Cisco Systems (CSCO) Upgrades Revenue Forecast on Better-Than-Expected Q3 Results"

Cisco Systems (NASDAQ:CSCO) has announced an upgrade to its annual revenue forecast following the release of its fiscal third-quarter results, which surpassed market expectations despite a slight dip in revenue. The network equipment maker reported firmer margins, which helped offset the decline in revenue and led to a surge in its share price during premarket trading.

In the third quarter, Cisco reported adjusted earnings per diluted share (EPS), slightly lower than the previous year, while revenue decreased by 13% to $12.7 billion. Chief Financial Officer Scott Herren attributed the revenue decline to an ongoing inventory backlog. Despite experiencing a decline in revenue for two consecutive quarters, Goldman Sachs analysts indicated that order demand is stabilizing and anticipated a return to normal seasonality at the beginning of Cisco's 2026 financial year.

Wall Street estimates had predicted adjusted EPS of $0.83 on revenue of $12.48 billion for Cisco's fiscal third quarter. Notably, the company's gross margin improved to 65.1% from 63.4% year-over-year, driven by increased spending from enterprise clients and mitigated supply chain issues. Additionally, revenue from Splunk (NASDAQ:SPLK), a company acquired by Cisco to enhance its cybersecurity offerings, contributed $413 million.

Looking forward, Cisco raised its revenue forecast to a range of $53.6 billion to $53.8 billion, up from the previous guidance of $51.5 billion to $52.5 billion. Full-year adjusted EPS is expected to be between $3.69 and $3.71, compared to the previous forecast of $3.68 to $3.74 provided in February.

Cisco's better-than-expected performance in the third quarter and the upward revision of its annual revenue forecast demonstrate resilience and strategic adaptability amid ongoing market challenges, positioning the company for continued growth and value creation in the coming quarters.

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