Cisco Systems (NASDAQ: CSCO) reported record third-quarter revenue of 15.84 billion dollars on Wednesday, beating Wall Street estimates of 15.56 billion dollars and sending shares surging by more than 17 percent in after-hours trading.
Alongside the strong financial results, the company announced a restructuring plan that will see fewer than 4,000 employees cut from the workforce this quarter, representing less than five percent of total headcount.
Adjusted earnings per share came in at 1.06 dollars against an expectation of 1.04 dollars, with year-over-year revenue growth reaching 12 percent compared to the 14.15 billion dollars posted in the same period a year earlier. The San Jose-based networking giant described its product revenue as growing 17 percent, driven by a 25 percent jump in networking revenue to 8.82 billion dollars. Security revenue held roughly flat at approximately 2 billion dollars.
CEO Chuck Robbins described the performance as evidence of the company’s positioning within the AI infrastructure buildout. “Cisco delivered record quarterly revenue in Q3 and we saw very strong, broad-based demand for our products, demonstrating the relevance of our technology for connecting and securing AI,” Robbins said. “Cisco is well-positioned as the critical infrastructure for the AI era, building on our technology leadership and customer trust.”
The numbers that captured attention beyond the headline figures were in the AI infrastructure order book. The company has secured 5.3 billion dollars in AI infrastructure and hyperscaler orders in the current fiscal year to date, and raised its full-year expectation for such orders from 5 billion to 9 billion dollars. Revenue from the segment is now projected at 4 billion dollars for the year, up from an earlier forecast of 3 billion dollars.
Cisco’s stock had already gained 33 percent this year heading into earnings, outpacing the Nasdaq’s 14 percent advance over the same period. The share price had recently surpassed its dot-com era peak for the first time in over two decades, a symbolic milestone for a company that has spent years being perceived as a laggard in the AI transition relative to its data centre peers.
The restructuring charge will result in pre-tax costs of up to 1 billion dollars, with approximately 450 million dollars expected to be recognised in the next fiscal quarter and the remainder carrying into fiscal 2027. The job cuts begin today and will be supported by severance packages, extended training resources, and placement assistance. Full-year revenue guidance was lifted to a range of 62.8 to 63 billion dollars, up from the prior outlook of 61.2 to 61.7 billion dollars.
The combination of record results and layoffs is not unusual in the current tech cycle. Companies across the sector are redirecting headcount from legacy divisions toward AI-related functions, accepting short-term costs in exchange for what they project as stronger positioning in future growth markets. Cisco’s execution of this strategy this quarter was more convincing than most quarters in recent memory.
