3 results reflect disciplined execution and operational control. We are continuing to generate strong cash flow, improve profitability, and invest strategically to position Cisco for long-term growth. Our financial discipline allows us to deliver substantial value to our shareholders.”

Conclusion: Positioned for Leadership in the AI-Driven Era

Cisco’s Q3 FY2025 results position the company as a global technology leader, combining strong core business growth with advancing leadership in AI and cybersecurity. With a resilient financial structure, proven technological capabilities, and a rising demand environment, Cisco enters the remainder of the year with confidence and strategic clarity.