Cisco Systems Inc Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Yeah. Thanks for taking a question and congrats on the quarter. I guess I want to dive a little bit deeper into the AI orders. Obviously, tracking to, I think that was a $3 billion number in fiscal '26 from the web scale vertical, so maybe start there. As we think about the diversity that Cisco is seeing in the web scale opportunity, how has that evolved? And have you guys been engaged in deepening super spine or even scale across opportunities in the web scale vertical? And then as a follow-up on the enterprise side, I think the number was $2 billion pipeline, I think the slide deck says $200 million versus last quarter. How do we expect that to progress through this fiscal year? Thank you.

Question: Meta Marshall - Morgan Stanley & Co Ltd - Analyst : Great. Thanks. Maybe just following up on Aaron's question. Just in terms of some of that strength that you're seeing, is the upside that you're seeing to some of these AI orders coming from scale across strengthening? Or is it just coming from deepening engagement because I guess our view is that scale across has strengthened throughout the quarter? So just want to get a sense of if that is something you've picked up on as well. And then just as a follow-up question, just any commentary around DRAM pricing has certainly become more elevated. Just how you guys are thinking about that in terms of the gross margin? Thanks.

Question: Tal Liani - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hello. Great quarter. It's hard for me to ask a tough question in a great quarter, but I'm going to do it anyway with your permission. If I remove $1 billion from last year revenues, which were the AI back end and I removed $3 million from the guidance for next year. The rest of the business, which is the majority, [$55 billion] base for last year is only growing 3.6%. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2025 / 9:30PM, CSCO.OQ - Q1 2026 Cisco Systems Inc Earnings Call Why don't we see greater growth with what we have in Wi-Fi and campus. And security, why don't we see more than 3.5% growth for the rest of the business?

Question: James Fish - Piper Jaffray Inc - Analyst : Hey, guys. Good stuff on the networking side. I guess, how for long or what's the penetration of Silicon One into the product portfolio now? And as a stand-alone product, what are you guys seeing as why Silicon One starting to gain some of that traction with the hyperscalers and what it can do versus the custom solutions that are being talked about as well as Broadcom's latest chips? And just as a follow-up, why is it now that Splunk is starting to see some of those greater shifts to cloud at this point? And any sense of the impact it had on the security number this quarter? Thanks, guys.

Question: David Vogt - UBS - Analyst : Great. Thanks, guys, for taking my questions. One, maybe just to start, just to pivot the campus, I think in the deck in your prepared remarks, you talked about the next-gen solutions ramping faster than prior product launches. Can you give us a sense for like what's driving that? Is it a competitive -- is it just better for competitive products? Are you seeing disruption from some of the smaller players, like number two and number three in the marketplace given the dynamics in that integration there? Just more color there would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2025 / 9:30PM, CSCO.OQ - Q1 2026 Cisco Systems Inc Earnings Call And then along those lines, maybe when you think about the campus market, I do know you mentioned in the prepared remarks, there's a lot of end-of-life product out there. How do you think about that as it relates to some of those customers, I think, are government customers is not public sector customers put in the context of what's going on actually in D.C. right now. So is that part of the strategy going forward, just to upgrade those as many starts to free up and get this first? I'm just trying to marry the two markets here, both campus and government, what's going on there?

Question: Samik Chatterjee - JPMorgan Chase & Co - Analyst : Hi. Thanks for taking my questions. Chuck, maybe both questions on the AI front itself. Firstly, on optical, you talked about the strong growth you're seeing in Acacia. Could you just talk about optical more broadly in terms of the demand you're seeing inside the data center versus outside the data center in terms of like pull-through from scale across, et cetera? And what -- how you -- how is Cisco is participating in both of those aspects? And then for the follow-up, for the I heard you say twice the number of orders in terms of AI orders from the same customer group in fiscal '26 and the sovereign customers, it looks like you are progressing on the engagement, but haven't seen orders as much yet. So that would be upside to REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2025 / 9:30PM, CSCO.OQ - Q1 2026 Cisco Systems Inc Earnings Call that number? I just wanted to clarify that the sovereigns aren't included as those orders come through that $4 billion number that you're highlighting for orders. Thank you.

Question: Michael Ng - Goldman Sachs Group Inc - Analyst : Hey, good afternoon. Thanks for the question. I just have two. First, the G42 partnership, it looked like it was a full rack solution using AMD chips. I was just wondering if you have some preferred partnership with AMD. Should we see more of that as we head out through the year? And how important is that combination of compute and networking as rack solutions potentially get more important? And then second, I wanted to ask about some of the channel partner program changes that are supposed to kick off next year. Any feedback or comments just on the drivers of that change and what you expect to be the result on the business going forward? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2025 / 9:30PM, CSCO.OQ - Q1 2026 Cisco Systems Inc Earnings Call

Question: Antoine Chkaiban - New Street Research LLP - Analyst : Hi, thank you very much for taking my question. I'd love to follow up about Cisco Unified Edge. How large do you think that opportunity can be relative to the large-scale multi-gigawatt cloud data centers and I think you mentioned use cases in retail, health care, manufacturing, if you can double-click on each of them? And what's the preferred deployment strategy for Edge AI Compute. Do you think that's more an opportunity for players with Edge assets like CDN or operators? Or do you think that's more something enterprises will deploy on-prem? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2025 / 9:30PM, CSCO.OQ - Q1 2026 Cisco Systems Inc Earnings Call And maybe as a follow-up, so is Cisco planning to participate to the scale-up opportunity? And will that be material? And what partnerships would you be forming to do that? Thank you.

Question: Simon Leopold - Raymond James - Analyst : Thank you for taking the question. I've got the two as well. One is, I want to understand what's motivating the customers in this campus refresh. And where I'm coming from is we had the backlog flush after the pandemic. So 2023 was a phenomenal year for your campus business. And so I assume the embedded base is relatively young. So help me understand the motivation or why you're succeeding here? And the second question is, we've heard that other governments, international governments, state and local governments have picked up more of the slack with the federal challenges you saw earlier this year. Could you unpack what you're seeing, particularly on the international governments? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2025 / 9:30PM, CSCO.OQ - Q1 2026 Cisco Systems Inc Earnings Call

Question: Ben Bollin - Cleveland Research Co LLC - Analyst : Good afternoon, everyone. Thanks for getting me in. A bigger picture question for you, Chuck. When you look at the current AI build-out, how do you think about this relative to in the late '90s with respect to the Internet build-out. And interested in your thoughts on durability, sustainability, integrity, just how you're contemplating and thinking about all these orders and the optionality going forward?