Cisco’s first quarter results for 2025 were well received by the market, reflecting above-consensus revenue and profitability. Management linked the quarter’s performance to a surge in AI infrastructure orders, a rebound in networking and security products, and disciplined operational execution. CEO Chuck Robbins highlighted, “We received AI infrastructure orders from web-scale customers in excess of $600 million,” noting this surpassed Cisco’s initial annual target a quarter early. The company also called out strong demand from enterprise and public sector clients, as organizations continued network upgrades and modernization.
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Cisco (CSCO) Q1 CY2025 Highlights:
- Revenue: $14.15 billion vs analyst estimates of $14.06 billion (11.4% year-on-year growth, 0.7% beat)
- Adjusted EPS: $0.96 vs analyst estimates of $0.92 (4.6% beat)
- Adjusted EBITDA: $5.51 billion vs analyst estimates of $5.34 billion (38.9% margin, 3.2% beat)
- Revenue Guidance for Q2 CY2025 is $14.6 billion at the midpoint, roughly in line with what analysts were expecting
- Management raised its full-year Adjusted EPS guidance to $3.78 at the midpoint, a 1.9% increase
- Operating Margin: 22.6%, up from 17.2% in the same quarter last year
- Annual Recurring Revenue: $30.6 billion at quarter end, up 4.8% year on year
- Billings: $14.26 billion at quarter end, up 5.5% year on year
- Market Capitalization: $273.6 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Cisco’s Q1 Earnings Call
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Meta Marshall (Morgan Stanley) asked about customer buying behavior amid tariff uncertainty. CEO Chuck Robbins reported no broad-based pull-forward or delay, noting, “We haven’t seen any customers really fundamentally slowing down.”
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Tal Liani (Bank of America) questioned if 2025 could be a peak year for cloud capital spending. Robbins responded that global sovereign cloud projects and enterprise AI deployments suggest several years of sustained demand.
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Aaron Rakers (Wells Fargo) inquired about the scale of Middle East opportunities and the ramp of new data center switching products. Robbins clarified that recent AI orders did not include Saudi sovereign cloud deals, which are just beginning, and highlighted ongoing customer demand for G200 silicon-based systems.
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Matthew Niknam (Deutsche Bank) asked about Cisco’s competitive position as hyperscalers transition from InfiniBand to Ethernet. Robbins credited Cisco’s Silicon One technology and ability to deliver both systems and silicon as key differentiators winning share among the largest cloud providers.
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Amit Daryanani (Evercore ISI) pressed for clarity on AI order growth rates and margin guidance. Robbins cautioned that AI orders are “non-linear in nature,” while CFO Scott Herren explained that tariff impacts were the primary reason for projected margin fluctuations next quarter.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) progress on sovereign cloud opportunities and execution of large-scale partnerships in regions like the Middle East, (2) adoption rates for new networking and security products such as WiFi 7 and Hypershield, and (3) Cisco’s ability to manage tariff headwinds without eroding margins. Successful integration of Splunk and expansion of embedded security solutions will also be key signposts for the company’s strategic execution.
Cisco currently trades at $69.24, up from $61.29 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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