Cisco boosts revenue forecast, shares surge

Cisco, a leading networking hardware manufacturer, has reported its fiscal second-quarter results for 2025, showing significant growth and exceeding market expectations. The company’s performance was notably boosted by its recent acquisition of Splunk and strong demand for AI infrastructure.

Key Performance Metrics: Cisco reported fiscal second-quarter earnings of 94 cents per share adjusted and revenue of $13.99 billion, surpassing analyst expectations.

• Revenue grew 9% year-over-year, marking a turnaround after four consecutive quarters of decline
• The company received orders exceeding $350 million for artificial intelligence infrastructure during the quarter
• Net income decreased 8% to $2.43 billion, or 61 cents per share

Strategic Acquisition Impact: The integration of Splunk, acquired in March 2024 for $27 billion, has delivered better-than-expected results for Cisco’s business performance.

• Splunk’s contribution drove the security unit’s revenue up 117% to $2.11 billion
• Without Splunk’s addition, Cisco’s total revenue would have decreased by 1% year over year
• The acquisition became accretive to adjusted earnings per share earlier than anticipated

Divisional Performance: The company’s core networking division showed mixed results while the security segment demonstrated substantial growth.

• Networking division revenue reached $6.85 billion, down 3% but still exceeding analyst expectations
• Security unit revenue of $2.11 billion surpassed the projected $2.01 billion
• AI infrastructure orders indicate growing momentum in emerging technology segments

Forward Guidance: Cisco has revised its fiscal year 2025 outlook upward, reflecting increased confidence in its business trajectory.

• Adjusted earnings forecast raised to $3.68-$3.74 per share, up from previous guidance of $3.60-$3.66
• Revenue projection adjusted to $56-$56.5 billion, exceeding analyst estimates of $55.99 billion
• Stock price rose approximately 6% in extended trading following the announcement

Market Context: Despite broader economic uncertainties, Cisco’s stock has outperformed major market indices in early 2025.

• Shares have gained 5% year-to-date, compared to the S&P 500’s 3% increase
• The company appears largely insulated from federal government efficiency initiatives due to its strong Defense Department relationship
• Management reports no significant impact from pending tariff changes on customer ordering patterns

Looking Ahead: While Cisco’s improved performance and strategic acquisition of Splunk demonstrate positive momentum, the decline in core networking revenue suggests the company may need to continue diversifying its revenue streams and expanding its AI capabilities to maintain growth trajectory.