CSCO 10-K & 10-Q changes, risk factors and insider trading

Our operations can be difficult to predict because our operatingresults resultsof operations may fluctuate in future periods.

Our operatingresults resultsof operations have been in the past, and will continue to be, subject to quarterly and annual fluctuations as a result of numerous factors, some of which may contribute to more pronounced fluctuations in an uncertain global economic environment. Consequently, our results of operations are not a reliable indicator of future results. These factors include:

•ChangesCustomer patterns, such as fluctuating demand for our products and services, especially with respect to service providers and cloud customers; the timing, size, and mix of orders from customers; and changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue

•Our ability to maintain appropriate inventory levels and purchase commitments and manage manufacturing and customer lead times

•TheIndustry trends such as consolidation among our competitors and our customers, and the introduction and market acceptance of new technologiestechnologies, products and products,technology standards, and our success in these new and evolving markets,markets and inwith emerging technologies, including AI, as well as the adoption of new standardsAI

•Variations in sales channels, product costs, or mix of products sold,sold or(e.g., hardware and software sales, including mix of direct salescloud-based and indirecton-premise software sales)

•The ability of our direct sale customers, channel partners, contract manufacturers and suppliers to obtain financing orfinancing, to fund capital expenditures, especially in the event of direct sale customers, channel partner, contract manufacturer or supplierwithstand financial problems

•Our ability to achieve targeted cost reductions and anticipated benefits from our investments

As a consequence, operating results for a particular future period are difficult to predict, and, therefore, prior results are not necessarily indicative of results to be expected in future periods. Any of the foregoingthese factors, or any other factorsothers discussed elsewherein herein,this report, could materially harm our business, results of operations, andor financial condition.

Our operatingresults resultsof operations may be negatively impacted by unfavorable economic and market conditions and the uncertain geopolitical environment.

The global macroeconomic environment can be challenging and uncertain. Challenging global economic conditions, including tariffs or other trade barriers,barriers or disruptions, rising inflation, or other changes, have from time to time contributed, and may continue to contribute, to slowdowns in the communications and networking industries at large, as well as in specific segments and markets in which we operate, resulting in: reduced demand for our products asdue ato result of continued constraints onconstrained IT-related capital spending by our customers, particularly service providerprovider, and cloud as well ascloud, enterprise and other customer markets; increased price competition for our products, not only from our competitors but also as a consequence of customers disposing of unutilized products; risk of excess and obsolete inventories; risk of supply constraints; risk of excess facilities and manufacturing capacity; and higher overhead costs as a percentage of revenue and higher interest expense.

The global macroeconomic environment can be challenging and uncertain. For example,Furthermore, the impact of uncertainty regarding global central bank monetary policy, the instability in the geopolitical environment in many parts of the world (including as a result of the ongoing Russia and Ukraine war, Middle East conflicts and wars, and China-Taiwan relations), government-related disruptions or shutdowns, and other disruptions may continue to put pressure on global economic conditions.

resultEconomic conditions specific to one or more segments or customer markets may also affect our results of theoperations on-goingin Russiathose and Ukraine war, Middle East conflicts and wars, and China-Taiwan relations), and other disruptions may continue to put pressure on global economic conditions.segments. If global economic and market conditions were to deteriorate, we may experience material harm to our business, operatingresults results,of andoperations, or financial condition.

Our revenue for a particular period is difficult to predict, and a shortfall in revenue may harm our operatingresults results.of operations.

AsOur a result of a variety of factors discussed in this report, ourquarterly revenue for a particular quarter is difficult to predict, which can be exacerbated during periods when thechallenging global macroenvironment is challengingmacroenvironments and can result inresulting market uncertainty. OurAs in prior periods, we may experience a decline or slower revenue may grow at a slowergrowth rate than in past periods, or decline as it did in certain prior periods on a year-over-year basis. Our ability to meet financial expectations could also be negatively impacted if the nonlinear sales patternor shipping patterns seen in some of our pastprior quarters recursoccur again in future periods. WeNonlinear shipping patterns have alsooccurred experienced periods of time during whichwhen shipments have exceeded net bookings or manufacturing or other issues have delayed shipments, leading to nonlinearity in shipping patterns. In addition to making it difficult to predict revenue for a particular period,period. nonlinearityFurthermore, innonlinear or irregular shipping patterns can increase costs, becausedue irregularto shipment patterns result inresulting periods of underutilized capacity and periods in whichcapacity, overtime expensesexpenses, may be incurred, as well as inand potential additional inventory management-related costs. In addition, to the extent that manufacturing issues and any related component shortages result in delayed shipments inarising thefrom future,manufacturing, andcomponent shortages, or any other issues, particularly in periods in which our contract manufacturers are operating at higher levels of capacity, itcould isnegatively possible thatimpact revenue for a quarter could be negatively impacted if such matters occur and are not remediated within the same quarter.

The timing of large orders can also have a significant impact on our business and operatingresults resultsof operations from quarter to quarter. From time to time, we receive large orders that have a significant effect on our operatingresults resultsof operations in the period in which the order is recognized as revenue. The timing of such orders is difficult to predict, and the timing of revenue recognition from such orders may affect period to period changes in revenue. As a result, our operatingresults resultsof operations could vary materially from quarter to quarter based on the receipt of such orders and their ultimate recognition as revenue. LongerAdditionally, longer than normal manufacturing lead times in the past have caused, and in the future could cause, some customers to place the same or a similar order multiple timesorders within our various sales channels and to cancel the duplicative orders upon shipment or receipt of the product, or to also place orders with other vendors with shorter manufacturing lead times. Such multiple ordering (along with other factors) or risk of order cancellation may cause difficulty in predicting our revenue. Further, our efforts to improve manufacturing lead-time performance may result in more variability and less predictability in our revenue and operatingresults results.of operations. In addition, when facingmanaging component supply-related challenges, we have in the pastpast, and may in the futurefuture, increase our efforts in procuring components in order to meet customer expectations, which in turn contributes to an increase in inventory and purchase commitments. These increases in our inventory and purchase commitments to shorten lead times could also lead to potential material excess and obsolete inventory charges or other negative impacts to our product gross margin in future periods if product demand significantly decreases for a sustained duration, we are unable to generate demand for certain products planned for development, or we are unable to continue to mitigate the remaining supply chain exposures. Product demand conditions for future periods can be difficult to predict or may persist longer than anticipated. WeBecause we plan our operating expenseexpenses levelsprimarily based primarily on forecasted revenue levels.levels Theseand expensesthese costs and the impact of long-termlong term commitments are relatively fixed in the short term.term, Aa revenue shortfall infrom revenueshort couldterm leadbusiness tochanges operatingor results being below expectations because weotherwise, may notprevent beus ablefrom to quickly reduceadjusting these fixed expenses inquickly responseenough to short-termmeet businessfinancial changes.expectations. Any of the above factors could materially harm our operations and financial results. For additional information and a further discussion of impacts and risks related to our inventory commitments and our purchase commitments with contract manufacturers and suppliers, see “Results of Operations—Product Gross Margin—Supply Chain Impacts and Risks”, “Liquidity and Capital Resources—Inventory Supply Chain” under Item 7 and Note 14 to the Consolidated Financial Statements of this report.

Supply chain issues, including financial problems of contract manufacturers or component suppliers, or a shortage of adequate component supply or manufacturing capacity that increase our costs or cause a delay in our ability to fulfill orders, could have an adverse impact on our business and operatingresults results,of operations, and our failure to estimate customer demand properly or significant purchase commitments made in anticipation of such demand may result in excess or obsolete component supply,supply or other charges, which could negatively impact our gross margins.

The fact that we do not own or operate the bulk of our manufacturing facilities and that we are reliant on our extended supply chain could have an adverse impact on the supply of our products and on our business and operatingresults results.of operations. Financial problems of either contract manufacturers or component suppliers, reservation of manufacturing capacity at our contract manufacturers by other companies, and industry consolidation occurring within one or more component supplier markets, such as the semiconductor market, in each case, could either limit supply or increase costs.

A reduction or interruption in supply, including disruptions on our global supply chain, caused in part by geopolitical tensions; public health emergencies, geopolitical tensions (including as a result of China-Taiwan relations, increasing tariffs or any other trade tensions) or aemergencies; significant natural disasterdisasters (including as a result of climate change); tariffs or other trade barriers or disruptions; a significant increase in the price of one or more components (including as a result of inflation); a failure to adequately authorize procurement of inventory by our contract manufacturers; a failure by suppliers to deliver on our contracts; IT-related failure or disruption; a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs; or a decrease in demand for our products could materially harm our business, operatingresults results,of andoperations, or financial condition and could materially damage customer relationships. Furthermore, as a result of binding price or purchase commitments with suppliers, we may be obligated to purchase components at prices that are higher than those available in the current market.market Inor thein eventquantities that exceed our actual requirements if customer demand is lower than anticipated, delayed or shifts to different products or technologies. If we becomeare committed to purchase components at prices in excess of the current market price when the components are actually used, or in quantities in excess of our needs, our gross margins could decrease.decrease and we could incur excess or obsolete inventory, losses on purchase commitments or other charges. In addition, vendors may beprioritize under pressure to allocate product to certainother customers for business, regulatoryregulatory, or political reasons,reasons and/or demand changesprice in agreed pricingadjustments as a condition of supply. Although we have generally secured additional supply or taken other mitigation actions when significant disruptions have occurred, if similar situations occur in the future, they could materially harm our business, results of operations,operations andor financial condition.

Our growth and ability to meet customer demands depend in part on our ability to obtain timely deliveries of parts from our suppliers and contract manufacturers. We have experienced component shortages in the past, including shortages caused by manufacturing process issues, that have affected our operations, including longer than normalextended lead times. Additionally, we may in the future experience a shortage of certain component parts as a result of our own manufacturing issues, manufacturing issues or capacity problems at our suppliers or contract manufacturers, capacity problems experienced by our suppliers or contract manufacturers including capacity or cost problems resulting from industry consolidation,consolidation or otherwise, or strong demand for those parts. Growth in the economy is likely to create greater pressures on us and our suppliers to accurately project component demand and to establish optimaloptimize component levels and manufacturing capacity, especially for labor-intensive components, components for which we purchase a substantial portion of the supply, or the re-ramping of manufacturing capacity for highly complex products. During periods of shortages or delays, including delays theresulting pricefrom ofus componentsnot accurately forecasting our needs, component prices may increase, or the components may not be available at all,all. andFor these or other reasons, we may also encounter shortages if we do not accurately anticipate our needs. We may not be able to secure enough components at reasonable prices or of acceptable quality to build new products in a timely manner in the quantities or configurations needed. Accordingly, our revenue and gross margins could suffer until other sources can be developed.

Although in many cases we use standard parts and components for our products, certain components are presently available only from a single sourcelimited or limitedsingle sources, and a global economic downturn and related market uncertainty could negatively impact the availability of components from one or more of these sources, especially during times when there are supplier constraints based on labor and other actions taken during economic downturns. We may not be able to diversify sources in a timely manner, which could harm our ability to deliver products to customers and seriously impact present and future sales.

We believe thatfuture wesupply chain challenges may beinclude: facedrapid with the following challengesgrowth in the future: new markets in which we participate may grow quickly,participate, which may make it difficult to quickly obtain significant component capacity; as we acquire companies and new technologies, we may be dependentdependency on unfamiliar supply chains or relatively small supply partners for the companies and new technologies we acquire; and we face competition for certain components that are supply-constrained from existing competitors and companies in other markets.

Manufacturing capacity and component supply constraintsconstraints, couldsuch as the memory shortages experienced in fiscal 2026, remain significant risks, and we expect to continue to be significantadversely issuesimpacted forby usthe asrising theycosts haveof beencurrently inconstrained certainmemory prior periods.components. We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to improve manufacturing lead-time performance and to help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by us or that establish the parameters defining our requirements. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed. WhenIn facingrecent component supply-related challenges,periods, we have increased our efforts in procuring components in order to meet customer expectations, such as we have historically done in past periods due to supply constraints, which inhas turn contributescontributed to an increase in inventory and purchase commitments. InFor example, in fiscal 2025,2025 and 2026, we entered into additional purchase commitments with contract manufacturers and suppliers related to manufacturing Cisco Silicon OneOne, memory components and other products to meet expected demand from webscalehyperscalers and other customers. We expect to continue entering into these additional purchase commitments in fiscal 2026.2027. We have also increased inventory deposits and prepayments with certain contract manufacturers and suppliers in connection with these arrangements. These past efforts and additional purchase commitments and prepayments significantly increased our supply chain exposure, which resulted in negative impacts to our product gross margin in recent periods and may result in further negative impacts in future periods. On August 26, 2025, we settled a legal dispute with a supplier relating to purchase obligations arising under long-term supply arrangements, which resulted in a charge to product cost of sales, which is described in Note 21 to the Consolidated Financial Statements. The remaining and newThese supply chain exposures include potential material excess and obsolete inventory, losses on purchase commitments or other charges if product demand significantly decreases or is delayed for a sustained duration, we are unable to generate demand for certain products planned for development, customer requirements or technology architectures change or we are otherwise unable to mitigate these supply chain exposures. Product demand conditions for future periods can be difficult to predictpredict, orparticularly mayin persistrapidly longerevolving thansectors anticipated.such as AI infrastructure. For additional information and a further discussion of impacts and risks related to our inventory commitments and our purchase commitments with contract manufacturers and suppliers, see “Results of Operations—Product Gross Margin—Supply Chain Impacts and Risks”, “Liquidity and Capital Resources—Inventory Supply Chain” and Note 13 to the Consolidated Financial Statements.

Although our product gross margin increased in fiscal 2025, ourOur level of product gross margins has declined in certain prior periods,periods and could decline in future periods due to adverse impacts from various factors, including:

•Changes in customer, geographic, or product mix, including the mix of hardware and software sales (and the mix of cloud-based and on-premise software sales)

•The timing of revenue recognition and revenue deferrals or increased amortization of purchased intangible assets, especially from acquisitions

•Increased costs (including royalty or royalty costs and those caused by tariffs or economic conditions, including inflation), loss of cost savings or dilution of savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand or if the financial health of either contract manufacturers or suppliers deteriorates

•Lower than expected benefits from value engineering and our ability to reduce production costs

Changes in service gross margin may result from various factors such as changes in the mix between technical support services and advancedprofessional services, as well as the timing of technical support service contract initiations and renewals, the addition of personnel and other related costs, and other resources to support higher levels of service business in future periods.

Sales to the service provider and cloud marketmarket, including sales of AI infrastructure solutions to large cloud and hyperscaler customers, are especially volatile,volatile and may be concentrated among a limited number of customers, and weakness in orders from this industry may harm our operating results andof operations or financial condition.

Sales to the service provider and cloud market haveare beenoften characterized by large and sporadic purchases,purchases. especially relating to our router sales andOur sales of certainAI infrastructure solutions to cloud and hyperscaler customers may similarly involve large and concentrated purchases, and demand may depend on a limited number of customers' capital spending levels, the timing and scale of AI infrastructure deployments, technology and network architecture decisions, and decisions regarding whether to purchase solutions from us or other Networkingvendors or develop certain technologies internally. These customers may delay, reduce or cancel planned deployments or purchases for a variety of reasons, including, among others, as a result of budgetary constraints, funding limitations or concerns and Collaboration products,changes in additionanticipated todemand longerfor salesAI cycles.infrastructure, available capacity, technology requirements, competitive offerings or investment priorities. Although service provider and cloud product orders increased during fiscal 2025, service provider and cloud market product orders decreased in fiscalrecent 2024, and at various timesquarters, in the past we have experienced significant weakness in product orders from the service provider and cloud market. ProductThese orders from the service provider and cloud market could decline in the future and, as has been the case in the past, such weakness could persist over extended periods of time given fluctuating market conditions. Products in the service provider and cloud market could also face a high degree of customer concentration, with bespoke product designs and features that would be difficult to sell to alternate customers should the primary customer reduce its product ordersorders. As our business with Cisco.large cloud and hyperscaler customers grows, changes in the timing or size of purchases by a limited number of customers could have a greater impact on our revenue, gross margins and results of operations from period to period. Sales activity in this industry depends upon the stage of completion of expanding network infrastructures; the availability of funding; the expected returns from investments in AI and other infrastructure; customer decisions regarding network architecture, silicon, optics and other technologies; and the extent to which service provider and cloud customers are affected by regulatory, economic, and business conditions in the country of operations. Weakness in orders from this industry, including as a result of any slowdown in capital expenditures by service providers (which may be more prevalent during a global economic downturn, or periods of economic, political or regulatory uncertainty), could materially harm our business, operatingresults results,of andoperations, or financial condition. Such slowdowns may continue or recur in future periods. Orders from this industry could decline for many reasons other than the competitiveness of our products and services within their respective markets. For example, in the past, many of our service provider and cloud customers have been negatively impacted by: slowdowns in the general economy,economy; by overcapacity, byovercapacity; changes in the service provider and cloud market, bymarket; regulatory developments,developments; and by constraints on capital availability, resulting in business failures and substantial reductions in spending and expansion plans. Changes in expectations regarding future demand for AI infrastructure or other network capacity could similarly result in reductions, delays or changes in customer investment plans. These conditions have negatively impacted our business and operatingresults resultsof operations in the past, and could materially harm our business and operatingresults of operations in any future period. Finally, service provider and cloud customers typically have longer implementation cycles; require a broader range of services, including design services; demand that vendors take on a larger share of risks; may require customized products or significant commitments of supply or capacity; often require acceptance provisions, which can lead to a delay in revenue

If we fail to manage distribution of our products and services properly, or if our distributors’ financial condition or operations weaken, our revenue and gross margins could be negatively impacted. A substantial portion of our products and services is sold through our channel partners, and the remainder is sold through direct sales. Our channel partners include systems integrators, service providers, other third-party resellers, and distributors. Systems integrators and service providers typically sell directly to end users and often provide system installation, technical support, professional services, and other support services in addition to network equipment sales. Systems integrators also typically integrate our products into an overall solution,solution. and aA number of service providers are also systems integrators. Distributors stock inventory and typically sell to systems integrators, service providers, and other third-party resellers. We refer to sales through distributors as our two-tier system of sales to the end user. If sales through indirect channels increase, this may lead to greater difficulty in forecasting the mix of our products and, to a degree, the timing of orders from our customers.

Historically, we have seen fluctuations in our gross margins based on changes in the balance of our distribution channels. There can be no assurance that future changes in the balance of our distribution model in future periods would not have an adverse effect on our gross margins and profitability. Some factors could result in disruption of or changes in our distribution model, which could harm our sales and margins, including the following: competition with some of our channel partners, including through our direct sales, which may lead these channel partners to use other suppliers that do not sell directly sell their own products or otherwise compete with them; some of our channel partners may demand that we absorb a greater share of the risks that their customers may ask them to bear; some of our channel partners may have insufficient financial resources and may not be able to withstand changes and challenges in business conditions; and revenue from indirect sales could suffer if our distributors’ financial condition or operations weaken. In addition, we depend on our channel partners globally to comply with applicable regulatory requirements. To the extent that they fail to do so, that could materially harm our business, operatingresults results,of andoperations, or financial condition. Further, sales of our products outside of agreed territories can result in disruption to our distribution channels.

The markets in which we compete are characterized by rapid change, converging technologies, and a migration to networking and communications solutions that offer relative advantages.advantages, Theseall marketof which are factors representthat apose competitive threat to us.threats. We compete with numerous vendors inacross eachour product category.categories, Theand overallthe numbernumber, identity, and composition of our competitorscompetitors, including those providing niche product solutions may increase. Also, the identity and composition of competitorssolutions, may change as we increaseexpand our activity ininto newer productproducts, areas,technologies, and in key priority areas. For example, as products related to network programmability, such as software definedsoftware-defined networking (SDN) products, have become more prevalent, we have faced increased competition from companies that develop networking products based on commoditized hardware, referred to as “white box” hardware,hardware. toSimilar dynamics apply in the markets supporting AI and cloud infrastructure, where customers select among competing network architectures before they select individual products. To the extent customers decideadopt architectures that are not designed to purchaseinclude thosethe product offerings insteadtype of ours.products and solutions we provide, our opportunities may be limited even if our products are superior. The competitors in these markets include semiconductor companies, systems providers, cloud providers and other technology companies in addition to traditional networking vendors. In addition, the growth in demand for technology delivered as a service enables new competitors to enter the market. Providers of cloud-based services also compete with us directly in certain of our product categories. As we continue to expand globally, we may see new competition in different geographic regions. In particular, we have experienced price-focused competition from competitors in Asia, especially from China, and we anticipate this will continue. For information regarding our competitors, see the section entitled “Competition” contained in “Item 1. Business” of this report.

Some of our competitors compete across many of our product lines, while others are primarily focusedfocus in a specific product area. Barriers to entry are relatively low, and new ventures to create products that do or could compete with our products are regularly formed. In addition, some of our competitors may have greater resources, including technical and engineering resources, than we do. As we expand into new markets, we will face competition not only from our existingcurrent competitors but also from other competitors, including existingestablished companies with strong technological, marketing, and sales positions in those markets. We also sometimes face competition from resellers and distributors of our products. Companies with which we have strategic alliances in some areas may be competitors in other areas, and this trend may increase.increase and we may have to cooperate and at the same time compete with companies. For example, the enterprise data center is undergoing a fundamental transformation arising from the convergence of technologies, including computing, networking, storage, and software, that previously were segregated. Due to several factors, including the availability of highly scalable and general purpose microprocessors, application specific integrated circuits offering advanced services, standards based protocols, cloud computing and virtualization, the convergence of technologies within the enterprise data center is spanning multiple, previously independent, technology segments. Also, some of our current and potential competitors for enterprise data center business have made acquisitions, or announced new strategic alliances, designed to position them to provide end-to-end technology solutions for the enterprise data center. As a result of all of these developments, we face greater

provide end-to-end technology solutions. As a result of these developments, we face greater competition in the development and sale of enterprise data center technologies, including competition from entities that are among our long-term strategic alliance partners. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us. To remain competitive, we may be required to reduce prices, increase discounts or offer more favorable terms, and we may need to increase research and development and sales and marketing spending in response to competitive pressures, any of which could reduce our revenue and gross margins. If we do not compete successfully in the markets in which we participate, we could lose market share.

We also face competition from customers to which we license or supply technology and suppliers from which we transfer technology. Certain of our largest customers, including hyperscalers, have the technical and financial resources to design their own networking equipment, semiconductors and software, or to purchase directly from contract manufacturers, rather than purchase these technologies from us. The inherent nature of networking requires interoperability. As such, we must cooperateinteroperability and at the same time compete with many companies. Anyany inability to effectively manage these complicated relationships with customers, suppliers, and strategic alliance partners could materially harm our business, operatingresults results,of andoperations, or financial condition and accordingly affect our chances of success.

We must manage inventory relating to sales toof our distributors effectively, becauseas inventory held by them could affect our results of operations. Our distributorsDistributors may increase orders during periods of product shortages, cancel orders if their inventory is too high, or delay orders in anticipation of new products. They also may adjust their orders in response to the supply of our products and thecompeting products of our competitors that are available to them, andas inwell response toas seasonal fluctuations in end-user demand. Our distributors are generally givenhave business terms that allow them to return a portion of inventory, receive credits for changes in selling price, and participate in various cooperative marketing programs. Inventory management remains an area of focus as we balance the need to maintain strategic inventory levels to ensure competitive lead times against the risk of inventory obsolescence becauseresulting offrom rapidly changing technologytechnologies and customer requirements. When facing component supply-related challenges, we have in the past and may in the future increase our efforts in procuring components or enter additional purchase commitments with contract manufacturers and suppliers in order to meet customer expectations. If we ultimately determine that we have excess inventory, we may have to reduce our prices and write down inventory, which in turn could result in lower gross margins.

We currently incorporate AI technology in certain of our commercial offerings and in our business operations. Our research and development of AI technology remains ongoing. AI presents risks and challenges and may result in unintended consequences, including inadvertent disclosure or misuse of intellectual property, confidential, personal, and/or competitive information, that could affect our reputation, our further AI development or our and our customers’ adoption and use of this technology. Agentic AI systems, which operate with autonomous decision-making capabilities and access to multiple tools and data sources, may also introduce unique risks such as unauthorized actions, privilege escalation, and potential exploitation by malicious actors. AI algorithms and training methodologies may be flawed. Additionally, AI technologies are complex and rapidly evolving, and we face significant competition in the market and from other companies regarding such technologies. Leveraging AI capabilities to potentially improve our internal functions and operations also presents risks, costs, and challenges. While we aim to develop and use AI responsibly and attempt to identify and mitigate ethical and legal issues and risks presented by its use, we may be unsuccessful in identifying or resolving issues and risks before they arise. The AI-related legal and regulatory landscape is complex and constantly evolving and therefore remains uncertain and may be inconsistent from jurisdiction to jurisdiction. Our obligations to comply with thethis complex and evolving legal and regulatory landscape could entail significant compliance or other costs or limit our ability to incorporate certain AI capabilities into our offerings. Because of increased complexity and autonomy, the use of agentic AI increases the difficulty of monitoring and controlling AI behavior, potentially resulting in unintended actions that could cause legal, regulatory, or reputational harm. AI-related issues, deficiencies and/or failures could also give rise to legal and/or regulatory action (including with respect to proposed legislation regulating AI in jurisdictions such as the European Union and others, and as a result of new and different applications of existing and new data protection, privacy, cybersecurity, intellectual property, and other laws and regulations); damage our reputation; or otherwise materially harm our business.

In recent years, we have shifted our business model to deliver more recurring software and subscription offerings. This shift in our business model was accelerated by recent acquisitions, including our acquisition of Splunk in the third quarter of fiscal 2024.Splunk. Market acceptance of our software subscription offerings, which includes our as-a-service solutions, can be affected by a variety of factors, including: security, reliability, performance, terms of service, support terms, customer preference, community engagement, concerns regarding data privacy or data protection, and the enactment of laws or regulations in jurisdictions in which we operate. To generate sales growth for our software subscription offerings, we need to convince potential customers to purchase new licenses or subscriptions and generate timely renewals and additional purchases from existing customers. Any failure to do so could result in decreased revenue, reduced sales, increased churn or otherwise negatively impact our results of operations and financial condition. Further, growth of our software subscription offerings depends, in part, on the ability of customers to use and access these solutions. We have experienced, and may in the future experience, interruptions in service, storage failures, and other performance-related problems due to a variety of factors, such as infrastructure and software

growth for our software subscription offerings, we need to convince potential customers to purchase new licenses or subscriptions and generate timely renewals and additional purchases from existing customers. Any failure to do so could result in decreased revenue, reduced sales, increased churn or otherwise negatively impact our results of operations or financial condition. Further, growth of our software subscription offerings depends, in part, on the ability of customers to use and access these solutions. We have experienced, and may in the future experience, interruptions in service, storage failures, and other performance-related problems due to a variety of factors, such as infrastructure and software changes, human or software errors, capacity constraints, unauthorized access, denial of service or other cyber attacks.attacks, and our exposure to these risks is growing as increasingly powerful AI capabilities emerge and are widely disseminated among threat actors. In some instances, we may not be able to timely identify the cause or causes of these performance problems and, even if timely identified, we may be unable to timely remediate the underlying cause. It may become increasingly difficult to maintain and improve our performance for our software subscription offerings, especially during peak usage times and as our solutions become more complex and our user traffic increases. Performance-related issues ofwith our software subscription offerings may result in increased operational costs, delays in new feature rollouts, customer loss, reputational damage, and legal or regulatory liability, including liability under customer contracts or for losses suffered by our customers.

To deliver our software subscription offerings, we have incurred and will continue to incur substantial costs to implement and maintain this business. We also make significant investments to increase or maintain capacity and to develop and implement new technologies in our infrastructure and operations, including those provided by third-party providers on which we rely. We may not be successful in developing or implementing these technologies. To the extent that costs associated with software subscription offerings were to significantly increase or we do not effectively scale our operations to meet the needs of our customers andor to maintain performance as our customers expand their use of our solutions, we may not be able to grow this business as quickly as we anticipate, our customers may reduce or cancel use of our solutions, and we may be unable to compete as effectively and our business and results of operations may be harmed. Additionally, if our costs associated with our software subscription offerings were to significantly increase, our business, results of operations and financial condition may be negatively impacted. Wewe are also subject to the risk of performance-related problems or interruption of the services provided by third-party providers on which we rely, which could cause revenues for software subscription offerings to decline, damage to our reputation, legal liability exposure, and/or increased expenses, all of which could negatively impact our business, results of operations, andor financial condition.

Cisco designs and sells a broad range of technologies thatincluding helphardware, software, and artificial intelligence (AI) powered digital infrastructure to power, help secure, and draw insights from the Internet. We are incorporating artificial intelligence (AI) into our product portfolios across networking, security, collaboration and observabilityobservability, as well as integrating our products more tightly together.together into a platform. We are simplifying how our technology is delivered, managed and optimized and helping customers maximize the business value of their technology investments.

In fiscal 2025,2026, we delivered strong revenue growth across all geographies and solidprofitability margins as we sawin a continued positive demand environment. Total revenue increasedwas by$63.3 5%billion, an increase of 12% compared with fiscal 2024. Our results for fiscal 2025 include a full year of Splunk's results compared to approximately four months for fiscal 2024.2025. Within total revenue, product revenue increased by 6%16% and services revenue increasedwas byflat. 3%. In fiscal 2025, totalTotal software revenue was $22.3$23.2 billion,billion across all product areas and services, an increase of 21%,4%, drivenand by the contribution of Splunk. Totaltotal subscription revenue increased 15%, driven by the contribution of Splunk.1%.

Total gross margin increaseddecreased by 0.20.4 percentage points.points, primarily driven by a decline in product gross margin, partially offset by an increase in services gross margin. Product gross margin increaseddecreased by 0.20.5 percentage points, primarily driven by benefits from Splunk and productivity improvements, partially offset by negative impacts from pricing,product mix and higher memory costs, partially offset by productivity improvements, pricing actions, lower amortization of purchased intangible assets and a charge in fiscal 2025 as a result of a legal dispute with a supplier, andwhich thedid amortizationnot ofrecur purchasedin intangiblefiscal assets primarily related to Splunk.2026. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, increaseddecreased by 1.83.4 percentage points. Operating income as a percentage of revenue decreasedincreased by 1.83.5 percentage points primarily duedriven toby increasesrevenue ingrowth, amortizationpartially ofoffset purchasedby intangiblelower assetsgross margin and share-basedhigher compensationoperating expenseexpenses in fiscal 2025, and a charge in the fourth quarter of fiscal 2025 as a result of a legal dispute with a supplier.2026. Diluted earnings per share wasincreased flat31%, compareddriven withby fiscalrevenue 2024.growth and operating margin improvement.

We continue to operate in a highly competitive and complex environment, especially as it relates to memory constraints and one that is complex especially with respect to tariffscosts, and trade policy. Notwithstanding these challenges, we believe that we are making progress on our strategic priorities. We plan to continue to invest in key priority areas with the objective of driving profitable growth over the long term.term, Weand we remain focused on delivering innovation across our technologies to assist our customers in executing on their digital transformations and on accelerating innovation across our portfolio. We believe that we are making progress on our strategic priorities.transformations.

For the fourth quarter of fiscal 2025,2026, as compared with the fourth quarter of fiscal 2024,2025, total revenue increased by 8%.18% to $17.3 billion. Within total revenue, product revenue increased by 10%24% to $13.5 billion and services revenue was flat.flat at $3.8 billion. With regard to our geographic segment performance, on a year-over-year basis, revenue infrom the Americas increased by 9%,18%, EMEA increased by 4%19% and APJC increased by 7%.14%. From a product category perspective, weon experienceda year-over-year basis, product revenue growthincreased in Networking,Networking Security,by Observability,28%, Security by 14%, Collaboration by 12% and Collaboration. Total gross margin decreasedObservability by 1.26%. percentage points, driven primarily by a charge as a result of a legal dispute with a supplier. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, decreased by 2.2 percentage points. Operating income as a percentage of revenue increased by 1.8 percentage points primarily driven by lower amortization of purchased intangible assets, lower restructuring and other charges, and a decrease in cash compensation expenses from acquisitions, partially offset by a charge as a result of a legal dispute with a supplier. Diluted earnings per share increased by 19%, primarily driven by the revenue increase and theThe increase in ourNetworking operatingreflected margingrowth percentage.in AI infrastructure and data center switching.

In today'stoday’s digital-firstfast-paced world,world shaped by AI, businesses and organizations globally are deploying technology to pursue their strategic objectives, from accelerating growth to enhancing operational efficiency and fostering innovation. Our strategy is to securely connect everything to make those desired outcomes possible.

We assess relevant contractual terms in our customer contracts to determine the transaction price. We apply judgment in identifying contractual terms and determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes potential contractual penalties and various rebate, cooperative marketing and other incentive programs that we offer to our distributors, channel partners and customersdirect thatsale we sell to directly.customers. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers’ right of return in determining the transaction price, where applicable. If actual credits received by customers under these programs were to deviate significantly from our estimates, which are based on historical experience, our revenue could be adversely affected.

Our total provisions for inventory and the liability related to purchase commitments with contract manufacturers and suppliers were $493$387 million, $819$493 million, and $730$819 million in fiscal 2026, 2025, and 2024, respectively. Inventories were $5.7 billion as of July 25, 2026 compared with $3.2 billion as of July 26, 2025, reflecting increased demand for our Cisco Silicon One and 2023,the respectively.impact of higher memory prices. If there were to be a sudden and significant decrease in demand for our products, or a higher incidence of inventory obsolescence because of rapidly changing technology or customer requirements, then we could be required to increase our inventory write-downs and our liability for purchase commitments with contract manufacturers and suppliers, and accordingly our profitability,profitability could be adversely affected. We regularly evaluate our exposure for inventory write-downs, and the adequacy of our liability for purchase commitments. For further discussion around the supply chain impacts and risks, see “—Results of Operations—Gross Margin—Supply Chain Impacts and Risks” and “—Liquidity and Capital Resources—Inventory Supply Chain” under Item 7 of this report.

We are subject to the possibility of various losses arising in the ordinary course of business. We consider the likelihood of the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate information available to us to determine whether such accruals should be made or adjusted and whether new accruals are required. See Note 13 to the Consolidated Financial Statements for further discussion.

InGoodwill response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairmentas of goodwill.July 25, 2026 was $59.5 billion. There was no impairment of goodwill in fiscal 2025,2026, 2024,2025 andor 2023.2024. For the annual impairment testing in fiscal 2025,2026, the excess of the fair value over the carrying value for each of our reporting units was $56.5$64.7 billion for the Americas, $80.1$88.6 billion for EMEA, and $32.9$33.7 billion for APJC.

The accounting for acquisitions requires significant estimates and judgments in the valuation of purchased intangible assets. Critical estimates used in the valuation of purchased intangible assets include, but are not limited to, the amount and timing of expected future cash flows, useful lives and discount rates. While our estimates of fair value are based on assumptions that are believed to be reasonable, these assumptions are inherently uncertain and unpredictable and wouldmay not reflect unanticipated events and circumstances that may occur.

We make judgments about the recoverability of purchased intangible assets with finite lives whenever events or changes in circumstances indicate that an impairment may exist. Recoverability of purchased intangible assets with finite lives is measured by comparing the carrying amount of the asset group to the future undiscounted cash flows the asset group is expected to generate. We review indefinite-lived intangible assets for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired. If the asset is considered impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Assumptions and estimates about future values and remaining useful lives of our purchased intangible assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts. Our ongoing consideration of all the factors described previously could result in impairment charges in the future, which could adversely affect our net income.

Our provision for income taxes is subject to volatility and could be adverselynegatively impacted by earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates; by changes in the valuation of our deferred tax assets and liabilities; by changes to foreign-derived intangible income deduction,income, global intangible low-taxlow-taxed income andincome, base erosion and anti-abuse tax, research and development capitalization and amortization, and corporate alternative minimum tax laws, regulations, or interpretations thereof; by expiration of or lapses in tax incentives; by transfer pricing adjustments, including thethose effectresulting offrom acquisitions onor changes to our legal structure; by tax effects of nondeductible compensation; by tax costs related to intercompany realignments; by changes in accounting principles; or by changes in tax laws and regulations, treaties, or interpretations thereof, including changes to the taxation of earnings of our foreign subsidiaries, the deductibility of expenses attributable to foreign income, and the foreign tax credit rules. Significant judgment is required to determine the recognition and measurement attributes prescribedused in the accounting guidance for uncertainty in income taxes. The OECD, an international association comprised of 38 countries, including the United States, has made changes, including a Pillar Two framework that imposes a minimum tax rate of 15% in each taxing jurisdiction, and is contemplating additional changes to numerous long-standing tax principles. There can be no assurance that these changes and any contemplated changes if finalized, once adopted by countries, will not have an adverse impact ondetermining our provision for income taxes.taxes Asand aevaluating resulttax ofpositions. In certain ofcountries, our ongoingincome has benefited from reduced tax rates associated with employment and capital investment actions and commitments,commitments. ourIf incomewe indo certainnot countriesmeet wasthe subjectrequirements tofor these reduced tax rates. Our failure to meet these commitments could adversely impactrates, our provision for income taxes.taxes could be adversely affected. In addition, we are subject to the continuous examination of our income tax returns by the IRS and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse impact on our operatingresults resultsof operations and financial condition.

Total revenue in fiscal 20252026 increased by 5%12% compared with fiscal 2024.2025. Product revenue increased by 6%16% and services revenue increasedwas by 3%.flat. Our total revenue reflected growth across each of our geographic segments.

Product revenue in the Americas segment increased by 6%,17%, with growth inacross each of our customer markets, led by the enterpriseService Provider and Cloud customer market and the service provider and cloud market. The growth in the service provider and cloud marketwhich was largely driven by AI infrastructure revenue from webscaleour customers.AI TheseInfrastructure increases were partially offset by a decline in the public sector market.solutions. From a country perspective, product revenue increased in the United States, Canada,Canada and BrazilMexico by 7%,18%, 4%,8% and 8%,25%, respectively.respectively, partially offset by a decline in Brazil of 10%.

Product revenue in the EMEA segment increased by 4%,15%, driven by growth inacross theeach publicof sectorour andcustomer enterprise markets, partially offset by a slight decline in the service provider and cloud market.markets. From a country perspective, product revenue increased in the United Kingdom, Germany, and France by 9%,31%, 4%,16% and 6%,11%, respectively.

Product revenue in the APJC segment increased by 7%,13%, with growth across each of our customer markets. From a country perspective, product revenue increased in Australia, Japan, Australia, India, and China by 7%,13%, 11%,16%, 11%,2% and 10%23%, respectively.

The Networking product category consists of our core networking technologies of switching, routing, wireless, and servers. Revenue from the Networking product category decreasedincreased by 3%,22%, or $0.9$6.4 billion. Revenue declined across the portfolio as a result of product shipments returning to normalized levels during the first half of fiscal 2025 from the elevated levels of product shipments we experienced in the first half of fiscal 2024. Within the portfolio, the revenue decline wasbillion primarily driven by servers.our WeAI alsoInfrastructure experiencedsolutions, awhich include Cisco Silicon One based systems and optics. Growth was broad-based across the portfolio, with double digit revenue declineincreases in switchingService asProvider aRouting, resultData ofCenter aSwitching, declineWireless and servers, and growth in campusCampus switching.Switching and Enterprise Routing.

The Security product category consists of our Network Security, Identity and Access Management, SASESASE, and Threat Intelligence, Detection,Identity and ResponseAgentic offerings.Security solutions. Revenue in our Security product category increased by 59%,2%, or $3.0$0.1 billion, primarily driven by Threat Intelligence, Detection, and Response offerings, which includes the offerings from Splunk, and to a lesser extent, growth in our SASE and Network Security offerings.

The Collaboration product category consists of our Webex Suite, Collaboration Devices, Contact Center and CPaaS offerings. Revenue in our Collaboration product category increased 1%,4%, or $41$0.1 million,billion, primarily driven by revenuewith growth inacross each of our Collaboration Devices, CPaaS and Contact Center offerings, partially offset by a decline in our Webex Suite offerings.

The Observability product category consists of our networkobservability assurance, monitoringsuite and analyticsnetwork and observability suiteassurance offerings. Revenue in our Observability product category increased by 26%,4%, or $218$40 million, primarily drivendue by our Observability Suite offerings from Splunk andto growth in our ThousandEyes network servicesassurance offerings, partially offset by a decline in monitoringour andobservability analytics.suite offerings.

(1) Productivity includes overall manufacturing-related costs, such as component costs,costs (including memory), warranty expense, provisions for inventory and the liability related to the purchase commitments with contract manufacturers and suppliers, freight, logistics, shipment volume, and other items not categorized elsewhere.

Product gross margin increaseddecreased by 0.20.5 percentage points primarily driven by benefitsnegative impacts from Splunkproduct and productivity improvements,mix, partially offset by negativeproductivity impactsimprovements, from pricing, a charge as a result of a legal dispute with a supplier, andlower amortization of purchased intangible assetsassets, primarilya relatedcharge toin Splunk.the Thefourth productivityquarter improvementsof were primarily drivenfiscal

Our services gross margin percentage increased by 0.40.3 percentage points primarily due to highercost sales volume and lower delivery costs, partially offset by higher headcount-related costs.efficiencies.

Our services gross margin normally experiences some fluctuations due to various factors such as the timing of contract initiations in ourand renewals, our strategic investments in headcount, and the resources we deploy to support the overall serviceservices business. Other factors include the mix of service offerings, as the gross margin from our advancedprofessional services is typically lower than the gross margin from technical support services.

(1) The unallocated corporate items include the effects of amortization and impairments of acquisition-related intangible assets, share-based compensation expense, significant litigation settlements (which includes the supplier-related legal settlement as described in Note 21 to the Consolidated Financial Statements) and other contingencies, charges related to asset impairments and restructurings, and certain other charges. We do not allocate these items to the gross margin for each segment because management does not include such information in measuring the performance of the operating segments.

The APJCAmericas segment had a gross margin percentage decrease driven primarily by pricingnegative erosionimpacts andfrom lowerproduct services gross margin,mix, partially offset by positive impacts from productivity improvements and favorable product mix.improvements.

R&D expenses increased primarily due to higher headcount-related expenses reflecting our investments in AI, higher discretionary spending and higher share-based compensation expense, cashpartially compensationoffset expensesby fromlower acquisitions,acquisition-related costs and discretionarylower contracted services spending.

Sales and marketing expenses increased primarily due to higher headcount-related expenses, cash compensation expenses from acquisitions,higher share-based compensation expense,expense and discretionaryhigher contracted services spending, partially offset by lower contractedacquisition-related servicescosts and lower discretionary spending.

G&A expenses increaseddecreased primarily due to higher headcount-related expenses, share-based compensation expense, and discretionary spending, partially offset by lower acquisition-related costs and lower contractedheadcount-related servicesexpenses, partially offset by higher discretionary spending.

In fiscal 2025,2026, foreign currency fluctuations, net of hedging, decreasedincreased the combined R&D, sales and marketing, and G&A expenses by approximately $16$195 million, or 0.1%,0.8%, compared with fiscal 2024.2025.

In the firstfourth quarter of fiscal 2025,2026, we announced a restructuring plan in order to allow us to invest in key growth opportunities including silicon, optics, security and driveAI. moreThe efficienciestotal inpre-tax ourcharges business.are Thisestimated restructuringto be up to $1 billion, with the plan is expected to impactbe approximatelysubstantially 7%completed by the end of ourfiscal global workforce with estimated pre-tax charges of approximately $1 billion.2027. In connection with this restructuring plan, we incurred charges of $744$511 million during fiscal 2025. We expect this plan to be substantially completed by the end of the second quarter of fiscal 2026.

In the third quarter of fiscal 2024,2025, we initiatedannounced a restructuring plan in order to realignallow theus organizationto and enable further investmentinvest in key prioritygrowth areas.opportunities Inand connectiondrive withmore thisefficiencies plan,in weour business. We incurred cumulative charges of $654$926 million forand substantially completed this plan in fiscal 2024 and the plan is complete.2026.

Operating income decreasedincreased by 3%,31%, and as a percentage of revenue operating income decreasedincreased by 1.83.5 percentage points. These changes primarily resulted primarily from higherrevenue share-basedgrowth, compensationpartially expense,offset higherby amortizationlower ofgross purchased intangible assets, a charge as a result of a legal dispute with a supplier,margin and higher cash compensationoperating expenses fromin acquisitions.fiscal 2026.

The decrease in interest income was driven by a lower average balance of cash and available-for-sale debt investments and lower interest rates. The increasedecrease in interest expense was primarily driven by a higherlower average balance of debt outstanding duringand thelower period.effective interest rates on commercial paper.

Challenging global economic conditions, including tariffs or other trade barriers,barriers or disruptions, rising inflation, or other changes, have from time to time contributed, and may continue to contribute, to slowdowns in the communications and networking industries at large, as well as in specific segments and markets in which we operate, resulting in: reduced demand for our products as a result of continued constraints on IT-related capital spending by our customers, particularly service provider and cloud as well as enterprise and other customer markets; increased price competition for our products, not only from our competitors but also as a consequence of customers disposing of unutilized products; risk of excess and obsolete inventories; risk of supply constraints; risk of excess facilities and manufacturing capacity; and higher overhead costs as a percentage of revenue and higher interest expense.

As a result of a variety of factors discussed in this report, our revenue for a particular quarter is difficult to predict, which can be exacerbated during periods when the global macroenvironment is challenging and can result in market uncertainty. Our revenue may grow at a slower rate than in past periods, or decline as it did in certain prior periods on a year-over-year basis. Our ability to meet financial expectations could also be negatively impacted if the nonlinear sales pattern seen in some of our past quarters recurs in future periods. We have also experienced periods of time during which shipments have exceeded net bookings or manufacturing or other issues have delayed shipments, leading to nonlinearity in shipping patterns. In addition to making it difficult to predict revenue for a particular period, nonlinearity in shipping can increase costs, because irregular shipment patterns result in periods of underutilized capacity and periods in which overtime expenses may be incurred, as well as in potential additional inventory management-related costs. In addition, to the extent that manufacturing or other issues and any related component shortages result in delayed shipments in the future, and particularly in periods in which our contract manufacturers are operating at higher levels of capacity, it is possible that revenue for a quarter could be negatively impacted if such matters occur and are not remediated within the same quarter.

A reduction or interruption in supply, including disruptions on our global supply chain, caused in part by public health emergencies, geopolitical tensions (including as a result of China-Taiwan relations,relations or Middle East conflicts or wars, increasing tariffs or any other trade tensions or disruptions) or a significant natural disaster (including as a result of climate change); a significant increase in the price of one or more components (including as a result of inflation); a failure to adequately authorize procurement of inventory by our contract manufacturers; a failure by suppliers to deliver on our contracts; IT-related failure or disruption; a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs; or a decrease in demand for our products could materially harm our business, operating results, and financial condition and could materially damage customer relationships.

damage customer relationships. Furthermore, as a result of binding price or purchase commitments with suppliers, we may be obligated to purchase components at prices that are higher than those available in the current market. In the event that we become committed to purchase components at prices in excess of the current market price when the components are actually used, our gross margins could decrease. In addition, vendors may be under pressure to allocate product to certain customers for business, regulatory or political reasons, and/or demand changes in agreed pricing as a condition of supply. Although we have generally secured additional supply or taken other mitigation actions when significant disruptions have occurred, if similar situations occur in the future, they could materially harm our business, results of operations, and financial condition.

Manufacturing capacity and component supply constraints, as we saw with memory in the first sixnine months of fiscal 2026, could be significant issues for us as they have been in certain prior periods. We have been and expect to continue to be adversely impacted by an increase in the cost of certain memory components which are currently constrained. We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to improve manufacturing lead-time performance and to help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by us or that establish the parameters defining our requirements. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed. In recent periods, we have increased our efforts in procuring components in order to meet customer expectations, such as we have done in past periods due to supply constraints, which in turn contributes to an increase in inventory and purchase commitments. For example, in fiscal 2025 and in the first sixnine months of fiscal 2026, we entered into additional purchase commitments with contract manufacturers and suppliers related to manufacturing Cisco Silicon One, memory components and other products to meet demand from hyperscalers and other customers. We expect to continue entering into these additional purchase commitments in fiscal 2026. These past efforts and additional purchase commitments significantly increased our supply chain exposure, which resulted in negative impacts to our product gross margin in recent periods and may result in further negative impacts in future periods. For example, on August 26, 2025, we settled a legal dispute with a supplier relating to purchase obligations arising under long-term supply arrangements, which resulted in a charge to product cost of sales in the fourth quarter of fiscal 2025. These supply chain exposures include potential material excess and obsolete or other charges if product demand significantly decreases for a sustained duration, we are unable to generate demand for certain products planned for development, or we are otherwise unable to mitigate these supply chain exposures. Product demand conditions for future periods can be difficult to predict or may persist longer than anticipated. For additional information and a further discussion of impacts and risks related to our inventory commitments and our purchase commitments with contract manufacturers and suppliers, see “Results of Operations—Product Gross Margin—Supply Chain Impacts and Risks”, “Liquidity and Capital Resources—Inventory Supply Chain” and Note 14 to the Consolidated Financial Statements.

Our level of product gross margins has declined in certain prior periods, including in the firstthird quarter of fiscal 2026, and could decline in future periods due to adverse impacts from various factors, including:

•Increases in material, labor or other manufacturing-related costs (i.e., component costs, broker fees, expedited freight and overtime) or higher supply chain logistics costs, any of which could be significant, especially during periods of supply constraints for certain costs, such as those that have impacted the market for components, including semiconductors (as we have seen in past periods) and memory (as we saw in the first sixnine months of fiscal 2026 and expect to continue seeing), and which costs have in the past and may continue to be exacerbated by inflation

Sales to the service provider and cloud market have been characterized by large and sporadic purchases. Although service provider and cloud product orders increased duringin therecent first and second quarters of fiscal 2026,quarters, at various times in the past we have experienced significant weakness in product orders from the service provider and cloud market. Product orders from the service provider and cloud market could decline in the future and, as has been the case in the past, such weakness could persist over extended periods of time given fluctuating market conditions. Products in the service provider and cloud market could also face a high degree of customer concentration, with bespoke product designs and features that would be difficult to sell to alternate customers should the primary customer reduce its product orders with Cisco. Sales activity in this industry depends upon the stage of completion of expanding network infrastructures; the availability of funding; and the extent to which service provider and cloud customers are affected by regulatory, economic, and business conditions in the country of operations. Weakness in orders from this industry, including as a result of any slowdown in capital expenditures by service providers (which may be more prevalent during a global economic downturn, or periods of economic, political or regulatory uncertainty), could materially harm our business, operating results, and financial condition. Such slowdowns may continue or recur in future periods. Orders from this industry could decline for many reasons other than the competitiveness of our products and services within their respective markets. For example, in the past, many of our service provider and cloud customers have been negatively impacted by slowdowns in the general economy, by overcapacity, by changes in the service provider and cloud market, by regulatory developments, and by constraints on capital availability, resulting in business failures and substantial reductions in spending

reductions in spending and expansion plans. These conditions have negatively impacted our business and operating results in the past, and could materially harm our business and operating results in any future period. Finally, service provider and cloud customers typically have longer implementation cycles; require a broader range of services, including design services; demand that vendors take on a larger share of risks; often require acceptance provisions, which can lead to a delay in revenue recognition; and expect financing from vendors. All these factors can add further risk to business conducted with service providers.

Some of our competitors compete across many of our product lines, while others are primarily focused in a specific product area. Barriers to entry are relatively low, and new ventures to create products that do or could compete with our products are regularly formed. In addition, some of our competitors may have greater resources, including technical and engineering resources, than we do. As we expand into new markets, we will face competition not only from our existing competitors but also from other competitors, including existing companies with strong technological, marketing, and sales positions in those markets. We also sometimes face competition from resellers and distributors of our products. Companies with which we have strategic alliances in some areas may be competitors in other areas, and this trend may increase. For example, the enterprise data center is undergoing a fundamental transformation arising from the convergence of technologies, including computing, networking, storage, and software, that previously were segregated. Due to several factors, including the availability of highly scalable and general purpose microprocessors, application specific integrated circuits offering advanced services, standards based protocols, cloud computing and virtualization, the convergence of technologies within the enterprise data center is spanning multiple, previously independent, technology segments. Also, some of our current and potential competitors for enterprise data center business have made acquisitions, or announced new strategic alliances, designed to position them to provide end-to-end technology solutions for the enterprise data center. As a result of all of these developments, we face greater

provide end-to-end technology solutions for the enterprise data center. As a result of all of these developments, we face greater competition in the development and sale of enterprise data center technologies, including competition from entities that are among our long-term strategic alliance partners. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us.

In recent years, we have shifted our business model to deliver more recurring software and subscription offerings. This shift in our business model was accelerated by recent acquisitions, including our acquisition of Splunk in the third quarter of fiscal 2024. Market acceptance of our software subscription offerings, which includes our as-a-service solutions, can be affected by a variety of factors, including: security, reliability, performance, terms of service, support terms, customer preference, community engagement, concerns regarding data privacy or data protection, and the enactment of laws or regulations in jurisdictions in which we operate. To generate sales growth for our software subscription offerings, we need to convince potential customers to purchase new licenses or subscriptions and generate timely renewals and additional purchases from existing customers. Any failure to do so could result in decreased revenue, reduced sales, increased churn or otherwise negatively impact our results of operations and financial condition. Further, growth of our software subscription offerings depends, in part, on the ability of customers to use and access these solutions. We have experienced, and may in the future experience, interruptions in service,

customers to use and access these solutions. We have experienced, and may in the future experience, interruptions in service, storage failures, and other performance-related problems due to a variety of factors, such as infrastructure and software changes, human or software errors, capacity constraints, unauthorized access, denial of service or other cyber attacks.attacks, and our potential exposure to these problems is increasing as increasingly powerful AI capabilities emerge and are widely disseminated among threat actors. In some instances, we may not be able to timely identify the cause or causes of these performance problems and, even if timely identified, we may be unable to timely remediate the underlying cause. It may become increasingly difficult to maintain and improve our performance for our software subscription offerings, especially during peak usage times and as our solutions become more complex and our user traffic increases. Performance-related issues of our software subscription offerings may result in increased operational costs, delays in new feature rollouts, customer loss, reputational damage, and legal or regulatory liability, including liability under customer contracts or for losses suffered by our customers.

Furthermore, we may not execute successfully on our vision or strategy because of challenges with regard to product planning and timing, technical hurdles that we fail to overcome in a timely fashion, or a lack of appropriate resources. This could result in competitors, some of which may also be our strategic alliance partners, providing those solutions before we do and loss of market share, revenue, and earnings. In addition, the growth in demand for technology delivered as a service enables new competitors to enter the market. The success of new products and services depends on several factors, including proper new product and service definition, component costs, timely completion and introduction of these products and services, differentiation of new products and services from those of our competitors, and market acceptance of these products and services. There can be no assurance that we will successfully identify new product and services opportunities, develop and bring new products and services to market in a timely manner, or achieve market acceptance of our products and services or that products, services and technologies developed by others will not render our products, services or technologies obsolete or

that products, services and technologies developed by others will not render our products, services or technologies obsolete or noncompetitive. The products and technologies in our other product categories and key priority areas may not prove to have the market success we anticipate, and we may not successfully identify and invest in other emerging or new products and services.

In response to changes in industry and market conditions, we may be required to strategically realign our resources and to consider restructuring, disposing of, or otherwise exiting businesses. Any resource realignment, or decision to limit investment in or dispose of or otherwise exit businesses, may result in the recording of special charges, such as inventory and technology-related write-offs, workforce reduction or restructuring costs, charges relating to consolidation of excess facilities, or claims from third parties who were resellers or users of discontinued products. Our estimates with respect to the useful life or ultimate recoverability of our carrying basis of assets, including purchased intangible assets, could change as a result of such assessments and decisions. Although in certain instances our supply agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed, our loss contingencies may include liabilities for contracts that we cannot cancel with contract manufacturers and suppliers. Further, our estimates relating to the liabilities for excess facilities are affected by changes in real estate market conditions. Additionally, we are required to perform goodwill impairment tests on an annual basis and between annual tests in certain circumstances, and future goodwill impairment tests may result in a charge to earnings. From time to time we initiate restructuring plans. For example, we initiated a restructuring plan in the fourth quarter of fiscal 2026, for which we expect such plan to be substantially completed by the end fiscal 2027. Our business may not be more efficient or effective than prior to implementation of such plans. Our restructuring activities, including any related charges and the impact of the related headcount restructurings, could materially harm our business, operating results, and financial condition.

Our growth depends uponon market growth, our ability to enhance our existing products, and our ability to introduce new products on a timely basis. We intendexpect to continue to address the need to developdeveloping new products and enhanceenhancing existing products through acquisitions of other companies, product lines, technologies, and personnel. Acquisitions involve numerous risks, including the following:

•Difficulties or delays in integrating the operationsoperations, (including IT security),security, systems, technologies, products, and personnel of the acquired companies, particularly with companies that havewith large and widespreadglobal operations and/or complex products (such as Splunk)

•Diversion of management’s attention from normal dailyday-to-day operations of the business and the challenges of managing larger and more widespreadcomplex operations resulting fromfollowing acquisitions

•Potential difficulties inDifficulties completing projects associatedrelated withto acquired in-process research and development intangibles

•Difficulties inChallenges entering markets in whichwhere we have no or limited direct prior experience and where competitors in such markets have stronger market positions

•Initial dependenceDependence on unfamiliar supply chains or relatively smallsmaller supply partners

•Insufficient revenue to offset increasedacquisition-related expenses associated with acquisitionscosts

•SignificantlyUse significant cash resources, incur debt, or increase our interest expense, leverageleverage, and debt service requirements if we incur additional debt to pay for an acquisitionobligations

•BecomeAssume liabilities, become subject to intellectual property or other litigationlitigation, and incur significant write-offs, restructuring charges, and related expenses

Mergers and acquisitions of high-technologytechnology companies are inherently risky and subject to many factors outside of our control, and no assurancethere can be givenno assurance that our previouspast or future acquisitions will be successful andor will not materially harm our business, operating results, or financial condition. Failure to successfully manage and successfully integrate acquisitions could materially harm our business and operating results. Prior acquisitions have resultedproduced inmixed aresults, wide range of outcomes,ranging from successful introduction of new products and technologies to a failurefailures to doachieve so.expected benefits. Even whenwhere an acquired company has already developed and marketedexisting products, there can be no assurance that product enhancements will be madecompleted inon a timely fashionbasis or that pre-acquisition due diligence will havehas identified all possiblepotential issues that might arise with respect to such products.issues. In addition, mergers and acquisitions could affect our future effective tax rate for future periods is uncertain and could be impacted by mergers and acquisitions.rate. Risks describedassociated with respect to new product development also apply to acquisitions.

We produce highly complex products that incorporate leading-edge technology, including both hardware and software. Software typically contains bugs or other quality or reliability problems that can unexpectedly interfere with its intended operations or the intended operation of the systems in which our software is installed. There can be no assurance that our pre-shipment or pre-release testing programs will be adequate to detect all defects, either ones in individual products or ones that could affect numerous shipments, which might interfere with customer satisfaction, reduce sales opportunities, or affect gross margins. From time to time, we have had to replace certain components and provide remediation in response to the discovery of defects or bugs in products that we had shipped. There can be no assurance that such remediation, depending on the product involved, would not have a material impact. An inability to cure a product defect or bug could result in the failure of a product line, temporary or permanent withdrawal from a product or market, damage to our reputation, inventory costs, product reengineering expenses or legal liability, any of which could materially harm our revenue, margins, and net income.

We conduct significant sales and customer support operations in countries around the world. As such, our growth depends in part on our increasing sales into emerging countries. We also depend on non-U.S. operations of our contract manufacturers, component suppliers and distribution partners. Our business in emerging countries in the aggregate experienced a decline in orders in certain prior periods. We continue to assess the sustainability of any improvements in our business in these countries and there can be no assurance that our investments in these countries will be successful. Our future results could be negatively impacted by a variety of political, economic or other factors relating to our operations inside and outside the United States, any or all of which could materially harm our operating results and financial condition, including the following: impacts from global central bank monetary policy; issues related to the political relationship between the United States and other countries that can affect regulatory matters, affect the willingness of customers in those countries to purchase products from companies headquartered in the United States or affect our ability to procure components if a government body were to deny us access to those components; government-related disruptions or shutdowns; the challenging and inconsistent global macroeconomic environment; foreign currency exchange rates; geopolitical tensions (including China-Taiwan relations); political or social unrest; economic instability or weakness or natural disasters in a specific country or region, including economic challenges in China and global economic ramifications of Chinese economic difficulties; environmental protection regulations (including new laws and regulations related to climate change); trade protection measures, such as tariffs; other legal and regulatory requirements, some of which may affect our ability to import our products to, export our products from, or sell our products in various countries or affect our ability to procure components; political considerations that affect service provider and government spending patterns; health or similar issues, including pandemics or epidemics; difficulties in staffing and managing international operations; and adverse tax consequences, including imposition of withholding or other taxes on our global operations.

We maintain an investment portfolio of various holdings, types, and maturities. Our portfolio includes available-for-sale debt investments and equity investments, the values of which are subject to market price volatility. If such investments suffer market price declines, as we experienced with some of our investments in the past, we may recognize in earnings the decline in the fair value of our investments below their cost basis. Our privatelynon-marketable heldequity investmentssecurities are subject to risk of loss of investment capital. These investments are inherently risky because the markets for the technologies or products they have under development are typically in the early stages and may never materialize. We could lose our entire investment in these companies. For information regarding the market risks associated with the fair value of portfolio investments and interest rates, refer to the section titled “Quantitative and Qualitative Disclosures About Market Risk.”

Because a significant portion of our business is conducted outside the United States, we face exposure to adverse movements in foreign currency exchange rates, including emerging market currencies which can have extreme currency volatility. An increase in the value of the dollar could increase the real cost to our customers of our products in those markets outside the United States where we sell in dollars and a weakened dollar could increase the cost of local operating expenses and procurement of raw materials to the extent that we must purchase components in foreign currencies. These exposures may change over time as business practices evolve, and they could materially harm our financial results and cash flows.

Our success has always depended in large part on our ability to attract and retain highly skilled technical, managerial, sales, and marketing personnel. Competition for such personnel is intense, especially in the Silicon Valley area of Northern California and other major United States locations. Stock incentive plans are designed to reward employees for their long-term contributions and provide incentives for them to remain with us. Volatility or lack of positive performance in our stock price or equity incentive awards, or changes to our overall compensation program, including our stock incentive program, resulting from the management of share dilution and share-based compensation expense or otherwise, may also negatively impact our ability to retain key employees. As a result of one or more of these factors, we may increase our hiring in geographic areas outside the United States, which could subject us to additional geopolitical and exchange rate risk. The loss of services of any of our key personnel; the inability to retain and attract qualified personnel in the future; or delays in hiring required personnel, particularly in engineering and sales fields, could make it difficult to meet key objectives, such as timely and effective product introductions. In addition, companies in our industry whose employees accept positions with competitors frequently claim that competitors have engaged in improper hiring practices. We have received these claims in the past and may receive additional claims in the future.

Our provision for income taxes is subject to volatility and could be negatively impacted by earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates; by changes in the valuation of our deferred tax assets and liabilities; by changes to foreign-derived intangible income, global intangible low-tax income and base erosion and anti-abuse tax, research and development capitalization and amortization, and corporate alternative minimum tax laws, regulations, or interpretations thereof; by expiration of or lapses in tax incentives; by transfer pricing adjustments, including the effect of acquisitions on our legal structure; by tax effects of nondeductible compensation; by tax costs related to intercompany realignments; by changes in accounting principles; or by changes in tax laws and regulations, treaties, or interpretations thereof, including changes to the taxation of earnings of our foreign subsidiaries, the deductibility of expenses attributable to foreign income, and the foreign tax credit rules. Significant judgment is required to determine the recognition and measurement attribute prescribed in the accounting guidance for uncertainty in income taxes. The Organisation for Economic Co-operation and Development (OECD), an international association comprised of 38 countries, including the United States, has made changes, including a Pillar Two framework that imposes a minimum tax rate of 15% in each taxing jurisdiction, and is contemplating additional changes to numerous long-standing tax principles. There can be no assurance that these changes and any contemplated changes if finalized, once adopted by countries, will not have an adverse impact on our provision for income taxes. Further, as a result of certain of our ongoing employment and capital investment actions and commitments, our income in certain countries was subject to reduced tax rates. Our failure to meet these commitments could adversely impact our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on our operating results and financial condition.

Our corporate headquarters, including certain of our research and development operations are located in the Silicon Valley area of Northern California, a region known for seismic activity. Additionally, a certain number of our facilities are located near rivers that have experienced flooding in the past. Also certain of our customers, suppliers and logistics centers are located in regions that have been or may be affected by earthquake, tsunami and flooding or other weather-related activity which in the past has disrupted, and in the future could disrupt, the flow of supply chain components and delivery of products. In addition, global climate change may result in significant natural disasters occurring more frequently and/or with greater intensity, such as drought, wildfires, storms, sea-level rise, changing precipitation, and flooding. We have not to date experienced a material event as a result of these kinds of natural disasters; however, the occurrence of any such event in the future could materially harm our business, operating results, and financial condition.

The continued threat of terrorism and heightened security and military action in response thereto, or any other current or future acts of terrorism, war (such as the ongoing Russia-Ukraine war and Middle East conflicts and wars), and other events (such as economic sanctions, trade restrictions or disruptions and reactions of the governments, markets and the general public, including the sanctions and restrictions related to the ongoing Russia-Ukraine war or arising out of the current conflicts and wars in the Middle East) may cause further disruptions to the economies of the United States and other countries and create further uncertainties or could otherwise negatively impact our business, operating results, and financial condition. Likewise, events such as loss of infrastructure and utilities services such as energy, transportation, or telecommunications could have similar negative impacts. To the extent that such disruptions or uncertainties result in delays or cancellations of customer orders or the manufacture or shipment of our products, our business, operating results, and financial condition could be materially harmed.

As of the end of the secondthird quarter of fiscal 2026, we have senior unsecured notes outstanding in an aggregate principal amount of $24.8$23.0 billion that mature at specific dates from calendar year 2026 through 2064. We have also established a commercial paper program under which we may issue short-term, unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $15.0 billion, and we had $5.5$8.4 billion in commercial paper notes outstanding under this program as of JanuaryApril 24,25, 2026. There can be no assurance that our incurrence of this debt or any future debt, including any additional debt to refinance maturing debt, will be a better means of providing liquidity to us than would our use of our existing cash resources. Further, we cannot be assured that our maintenance of this indebtedness or incurrence of future indebtedness will not negatively impact our operating results or financial condition. In addition, changes by any rating agency to our credit rating can negatively impact the value and liquidity of both our debt and equity securities, as well as the terms upon which we may borrow under our commercial paper program or future debt issuances.

We generally rely on patents, copyrights, trademarks, and trade secret laws to establish and maintain proprietary rights in our technology and products. Although we have been issued numerous patents and other patent applications are currently pending, there can be no assurance that any of these patents or other proprietary rights will not be challenged, invalidated, or circumvented or that our rights will, in fact, provide competitive advantages to us. Furthermore, many key aspects of our technology are governed by industry-wide standards, which are usable by all market entrants. In addition, there can be no assurance that patents will be issued from pending applications or that claims allowed on any patents will be sufficiently broad to protect our technology. Additionally, some U.S. governmental entities and courts have expressed a position that U.S. copyright and patent protection should be limited to protecting inventions and works of authorship created by humans. Therefore, U.S. copyright or patent protection for inventions or works developed in part or wholly by generative AI tools may be limited, or not available at all. In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent as do the laws of the United States. The outcome of any actions taken in these foreign countries may be different than if such actions were determined under the laws of the United States. Although we are not dependent on any individual patents or group of patents for particular segments of the business in which we compete, if we are unable to protect our proprietary rights to the totality of the features (including aspects of products protected other than by patent rights) in a market, we may find ourselves at a competitive disadvantage to others who need not incur the substantial expense, time, and effort required to create innovative products that have enabled us to be successful.

We experience cyber attacks and other attempts to gain unauthorized access on a regular basis to (i) our products and services (together, our “solutions”) and (ii) the servers, data centers, networks, systems, and cloud-based services operated or enabled by us, or by third parties upon which we rely, on or through which our and third-party data are stored, processed, or can be accessed (collectively, our “IT environment”). We anticipate continuing to be increasingly subject to such attempts as cyber attacks become more sophisticated and difficult to predict and protect against. Furthermore, the emergence and maturation of AI capabilities has led to new and/or more effective methods of cyber attacks. Despite our active implementation of security and other measures, our solutions and IT environment have been, and continue to be, vulnerable to cyber attacks, incidents, data breaches, malware, inadvertent error, disruptions, failures, physical security breaches, tampering or other theft or misuse, including by malicious actors (including criminals and activists) and by insider threats (including employees and contingent workers). Additionally, nation-state actors or their agents have in the past successfully attacked our solutions and IT environment and have also exploited vulnerabilities in our solutions to carry out attacks, and we anticipate that these attacks and the exploitation of vulnerabilities in our solutions will continue and may intensify during periods of diplomatic or armed conflict or other geopolitical tensions. Further, a cyber attack, vulnerability exploitation, or other incident could go undetected and persist in our environments,solutions and IT environment, or those of our customers or third-party providers upon which we rely, for extended periods. Cyber-related events have caused, and in the future could result in, compromise to, or the disruption of access to, the operation of our solutions and IT environment or those of our customers or third-party providers upon which we rely, or result in confidential, private or otherwise sensitive information stored on our systems or our customers’ or other third-party systems being improperly accessed, processed, disclosed now (or in the future), or being lost or stolen. Efforts to limit the ability of malicious actors to disrupt the operations of the Internet or undermine our security efforts are costly to implement and may not be successful. Breaches of security in our solutions or IT environment, our customers’ or third-party providers’ networks, or in third-party products we use, regardless of whether the breach is attributable to a vulnerability in our solutions, a failure by us to timely mitigate or apply a security fix for products we use that are found vulnerable, or a failure to maintain the digital security infrastructure or security tools that protect the integrity of our solutions and IT environment, could, in each case, result in claims of legal and/or regulatory action against us, damage our reputation or otherwise materially harm our business. The occurrence of a cyber attack, data breach or other incident could subject us to direct or indirect liability to our customers, data subjects, suppliers, business partners, employees, and others, give rise to legal and/or regulatory action, could damage our reputation or could otherwise negatively impact our business, any of which could materially harm our business, operating results, and financial condition.

The products and services (together, our “solutions”) we sell to customers, the third-party products and components that we integrate into our solutions and use in our operations, and the cloud-based services operated or enabled by us, or by third parties upon which we rely, inevitably contain vulnerabilities or security defects (despite our efforts to prevent and detect them through secure development lifecycle practices, testing, or other means), which have not been remedied or cannot be disclosed without compromising security. We also make prioritization decisions in determining which vulnerabilities or security defects to fix and the timing of these fixes. Even when we prioritize a vulnerability or security defect, in certain instances it has taken, and in the future could take, time for us to develop and test a remedy and the remedy may ultimately be insufficient to fully fix the issue or may be found to create other issues. Rapidly accelerating advances in AI technology are enabling threat actors, or autonomous systems, to identify and exploit vulnerabilities across both software and hardware with little or no delay between discovery and exploitation, including so-called “zero-minute” vulnerabilities, increasing the likelihood and speed of successful cyber attacks. These advances also show AI technology can rapidly chain otherwise low-severity, unrelated vulnerabilities into more severe combined exploits, complicating prioritization of security updates. As a result of these advances in AI technology, the time available to detect, assess and remediate vulnerabilities before exploitation has been significantly reduced or eliminated, increasing the risk of unauthorized access to, or compromise of, solutions we sell to customers, the third-party products and components that we integrate into our solutions and use in our operations, and the cloud-based services operated or enabled by us or by third parties upon which we rely. In addition, workarounds or other mitigation efforts with our solutions and in our and customer environments in certain instances have not been, and in the future may not be, availableavailable, sufficient, or sufficienttimely to protect customers prior to a security update being made available. Vulnerabilities can persist even after we have issued security updates if we have not identified and addressed the root cause of a particular vulnerability, if we are required to issue incomplete or preliminary mitigations as new threats rapidly emerge, if customers have not installed the most recent updates, if the attackers exploited the vulnerabilities before a security update is applied (such as to install additional malware to further compromise customers’ systems), or if a previously patched vulnerability is inadvertently reintroduced due to a security regression during future development or a changed deployment. Additionally, customers may also desire to test security updates before they can be deployed which can delay implementation. When customers do not deploy security updates in a timely manner, use solutions that are end of life and no longer receive security updates, decide not to upgrade to the latest versions of our solutions containing security updates or security enhancements, configure our solutions in insecure ways, or fail to sufficiently monitor activity on those solutions, they are left vulnerable. In addition, we rely on third-party providers of software (including open source) and cloud-based services on which our and third-party data is stored or processed, and we cannot control the timing at which third-party providers remedy vulnerabilities, which could leave us vulnerable. Further, any failure by us to timely implement, or by our customers to timely adopt, post-quantum cryptography in our solutions or IT systems as it becomes available could render existing cryptographic protections ineffective upon the emergence of viable quantum computing, exposing pre-quantum encrypted data and systems to compromise. Failure to comply with internal security policies and standards, including secure development lifecycle practices, failure to prevent or promptly mitigate vulnerabilities and security defects, failure of companies that we have acquired to have adequate organizational security practices,

which third-party providers remedy vulnerabilities, which could leave us vulnerable. Failure to comply with internal security policies and standards, including secure development lifecycle practices, failure to prevent or promptly mitigate vulnerabilities and security defects, prioritization errors in remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security updates in a timely manner, deciding not to upgrade solutions, or configuring our solutions in insecure waysways, could, in each case, result in claims of legal and/or regulatory action against us, damage our reputation, or otherwise materially harm our business.

Global privacy and data related laws and regulations, including cybersecurity laws, are evolving, extensive, and complex. Compliance with these laws and regulations is difficult and costly. In addition, evolving legal requirements restricting or controlling the collection, processing, use, sharing, accessaccess, or cross-border transmission of data, including regulation of cloud-based services, could materially affect our customers’ ability to use, and our ability to sell, our products and services. The interpretation and application of these laws in some instances are uncertain, and our legal obligations and customer requirements are subject to frequent changes. For example, the European Union’s (“EU”) General Data Protection Regulation (“GDPR”) and Data Act apply to our activities conducted from an establishment in the EU or related to products and services offered in the EU and imposes a range of compliance obligations regarding the handling of personal and industrial data for both ourselves and our customers. Additionally, we are subject to the California Privacy Rights Act, Singapore’s Personal Data Protection Act, and other laws, regulations, and obligations around the world that govern the handling of data. Our actual or perceived failure to comply with applicable laws and regulations or other obligations relating to the use of data and protecting data from unauthorized access, use, or other processing, could subject us to claims of liability, give rise to legal and/or regulatory action, damage our reputation, and/or otherwise negatively impact our business, any of which could materially harm our operating results and financial condition.

Changes in regulatory requirements applicable to the industries and sectors in which we operate, in the United States and in other countries, could materially affect our operations and the sales and use of our products and services. In particular, economic sanctions and changes to export and import control requirements have impacted and may continue to impact our ability to sell and support our products and services in certain jurisdictions. In addition, changes in telecommunications regulations could impact our service provider customers’ purchase and use of our products and services, and they could also impact sales of our own regulated offerings. Government and other customers’ procurement policies, priorities, regulations, technology initiatives and/or other obligations often give rise to evolving privacy, cybersecurity, operational resilience, data governance, sourcing, or other requirements; the failure or delay in meeting and maintaining compliance with such requirements could negatively impact our business, including by limiting our ability to sell products and services, directly or indirectly, to public sector, critical infrastructure, and other customers. Additional areas of uncertainty that could impact sales of our products and services include laws, regulations, or customer procurement requirements related to encryption technology, data, AI, privacy, cybersecurity, sovereignty, localization, operational resilience, environmental sustainability (including climate change), human rights, product certification, product and digital accessibility, country of origin, sourcing, national security, and other security controls applicable to our offerings and supply chain. Changes in regulatory requirements or our actual or perceived failure to comply (or to enable our customers to comply when using our offerings) with applicable laws, regulations, or other obligations could materially harm our business, operating results, and financial condition.

In the secondthird quarter of fiscal 2026, we delivered strong revenue growth and profitability as we saw a continued positive demand environment. Total revenue increased by 10%12% compared with the secondthird quarter of fiscal 2025. Within total revenue, product revenue increased by 14%17% and services revenue decreased by 1%. In the secondthird quarter of fiscal 2026, total software revenue was $5.7 billion across all product areas and services, an increase of 2%.1%. Total subscription revenue wasdecreased flat.2%.

Total gross margin decreased by 0.12.0 percentage points. Product gross margin increaseddecreased by 0.22.5 percentage points, primarily driven by negative impacts from product mix and higher memory costs, partially offset by productivity improvements and lower amortization of purchased intangible assets, partially offset by negative impacts from product mix and pricing.assets. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, decreased by 2.33.8 percentage points. Operating income as a percentage of revenue increased by 2.32.4 percentage points, primarily driven by revenue growthgrowth, andpartially offset by lower amortizationgross of purchased intangible assetsmargin in the secondthird quarter of fiscal 2026. Diluted earnings per share increased 31%,37%, driven by revenue growth and operating margin improvement.

Total revenue increased 9%,10%, with product revenue increasing 12%13% and services revenue was flat. Total gross margin decreased 0.30.8 percentage points, primarily driven by negative impacts from product mix and to a lesser extent pricing, partially offset by productivity improvements and lower amortization of purchased intangible assets. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, decreased by 2.02.6 percentage points. Operating income as a percentage of revenue increased by 3.93.4 percentage points, primarily driven by higher revenue, lower restructuring and other charges and lower amortization of purchased intangible assetsassets, partially offset by lower gross margin in the first sixnine months of fiscal 2026. Diluted earnings per share increased 18%,24%, driven by revenue growth and operating margin improvement, partially offset by the income tax benefit of $720 million we had in the first sixnine months of fiscal 2025.

The following is a summary of our other key financial measures for the secondthird quarter of fiscal 2026 (in millions):

Our total provisions for inventory and the liability related to purchase commitments with contract manufacturers and suppliers were $104$187 million and $357$459 million for the first sixnine months of fiscal 2026 and 2025, respectively. If there were to be a sudden and significant decrease in demand for our products, or a higher incidence of inventory obsolescence because of rapidly changing technology or customer requirements, then we could be required to increase our inventory write-downs, and our liability for purchase commitments with contract manufacturers and suppliers, and accordingly our profitability, could be adversely affected. We regularly evaluate our exposure for inventory write-downs and the adequacy of our liability for purchase commitments. For further discussion around the supply chain impacts and risks, see “—Results of Operations—Gross Margin—Supply Chain Impacts and Risks” and “—Liquidity and Capital Resources—Inventory Supply Chain.”

In response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairment of goodwill. There was no impairment of goodwill in each of the first sixnine months of fiscal 2026 and 2025.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective tax rates differ from the statutory rate, primarily due to the tax impact of state taxes, foreign operations, R&D tax credits, foreign-derived intangible income deductions, global intangible low-taxed income, tax audit settlements, nondeductible compensation, and international realignments. Our effective tax rate was 12.9%16.5% and 15.9%15.5% in the secondthird quarter of fiscal 2026 and 2025, respectively and 14.2%15.1% and 0.3%5.8% in the first sixnine months of fiscal 2026 and 2025, respectively.

Product revenue in the EMEA segment increased by 19%,11%, with growth across each of our customer markets. From a country perspective, product revenue increased in Germany and the United Kingdom and Germany by 23%26% and 41%,7%, respectively.

Product revenue in the EMEA segment increased by 13%,12%, with growth across each of our customer markets. From a country perspective, product revenue increased in Germany and the United Kingdom and Germany by 12%24% and 22%,11%, respectively.

Product revenue in the APJC segment increased by 9%,14%, with growth across each of our customer markets. From a country perspective, product revenue increased in Japan, IndiaIndia, Australia and China by 19%,12%, 1%,22%, 19% and 5%,42%, respectively, partially offset by a decline in Australia of 6%.respectively.

The Networking product category consists of our core networking technologies of switching, routing, wireless, and servers. Revenue from the Networking product category increased by 21%,25%, or $1.4$1.7 billion primarily driven by our AI Infrastructure and Campus Networking solutions. The increase was primarily driven by growth across the portfolio led by double digit revenue growth in ServiceCampus Provider Routing,Switching, Data Center Switching, Campus Switching, Enterprise Routing, Wireless and Compute.Service Provider Routing.

Revenue from the Networking product category increased by 18%,20%, or $2.5$4.2 billion. The increase was primarily driven by double digit revenue growth in Service Provider Routing, particularly within our AI Infrastructure solutions, Data Center SwitchingSwitching, Campus Switching, Wireless and Enterprise Routing. We also experienced revenue growth in Campus Switching and Wireless.

The Security product category consists of our Network Security, Identity and Access Management, SASE and Threat Intelligence, Detection, and Response offerings. Revenue in our Security product category decreasedwas by 4%, or $93 million. The decline wasflat, primarily driven by declines in our prior generation products and Splunk offerings. We continued to see a change in how our customers consumed Splunk offerings, shifting from fewer on-premise deals to more cloud subscriptions. These declines were partially offset by growth in new and refreshed products.

Revenue from the Security product category decreased by 3%,2%, or $131$136 million, primarily driven by Threat Intelligence, Detection, and Response offerings and our prior generation products, partially offset by growth in SASE and Duo offerings.

The Collaboration product category consists of our Webex Suite, Collaboration Devices, Contact Center and CPaaS offerings. Revenue in our Collaboration product category increaseddecreased by 6%,1%, or $58$7 million, primarily driven by doubledeclines digitin revenueWebex Suite offerings partially offset by growth in our Collaboration Devices, Cloud Contact Center and CPaaS offerings. We also experienced growth in our Webex Suite offerings.

Revenue from the Collaboration product category increased by 1%, or $28$21 million, primarily driven by revenue growth in our Collaboration Devices and CPaaS offerings, partially offset by declines in Webex Suite offerings.

The Observability product category consists of our network assurance, monitoring and analytics and observability suite offerings. Revenue in our Observability product category wasincreased flat,by 3%, primarily due to growth in ThousandEyesThousandEyes, partially offset by a decline in Splunk offerings.

Revenue from Observability product category increased by 3%, or $15$24 million, primarily driven by growth in ThousandEyes.ThousandEyes, partially offset by a decline in Splunk offerings.

Services revenue decreased by 1% in the secondthird quarter of fiscal 2026 compared with the secondthird quarter of fiscal 2025, with the decline primarily driven by lower revenue from support services, partially offset by higher professional services. Services revenue declined in the Americas segment,and APJC segments, partially offset by an increase in the EMEA segment for the secondthird quarter of fiscal 2026. Service revenue in the APJC segment was flat.

Services revenue was flat in the first sixnine months of fiscal 2026 compared to the first sixnine months of fiscal 2025. Services revenue increased in the EMEA and APJC segments,segment, offset by a decline in the Americas segment. Services revenue in the APJC segment was flat.

The following table summarizes the key factors that contributed to the change in product gross margin percentage for the secondthird quarter and first sixnine months of fiscal 2026, as compared with the corresponding prior year periods:

(1) Productivity includes overall manufacturing-related costs, such as component costs,costs (including memory), warranty expense, provisions for inventory and the liability related to the purchase commitments with contract manufacturers and suppliers, freight, logistics, shipment volume, and other items not categorized elsewhere.

Product gross margin decreased by 0.22.5 percentage points primarily driven by negative impacts from product mix and to a lesser extent, pricing, partially offset by productivity improvementsimprovements. andThe lowernegative amortizationimpacts offrom purchasedproduct intangiblemix assets.were primarily due to higher Networking revenue. Productivity benefits were adversely impacted by higher memory costs.

Our services gross margin percentage decreasedincreased by 0.5 percentage points in the secondthird quarter of fiscal 2026 and decreasedincreased by 0.1 percentage points in the first sixnine months of fiscal 2026. For each of the secondthird quarter and first sixnine months of fiscal 2026, the decreaseincrease in services gross margin was primarily drivendue byto highercost headcount costs and mix of service offerings.efficiencies.

We experienced a gross margin percentage decrease in our Americas segment due to negative impacts from product mix, pricingmix and lowerto servicesa grosslesser margin,extent pricing, partially offset by positive impacts from productivity improvements.

Gross margin percentage in our EMEA segment increased slightly primarily due to productivity improvements,improvements and to a lesser extent pricing, partially offset by negative impacts from product mix and pricing.mix.

The decrease in the APJC segment gross margin percentage was primarily due to product mixmix, pricing and pricing,negative partiallyimpacts offsetfrom by productivity improvements.productivity.

R&D expenses increased primarily due to higher discretionary spending and higher headcount-related expenses reflecting our investments in AI and higher discretionary spending,AI, partially offset by lower acquisition-related costs.costs and lower contracted services spending.

R&D expenses increased primarily due to higher share-based compensation expense, higher discretionary spending and higher headcount-related expenses reflecting our investments in AI, higher share-based compensation expense and higher discretionary spending, partially offset by lower acquisition-related costs.costs and lower contracted services spending.

Sales and marketing expenses increased primarily due to higher headcount-related expenses,expenses and higher contracted servicesservices, partially offset by lower acquisition-related costs and higherlower discretionary spending.

Sales and marketing expenses increased primarily due to higher headcount-related expenses, higher share-based compensation expense,expense and higher contracted services spending, andpartially higheroffset discretionaryby spending.lower acquisition-related costs.

G&A expenses decreased primarily due to lower headcount-related expensesexpenses, lower acquisition-related costs and lower acquisition-relateddiscretionary costs.spending.

G&A expenses decreased primarily due to lower acquisition-related costs and lower headcount-related expenses.expenses, partially offset by higher discretionary spending.

In the secondthird quarter of fiscal 2026, foreign currency fluctuations, net of hedging, increased the combined R&D, sales and marketing, and G&A expenses by approximately $56$90 million, or 1.0%,1.6%, compared with the secondthird quarter of fiscal 2025.

In the first sixnine months of fiscal 2026, foreign currency fluctuations, net of hedging, increased the combined R&D, sales and marketing, and G&A expenses by approximately $91$181 million, or 0.8%,1.0%, compared with the first sixnine months of fiscal 2025.

For each of the secondthird quarter and first sixnine months of fiscal 2026, the decrease in amortization of purchased intangible assets was primarily due to certain purchased intangible assets that became fully amortized and impairment charges of $19 million recognized in the correspondingfirst periodsnine months of fiscal 2025. Impairment charges were as a result of declines in estimated fair value resulting from the reductions in or the elimination of expected future cash flows associated with certain technology intangible assets.

InWe the first quarter of fiscal 2025, we announcedinitiated a restructuring plan in fiscal 2025 in order to allow us to invest in key growth opportunities and drive more efficiencies in our business. In connection with this restructuring plan, we incurred cumulative charges of $36$926 million and $183 million in the second quarter and first six months of fiscal 2026. Wesubstantially completed this restructuring plan in the second quarter of fiscal 2026.

Operating income increased by 21%,24%, and operating income as a percentage of revenue increased by 2.32.4 percentage points. These changes primarily resulted from revenue growthgrowth, andpartially offset by lower amortizationgross of purchased intangible assetsmargin in the secondthird quarter of fiscal 2026.

Operating income increased by 31%,28%, and operating income as a percentage of revenue increased by 3.93.4 percentage points. These changes primarily resulted from revenue growth, lower restructuring and other charges and lower amortization of purchased intangible assets in the first sixnine months of fiscal 2026.

For the secondthird quarter and first sixnine months of fiscal 2026, the decrease in interest income was driven by a lower average balance of cash and available-for-sale debt investments and lower interest rates. The decrease in interest expense was driven by a lower average balance of debt outstanding and lower effective interest rate on commercial paper during the respective periods.

For eachthe third quarter of fiscal 2026, the secondchange quarterin our other income (loss), net was primarily driven by higher gains on our marketable and non-marketable equity securities. For the first sixnine months of fiscal 2026, the change in our other income (loss), net was primarily driven by higher gains on privatelynon-marketable heldequity securities and lower losses on our available-for-sale debt investments.

The provision for income taxes resulted in an effective tax rate of 12.9%16.5% for the secondthird quarter of fiscal 2026, compared with an effective tax rate of 15.9%15.5% for the secondthird quarter of fiscal 2025. The decreaseincrease in the effective tax rate was primarily due to a decrease in foreign derived intangible income deduction partially offset by an increase in stock-basedresearch compensationtax windfallcredit benefit.

The provision for income taxes resulted in an effective tax rate of 14.2%15.1% for the first sixnine months of fiscal 2026, compared with an effective tax rate of 0.3%5.8% for the first sixnine months of fiscal 2025. The increase in the effective tax rate was primarily due to a $720 million tax benefit related to the U.S. Tax Court opinion issued during the first quarter of fiscal 2025 regarding the U.S. taxation of deemed foreign dividends in the transition year of the Tax Cut and Job Act (our fiscal 2018).

Securities Lending We periodically engage in securities lending activities with certain of our available-for-sale debt investments. These transactions are accounted for as a secured lending of the securities, and the securities are typically loaned only on an overnight basis. We require collateral equal to at least 102% of the fair market value of the loaned security and that the collateral be in the form of cash or liquid, high-quality assets. We engage in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify us against collateral losses. We did not experience any losses in connection with the secured lending of securities during the periods presented. As of JanuaryApril 24,25, 2026 and July 26, 2025, we had no outstanding securities lending transactions.

The net cash provided by operating activities in the first sixnine months of fiscal 2026 includes our final U.S. transition tax payment of $2.3 billion.

On FebruaryMay 11,13, 2026, our Board of Directors declared a quarterly dividend of $0.42 per common share to be paid on AprilJuly 22, 2026, to all stockholders of record as of the close of business on AprilJuly 2,6, 2026. Future dividends will be subject to the approval of our Board of Directors.

As of JanuaryApril 24,25, 2026, the remaining authorized amount for stock repurchases under this program is approximately $10.8$9.6 billion, with no termination date.