A month has gone by since the last earnings report for Cisco Systems (CSCO Quick QuoteCSCO - Free Report) . Shares have added about 3.7% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Cisco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Cisco Q2 Earnings Top Estimates, Revenues Up Y/Y

Cisco Systems reported second-quarter fiscal 2026 non-GAAP earnings of $1.04 per share, beating the Zacks Consensus Estimate by 1.96%. The figure increased 10.6% year over year.

Revenues of $15.35 billion surpassed the Zacks Consensus Estimate by 1.49%. The top line increased 9.7% year over year. Total Annual Recurring Revenues (ARR) were $31 billion, up 3% with product ARR growth of 6%. Total subscription revenues were $7.83 billion and represented 51% of Cisco’s total revenues. Total software revenue increased 36.9% year over year to $5.6 billion.

CSCO’s Q2 Top-Line Details

Revenues from Networking in the second quarter of fiscal 2026 were $8.29 billion, up 21% on a year-over-year basis. Security revenues were $2.01 billion, down 4% year over year. Collaboration revenues were $1.05 billion, up 6% year over year. Observability revenues were $277 million, which was in line year over year. 

Total Product revenues in the second quarter of fiscal 2026 were $11.64 billion, comprising 75.8% of Cisco’s total revenues. On a year-over-year basis, product revenues increased 13.8%. Service Revenues were $3.70 billion, comprising 24.2% of Cisco’s total revenues and down 1.3% on a year-over-year basis. 

Region-wise, the Americas’ revenues increased 8% year over year to $8.84 billion. EMEA (Europe, Middle East, and Africa) revenues climbed 15% year over year to $4.42 billion. APJC (Asia Pacific Japan China) revenues climbed 8% year over year to $2.08 billion. 

In the second quarter of fiscal 2026, AI Infrastructure orders from webscale customers exceeded $2.1 billion.

CSCO’s Q2 Operating Details

Second-quarter fiscal 2026 non-GAAP gross margin was 67.5%, which contracted 120 basis points (bps) year over year. On a non-GAAP basis, the product gross margin decreased 90 bps on a year-over-year basis to 50.4%. Service gross margin decreased 210 bps to 17.1%. 

In the second quarter of fiscal 2026, Cisco reported total non-GAAP operating expenses of $5.04 billion, up 6.2% year over year. As a percentage of revenues, operating expenses declined 110 bps year over year. 

Consequently, CSCO reported a non-GAAP operating income of $5.31 billion, up 9.3% year over year. Operating margin contracted 10 bps year over year to 34.6%.

CSCO’s Balance Sheet Details

As of Jan. 24, 2026, cash and cash equivalents and investments totaled $15.8 billion, which increased from $15.7 billion as of Oct. 25, 2026. 

Total debt was $30 billion as of Jan. 24, 2026, compared with $28.1 billion as of Oct. 25, 2025. 

The remaining performance obligations (RPO) at the end of the second quarter of fiscal 2026 were $43.4 billion, up 5% year over year. Product RPO increased 8% year over year, of which long-term RPO was $11.8 billion, up 11% year over year. Services RPO was up 2% year over year. 

In the second quarter of fiscal 2026, CSCO returned $3 billion to stockholders through share buybacks and dividends.

CSCO Offers Positive Guidance

For the third quarter of fiscal 2026, Cisco expects non-GAAP earnings between $1.02 and $1.04 per share. Revenues are expected to be in the range of $15.4 billion-$15.6 billion. Non-GAAP gross margins are expected to be between 65.5% and 66.5%. 

Non-GAAP operating margin is anticipated to be between 33.5% and 34.5%. For fiscal 2026, Cisco expects non-GAAP earnings between $4.13 and $4.17 per share. The company expects revenues between $61.2 billion and $61.7 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates review.

VGM Scores

At this time, Cisco has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a score of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Cisco has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.