A month has gone by since the last earnings report for Cisco Systems (CSCO Quick QuoteCSCO - Free Report) . Shares have added about 5.5% 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 latest earnings report in order to get a better handle on the important drivers.

CSCO Q3 Earnings Beat Estimates, Strong Networking Aids Top Line

Cisco Systems reported third-quarter fiscal 2026 non-GAAP earnings of $1.06 per share, beating the Zacks Consensus Estimate by 1.92%. The figure increased 10% year over year.

Revenues of $15.841 billion topped the consensus mark by 1.71% and grew 12% year over year. Annualized recurring revenues were $31.2 billion at the end of the reported quarter, up 2%, underscoring the continued buildout of subscription and maintenance streams.

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 Rides Networking Strength Across Key Platforms

Networking revenues were $8.82 million, up 25% year over year, highlighting accelerating demand for the company’s switching and routing portfolio.

That strength aligned with management’s view that customers are modernizing networks to handle AI-driven traffic growth and campus refresh cycles. Cisco pointed to record campus networking orders growing more than 25% year over year and data center switching orders up more than 40%, supported by strong uptake in wireless and campus switching.

Cisco Scales AI Infrastructure With Systems and Optics

Cisco’s hyperscaler AI infrastructure business remained a major engine of demand. AI infrastructure orders taken from hyperscalers were $1.9 billion in the quarter, helping lift the year-to-date total to $5.3 billion.

Reflecting that momentum, Cisco raised expected hyperscaler AI orders to approximately $9 billion for fiscal 2026 and lifted expected AI infrastructure revenue from hyperscalers to about $4 billion. Cisco also highlighted a balanced mix between Silicon One-based networking systems and optics, alongside multiple hyperscaler design wins during the quarter.

CSCO Sees Mixed Trends Outside Core Networking

Security revenues were $2 billion, essentially flat year over year, as gains in newer offerings continued to be weighed down by declines in prior-generation products.

Management noted progress in refreshed security products and highlighted that over 1,000 new customers purchased products such as Secure Access, XDR, Hypershield and AI Defense in the quarter, bringing net new customers since launch to roughly 5,000. At the same time, Cisco reiterated that Splunk’s transition toward cloud subscriptions from on-premise deals is creating a near-term revenue drag, even as the company targets more than 1,000 new Splunk customer logos in fiscal 2026.

Observability revenues were $269 million, up 3% year over year.

Cisco Holds Operating Discipline Amid Cost Pressures

In the third quarter of fiscal 2026, non-GAAP gross margin was 66%, down 260 basis points (bps) year over year. Non-GAAP product gross margin was 64.3%, down 330 bps, partially offset by non-GAAP services gross margin of 71.6%, up 30 bps.

In the third quarter of fiscal 2026, Cisco reported total non-GAAP operating expenses of $5.05 billion, up 4.6% year over year. As a percentage of revenues, operating expenses declined 220 bps year over year.

Cisco still delivered operating leverage, posting a non-GAAP operating margin of 34.2% on non-GAAP operating expenses of $5 billion.

CSCO’s Balance Sheet Details

As of April 25, 2026, cash and cash equivalents and investments totaled $16.64 billion, which increased from $15.8 billion as of Jan. 24, 2026. Total debt was $31.30 billion as of April 25, 2026. 

The remaining performance obligations (RPO) at the end of the third quarter of fiscal 2026 were $43.5 billion, up 4% year over year. Product RPO increased 6% year over year, of which long-term RPO was $11.7 billion, up 6% year over year. Services RPO was up 2% year over year.

The company returned $2.912 billion to shareholders, including dividends of 42 cents per share and $1.252 billion in share repurchases, with $9.6 billion remaining under the repurchase authorization.

CSCO Lifts Outlook and Details Restructuring Plans

Cisco’s guidance pointed to a strong finish to fiscal 2026. For the fourth quarter of fiscal 2026, the company expects revenues of $16.7 billion to $16.9 billion and non-GAAP earnings of $1.16 to $1.18 per share.

For fiscal 2026, management raised its outlook to revenue of $62.8 billion to $63.0 billion and non-GAAP earnings of $4.27 to $4.29 per share. 

Cisco also announced a restructuring plan to reallocate resources toward silicon, optics, security and AI, and expects up to $1 billion of pretax charges, including roughly $450 million in the fourth quarter of fiscal 2026, with the remainder in fiscal 2027.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted 7.44% due to these changes.

VGM Scores

Currently, Cisco has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock has a score of F on the value side, putting it in the bottom 20% 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 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.