Cisco Q3 EPS Beat and $15.35B Revenue Topped Estimates, Margins Guided Lower
Cisco reported Q3 EPS of $1.04 beating the $1.02 consensus and revenue of $15.35 billion topped estimates of $15.11 billion. However, fiscal Q3 gross margin guidance of 65.5%–66.5% fell short of the 68% forecast due to higher memory costs and a heavier hardware mix.
1. Q3 Earnings and Revenue
Cisco reported fiscal third-quarter EPS of $1.04 versus the $1.02 consensus and delivered $15.35 billion in revenue, outpacing $15.11 billion estimates. Networking revenue grew 21% year-over-year and orders accelerated above 20%, reflecting demand strength.
2. Margin Guidance and Cost Pressures
The company guided Q3 gross margins to 65.5%–66.5%, below the 68% analyst forecast, attributing the shortfall to a heavier hardware mix and memory inflation. Management outlined pricing actions and secured long-term memory supply agreements through fiscal 2026 to stabilize costs.
3. Market Reaction and Outlook
Shares plunged about 11.6%, erasing $39.4 billion in market value as investors weighed margin headwinds against the earnings beat. Peer hardware names Dell and HP fell 9.2% and 6.2% respectively, underscoring industrywide input-cost challenges alongside AI-driven software concerns.