Cisco Systems reported revenue of $15.3 billion, a 10 percent increase year-over-year, in its fiscal second-quarter 2026.
The double-digit growth in Cisco revenue was driven by a surge in demand for AI infrastructure and a significant campus networking refresh cycle.
Cisco raised its full-year 2026 revenue guidance to a range of $61.2 billion – $61.7 billion.
Cisco’s results showed a sharp divergence between its high-growth networking segment and its transitioning security and services businesses:
Networking ($8.29 Billion, +21 percent): The standout segment, driven by record demand for AI infrastructure and “next-generation” switching and routing products. Networking orders grew over 20 percent during the quarter.
Security ($2.02 Billion, -4 percent): This segment saw a decline, which management attributed to a transition from older on-premise products to cloud-based subscriptions (including Splunk integration). However, newer “secure access” solutions showed growth.
Collaboration ($1.05 Billion, +6 percent): Returned to growth, led by double-digit increases in device sales and steady performance in Webex and cloud contact center services.
Observability ($277 Million, Flat): Remained stable year-over-year as the company continues to integrate its full-stack observability offerings.
Services ($3.71 Billion, -1 percent): Slipped slightly, though software and subscription-based service revenue remained a core priority.
Growth Strategy
Cisco is repositioning itself as a fundamental provider for the “AI era” through several key initiatives:
AI Infrastructure Dominance: Cisco reported $2.1 billion in AI orders from hyperscalers in Q2 alone (up from $1.3 billion in Q1). The company expects over $5 billion in AI orders for the full fiscal year, powered by its Silicon One chips and high-performance optics.
Campus Networking Refresh: A “multi-year, multi-billion-dollar” cycle is underway as enterprises upgrade their old Catalyst generations to support modern AI-native and secure networking capabilities.
Software & Subscriptions: The strategy to move toward recurring revenue is succeeding; subscriptions now account for 51 percent of total revenue, and total Annual Recurring Revenue (ARR) reached $31 billion.
M&A and Innovation: Cisco closed acquisitions of NeuralFabric (Enterprise AI platform) and EzDubs (AI software) during the quarter to further bolster its AI and automation capabilities.
RAJANI BABURAJAN
