Cisco Systems Reports Q2 Fiscal 2025 Revenue Growth of 9% to $13.99 Billion

Cisco Systems, Inc. reported its financial results for the second quarter and first six months of fiscal 2025, revealing a total revenue of $13.99 billion for the quarter, a 9% increase from $12.79 billion in the same period last year. For the first half of the fiscal year, revenue reached $27.83 billion, up 1% from $27.46 billion. The company's net income for the quarter was $2.43 billion, down 8% from $2.63 billion year-over-year, while net income for the first six months fell 18% to $5.14 billion from $6.27 billion. Diluted earnings per share were $0.61 for the quarter, compared to $0.65 in the prior year.

The increase in revenue was primarily driven by a significant rise in product sales, which grew by 11% to $10.23 billion, while services revenue increased by 6% to $3.76 billion. Notably, the security product category saw a remarkable 117% increase in revenue, largely attributed to the acquisition of Splunk, which also contributed to a 23% rise in total subscription revenue. However, networking product revenue declined by 3%, reflecting challenges in that segment.

Cisco's operational expenses rose, with research and development costs increasing by 18% to $2.30 billion, and sales and marketing expenses up 9% to $2.67 billion. The total operating expenses for the quarter were $5.99 billion, a 13% increase compared to the previous year. The company also incurred restructuring charges of $675 million in the first half of the fiscal year as part of a plan to streamline operations and invest in growth areas. This restructuring is expected to impact approximately 7% of Cisco's global workforce.

In terms of operational metrics, Cisco's accounts receivable decreased by 15% to $5.67 billion, while inventories fell by 13% to $2.93 billion. The company reported a total cash and cash equivalents balance of $8.56 billion, up from $7.51 billion at the end of the previous fiscal year. Cisco's remaining performance obligations increased by 1% to $41.27 billion, indicating a stable demand outlook. The company plans to continue investing in key growth areas, including artificial intelligence and cybersecurity, to drive long-term profitability.

Looking ahead, Cisco remains cautious about the macroeconomic environment but is optimistic about its strategic priorities. The company aims to leverage its technology portfolio to assist customers in their digital transformations while navigating the competitive landscape. Cisco's management emphasized the importance of innovation and operational efficiency as it seeks to enhance its market position and deliver value to shareholders.