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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________________________

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~April~~October 2625, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-39940

_____________________________________

CISCO SYSTEMS, INC.

(Exact name of registrant as specified in its charter)


Delaware						77-0059951
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

170 West Tasman Drive

San Jose, California 95134

(Address of principal executive office and zip code)

(408) 526-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and formal fiscal year, if changed since last report.)

_____________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CSCO	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of the registrant’s common stock outstanding as of ~~May~~November 1513, 2025: 3,~~959~~951,~~998~~094,~~180~~563

____________________________________

Table of Contents

Cisco Systems, Inc.

Form 10-Q for the Quarter Ended ~~April~~October 2625, 2025

INDEX

Page

Part I

Financial Information

Item 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets at April 26, 2025 and July 27, 2024

Consolidated Balance Sheets at October 25, 2025 and July 26, 2025

Consolidated Statements of Operations for the Three and Nine Months Ended April 26, 2025 and April 27, 2024

Consolidated Statements of Operations for the Three Months Ended October 25, 2025 and October 26, 2024

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended April 26, 2025 and April 27, 2024

Consolidated Statements of Comprehensive Income for the Three Months Ended October 25, 2025 and October 26, 2024

Consolidated Statements of Cash Flows for the Nine Months Ended April 26, 2025 and April 27, 2024

Consolidated Statements of Cash Flows for the Three Months Ended October 25, 2025 and October 26, 2024

Consolidated Statements of Equity for the Three and Nine Months Ended April 26, 2025 and April 27, 2024

Consolidated Statements of Equity for the Three Months Ended October 25, 2025 and October 26, 2024

Notes to Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

4035

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

6153

Item 4.

Controls and Procedures

6254

Part II.

Other Information

6254

Item 1.

Legal Proceedings

6254

Item 1A.

Risk Factors

6355

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

7870

Item 3.

Defaults Upon Senior Securities

7870

Item 4.

Mine Safety Disclosures

7870

Item 5.

Other Information

7870

Item 6.

Exhibits

8072

Signature

8173

Table of Contents

PART I. FINANCIAL INFORMATION


Item 1.			Financial Statements (Unaudited)

CISCO SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except par value)

(Unaudited)

	April 26, 2025		July 27, 2024
	October 25, 2025		July 26, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	8,~~161~~400	$	78,~~508~~346
Investments	7,~~481~~336		107,~~346~~764
Accounts receivable, net of allowance of $82 at April 26, 2025 and $87 at July 27, 2024	5,277		6,685
Accounts receivable, net of allowance of $62 at October 25, 2025 and $69 at July 26, 2025	4,827		6,701
Inventories	23,~~832~~395		3,~~373~~164
Financing receivables, net	23,~~958~~085		3,~~338~~061
Other current assets	65,~~107~~833		5,~~612~~950
Total current assets	32,~~816~~876		3634,~~862~~986
Property and equipment, net	2,~~076~~248		2,~~090~~113
Financing receivables, net	3,~~247~~719		3,~~376~~466
Goodwill	59,~~024~~119		5859,~~660~~136
Purchased intangible assets, net	98,~~643~~713		119,~~219~~175
Deferred tax assets	7,~~016~~314		67,~~262~~356
Other assets	57,~~960~~113		56,~~944~~059
TOTAL ASSETS	$	~~119~~121,~~782~~102	$	~~124~~122,~~413~~291
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	6,~~422~~725	$	115,~~341~~232
Accounts payable	2,~~260~~418		2,~~304~~528
Income taxes payable	12,~~821~~471		1,~~439~~857
Accrued compensation	3,~~210~~064		3,~~608~~611
Deferred revenue	1615,~~081~~801		16,~~249~~416
Other current liabilities	4,~~701~~972		5,~~643~~420
Total current liabilities	3435,~~495~~451		4035,~~584~~064
Long-term debt	2221,~~857~~364		1922,~~621~~861
Income taxes payable	12,~~874~~172		32,~~985~~165
Deferred revenue	1112,~~910~~168		12,~~226~~363
Other long-term liabilities	23,~~711~~074		2,~~540~~995
Total liabilities	7374,~~847~~229		7875,~~956~~448
Commitments and contingencies (Note 14)
Equity:
Cisco stockholders’ equity:
Preferred stock, $0.001 par value: 5 shares authorized; none issued and outstanding	—		—
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 3,960 and 4,007 shares issued and outstanding at April 26, 2025 and July 27, 2024, respectively	46,916		45,800
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 3,938 and 3,960 shares issued and outstanding at October 25, 2025 and July 26, 2025, respectively	48,167		47,747
Retained earnings	152		1,087
Retained earnings (Accumulated deficit)	(364)		50
Accumulated other comprehensive loss	(~~1,133~~930)		(~~1,430~~954)
Total equity	4546,~~935~~873		4546,~~457~~843
TOTAL LIABILITIES AND EQUITY	$	~~119~~121,~~782~~102	$	~~124~~122,~~413~~291

See Notes to Consolidated Financial Statements.

Table of Contents

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per-share amounts)

(Unaudited)

Three Months Ended

~~Nine Months Ended~~

April 26, 2025

April 27, 2024

April 26, 2025

April 27, 2024

October 25, 2025

October 26, 2024

REVENUE:

Product

1011,~~374~~077

910,~~024~~114

~~30,722~~

~~29,395~~

Services

3,~~775~~806

3,~~678~~727

~~11,259~~

~~10,766~~

Total revenue

14,~~149~~883

1213,~~702~~841

~~41,981~~

~~40,161~~

COST OF SALES:

Product

3,~~688~~934

3,~~295~~526

~~10,927~~

~~10,695~~

Services

1,~~183~~204

1,~~134~~194

~~3,544~~

~~3,419~~

Total cost of sales

45,~~871~~138

4,~~429~~720

~~14,471~~

~~14,114~~

GROSS MARGIN

9,~~278~~745

89,~~273~~121

~~27,510~~

~~26,047~~

OPERATING EXPENSES:

Research and development

2,~~335~~400

12,~~948~~286

~~6,920~~

~~5,804~~

Sales and marketing

2,~~724~~871

2,~~559~~752

~~8,148~~

~~7,523~~

General and administrative

~~739~~733

~~736~~795

~~2,286~~

~~2,050~~

Amortization of purchased intangible assets

~~244~~231

~~297~~265

~~774~~

~~430~~

Restructuring and other charges

34147

~~542~~665

~~709~~

~~677~~

Total operating expenses

6,~~076~~382

6,~~082~~763

~~18,837~~

~~16,484~~

OPERATING INCOME

3,~~202~~363

2,~~191~~358

~~8,673~~

~~9,563~~

Interest income

~~250~~222

~~411~~286

~~774~~

~~1,095~~

Interest expense

(~~403~~350)

(~~357~~418)

~~(1,225)~~

~~(588)~~

Other income (loss), net

~~(102)~~156

~~(10)~~41

~~(121)~~

~~(232)~~

Interest and other income (loss), net

~~(255)~~28

44(91)

~~(572)~~

~~275~~

INCOME BEFORE PROVISION FOR INCOME TAXES

23,~~947~~391

2,~~235~~267

~~8,101~~

~~9,838~~

Provision for income taxes

456

349

471

1,680

Provision for (benefit from) income taxes

531

(444)

NET INCOME

2,~~491~~860

12,~~886~~711

~~7,630~~

~~8,158~~

Net income per share:

Basic

0.6372

0.4768

~~1.92~~

~~2.01~~

Diluted

0.6272

0.4668

~~1.91~~

~~2.00~~

Shares used in per-share calculation:

Basic

3,~~972~~956

43,~~042~~990

~~3,981~~

~~4,051~~

Diluted

43,~~002~~993

4,~~060~~013

~~4,004~~

~~4,071~~

See Notes to Consolidated Financial Statements.

Table of Contents

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(Unaudited)

	Three Months Ended				~~Nine Months Ended~~
	April 26, 2025		April 27, 2024		April 26, 2025		April 27, 2024
	October 25, 2025		October 26, 2024
Net income	$	2,~~491~~860	$	12,~~886~~711	$	~~7,630~~	$	~~8,158~~
Available-for-sale investments:
Change in net unrealized gains and losses, net of tax benefit (expense) of $(10) and $(27) for the third quarter and first nine months of fiscal 2025, respectively, and $19 and $(14) for the corresponding periods of fiscal 2024, respectively	41		(39)		99		60
Change in net unrealized gains and losses, net of tax benefit (expense) of $(10) and $(17) for the first quarter of fiscal 2026 and 2025, respectively	38		54
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $(8) and $(31) for the third quarter and first nine months of fiscal 2025, respectively, and $(3) and $(12) for the corresponding periods of fiscal 2024, respectively	22		11		44		45
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $(1) and $(6) for the first quarter of fiscal 2026 and 2025, respectively	3		19
	63		(28)		143		105
	41		73
Cash flow hedging instruments:
Change in unrealized gains and losses, net of tax benefit (expense) of $16 and $1 for the third quarter and first nine months of fiscal 2025, respectively, and $(20) and $(29) for the corresponding periods of fiscal 2024, respectively	(54)		63		(4)		93
Change in unrealized gains and losses, net of tax benefit (expense) of $(10) and $(2) for the first quarter of fiscal 2026 and 2025, respectively	32		7
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $4 and $9 for the third quarter and first nine months of fiscal 2025, respectively, and $4 and $9 for the corresponding periods of fiscal 2024, respectively	(11)		(9)		(30)		(27)
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $2 for each of the first quarter of fiscal 2026 and 2025	(7)		(7)
	(65)		54		(34)		66
	25		—
Net change in cumulative translation adjustment and actuarial gains and losses net, of tax benefit (expense) of $0 for each of the third quarter and first nine months of fiscal 2025, and $(2) and $(1) for the corresponding periods of fiscal 2024, respectively	362		(144)		188		(226)
Net change in cumulative translation adjustment and actuarial gains and losses, net of tax benefit (expense) of $(1) and $0 for the first quarter of fiscal 2026 and 2025, respectively	(42)		(19)
Other comprehensive income (loss)	360		(118)		297		(55)
Other comprehensive income	24		54
Comprehensive income	$	2,~~851~~884	$	12,~~768~~765	$	~~7,927~~	$	~~8,103~~

See Notes to Consolidated Financial Statements.

Table of Contents

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

	Nine Months Ended
	Three Months Ended
	April 26, 2025		April 27, 2024
	October 25, 2025		October 26, 2024
Cash flows from operating activities:
Net income	$	72,~~630~~860	$	82,~~158~~711
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other	~~2,176~~606		~~1,684~~789
Share-based compensation expense	21,~~693~~055		~~2,274~~827
Provision for receivables	17		19
Benefit from receivables	(3)		(1)
Deferred income taxes	~~(792)~~25		(~~245~~281)
(Gains) losses on divestitures, investments and other, net	52(178)		~~224~~(60)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable	1,~~406~~857		12,~~286~~227
Inventories	~~541~~(234)		~~530~~229
Financing receivables	~~505~~(312)		92173
Other assets	(~~516~~592)		(~~382~~190)
Accounts payable	(10108)		(~~300~~269)
Income taxes, net	(~~2,002~~128)		(~~5,223~~806)
Accrued compensation	(~~431~~539)		(~~1,092~~754)
Deferred revenue	(~~524~~723)		~~211~~(971)
Other liabilities	(~~786~~374)		~~(86)~~37
Net cash provided by operating activities	93,~~959~~212		73,~~150~~661
Cash flows from investing activities:
Purchases of investments	(31,~~066~~984)		(31,~~044~~775)
Proceeds from sales of investments	21,~~228~~269		31,~~874~~490
Proceeds from maturities of investments	31,~~985~~222		51,~~804~~164
Acquisitions, net of cash and cash equivalents acquired and divestitures	(~~291~~7)		(~~25,874~~217)
Purchases of investments in privately held companies	(~~265~~18)		(8242)
Return of investments in privately held companies	~~108~~19		~~146~~77
Acquisition of property and equipment	(~~688~~323)		(~~472~~217)
Other	(522)		(21)
Net cash provided by (used in) investing activities	2,006		(19,650)
Net cash provided by investing activities	156		479
Cash flows from financing activities:
Issuances of common stock	320		347
Repurchases of common stock—repurchase program	(1,992)		(2,003)
Repurchases of common stock—repurchase program	(4,748)		(3,772)
Shares repurchased for tax withholdings on vesting of restricted stock units	(284)		(165)
Shares repurchased for tax withholdings on vesting of restricted stock units	(910)		(765)
Short-term borrowings, original maturities of 90 days or less, net	1,260		68
Short-term borrowings, original maturities of 90 days or less, net	(479)		1,547
Issuances of debt	1,559		5,732
Issuances of debt	17,388		24,159
Repayments of debt	(2,788)		(4,821)
Repayments of debt	(18,545)		(2,195)
Dividends paid	(1,617)		(1,592)
Repayments of Splunk convertible debt, net of capped call proceeds	—		(3,140)
Other	(1)		(3)
Dividends paid	(4,812)		(4,778)
Net cash used in financing activities	(3,863)		(2,784)
Other	(80)		(52)
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	(14)		10
Net cash provided by (used in) financing activities	(11,866)		11,351
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	(509)		1,366
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	(23)		(39)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period	8,910		8,842
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	76		(1,188)
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	$	8,401	$	10,208
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period	8,842		11,627
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	$	8,918	$	10,439
Supplemental cash flow information:
Cash paid for interest	$	~~1,370~~616	$	~~350~~545
Cash paid for income taxes, net	$	~~3,265~~634	$	~~7,150~~643

See Notes to Consolidated Financial Statements.

Table of Contents

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except per-share amounts)

(Unaudited)

Three Months Ended April 26, 2025	Shares ofCommonStock	Common StockandAdditionalPaid-In Capital		Retained Earnings		AccumulatedOtherComprehensive Loss		TotalEquity
Three Months Ended October 25, 2025	Shares ofCommonStock	Common StockandAdditionalPaid-In Capital		Retained Earnings (Accumulated Deficit)		AccumulatedOtherComprehensive Loss		TotalEquity
Balance at January 25, 2025	3,977	$	46,521	$	502	$	(1,493)	$	45,530
Balance at July 26, 2025	3,960	$	47,747	$	50	$	(954)	$	46,843
Net income				2,~~491~~860				2,~~491~~860
Other comprehensive income (loss)						~~360~~24		~~360~~24
Issuance of common stock	12	—						—
Repurchase of common stock	(2529)	(~~295~~354)		(1,~~209~~647)				(12,~~504~~001)
Shares repurchased for tax withholdings on vesting of restricted stock units and other	(45)	(~~256~~282)						(~~256~~282)
Cash dividends declared ($0.41 per common share)				(1,~~627~~617)				(1,~~627~~617)
Share-based compensation		~~945~~1,055						~~945~~1,055
Other		1		(510)				(49)
Balance at April 26, 2025	3,960	$	46,916	$	152	$	(1,133)	$	45,935
Balance at October 25, 2025	3,938	$	48,167	$	(364)	$	(930)	$	46,873

Nine Months Ended April 26, 2025	Shares ofCommonStock	Common StockandAdditionalPaid-In Capital		Retained Earnings		AccumulatedOtherComprehensive Loss		TotalEquity
Three Months Ended October 26, 2024	Shares ofCommonStock	Common StockandAdditionalPaid-In Capital		Retained Earnings		AccumulatedOtherComprehensive Loss		TotalEquity
Balance at July 27, 2024	4,007	$	45,800	$	1,087	$	(1,430)	$	45,457
Net income				72,~~630~~711				72,~~630~~711
Other comprehensive income (loss)						~~297~~54		~~297~~54
Issuance of common stock	5611	~~320~~—						~~320~~—
Repurchase of common stock	(8640)	(~~1,001~~462)		(31,~~742~~541)				(42,~~743~~003)
Shares repurchased for tax withholdings on vesting of restricted stock units and other	(174)	(~~905~~174)						(~~905~~174)
Cash dividends declared ($1.21 per common share)				(4,812)				(4,812)
Cash dividends declared ($0.40 per common share)				(1,592)				(1,592)
Share-based compensation		~~2,693~~827						~~2,693~~827
Other		9—		(113)				(23)
Balance at April 26, 2025	3,960	$	46,916	$	152	$	(1,133)	$	45,935
Balance at October 26, 2024	3,974	$	45,991	$	662	$	(1,376)	$	45,277

See Notes to Consolidated Financial Statements.

Table of Contents

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except per-share amounts)

(Unaudited)

Three Months Ended April 27, 2024	Shares ofCommonStock	Common StockandAdditionalPaid-In Capital		Retained Earnings		AccumulatedOtherComprehensive Loss		TotalEquity
Balance at January 27, 2024	4,050	$	45,002	$	2,761	$	(1,512)	$	46,251
Net income				1,886				1,886
Other comprehensive income (loss)						(118)		(118)
Issuance of common stock	11	(2)						(2)
Repurchase of common stock	(26)	(283)		(973)				(1,256)
Shares repurchased for tax withholdings on vesting of restricted stock units and other	(4)	(186)						(186)
Cash dividends declared ($0.40 per common share)				(1,615)				(1,615)
Share-based compensation		811						811
Other		1		(4)				(3)
Balance at April 27, 2024	4,031	$	45,343	$	2,055	$	(1,630)	$	45,768

Nine Months Ended April 27, 2024	Shares ofCommonStock	Common StockandAdditionalPaid-In Capital		Retained Earnings		AccumulatedOtherComprehensive Loss		TotalEquity
Balance at July 29, 2023	4,066	$	44,289	$	1,639	$	(1,575)	$	44,353
Net income				8,158				8,158
Other comprehensive income (loss)						(55)		(55)
Issuance of common stock	54	347						347
Repurchase of common stock	(74)	(811)		(2,951)				(3,762)
Shares repurchased for tax withholdings on vesting of restricted stock units and other	(15)	(767)						(767)
Cash dividends declared ($1.18 per common share)				(4,778)				(4,778)
Share-based compensation		2,274						2,274
Other		11		(13)				(2)
Balance at April 27, 2024	4,031	$	45,343	$	2,055	$	(1,630)	$	45,768

See Notes to Consolidated Financial Statements.

Table of Contents

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.Organization and Basis of Presentation

The fiscal year for Cisco Systems, Inc. (the “Company,” “Cisco,” “we,” “us,” or “our”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal ~~2025~~2026 and fiscal ~~2024~~2025 are each 52-week fiscal years. The Consolidated Financial Statements include our accounts and those of our subsidiaries and those of our investments consolidated under the voting interest method. All intercompany accounts and transactions have been eliminated. We conduct business globally and are primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).

We have prepared the accompanying financial data as of ~~April~~October 2625, 2025 and for the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2025~~2026 and ~~2024~~2025, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. The July 2726, ~~2024~~2025 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 2726, ~~2024~~2025.

In the opinion of management, all normal recurring adjustments necessary to state fairly the consolidated balance sheet as of ~~April~~October 2625, 2025, the results of operations, the statements of comprehensive income, ~~and~~ the statements of ~~equity~~cash ~~for~~flows ~~the third quarter~~ and ~~first nine months of fiscal 2025 and 2024, and~~ the statements of ~~cash~~equity ~~flows~~ for the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 and ~~2024~~2025, as applicable, have been made. The results of operations for the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2025~~2026 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Our consolidated financial statements include our accounts and investments consolidated under the voting interest model. The noncontrolling interests attributed to these investments are not presented as a separate component in the equity section of the Consolidated Balance Sheets as these amounts are not material for any of the fiscal periods presented. The share of earnings attributable to the noncontrolling interests are not presented separately in the Consolidated Statements of Operations as these amounts are not material for any of the fiscal periods presented.

We have evaluated subsequent events through the date that the financial statements were issued.

2.Recent Accounting Pronouncements

(a)Recent Accounting Standards or Updates Not Yet Effective

Segment Reporting In November 2023, the Financial Accounting Standards Board (FASB) issued an accounting standard update that expands the disclosure requirements for reportable segments, primarily through enhanced disclosures around significant segment expenses. The accounting standard update will be effective for our fiscal 2025 Form 10-K on a retrospective basis, and early adoption is permitted. We are currently evaluating the impact of this accounting standard update on our segment disclosures.

Improvements on Income Tax Disclosures In December 2023, the FASB issued an accounting standard update expanding the requirements for disclosure of disaggregated information about the effective tax rate reconciliation and income taxes paid. The accounting standard update will be effective for our fiscal 2026 Form 10-K. We are currently evaluating the impact of this accounting standard update on our income tax disclosures.

Disaggregation of Income Statement Expenses In November 2024, the FASB issued an accounting standard update expanding the disclosure requirements about specific expense categories, primarily through disaggregated information on income statement line items. The accounting standard update will be effective for our fiscal 2028 Form 10-K, and early adoption is permitted. We are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.

9Targeted Improvements to the Accounting for Internal-Use Software In September 2025, the FASB issued an accounting standard update to modernize the accounting for internal-use software costs and clarify the criteria for capitalization. The accounting standard update will be effective for our interim and annual reporting periods of fiscal 2029, with early adoption permitted. We are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.

3.Revenue

We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to

Table of Contents

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

3our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers. Revenue from subscription offers includes revenue recognized over time as well as upfront.

We ~~enter~~recognize ~~into~~revenue ~~contracts~~upon ~~with~~transfer ~~customers~~of ~~that~~control ~~can~~of ~~include~~promised ~~various~~goods ~~combinations~~or ofservices ~~products~~in ~~and~~a ~~services~~contract ~~which~~with ~~are~~a ~~generally~~customer ~~distinct~~in ~~and~~an ~~accounted~~amount ~~for~~that asreflects ~~separate~~the ~~performance~~consideration ~~obligations.~~we Asexpect ato ~~result,~~receive ~~our~~in ~~contracts~~exchange ~~may~~for ~~contain~~those ~~multiple~~products ~~performance~~or ~~obligations~~services. WeTransfer ~~determine~~of ~~whether~~control ~~arrangements~~occurs ~~are~~once ~~distinct~~the ~~based~~customer onhas ~~whether~~ the ~~customer~~contractual ~~can~~right ~~benefit~~to ~~from~~use the product, orgenerally ~~service~~upon onshipment, ~~its~~electronic ~~own~~delivery (or ~~together~~when ~~with~~the ~~other~~software ~~resources~~is ~~that~~available ~~are~~for ~~readily~~download ~~available~~by ~~and~~the ~~whether~~customer), ~~our~~or ~~commitment~~once totitle ~~transfer~~and ~~the~~risk ~~product~~of orloss ~~service~~has transferred to the customer. isTransfer ~~separately~~of ~~identifiable~~control ~~from~~can ~~other~~also ~~obligations~~occur inover time for software maintenance and services as the ~~contract.~~customer Wereceives ~~classify~~the ~~our~~benefit ~~hardware,~~over ~~perpetual~~the ~~software~~contract ~~licenses,~~term. Our hardware and perpetual software~~-as-a-service~~ ~~(SaaS)~~licenses asare distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses ~~represent~~include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, ~~which~~with ~~include~~the associated software ~~licenses~~maintenance revenue recognized ratably over the contract term as services and software ~~maintenance~~updates are provided. InSaaS ~~transactions~~arrangements ~~where~~do wenot ~~deliver~~include ~~hardware~~the orright for the customer to take possession of the software during the term, weand ~~are~~therefore ~~typically~~have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the ~~principal~~contract ~~and~~term as the customer consumes the services. On our product sales, we record ~~revenue~~consideration ~~and~~from ~~costs~~shipping ofand ~~goods~~handling ~~sold~~ on a gross basis within net product sales. We ~~refer~~record to our ~~term~~revenue ~~software~~net ~~licenses,~~of ~~security~~any ~~software~~associated ~~licenses,~~sales ~~SaaS,~~taxes. ~~and~~An ~~associated~~allowance ~~service~~for ~~arrangements~~future assales ~~subscription~~returns ~~offers.~~is ~~Revenue~~established ~~from~~based ~~subscription~~on ~~offers~~historical ~~includes~~trends ~~revenue~~in ~~recognized~~product ~~over~~return ~~time~~rates asand ~~well~~the related provision is recorded as ~~upfront~~a reduction to revenue.

We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment, electronic delivery (or when the software is available for download by the customer), or once title and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements do not include the right for the customer to take possession of the software during the term, and therefore have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes.

An allowance for future sales returns is established based on historical trends in product return rates. The allowance for future sales returns as of April 26, 2025 and July 27, 2024 was $39 million and $37 million, respectively, and was recorded as a reduction of our accounts receivable and revenue.

Significant Judgments

Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.

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 ~~end~~direct sale 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.

We assess certain software licenses, such as for security software, that contain critical updates or upgrades which customers can download throughout the contract term. Without these updates or upgrades, the functionality of the software would diminish over a relatively short time period. These updates or upgrades provide the customer the full functionality of the purchased security software licenses and are required to maintain the security license’s utility as the risks and threats in the environment are rapidly changing. In these circumstances, the revenue from these software arrangements is recognized as a single performance obligation satisfied over the contract term.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(a)Disaggregation of Revenue

We disaggregate our revenue into groups of similar products and services that depict the nature, amount, and timing of revenue and cash flows for our various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies differ for each of our product categories, resulting in different economic risk profiles for each category. The following table presents this disaggregation of revenue (in millions):

Three Months Ended

~~Nine Months Ended~~

April 26,2025

April 27,2024

April 26,2025

April 27,2024

October 25,2025

October 26,2024

Product revenue:

Networking

7,~~068~~768

6,~~522~~753

~~20,671~~

~~22,425~~

Security

21,~~013~~980

12,~~304~~017

~~6,142~~

~~3,288~~

Collaboration

1,~~031~~055

~~987~~1,085

~~3,112~~

~~3,093~~

Observability

~~261~~274

~~211~~258

~~796~~

~~589~~

Total Product

1011,~~374~~077

910,~~024~~114

~~30,722~~

~~29,395~~

Services

3,~~775~~806

3,~~678~~727

~~11,259~~

~~10,766~~

Total

14,149

12,702

41,981

40,161

Total revenue

14,883

13,841

Amounts may not sum due to rounding.

Networking consists of our core networking technologies of switching, routing, wireless, and servers. These technologies consist of both hardware and software offerings, including software licenses and SaaS. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Security consists of our Network Security, Identity and Access Management, Secure Access Service Edge (SASE) and Threat Intelligence, Detection, and Response offerings. These products consist of both hardware and software offerings, including software licenses and SaaS. Updates and upgrades for the term software licenses are critical for our software to perform its intended commercial purpose because of the continuous need for our software to secure our customers’ network environments against frequent threats. Therefore, security software licenses are generally represented by a single distinct performance obligation with revenue recognized ratably over the contract term. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Collaboration consists of our Webex Suite, Collaboration Devices, Contact Center and Communication Platform as a Service (CPaaS) offerings. These products consist primarily of software offerings, including software licenses and SaaS, as well as hardware. Our perpetual software and hardware in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Observability consists of our network assurance, monitoring and analytics and observability suite offerings. These products consist primarily of software offerings, including software licenses and SaaS. Our perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

In addition to our product offerings, we provide a broad range of service and support options for our customers, including technical support services and advanced services. Technical support services represent the majority of these offerings which are distinct performance obligations that are satisfied over time with revenue recognized ratably over the contract term. Advanced services are distinct performance obligations that are satisfied over time with revenue recognized as services are delivered.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The sales arrangements as discussed above are typically made pursuant to customer purchase orders based on master purchase or partner agreements. Cash is received based on our standard payment terms which is typically 30 days. We provide financing arrangements to customers for our hardware, software and service offerings. Refer to Note 9 for additional information. For these arrangements, cash is typically received over time.

Subscription revenue includes revenue recognized from our term software licenses, security software licenses, SaaS, and associated service arrangements. Our subscription revenue is recorded in product and services revenue in our Consolidated Statements of Operations as follows (in millions):

Three Months Ended

~~Nine Months Ended~~

April 26, 2025

April 27, 2024

April 26, 2025

April 27, 2024

October 25, 2025

October 26, 2024

Product

4,~~483~~500

34,~~510~~419

~~13,334~~

~~9,827~~

Services

3,~~433~~500

3,~~344~~425

~~10,288~~

~~9,878~~

Total

78,~~916~~000

67,~~854~~844

~~23,622~~

~~19,705~~

The majority of our product subscription revenue is recognized over time and the remainder is recognized upfront. Substantially all of our services subscription revenue is recognized over time based on the contract term.

(b)Contract Balances

Accounts Receivable

Accounts receivable, net was $54.38 billion as of ~~April~~October 2625, 2025 compared to $6.7 billion as of July 2726, ~~2024~~2025, as reported on the Consolidated Balance Sheets.

The allowances for credit loss for our accounts receivable are summarized as follows (in millions):

	Three Months Ended				~~Nine Months Ended~~
	April 26, 2025		April 27, 2024		April 26, 2025		April 27, 2024
	October 25, 2025		October 26, 2024
Allowance for credit loss at beginning of period	$	8069	$	7987	$	87	$	85
Provisions	13(4)		10—		25		21
Write-offs, net of recoveries	(113)		(89)		~~(30)~~		~~(25)~~
Allowance for credit loss at end of period	$	8262	$	8178	$	82	$	81

Contract Assets and Liabilities

Gross contract assets by our internal risk ratings are summarized as follows (in millions):

	April 26,2025		July 27,2024
	October 25,2025		July 26,2025
1 to 4	$	1,~~245~~379	$	1,~~266~~358
5 to 6	12,~~762~~001		1,~~456~~868
7 and Higher	7075		7273
Total	$	3,~~077~~455	$	23,~~794~~299

Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to software and service arrangements where transfer of control has occurred but we have not yet invoiced. Our contract assets for these unbilled receivables, net of allowances, were $3.04 billion as of ~~April~~October 2625, 2025 and $23.72 billion as of July 2726, ~~2024~~2025, of which $1.8 billion and $1.7 billion, respectively, were included in other current assets, ~~and~~with remaining balances included in other assets.

Contract liabilities consist of deferred revenue. Deferred revenue was $28.0 billion as of ~~April~~October 2625, 2025 compared to $28.5 8 billion as of July 2726, ~~2024~~2025. We recognized approximately $35.64 billion ~~and $13.3 billion~~ of revenue during the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2025~~2026 that was included in the deferred revenue balance at July 2726, ~~2024~~2025.

(c)Capitalized Contract Acquisition Costs

We capitalize direct and incremental costs incurred to acquire contracts, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. We incur these costs in connection with both initial contracts and renewals. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

the period of benefit. Capitalized contract acquisition costs were $1.5 billion ~~and~~as ~~$1.3 billion~~of aseach of ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025, ~~respectively,~~ and were included in other current assets and other assets. The amortization expense associated with these costs was $~~272~~234 million and $~~718~~208 million for the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2025,~~2026 ~~respectively,~~ and ~~$201 million and $525 million for the corresponding periods of fiscal 2024~~2025, respectively, and was included in sales and marketing expenses.

4.Acquisitions

AAllocation ~~summary~~ of the ~~allocation of the~~ total purchase consideration offor ~~our~~an ~~completed~~acquisition ~~acquisitions~~we completed during the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 is ~~presented~~summarized as follows (in millions):

	Purchase Consideration		Net Tangible Assets Acquired (Liabilities Assumed)		Purchased Intangible Assets		Goodwill
Total acquisitions	$	293	$	(21)	$	121	$	193
Allocation of purchase consideration	$	10	$	1	$	4	$	5

The total purchase consideration related to ~~our~~this ~~acquisitions~~acquisition ~~completed during the first nine months of fiscal 2025~~ consisted primarily of cash consideration. ~~The total cash and cash equivalents acquired from these acquisitions was approximately $15 million.~~ Total transaction costs related to acquisition activities were $123 million and $~~102~~ 9 million for the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 and ~~2024~~2025, respectively. These transaction costs were expensed as incurred in general and administrative expenses (“G&A”) in the Consolidated Statements of Operations.

The purchase price allocation for acquisitions completed during recent periods is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information that existed as of the acquisition date but is currently unknown to us may become known during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date.

The goodwill generated from ~~these~~the ~~acquisitions~~acquisition completed during the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 is primarily related to expected synergies. The goodwill is generally not deductible for income tax purposes.

The Consolidated Financial Statements include the operating results of each acquisition from the date of acquisition. Pro forma results of operations and the revenue and net income subsequent to the acquisition date for the ~~acquisitions~~acquisition completed during the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 have not been presented because the effects of the ~~acquisitions~~acquisition ~~were~~was not material to our financial results.

Compensation Expense Related to Acquisitions

In connection with our acquisitions, we have agreed to pay certain additional amounts contingent upon the continued employment with Cisco of certain employees of the acquired entities.

The following table summarizes the compensation expense related to acquisitions (in millions):

Three Months Ended

~~Nine Months Ended~~

April 26, 2025

April 27, 2024

April 26, 2025

April 27, 2024

October 25, 2025

October 26, 2024

Compensation expense related to acquisitions

~~216~~110

~~216~~297

~~735~~

~~310~~

As of ~~April~~October 2625, 2025, we estimated that future cash compensation expense of up to $~~806~~502 million may be required to be recognized pursuant to applicable acquisition agreements.

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

5.Goodwill and Purchased Intangible Assets

(a)Goodwill

The following table presents the goodwill allocated to our reportable segments as of ~~April~~October 2625, 2025 and changes to goodwill during the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 (in millions):

Balance at July 27, 2024

Acquisitions, net of Divestitures

Foreign Currency Translation and Other

Balance at April 26, 2025

Balance at July 26, 2025

Acquisitions, net of Divestitures

Foreign Currency Translation and Other

Balance at October 25, 2025

Americas

36,~~169~~468

~~121~~3

~~109~~(14)

36,~~399~~457

EMEA

14,~~283~~397

471

40(5)

14,~~370~~393

APJC

8,~~208~~271

231

24(3)

8,~~255~~269

Total

5859,~~660~~136

~~191~~5

~~173~~(22)

59,~~024~~119

(b)Purchased Intangible Assets

The following table presents details of our intangible assets acquired through acquisitions completed during the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 (in millions, except years):

	FINITE LIVES									INDEFINITE LIVES		TOTAL
	CUSTOMERRELATED			TECHNOLOGY			TRADE NAME			IPR&D
	CUSTOMER RELATED			TECHNOLOGY			TRADE NAME			IPR&D
	Weighted-Average UsefulLife (in Years)	Amount		Weighted-Average UsefulLife (in Years)	Amount		Weighted-Average UsefulLife (in Years)	Amount		Amount		Amount
Total acquisitions	3.5	$	16	3.8	$	105	—	$	—	$	—	$	121
Total	—	$	—	3.0	$	4	—	$	—	$	—	$	4

The following tables present details of our purchased intangible assets with finite lives (in millions):

April 26, 2025	Gross		Accumulated Amortization		Net
October 25, 2025	Gross		Accumulated Amortization		Net
Purchased intangible assets with finite lives:
Customer related	$	6,340	$	(1,488)	$	4,852
Customer related	$	6,371	$	(1,076)	$	5,295
Technology	5,209		(1,791)		3,418
Technology	5,347		(1,485)		3,862
Trade name	526		(83)		443
Trade name	525		(60)		465
Total	$	12,075	$	(3,362)	$	8,713
Total purchased intangible assets with finite lives	12,243		(2,621)		9,622
In-process research and development, with indefinite lives	21		—		21
Total	$	12,264	$	(2,621)	$	9,643

July 27, 2024	Gross		Accumulated Amortization		Net
July 26, 2025	Gross		Accumulated Amortization		Net
Purchased intangible assets with finite lives:
Customer related	$	6,341	$	(1,268)	$	5,073
Customer related	$	6,844	$	(829)	$	6,015
Technology	5,254		(1,606)		3,648
Technology	6,680		(2,006)		4,674
Trade name	526		(72)		454
Trade name	553		(49)		504
Total	$	12,121	$	(2,946)	$	9,175
Total purchased intangible assets with finite lives	14,077		(2,884)		11,193
In-process research and development, with indefinite lives	26		—		26
Total	$	14,103	$	(2,884)	$	11,219

Purchased intangible assets include intangible assets acquired through acquisitions as well as through direct purchases or licenses.

14The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):


	Three Months Ended
	October 25, 2025		October 26, 2024
Amortization of purchased intangible assets:
Cost of sales	$	240	$	325
Operating expenses	231		265
Total	$	471	$	590

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~There~~The ~~were~~estimated nofuture ~~impairment~~amortization ~~charges~~expense ~~related to purchased intangible assets for the third quarter~~ of ~~fiscal 2025. Impairment charges related to~~ purchased intangible assets ~~were~~with ~~$19 million~~finite ~~for~~lives ~~the~~as ~~first nine months~~ of ~~fiscal 2025, and $139~~October ~~million and $145 million for the third quarter and first nine months of fiscal 2024~~25, ~~respectively.~~2025 ~~The~~is ~~impairment charges were~~ as afollows ~~result of declines~~ (in ~~estimated fair values resulting from the reductions in or the elimination of expected future cash flows associated with certain in-process research and development and technology intangible assets.~~millions):

The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):


Fiscal Year	Amount
2026 (remaining nine months)	$	1,359
2027	1,481
2028	1,403
2029	1,277
2030	993
Thereafter	2,200
Total	$	8,713

	Three Months Ended				Nine Months Ended
	April 26, 2025		April 27, 2024		April 26, 2025		April 27, 2024
Amortization of purchased intangible assets:
Cost of sales	$	269	$	254	$	934	$	620
Operating expenses	244		297		774		430
Total	$	513	$	551	$	1,708	$	1,050

The estimated future amortization expense of purchased intangible assets with finite lives as of April 26, 2025 is as follows (in millions):

Fiscal Year	Amount
2025 (remaining three months)	$	473
2026	$	1,820
2027	$	1,473
2028	$	1,394
2029	$	1,271
Thereafter	$	3,191

6.Restructuring and Other Charges

In the first quarter of fiscal 2025, we announced a restructuring plan (the “Fiscal 2025 Plan”), in order to allow us to invest in key growth opportunities and drive more efficiencies in our business, of which approximately 7% of our global workforce would be impacted with estimated pre-tax charges of up to $1 billion. In connection with the Fiscal 2025 Plan, we incurred charges of $34147 million ~~and~~in ~~$709 million for~~ the ~~third~~first quarter of fiscal 2026, and ~~first~~the ~~nine~~plan ~~months~~is expected to be completed in the second quarter of fiscal ~~2025, respectively~~2026. These aggregate pre-tax charges are primarily cash-based and consist of severance and other one-time termination benefits, and other costs. ~~We expect the Fiscal 2025 Plan to be substantially completed by the end of the first quarter of fiscal 2026.~~

In fiscal 2024, we initiated a restructuring plan (the “Fiscal 2024 Plan”), in order to realign the organization and enable further investment in key priority areas. We completed the Fiscal 2024 Plan and incurred cumulative charges of $654 million. These aggregate pretax charges were primarily cash-based and consisted of severance and other one-time termination benefits, real estate-related charges, and other costs.

The following table summarizes the activities related to our restructuring liability, which was included in other current liabilities on our Consolidated Balance Sheets (in millions):

	FISCAL 2025 PLAN				~~FISCAL 2024 PLAN~~
	Employee Severance		Other		~~Employee Severance~~Total		~~Other~~		~~Total~~
Liability as of July 27, 2024	$	—	$	—	$	201	$	9	$	210
Liability as of July 26, 2025	$	66	$	46	$	112
Charges	~~581~~113		~~128~~34		—147		—		~~709~~
Cash payments	(~~534~~61)		(521)		(~~159~~82)		~~(5)~~		~~(703)~~
Non-cash and other	32(1)		(7135)		(1936)		1		~~(57)~~
Liability as of April 26, 2025	$	79	$	52	$	23	$	5	$	159
Liability as of October 25, 2025	$	117	$	24	$	141

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

7.Balance Sheet and Other Details

The following tables provide details of selected balance sheet and other items (in millions, except percentages):

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

	April 26,2025		July 27,2024
	October 25,2025		July 26,2025
Cash and cash equivalents	$	8,~~161~~400	$	78,~~508~~346
Restricted cash and restricted cash equivalents included in other current assets	~~755~~1		~~765~~564
Restricted cash and restricted cash equivalents included in other assets	2		569
Total	$	8,401	$	8,910
Total	$	8,918	$	8,842

Our restricted cash and restricted cash equivalents are funds primarily related to contractual obligations with suppliers.

~~Inventories~~14

	April 26,2025		July 27,2024
Raw materials	$	1,520	$	2,039
Work in process	173		83
Finished goods	919		1,027
Service-related spares	214		216
Demonstration systems	6		8
Total	$	2,832	$	3,373

Property and Equipment, Net

	April 26,2025		July 27,2024
Gross property and equipment:
Land, buildings, and building and leasehold improvements	$	3,996	$	4,247
Production, engineering, computer and other equipment and related software	5,152		5,160
Operating lease assets	50		115
Furniture, fixtures and other	322		351
Total gross property and equipment	9,520		9,873
Less: accumulated depreciation and amortization	(7,444)		(7,783)
Total	$	2,076	$	2,090

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Inventories


	October 25, 2025		July 26, 2025
Raw materials	$	1,758	$	1,744
Work in process	411		261
Finished goods	985		933
Service-related spares	236		220
Demonstration systems	5		6
Total	$	3,395	$	3,164

Property and Equipment, Net


	October 25, 2025		July 26, 2025
Gross property and equipment:
Land, buildings, and building and leasehold improvements	$	4,062	$	4,045
Production, engineering, computer and other equipment and related software	5,232		5,178
Operating lease assets	49		51
Furniture, fixtures and other	318		316
Total gross property and equipment	9,661		9,590
Less: accumulated depreciation and amortization	(7,413)		(7,477)
Total	$	2,248	$	2,113

Remaining Performance Obligations (RPO)

April 26,2025

July 27,2024

October 25,2025

July 26,2025

Product

2021,~~752~~904

2021,~~055~~572

Services

20,~~915~~969

2021,~~993~~961

Total

4142,~~667~~873

4143,~~048~~533

Short-term RPO

2120,~~066~~971

2021,~~882~~723

Long-term RPO

2021,~~601~~902

2021,~~166~~810

Total

4142,~~667~~873

4143,~~048~~533

Amount to be recognized as revenue over the next 12 months

5149

5150

Deferred revenue

27,~~991~~969

28,~~475~~779

Unbilled contract revenue

1314,~~676~~904

1214,~~573~~754

Total

4142,~~667~~873

4143,~~048~~533

Unbilled contract revenue represents noncancelable contracts for which we have not invoiced, have an obligation to perform, and revenue has not yet been recognized in the financial statements.

~~Deferred Revenue~~15

	April 26,2025		July 27,2024
Product	$	13,170	$	13,219
Services	14,821		15,256
Total	$	27,991	$	28,475
Reported as:
Current	$	16,081	$	16,249
Noncurrent	11,910		12,226
Total	$	27,991	$	28,475

Transition Tax Payable

Our income tax payable associated with the one-time U.S. transition tax on accumulated earnings for foreign subsidiaries as a result of the Tax Cuts and Jobs Act is as follows:

	April 26,2025		July 27,2024
Current	$	1,595	$	1,819
Noncurrent	—		2,273
Total	$	1,595	$	4,092

Our remaining transition tax payable as of April 26, 2025 has been reduced to reflect the transition tax benefit of the U.S. Tax Court opinion in Varian Medical Systems, Inc. v. Commissioner. See Note 18.

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Deferred Revenue


	October 25, 2025		July 26, 2025
Product	$	13,252	$	13,490
Services	14,717		15,289
Total	$	27,969	$	28,779
Reported as:
Current	$	15,801	$	16,416
Noncurrent	12,168		12,363
Total	$	27,969	$	28,779

Transition Tax Payable/Receivable

Our income tax payable and receivable associated with the one-time U.S. transition tax on accumulated earnings for foreign subsidiaries as a result of the Tax Cuts and Jobs Act are as follows:


	October 25, 2025		July 26, 2025
Current income taxes payable	$	2,273	$	1,595
Less: Noncurrent income tax receivable included in other assets	(678)		—
Net	$	1,595	$	1,595

The income tax receivable as of October 25, 2025 reflects the transition tax benefit of the U.S. Tax Court opinion in Varian Medical Systems, Inc. v. Commissioner. See Note 18.

8.Leases

(a)Lessee Arrangements

The following table presents our operating lease balances (in millions):

Balance Sheet Line Item

~~April~~October 2625, 2025

July 2726, ~~2024~~2025

Operating lease right-of-use assets

Other assets

1,~~219~~303

~~1,066~~$

1,301

Operating lease liabilities

Other current liabilities

~~350~~403

~~364~~375

Operating lease liabilities

Other long-term liabilities

1,~~114~~145

~~906~~1,175

Total operating lease liabilities

1,~~464~~548

1,~~270~~550

The components of our lease expenses were as follows (in millions):

Three Months Ended

~~Nine Months Ended~~

April 26, 2025

April 27, 2024

April 26, 2025

April 27, 2024

October 25, 2025

October 26, 2024

Operating lease expense

~~115~~131

~~101~~114

~~378~~

~~304~~

Short-term lease expense

1825

1918

Variable lease expense

4772

4346

~~140~~

~~149~~

Total lease expense

~~180~~228

~~163~~178

~~570~~

~~508~~

Supplemental information related to our operating leases is as follows (in millions):

	Nine Months Ended
	Three Months Ended
	April 26, 2025		April 27, 2024
	October 25, 2025		October 26, 2024
Cash paid for amounts included in the measurement of lease liabilities — operating cash flows	$	~~345~~131	$	~~279~~114
Right-of-use assets obtained in exchange for operating leases liabilities	$	~~483~~123	$	~~307~~127

The weighted-average lease term was 5.5 years and 4.9 years as of April 26, 2025 and July 27, 2024, respectively. The weighted-average discount rate was 4.0% as of each of April 26, 2025 and July 27, 2024.16

The maturities of our operating leases (undiscounted) as of April 26, 2025 are as follows (in millions):

Fiscal Year	Amount
2025 (remaining three months)	$	113
2026	382
2027	292
2028	217
2029	175
Thereafter	470
Total lease payments	1,649
Less: interest	(185)
Total	$	1,464

(b)Lessor Arrangements

Our leases primarily represent sales-type leases with terms of four years on average. We provide leasing of our equipment and complementary third-party products primarily through our channel partners and distributors, for which the income arising from these leases is recognized through interest income. Interest income was $16 million and $49 million for the third quarter and the first nine months of fiscal 2025, respectively, and $18 million and $48 million for the corresponding periods of fiscal 2024, respectively, and was included in interest income in the Consolidated Statement of Operations. The net investment of our lease receivables is measured at the commencement date as the gross lease receivable, residual value less unearned income and allowance for credit loss. For additional information, see Note 9.

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~Future~~The ~~minimum~~weighted-average lease ~~payments~~term onwas ~~our~~5.3 ~~lease~~years ~~receivables~~and 5.7 years as of ~~April~~October 25, 2025 and July 26, 2025, ~~are~~respectively. ~~summarized~~The weighted-average discount rate was 3.9% and 4.1% as ~~follows~~of ~~(in~~October 25, ~~millions):~~2025 and July 26, 2025, respectively.

Fiscal Year	Amount
2025 (remaining three months)	$	126
2026	552
2027	239
2028	41
2029	43
Thereafter	24
Total	1,025
Less: Present value of lease payments	(922)
Unearned income	$	103

The maturities of our operating leases (undiscounted) as of October 25, 2025 are as follows (in millions):


Fiscal Year	Amount
2026 (remaining nine months)	$	360
2027	346
2028	262
2029	209
2030	183
Thereafter	374
Total lease payments	1,734
Less: interest	(186)
Total	$	1,548

(b)Lessor Arrangements

Our leases primarily represent sales-type leases with terms of four years on average. We provide leasing of our equipment and complementary third-party products primarily through our channel partners and distributors, for which the income arising from these leases is recognized through interest income. Interest income was $16 million and $17 million for the first quarter of fiscal 2026 and 2025, respectively, and was included in interest income in the Consolidated Statement of Operations. The net investment of our lease receivables is measured at the commencement date as the gross lease receivable, residual value less unearned income and allowance for credit loss. For additional information, see Note 9.

Future minimum lease payments on our lease receivables as of October 25, 2025 are summarized as follows (in millions):


Fiscal Year	Amount
2026 (remaining nine months)	$	303
2027	346
2028	171
2029	180
2030	60
Total	1,060
Less: Present value of lease payments	(962)
Unearned income	$	98

Actual cash collections may differ from the contractual maturities due to early customer buyouts, refinancings, or defaults.

We provide financing of certain equipment through operating leases, and the amounts are included in property and equipment in the Consolidated Balance Sheets. Amounts relating to equipment on operating lease assets held by us and the associated accumulated depreciation are summarized as follows (in millions):

	April 26, 2025		July 27, 2024
Operating lease assets	$	50	$	115
Accumulated depreciation	(13)		(61)
Operating lease assets, net	$	37	$	54

Our operating lease income was $9 million and $29 million for the third quarter and first nine months of fiscal 2025, respectively, and $14 million and $45 million for the corresponding periods of fiscal 2024, respectively, and was included in product revenue in the Consolidated Statements of Operations.

Minimum future rentals on noncancelable operating leases as of April 26, 2025 are summarized as follows (in millions):

Fiscal Year	Amount
2025 (remaining three months)	$	5
2026	15
2027	7
Total	$	27

9.Financing Receivables

(a)Financing Receivables

Financing receivables primarily consist of loan receivables and lease receivables. Loan receivables represent financing arrangements related to the sale of our hardware, software, and services (including technical support and advanced services), and also may include additional funding for other costs associated with network installation and integration of our products and services. Loan receivables have terms of one year to three years on average. Lease receivables represent sales-type leases resulting from the sale of Cisco’s and complementary third-party products and are typically collateralized by a security interest in the underlying assets. Lease receivables consist of arrangements with terms of four years on average.

1917

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

A summary of our financing receivables is presented as follows (in millions):

April 26, 2025

Loan Receivables

Lease Receivables

Total

October 25, 2025

Loan Receivables

Lease Receivables

Total

Gross

5,~~276~~826

1,~~025~~060

6,~~301~~886

Residual value

—

6567

Unearned income

—

(~~103~~98)

Allowance for credit loss

(4437)

(14)

(5851)

Total, net

5,~~232~~789

~~973~~1,015

6,~~205~~804

Reported as:

Current

2,~~336~~714

~~622~~371

23,~~958~~085

Noncurrent

23,~~896~~075

~~351~~644

3,~~247~~719

Total, net

5,~~232~~789

~~973~~1,015

6,~~205~~804

July 27, 2024

Loan Receivables

Lease Receivables

Total

July 26, 2025

Loan Receivables

Lease Receivables

Total

Gross

5,~~858~~628

~~965~~982

6,~~823~~610

Residual value

—

6766

Unearned income

—

(~~111~~99)

Allowance for credit loss

(5037)

(1513)

(6550)

Total, net

5,~~808~~591

~~906~~936

6,~~714~~527

Reported as:

Current

32,~~071~~715

~~267~~346

3,~~338~~061

Noncurrent

2,~~737~~876

~~639~~590

3,~~376~~466

Total, net

5,~~808~~591

~~906~~936

6,~~714~~527

(b)Credit Quality of Financing Receivables

The tables below present our gross financing receivables, excluding residual value, less unearned income, categorized by our internal credit risk rating by period of origination (in millions):

April 26, 2025			Fiscal Year								Nine Months Ended
October 25, 2025			Fiscal Year								Three Months Ended
Internal Credit Risk Rating	Prior		July 3130, ~~2021~~2022		July 3029, ~~2022~~2023		July 2927, ~~2023~~2024		July 2726, ~~2024~~2025		~~April~~October 2625, 2025		Total
Loan Receivables:
1 to 4	$	1558	$	~~121~~186	$	~~251~~306	$	~~462~~1,003	$	1,~~310~~361	$	~~1,138~~662	$	3,~~297~~576
5 to 6	638		4136		62131		~~238~~466		~~655~~1,137		~~910~~400		12,~~912~~208
7 and Higher	1—		356		87		24		922		123		6742
Total Loan Receivables	$	2296	$	~~197~~228	$	~~321~~444	$	~~702~~1,473	$	12,~~974~~520	$	21,~~060~~065	$	5,~~276~~826
Lease Receivables:
1 to 4	$	16	$	1521	$	31110	$	~~141~~194	$	~~224~~218	$	~~187~~35	$	~~599~~584
5 to 6	14		920		2870		79117		~~116~~103		7950		~~312~~364
7 and Higher	—		1		12		36		62		—3		1114
Total Lease Receivables	$	210	$	2542	$	60182	$	~~223~~317	$	~~346~~323	$	~~266~~88	$	~~922~~962
Total	$	24106	$	~~222~~270	$	~~381~~626	$	~~925~~1,790	$	2,~~320~~843	$	21,~~326~~153	$	6,~~198~~788

2018

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

July 27, 2024			Fiscal Year
July 26, 2025			Fiscal Year
Internal Credit Risk Rating	Prior		July 2531, ~~2020~~2021		July 3130, ~~2021~~2022		July 3029, ~~2022~~2023		July 2927, ~~2023~~2024		July 2726, ~~2024~~2025		Total
Loan Receivables:
1 to 4	$	2	$	7883	$	~~341~~236	$	~~555~~371	$	~~945~~1,258	$	1,~~803~~556	$	3,~~724~~506
5 to 6	2		2956		~~127~~53		~~130~~167		~~426~~561		1,~~314~~248		2,~~028~~087
7 and Higher	3—		1—		106		749		144		416		~~106~~35
Total Loan Receivables	$	74	$	~~108~~139	$	~~478~~295	$	~~759~~547	$	1,~~385~~823	$	32,~~121~~820	$	5,~~858~~628
Lease Receivables:
1 to 4	$	1—	$	89	$	3823	$	46112	$	~~176~~187	$	~~341~~207	$	~~610~~538
5 to 6	1—		116		2225		4477		~~129~~120		21103		~~228~~331
7 and Higher	—		—		1		3		48		82		1614
Total Lease Receivables	$	2—	$	1915	$	6149	$	93192	$	~~309~~315	$	~~370~~312	$	~~854~~883
Total	$	94	$	~~127~~154	$	~~539~~344	$	~~852~~739	$	12,~~694~~138	$	3,~~491~~132	$	6,~~712~~511

The following tables present the aging analysis of gross receivables as of ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025 (in millions):

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
April 26, 2025	31-60		61-90		91+		TotalPast Due		Current		Total		120+ Still Accruing		NonaccrualFinancingReceivables		ImpairedFinancingReceivables
October 25, 2025	31-60		61-90		91+		TotalPast Due		Current		Total		120+ Still Accruing		NonaccrualFinancingReceivables		ImpairedFinancingReceivables
Loan receivables	$	3046	$	~~137~~27	$	1831	$	~~185~~104	$	5,~~091~~722	$	5,~~276~~826	$	8	$	93	$	93
Lease receivables	1012		62		616		2230		~~900~~932		~~922~~962		35		1		1
Total	$	4058	$	~~143~~29	$	2447	$	~~207~~134	$	56,~~991~~654	$	6,~~198~~788	$	1113	$	104	$	104

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
July 27, 2024	31-60		61-90		91+		TotalPast Due		Current		Total		120+ Still Accruing		NonaccrualFinancingReceivables		ImpairedFinancingReceivables
July 26, 2025	31-60		61-90		91+		TotalPast Due		Current		Total		120+ Still Accruing		NonaccrualFinancingReceivables		ImpairedFinancingReceivables
Loan receivables	$	3418	$	1718	$	3516	$	8652	$	5,~~772~~576	$	5,~~858~~628	$	144	$	75	$	75
Lease receivables	147		43		56		2316		~~831~~867		~~854~~883		14		—1		—1
Total	$	4825	$	21	$	4022	$	~~109~~68	$	6,~~603~~443	$	6,~~712~~511	$	158	$	76	$	76

Past due financing receivables are those that are 31 days or more past due according to their contractual payment terms. The data in the preceding tables is presented by contract, and the aging classification of each contract is based on the oldest outstanding receivable, and therefore past due amounts also include unbilled and current receivables within the same contract.

(c)Allowance for Credit Loss Rollforward

The allowances for credit loss and the related financing receivables are summarized as follows (in millions):

Three Months Ended April 26, 2025	CREDIT LOSS ALLOWANCES
Three Months Ended October 25, 2025	CREDIT LOSS ALLOWANCES
	Loan Receivables		Lease Receivables		Total
Allowance for credit loss as of January 25, 2025	$	45	$	14	$	59
Allowance for credit loss as of July 26, 2025	$	37	$	13	$	50
Provisions (benefits)	~~(2)~~—		(1)		~~(3)~~1
Foreign exchange and other	1		1		2
Allowance for credit loss as of October 25, 2025	$	37	$	14	$	51
Allowance for credit loss as of April 26, 2025	$	44	$	14	$	58


Three Months Ended October 26, 2024	CREDIT LOSS ALLOWANCES
	Loan Receivables		Lease Receivables		Total
Allowance for credit loss as of July 27, 2024	$	50	$	15	$	65
Provisions (benefits)	(1)		—		(1)
Allowance for credit loss as of October 26, 2024	$	49	$	15	$	64

Table of Contents

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Three Months Ended April 27, 2024	CREDIT LOSS ALLOWANCES
	Loan Receivables		Lease Receivables		Total
Allowance for credit loss as of January 27, 2024	$	53	$	16	$	69
Provisions (benefits)	(3)		—		(3)
Recoveries (write-offs), net	—		(1)		(1)
Foreign exchange and other	(1)		—		(1)
Allowance for credit loss as of April 27, 2024	$	49	$	15	$	64

Nine Months Ended April 26, 2025	CREDIT LOSS ALLOWANCES
	Loan Receivables		Lease Receivables		Total
Allowance for credit loss as of July 27, 2024	$	50	$	15	$	65
Provisions (benefits)	(5)		(3)		(8)
Recoveries (write-offs), net	(3)		—		(3)
Foreign exchange and other	2		2		4
Allowance for credit loss as of April 26, 2025	$	44	$	14	$	58

Nine Months Ended April 27, 2024	CREDIT LOSS ALLOWANCES
	Loan Receivables		Lease Receivables		Total
Allowance for credit loss as of July 29, 2023	$	53	$	19	$	72
Provisions (benefits)	1		(3)		(2)
Recoveries (write-offs), net	(4)		(1)		(5)
Foreign exchange and other	(1)		—		(1)
Allowance for credit loss as of April 27, 2024	$	49	$	15	$	64

10.Investments

(a)Summary of Available-for-Sale Debt Investments

The following tables summarize our available-for-sale debt investments (in millions):

April 26, 2025	AmortizedCost		GrossUnrealizedGains		GrossUnrealized and Credit Losses		FairValue
October 25, 2025	AmortizedCost		GrossUnrealizedGains		GrossUnrealized and Credit Losses		FairValue
U.S. government securities	$	21,~~079~~637	$	47	$	(154)	$	21,~~068~~640
U.S. government agency securities	7749		—		—		7749
Non-U.S. government and agency securities	~~376~~409		1		—		~~377~~410
Corporate debt securities	32,~~206~~979		714		(7544)		32,~~138~~949
U.S. agency mortgage-backed securities	556		—		(66)		490
Mortgage- and asset-backed securities	270		—		(16)		254
Commercial paper	~~436~~884		—		—		~~436~~884
Certificates of deposit	~~608~~756		—		—		~~608~~756
Total	$	76,~~338~~984	$	1222	$	(~~156~~64)	$	76,~~194~~942


July 26, 2025	Amortized Cost		Gross Unrealized Gains		Gross Unrealized and Credit Losses		Fair Value
U.S. government securities	$	1,971	$	2	$	(12)	$	1,961
U.S. government agency securities	67		—		—		67
Non-U.S. government and agency securities	458		—		—		458
Corporate debt securities	3,138		13		(61)		3,090
Mortgage- and asset-backed securities	320		—		(34)		286
Commercial paper	950		—		—		950
Certificates of deposit	569		—		—		569
Total	$	7,473	$	15	$	(107)	$	7,381

Table of Contents

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

July 27, 2024	AmortizedCost		GrossUnrealizedGains		GrossUnrealized and Credit Losses		FairValue
U.S. government securities	$	2,380	$	1	$	(28)	$	2,353
U.S. government agency securities	223		—		(2)		221
Non-U.S. government and agency securities	370		1		—		371
Corporate debt securities	3,818		5		(146)		3,677
U.S. agency mortgage-backed securities	1,959		—		(178)		1,781
Commercial paper	1,023		—		—		1,023
Certificates of deposit	439		—		—		439
Total	$	10,212	$	7	$	(354)	$	9,865

The following table presents the gross realized gains and gross realized losses related to available-for-sale debt investments (in millions):

	Three Months Ended				~~Nine Months Ended~~
	April 26, 2025		April 27, 2024		April 26, 2025		April 27, 2024
	October 25, 2025		October 26, 2024
Gross realized gains	$	110	$	28	$	9	$	7
Gross realized losses	(3114)		(1633)		$	~~(84)~~	$	~~(64)~~
Total	$	(304)	$	(1425)	$	~~(75)~~	$	~~(57)~~

The following tables present the breakdown of the available-for-sale debt investments with gross unrealized losses and the duration that those losses had been unrealized at ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025 (in millions):

	UNREALIZED LOSSESLESS THAN 12 MONTHS				UNREALIZED LOSSES12 MONTHS OR GREATER				TOTAL
April 26, 2025	Fair Value		GrossUnrealizedLosses		Fair Value		GrossUnrealizedLosses		Fair Value		Gross Unrealized Losses
October 25, 2025	Fair Value		GrossUnrealizedLosses		Fair Value		GrossUnrealizedLosses		Fair Value		Gross Unrealized Losses
U.S. government securities	$	~~970~~—	$	~~(6)~~—	$	~~313~~436	$	(94)	$	~~1,283~~436	$	(154)
U.S. government agency securities	105		—		31—		—		415		—
Non-U.S. government and agency securities	76		—		—		—		76		—
Corporate debt securities	63		—		1,583		(18)		1,646		(18)
Corporate debt securities	319		(1)		1,917		(48)		2,236		(49)
Mortgage- and asset-backed securities	4		—		160		(16)		164		(16)
U.S. agency mortgage-backed securities	6		—		482		(66)		488		(66)
Commercial paper	10		—		—		—		10		—
Total	$	~~1,381~~82	$	~~(7)~~—	$	2,~~743~~179	$	(~~123~~38)	$	42,~~124~~261	$	(~~130~~38)

	UNREALIZED LOSSESLESS THAN 12 MONTHS				UNREALIZED LOSSES12 MONTHS OR GREATER				TOTAL
July 27, 2024	Fair Value		GrossUnrealizedLosses		Fair Value		GrossUnrealizedLosses		Fair Value		Gross Unrealized Losses
U.S. government securities	$	598	$	(2)	$	1,399	$	(26)	$	1,997	$	(28)
U.S. government agency securities	89		—		109		(2)		198		(2)
Non-U.S. government and agency securities	17		—		—		—		17		—
Corporate debt securities	276		(1)		2,818		(115)		3,094		(116)
U.S. agency mortgage-backed securities	238		(1)		1,438		(177)		1,676		(178)
Commercial paper	10		—		—		—		10		—
Total	$	1,228	$	(4)	$	5,764	$	(320)	$	6,992	$	(324)

Table of Contents

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table summarizes the maturities of our available-for-sale debt investments as of April 26, 2025 (in millions):


	UNREALIZED LOSSES LESS THAN 12 MONTHS				UNREALIZED LOSSES 12 MONTHS OR GREATER				TOTAL
July 26, 2025	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. government securities	$	1,076	$	(6)	$	302	$	(6)	$	1,378	$	(12)
U.S. government agency securities	8		—		21		—		29		—
Non-U.S. government and agency securities	292		—		—		—		292		—
Corporate debt securities	106		—		1,800		(35)		1,906		(35)
Mortgage- and asset-backed securities	5		—		279		(34)		284		(34)
Commercial paper	30		—		—		—		30		—
Total	$	1,517	$	(6)	$	2,402	$	(75)	$	3,919	$	(81)

	Amortized Cost		Fair Value
Within 1 year	$	3,160	$	3,118
After 1 year through 5 years	3,622		3,586
Mortgage-backed securities with no single maturity	556		490
Total	$	7,338	$	7,194

The following table summarizes the maturities of our available-for-sale debt investments as of October 25, 2025 (in millions):


	Amortized Cost		Fair Value
Within 1 year	$	3,925	$	3,883
After 1 year through 5 years	2,768		2,784
After 5 years through 10 years	21		21
Mortgage- and asset-backed securities with no single maturity	270		254
Total	$	6,984	$	6,942

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.

(b)~~Summary~~Marketable of Equity ~~Investments~~Securities

We held marketable equity securities of $~~287~~394 million and $~~481~~383 million as of ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025, respectively. We recognized a net unrealized ~~loss~~gains of $3530 million and $625 million during the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2025,~~2026 ~~respectively,~~ and ~~a net unrealized gain of $20 million and $40 million during the corresponding periods of~~ fiscal ~~2024~~2025, respectively, on our marketable securities still held as of the reporting date. Our net adjustments to non-marketable equity securities measured using the measurement alternative still held was a net loss of $2 million and $18 million for the third quarter and first nine months of fiscal 2025, respectively, and a net loss of $21 million and $155 million for the corresponding periods of fiscal 2024. We held equity interests in certain private equity funds of $0.7 billion and $0.8 billion as of April 26, 2025 and July 27, 2024, respectively, which are accounted for under the NAV practical expedient.

In(c)Investments ~~the ordinary course of business, we have investments~~ in ~~privately~~Privately ~~held~~Held companies and provide financing to certain customers. These privately held companies and customers are evaluated for consolidation under the variable interest or voting interest entity models. We evaluate on an ongoing basis our investments in these privately held companies and our customer financings, and have determined that as of April 26, 2025, there were no additional significant variable interest or voting interest entities required to be consolidated in our Consolidated Financial Statements.Companies

The carrying value of our investments in privately held companies was $2.01 billion and $1.89 billion as of ~~April~~October 2625, 2025 and July ~~27, 2024, respectively. Of the total carrying value of our investments in privately held companies as of April~~ 26, 2025, $0respectively.8 ~~billion of such investments are considered to be in variable interest entities which are not required to be consolidated.~~ As of ~~April~~October 2625, 2025, we have total funding commitments of $0.35 billion related to privately held investments. The carrying value of these investments and the additional funding commitments, collectively, represent our maximum exposure related to privately held investments.

24Investments in privately held companies measured using the measurement alternative had a carrying value of $0.7 billion and $0.6 billion as of October 25, 2025 and July 26, 2025, respectively. We have recorded cumulative adjustments to the carrying value of our investments in privately held companies measured using the measurement alternative as follows (in millions):


	October 25, 2025		July 26, 2025
Cumulative upward adjustments	$	277	$	195
Cumulative downward adjustments, including impairments	(595)		(597)
Net adjustments	$	(318)	$	(402)

We held equity interests in certain private equity funds of $0.7 billion as of each of October 25, 2025 and July 26, 2025, which are accounted for under the NAV practical expedient.

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Certain of our investments in privately held companies are required to be consolidated under the voting interest entity model. The noncontrolling interest attributed to these investments was $206 million and $162 million as of October 25, 2025 and July 26, 2025, respectively, and is included in the equity section of the Consolidated Balance Sheets. The share of earnings attributable to the noncontrolling interest attributed to these investments is not material for any of the periods presented and is included in other income (loss), net in the Consolidated Statements of Operations.

11.Fair Value

(a)Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):

	APRIL 26, 2025						JULY 27, 2024
	OCTOBER 25, 2025						JULY 26, 2025
	FAIR VALUE MEASUREMENTS						FAIR VALUE MEASUREMENTS
	Level 1		Level 2		TotalBalance		Level 1		Level 2		TotalBalance
Assets:
Cash equivalents:
Money market funds	$	56,~~356~~082	$	—	$	56,~~356~~082	$	35,~~334~~885	$	—	$	35,~~334~~885
Commercial paper	—		~~444~~149		~~444~~149		—		~~468~~336		~~468~~336
Corporate debt securities	—		4—		4—		—		251		251
Certificates of deposit	—		20		20		—		14		14
Available-for-sale debt investments:
U.S. government securities	—		21,~~068~~640		21,~~068~~640		—		21,~~353~~961		21,~~353~~961
U.S. government agency securities	—		7749		7749		—		~~221~~67		~~221~~67
Non-U.S. government and agency securities	—		~~377~~410		~~377~~410		—		~~371~~458		~~371~~458
Corporate debt securities	—		32,~~138~~949		32,~~138~~949		—		3,~~677~~090		3,~~677~~090
U.S. agency mortgage-backed securities	—		490		490		—		1,781		1,781
Mortgage- and asset-backed securities	—		254		254		—		286		286
Commercial paper	—		~~436~~884		~~436~~884		—		~~1,023~~950		~~1,023~~950
Certificates of deposit	—		~~608~~756		~~608~~756		—		~~439~~569		~~439~~569
Equity investments:
Marketable equity securities	~~287~~394		—		~~287~~394		~~481~~383		—		~~481~~383
Other current assets:
Money market funds	750		—		750		750		—		750
Other assets:
Money market funds	—		—		—		563		—		563
Derivative assets	—		4855		4855		—		6432		6432
Total	$	6,~~393~~476	$	7,~~710~~146	$	1413,~~103~~622	$	56,~~128~~831	$	107,~~436~~750	$	1514,~~564~~581
Liabilities:
Derivative liabilities	$	—	$	3558	$	3558	$	—	$	7431	$	7431
Total	$	—	$	3558	$	3558	$	—	$	7431	$	7431

Level 1 marketable equity securities are determined by using quoted prices in active markets for identical assets. Level 2 available-for-sale debt investments are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. We use inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. We use such pricing data as the primary input to make our assessments and determinations as to the ultimate valuation of our investment portfolio and have not made, during the periods presented, any material adjustments to such inputs. We are ultimately responsible for the financial statements and underlying estimates. Our derivative instruments are primarily classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. We did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

2522

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(b)Assets Measured at Fair Value on a Nonrecurring Basis

Our non-marketable equity securities using the measurement alternative are adjusted to fair value on a non-recurring basis. Adjustments are made when observable transactions for identical or similar investments of the same issuer occur, or due to impairment. These securities are classified as Level 3 in the fair value hierarchy because we estimate the value based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs such as volatility, rights, and obligations of the securities we hold.

The fair value for purchased intangible assets measured at fair value on a nonrecurring basis was categorized as Level 3 due to the use of significant unobservable inputs in the valuation. Significant unobservable inputs that were used included expected revenues and net income related to the assets and the expected life of the assets. The difference between the estimated fair value and the carrying value of the assets was recorded as an impairment charge, which was included in product cost of sales. See Note 5.

The fair value of our short-term loan receivables approximates their carrying value due to their short duration. The aggregate carrying value of our long-term loan receivables was $23.91 billion and $2.7 9 billion as of ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025, respectively. The estimated fair value of our long-term loan receivables approximates their carrying value. We use unobservable inputs in determining discounted cash flows to estimate the fair value of our long-term loan receivables, and therefore they are categorized as Level 3.

As of ~~April~~October 2625, 2025, the estimated fair value of our short-term debt approximates its carrying value due to the short maturities. As of ~~April~~October 2625, 2025, the fair value of our senior notes was $25.5 billion, with a carrying amount of $2524.16 billion. This compares to a fair value of $2025.40 billion and a carrying amount of $2024.16 billion as of July 2726, ~~2024~~2025. The fair value of the senior notes was determined based on observable market prices in a less active market and was categorized as Level 2.

12.Borrowings

(a)Short-Term Debt

The following table summarizes our short-term debt (in millions, except percentages):

	April 26, 2025				July 27, 2024
	October 25, 2025				July 26, 2025
	Amount		Effective Rate		Amount		Effective Rate
Current portion of senior notes	$	23,~~247~~249	43.4841	%	$	~~488~~1,749	64.6615	%
Commercial paper	43,~~174~~476		4.4909	%	103,~~853~~482		54.4337	%
Current portion of other debt	1—		~~1.13~~—	%	—1		—1.13	%
Total	$	6,~~422~~725			$	115,~~341~~232

We have a short-term debt financing program of up to $15.0 billion through the issuance of commercial paper notes. We use the proceeds from the issuance of commercial paper notes for general corporate purposes.

The effective rates for the short- and long-term debt include the interest on the notes, the accretion of the discount, the issuance costs, and, if applicable, adjustments related to hedging.

2623

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(b)Long-Term Debt

The following table summarizes our long-term debt (in millions, except percentages):

		April 26, 2025			July 27, 2024
		October 25, 2025			July 26, 2025
	Maturity Date	Amount		Effective Rate	Amount		Effective Rate
Senior notes:
Fixed-rate notes:
3.50%	June 15, 2025	$	500	5.67%	$	500	6.66%
4.90%	February 26, 2026	$	1,000	5.00%	$	1,000	5.00%
4.90%	February 26, 2026	1,000		5.00%	1,000		5.00%
2.95%	February 28, 2026	750		3.01%	750		3.01%
2.50%	September 20, 2026	1,500		2.55%	1,500		2.55%
4.80%	February 26, 2027	2,000		4.90%	2,000		4.90%
4.55%	February 24, 2028	1,000		4.61%	—1,000		—4.61%
4.85%	February 26, 2029	2,500		4.91%	2,500		4.91%
4.75%	February 24, 2030	1,000		4.73%	—1,000		—4.73%
4.95%	February 26, 2031	2,500		5.04%	2,500		5.04%
4.95%	February 24, 2032	1,000		4.94%	—1,000		—4.94%
5.05%	February 26, 2034	2,500		4.97%	2,500		4.97%
5.10%	February 24, 2035	1,250		5.11%	—1,250		—5.11%
5.90%	February 15, 2039	2,000		6.11%	2,000		6.11%
5.50%	January 15, 2040	2,000		5.67%	2,000		5.67%
5.30%	February 26, 2054	2,000		5.28%	2,000		5.28%
5.50%	February 24, 2055	750		5.49%	—750		—5.49%
5.35%	February 26, 2064	1,000		5.42%	1,000		5.42%
Other debt		32		1.13%	3		1.13%
Total		2524,~~253~~752			2024,~~253~~753
Unaccreted discount/issuance costs		(~~146~~139)			(~~133~~142)
Hedge accounting fair value adjustments		(2)			(11)
Total		$	24,613		$	24,611
Total		$	25,105		$	20,109
Reported as:
Current portion of long-term debt		$	23,~~248~~249		$	~~488~~1,750
Long-term debt		2221,~~857~~364			1922,~~621~~861
Total		$	2524,~~105~~613		$	2024,~~109~~611

InInterest ~~February~~is ~~2025~~payable semiannually on each class of the senior fixed-rate notes. Each of the senior fixed-rate notes is redeemable by us at any time, wesubject ~~issued~~to a make-whole premium. The senior notes ~~for~~rank anat ~~aggregate~~par ~~principal~~with ~~amount~~the ofcommercial $5paper notes that have been issued pursuant to our short-term debt financing program, as discussed above under “(a) Short-Term Debt.0” As of October ~~billion~~25, 2025, we were in compliance with all debt covenants.

WeAs ~~entered into an interest rate swap in a prior period with an aggregate notional amount~~ of ~~$0.5~~October 25, ~~billion~~2025, ~~designated~~future asprincipal apayments ~~fair~~for ~~value hedge of certain of our fixed~~long-~~rate~~term ~~senior~~debt, ~~notes.~~including ~~This swap converts~~ the ~~fixed~~current ~~interest~~portion, ~~rate~~are ofsummarized ~~the~~as ~~fixed-rate~~follows ~~note to a floating interest rate based on Secured Overnight Financing Rate~~ (~~SOFR). The gain and loss related to the change~~ in the fair value of the interest rate swap substantially offsets the change in the fair value of the hedged portion of the underlying debt that is attributable to the change in market interest rates. For additional information, see Note 13.millions):

Interest is payable semiannually on each class of the senior fixed-rate notes. Each of the senior fixed-rate notes is redeemable by us at any time, subject to a make-whole premium. The senior notes rank at par with the commercial paper notes that have been issued pursuant to our short-term debt financing program, as discussed above under “(a) Short-Term Debt.” As of April 26, 2025, we were in compliance with all debt covenants.


Fiscal Year	Amount
2026 (remaining nine months)	$	1,750
2027	3,502
2028	1,000
2029	2,500
2030	1,000
Thereafter	15,000
Total	$	24,752

2724

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As of April 26, 2025, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):

Fiscal Year	Amount
2025 (remaining three months)	$	500
2026	1,751
2027	3,502
2028	1,000
2029	2,500
Thereafter	16,000
Total	$	25,253

(c)Credit Facility

On February 2, 2024, we entered into an amended and restated 5-year $5.0 billion unsecured revolving credit agreement. The interest rate for the credit agreement is determined based on a formula using certain market rates. The credit agreement requires that we comply with certain covenants, including that we maintain an interest coverage ratio (defined in the agreement as the ratio of consolidated EBITDA to consolidated interest expense) of not less than 3.0 to 1.0. As of ~~April~~October 2625, 2025, we were in compliance with all associated covenants and we had not borrowed any funds under our credit agreement.

13.Derivative Instruments

(a)Summary of Derivative Instruments

We use derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates, interest rates, and equity prices. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We seek to mitigate such risks by limiting our counterparties to major financial institutions and requiring collateral in certain cases. In addition, the potential risk of loss with any one counterparty resulting from credit risk is monitored. Management does not expect material losses as a result of defaults by counterparties.

The fair values of our derivative instruments and the line items on the Consolidated Balance Sheets to which they were recorded are summarized as follows (in millions):

	DERIVATIVE ASSETS					DERIVATIVE LIABILITIES
	Balance Sheet Line Item	~~April~~October 2625,2025		July 2726,~~2024~~2025		Balance Sheet Line Item	~~April~~October 2625,2025		July 2726,~~2024~~2025
Derivatives designated as hedging instruments:
Foreign currency derivatives	Other current assets	$	1427	$	4717	Other current liabilities	$	51	$	12
Foreign currency derivatives	Other assets	127		1510		Other long-term liabilities	14—		—2
Interest rate derivatives	Other current assets	—		—		Other current liabilities	2		11
Total		54		27			1		4
Total		15		62			21		12
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Other current assets	191		23		Other current liabilities	1330		4717
Foreign currency derivatives	Other assets	14—		—2		Other long-term liabilities	127		1510
Total		331		25			1457		6227
Total		$	4855	$	6432		$	3558	$	7431

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following amounts were recorded on the Consolidated Balance Sheets related to cumulative basis adjustments for our fair value hedges (in millions):

	CARRYING AMOUNT OF THE HEDGED ASSETS/(LIABILITIES)				CUMULATIVE AMOUNT OF FAIR VALUE HEDGING ADJUSTMENT INCLUDED IN THE CARRYING AMOUNT OF THE HEDGED ASSETS/LIABILITIES
Balance Sheet Line Item of Hedged Item	April 26,2025		July 27,2024		April 26,2025		July 27,2024
Short-term debt	$	(498)	$	(488)	$	2	$	11

The effect of derivative instruments designated as fair value hedges, recognized in interest and other income (loss), net is summarized as follows (in millions):

	Three Months Ended				Nine Months Ended
	April 26, 2025		April 27, 2024		April 26, 2025		April 27, 2024
Interest rate derivatives:
Hedged items	$	(2)	$	(2)	$	(9)	$	(25)
Derivatives designated as hedging instruments	2		2		9		25
Total	$	—	$	—	$	—	$	—

The effect on the Consolidated Statements of Operations of derivative instruments not designated as hedges is summarized as follows (in millions):

		GAINS (LOSSES) FOR THE THREE MONTHS ENDED				~~GAINS (LOSSES) FOR THE NINE MONTHS ENDED~~
Derivatives Not Designated as Hedging Instruments	Line Item in Statements of Operations	~~April~~October 2625,2025		~~April~~October 2726,2024		~~April 26,2025~~		~~April 27,2024~~
Foreign currency derivatives	Other income (loss), net	$	~~163~~(46)	$	(8432)	$	68	$	~~(161)~~
Total return swaps—deferred compensation	Operating expenses and other	~~(105)~~54		1622		~~(72)~~		33
Equity derivatives	Other income (loss), net	—		—		—		1
Total		$	8	$	(10)
Total		$	58	$	(68)	$	(4)	$	(127)

The notional amounts of our outstanding derivatives are summarized as follows (in millions):

	April 26,2025		July 27,2024
	October 25,2025		July 26,2025
Foreign currency derivatives	$	78,~~851~~006	$	78,~~434~~978
Interest rate derivatives	500		500
Total return swaps—deferred compensation	1,195		1,087
Total return swaps—deferred compensation	947		985
Total	$	9,201	$	10,065
Total	$	9,298	$	8,919

~~(b)Offsetting of Derivative Instruments~~25

We present our derivative instruments at gross fair values in the Consolidated Balance Sheets. However, our master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty.

To further limit credit risk, we also enter into collateral security arrangements related to certain derivative instruments whereby cash is posted as collateral between the counterparties based on the fair market value of the derivative instrument. Under these collateral security arrangements, the net cash collateral provided for was $1 million and $11 million as of April 26, 2025 and July 27, 2024, respectively.

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(b)Offsetting of Derivative Instruments

(c)Foreign Currency Exchange Risk

We conduct business globally in numerous currencies. Therefore, we are exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, we enter into foreign currency contracts. We do not enter into such contracts for speculative purposes.

We may hedge forecasted foreign currency transactions related to certain revenues, operating expenses and service cost of sales with currency options and forward contracts. These currency options and forward contracts, designated as cash flow hedges, generally have maturities of less than 24 months. The derivative instrument’s gain or loss is initially reported as a component of accumulated other comprehensive income (AOCI) and subsequently reclassified into earnings when the hedged exposure affects earnings.

We enter into foreign exchange forward and option contracts to reduce the short-term effects of foreign currency fluctuations on assets and liabilities such as foreign currency receivables, long-term customer financings and payables. These derivatives are not designated as hedging instruments. Gains and losses on the contracts are included in other income (loss), net, and substantially offset foreign exchange gains and losses from the remeasurement of monetary assets and liabilities denominated in currencies other than the functional currency of the reporting entity.

We hedge certain net investments in our foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on our net investment in those foreign subsidiaries. These derivative instruments generally have maturities of up to six months.

(d)Interest Rate Risk

We hold an interest rate swap designated as a fair value hedge related to a fixed-rate senior note that is due in fiscal 2025. Under the interest rate swap, we receive fixed-rate interest payments and make interest payments based on SOFR plus a fixed number of basis points. The effect of the swap is to convert the fixed interest rate of the senior fixed-rate note to a floating interest rate based on SOFR. The gain and loss related to the change in the fair value of the interest rate swap is included in interest expense and substantially offsets the change in the fair value of the hedged portion of the underlying debt attributable to the change in market interest rates.

We periodically enter into treasury lock agreements, designated as cash flow hedges, in order to hedge the impact of changes in the U.S. benchmark interest rate on future interest payments in anticipation of future debt offerings. Changes in the fair value of treasury lock agreements are recorded to AOCI and reclassified into earnings when the hedged exposure affects earnings.

(e)Equity Price Risk

We ~~hold~~are ~~marketable~~exposed ~~equity~~to ~~securities~~variability in ~~our~~compensation ~~portfolio~~charges ~~that~~related ~~are subject~~ to ~~price~~certain deferred ~~risk.~~compensation obligations Toto ~~diversify~~employees ~~our~~and ~~overall~~directors. Although ~~portfolio, we may also hold equity derivatives that are~~ not designated as accounting hedges., ~~The~~we ~~change~~utilize inderivatives ~~the~~such ~~fair~~as ~~value~~total ofreturn ~~each~~swaps ofto ~~these~~economically ~~investment~~hedge ~~types~~this ~~are~~exposure ~~included~~and inoffset ~~other~~the ~~income~~related ~~(loss),~~compensation ~~net~~expense.

We are also exposed to variability in compensation charges related to certain deferred compensation obligations to employees and directors. Although not designated as accounting hedges, we utilize derivatives such as total return swaps to economically hedge this exposure and offset the related compensation expense.

14.Commitments and Contingencies

(a)Purchase Commitments with Contract Manufacturers and Suppliers

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 manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that allow them to procure inventory based upon criteria as defined by us or establish the parameters defining our requirements. A significant portion of our reported purchase commitments arising from these agreements consists of firm, noncancelable, and unconditional commitments. Certain of these inventory purchase commitments are directly with suppliers, and relate to fixed-dollar commitments to secure supply and pricing for certain product components for multi-year periods. 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.

30The following table summarizes our inventory purchase commitments with contract manufacturers and suppliers by period (in millions):


	October 25, 2025		July 26, 2025
Less than 1 year	$	7,879	$	7,202
1 to 3 years	396		320
3 to 5 years	46		77
Total	$	8,321	$	7,599

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~The~~We ~~following~~record ~~table~~a ~~summarizes~~liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of October 25, 2025 and July 26, 2025, the liability for these purchase commitments ~~with~~was ~~contract~~$185 ~~manufacturers~~million and ~~suppliers~~$206 bymillion, ~~period~~respectively, (and was included in ~~millions):~~other current liabilities.

	April 26,2025		July 27,2024
Less than 1 year	$	5,773	$	3,952
1 to 3 years	509		1,085
3 to 5 years	63		121
Total	$	6,345	$	5,158

We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of April 26, 2025 and July 27, 2024, the liability for these purchase commitments was $246 million and $498 million, respectively, and was included in other current liabilities.

(b)Other Commitments

We have certain funding commitments, primarily related to our privately held investments. The funding commitments were $0.35 billion and $0.23 billion as of ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025, respectively.

(c)Product Warranties

The following table summarizes the activity related to the product warranty liability (in millions):

	Nine Months Ended
	Three Months Ended
	April 26,2025		April 27,2024
	October 25,2025		October 26,2024
Balance at beginning of period	$	~~362~~399	$	~~329~~362
Provisions for warranties issued	~~300~~104		~~316~~105
Adjustments for pre-existing warranties	40—		201
Settlements	(~~306~~111)		(~~302~~111)
Balance at end of period	$	~~396~~392	$	~~363~~357

We accrue for warranty costs as part of our cost of sales based on associated material product costs, labor costs for technical support staff, and associated overhead. Our products are generally covered by a warranty for periods ranging from 90 days to five years, and for some products we provide a limited lifetime warranty.

(d)Financing and Other Guarantees

In the ordinary course of business, we provide financing guarantees for various third-party financing arrangements extended to channel partners customers. Payments under these financing guarantee arrangements were not material for the periods presented.

Channel Partner Financing Guarantees We facilitate arrangements for third-party financing extended to channel partners, consisting of revolving short-term financing, with payment terms generally ranging from 60 to 90 days. These financing arrangements facilitate the working capital requirements of the channel partners, and, in some cases, we guarantee a portion of these arrangements. The volume of channel partner financing was $56.97 billion and $6.10 billion for the ~~third~~first quarter of fiscal ~~2025~~2026 and ~~2024, respectively, and $18.1 billion and $20.9 billion for the first nine months of fiscal~~ 2025 ~~and 2024~~, respectively. The balance of the channel partner financing subject to guarantees was $1.25 billion asand of$1.3 billion ~~each~~as of ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025, respectively.

31Financing Guarantee Summary The aggregate amounts of channel partner financing guarantees outstanding at October 25, 2025 and July 26, 2025, representing the total maximum potential future payments under financing arrangements with third parties along with the related deferred revenue, are summarized in the following table (in millions):


	October 25, 2025		July 26, 2025
Maximum potential future payments	$	134	$	123
Deferred revenue	(17)		(13)
Total	$	117	$	110

(e)Indemnifications

In the normal course of business, we have indemnification obligations to other parties, including customers, lessors, and parties to other transactions with us, with respect to certain matters. We have agreed to indemnify against losses arising from a breach of representations or covenants or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time or circumstances within which an indemnification claim can be made and the amount of the claim.

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(Unaudited)

~~Financing~~cases, ~~Guarantee~~and ~~Summary The~~the ~~aggregate~~unique ~~amounts~~facts ofand ~~channel~~circumstances ~~partner~~involved ~~financing~~in ~~guarantees~~each ~~outstanding~~particular atcase ~~April 26, 2025~~ and ~~July 27,~~agreement. ~~2024~~Historically, ~~representing~~indemnity ~~the total maximum potential future~~ payments ~~under~~made ~~financing~~by ~~arrangements~~us ~~with~~have ~~third~~not ~~parties~~had ~~along~~a ~~with~~material ~~the~~effect ~~related~~on ~~deferred~~our ~~revenue,~~Consolidated ~~are~~Financial ~~summarized in the following table (in millions):~~Statements.

	April 26,2025		July 27,2024
Maximum potential future payments	$	116	$	127
Deferred revenue	(10)		(13)
Total	$	106	$	114

(e)Indemnifications

It is not possible to determine the maximum potential amount for claims made under the indemnification obligations due to uncertainties in the litigation process, coordination with and contributions by other parties and the defendants in these types of cases, and the unique facts and circumstances involved in each particular case and agreement. Historically, indemnity payments made by us have not had a material effect on our Consolidated Financial Statements.

In addition, we have entered into indemnification agreements with our officers and directors, and our Amended and Restated Bylaws contain similar indemnification obligations to our agents.

(f)Legal Proceedings

Brazil Brazilian authorities have investigated our Brazilian subsidiary and certain of its former employees, as well as a Brazilian importer of our products, and its affiliates and employees, relating to alleged evasion of import taxes and alleged improper transactions involving the subsidiary and the importer. Brazilian tax authorities have assessed claims against our Brazilian subsidiary based on a theory of joint liability with the Brazilian importer for import taxes, interest, and penalties. In addition to claims asserted by the Brazilian federal tax authorities in prior fiscal years, tax authorities from the Brazilian state of Sao Paulo have asserted similar claims on the same legal basis in prior fiscal years. The remaining asserted claims by Brazilian federal tax authorities are for calendar years 2004 through 2007, and the remaining asserted claims by the tax authorities from the state of Sao Paulo are for calendar years 2005 through 2007. The total remaining asserted claims by Brazilian state and federal tax authorities aggregate to $~~138~~145 million for the alleged evasion of import and other taxes, $~~788~~851 million for interest, and $~~282~~298 million for various penalties, all determined using an exchange rate as of ~~April~~October 2625, 2025.

We have completed a thorough review of the matters and believe the asserted claims against our Brazilian subsidiary are without merit, and we are defending the claims vigorously. While we believe there is no legal basis for the alleged liability, due to the complexities and uncertainty surrounding the judicial process in Brazil and the nature of the claims asserting joint liability with the importer, we are unable to determine the likelihood of an unfavorable outcome against our Brazilian subsidiary and are unable to reasonably estimate a range of loss, if any. We do not expect a final judicial determination for several years.

Centripetal On February 13, 2018, Centripetal Networks, Inc. (“Centripetal”) asserted patent infringement claims against us in the U.S. District Court for the Eastern District of Virginia, alleging that several of our products and services infringe eleven Centripetal U.S. patents. After two bench trials and various administrative actions and appeals, we have been found either to not have infringed any of the patents or the patents have been invalidated. Centripetal appealed one of the Patent Trial and Appeal Board’s (“PTAB”) invalidity decisions and weon ~~are~~October ~~awaiting~~22, 2025, the ~~decision~~Federal ~~following~~Circuit vacated the ~~Federal~~decision ~~Circuit~~and ~~hearing~~remanded onthe ~~that~~case ~~appeal~~to onthe ~~February~~PTAB 6,for ~~2025~~further consideration. Centripetal’s appeal of the non-infringement judgment of the District Court is ongoing.

Between April 2020 and February 2022, Centripetal also filed complaints in the District Court of Dusseldorf in Germany (“German Court”), asserting ~~a total of~~ five patents and one utility model. Centripetal sought damages and injunctive relief in all cases. In various proceedings in 2021, 2022, and 2023, we have been found to have not infringed three patents, one patent was invalidated, and the utility model was invalidated. The infringement action on the final patent is stayed due to an invalidity action heard on June 6, 2024 in the Federal Patent Court, in which all claims, aside from one auxiliary claim, were found invalid, and for which we are awaiting ~~the~~a ~~entry~~decision ofon ~~judgment~~appeal from the German Federal ~~Patent~~ Court of Justice. Centripetal’s appeals of two of the non-infringement findings remain pending and, on March 27, 2024, the Court of Appeals rejected Centripetal’s appeal of the third non-infringement finding. In an appellate decision on December 11, 2024, the German Federal Court of Justice revoked one of the two patents for which Centripetal appealed the finding of non-infringement, rendering moot the noninfringement appeal of that patent.

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(Unaudited)

On July 10, 2023, Centripetal filed a complaint in the Paris Judiciary Court asserting the French counterpart of a European Patent. Centripetal seeks damages and injunctive relief in the case. Centripetal previously asserted the German counterpart of the same European Patent in Germany and the German Court rejected Centripetal’s complaint finding no infringement. We have filed our response and defenses to the complaint and the case briefing is ongoing. While the Court has not set a final hearing date, we anticipate that it will occur in the third calendar quarter of 2026.

Due to uncertainty surrounding patent litigation processes in the U.S. and Europe, we are unable to reasonably estimate the ultimate outcome of the litigations at this time. If we do not prevail in these litigations, we believe that any damages ultimately assessed would not have a material effect on our Consolidated Financial Statements.

Ramot On June 12, 2019 and on February 26, 2021, Ramot at Tel Aviv University Ltd. (“Ramot”) asserted patent infringement claims against Cisco and Acacia in the U.S. District Court for the Eastern District of Texas (“E.D. Tex.”) and in the District of Delaware (“D. Del.”), respectively. Ramot is seeking damages, including enhanced damages, and a royalty on future sales. Ramot alleges that certain optical transceiver modules and line cards infringe three patents. We challenged the validity of the patents in the U.S. Patent and Trademark Office (“PTO”) and the pending District Court cases have been stayed. On September 28, 2021 and May 24, 2022, Cisco and Acacia filed two declaratory judgment actions of noninfringement against Ramot in D. ~~Del on other Ramot patents and those proceedings are ongoing. The Court set trial in the D. Del. cases for November 3, 2025.~~

While we believe that we have strong non-infringement and invalidity arguments in these litigations, and that Ramot’s damages theories in such cases are not supported by prevailing law, we are unable to reasonably estimate the ultimate outcome of these litigations at this time due to uncertainties in the litigation processes. If we do not prevail in court in these litigations, we believe any damages ultimately assessed would not have a material effect on our Consolidated Financial Statements.28

Egenera On August 8, 2016, Egenera, Inc. (“Egenera”) asserted infringement claims against us in the U.S. District Court for the District of Massachusetts, alleging that Cisco’s Unified Computing System Manager infringes three patents. Egenera sought damages, including enhanced damages, and an injunction. Two of the asserted patents were dismissed, leaving Egenera’s infringement claim based on one asserted patent. On March 25, 2022, the PTO preliminarily found all of the asserted claims of the remaining patent unpatentable in ex parte reexamination proceedings. On August 15, 2022, after a jury trial for the remaining patent, the jury returned a verdict in favor of Cisco. The District Court denied Egenera’s post-trial motions, and Egenera filed an appeal to the Federal Circuit on January 13, 2023. The Federal Circuit heard oral argument on October 11, 2024 and we are awaiting the decision.

In addition to the above matters, we are subject to other legal proceedings, claims, and litigation arising in the ordinary course of business, including intellectual property litigation. While the outcome of these matters is currently not determinable, we do not believe that the ultimate costs to resolve these matters will have a material effect on our Consolidated Financial Statements.

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(Unaudited)

Del. on other Ramot patents and those proceedings are ongoing. The Court rescheduled the trial date in the D. Del. cases for December 1, 2025.

15.Stockholders’ Equity

(a)Stock Repurchase Program

In September 2001, our Board of Directors authorized a stock repurchase program. As of ~~April~~October 2625, 2025, the remaining authorized amount for stock repurchases under this program was approximately $1512.42 billion, with no termination date. The stock repurchase activity for fiscal ~~2025~~2026 and ~~2024~~2025 under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):

Quarter Ended	Shares	Weighted-Average Price per Share		Amount
Fiscal 2026
October 25, 2025	29	$	68.28	$	2,001
Fiscal 2025
July 26, 2025	19	$	64.65	$	1,252
April 26, 2025	25	$	59.78	$	1,504
January 25, 2025	21	$	58.58	$	1,236
October 26, 2024	40	$	49.56	$	2,003
Fiscal 2024
July 27, 2024	43	$	46.80	$	2,002
April 27, 2024	26	$	49.22	$	1,256
January 27, 2024	25	$	49.54	$	1,254
October 28, 2023	23	$	54.53	$	1,252

There were stock repurchases of $2029 million and $2520 million that were pending settlement ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025, respectively.

The purchase price for the shares of our stock repurchased is reflected as a reduction to stockholders’ equity. We are required to allocate the purchase price of the repurchased shares as (i) a reduction to retained earnings or an increase to accumulated deficit and (ii) a reduction of common stock and additional paid-in capital.

(b) Dividends Declared

On ~~May~~November 1412, 2025, our Board of Directors declared a quarterly dividend of $0.41 per common share to be paid on ~~July~~January 2321, ~~2025~~2026, to all stockholders of record as of the close of business on ~~July~~January 32, ~~2025~~2026. Future dividends will be subject to the approval of our Board of Directors.

Under the terms of our Amended and Restated Certificate of Incorporation, the Board of Directors is authorized to issue preferred stock in one or more series and, in connection with the creation of such series, to fix by resolution the designation, powers (including voting powers (if any)), preferences and relative, participating, optional or other special rights, if any, of such series, and any qualifications, limitations or restrictions thereof, of the shares of such series. As of ~~April~~October 2625, 2025, we have not issued any shares of preferred stock.

~~16.Employee Benefit Plans~~ 29

(a)Employee Stock Incentive Plans

We have one stock incentive plan: the 2005 Stock Incentive Plan (the “2005 Plan”). In addition, we have, in connection with our acquisitions of various companies, assumed the share-based awards granted under stock incentive plans of the acquired companies or issued share-based awards in replacement thereof. Share-based awards are designed to reward employees for their long-term contributions to us and provide incentives for them to remain with us. The number and frequency of share-based awards are based on competitive practices, our operating results, government regulations, and other factors.

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(Unaudited)

~~non-employee directors of Cisco are eligible to participate in the 2005 Plan~~16.Employee ~~The~~Benefit 2005 Plan may be terminated by our Board of Directors at any time and for any reason, and is currently set to terminate at the 2030 Annual Meeting unless re-adopted or extended by our stockholders prior to or on such date.Plans

~~Under the 2005 Plan’s share reserve feature, a distinction is made between the number of shares in the reserve attributable to~~ (ia)Employee ~~stock~~Stock ~~options~~Incentive and SARs and (ii) “full value” awards (i.e., stock grants and stock units). Shares issued as stock grants, pursuant to stock units or pursuant to the settlement of dividend equivalents are counted against shares available for issuance under the 2005 Plan on a 1.5-to-1 ratio. For each share awarded as restricted stock or a restricted stock unit award under the 2005 Plan, 1.5 shares was deducted from the available share-based award balance. If awards issued under the 2005 Plan are forfeited or terminated for any reason before being exercised or settled, then the shares underlying such awards, plus the number of additional shares, if any, that counted against shares available for issuance under the 2005 Plan at the time of grant as a result of the application of the share ratio described above, will become available again for issuance under the 2005 Plan. As of April 26, 2025, 115 million shares were authorized for future grant under the 2005 Plan.Plans

The 2005 Plan provides for the granting of stock options, stock grants, stock units and stock appreciation rights (SARs), the vesting of which may be time-based or upon satisfaction of performance goals, or both, and/or other conditions. Time-based and performance-based RSUs generally vest over three years with certain awards containing retirement eligible provisions. Employees (including employee directors and executive officers) and consultants of Cisco and its subsidiaries and affiliates and non-employee directors of Cisco are eligible to participate in the 2005 Plan. The 2005 Plan may be terminated by our Board of Directors at any time and for any reason, and is currently set to terminate at the 2030 Annual Meeting unless re-adopted or extended by our stockholders prior to or on such date.

Under the 2005 Plan’s share reserve feature, a distinction is made between the number of shares in the reserve attributable to (i) stock options and SARs and (ii) “full value” awards (i.e., stock grants and stock units). Shares issued as stock grants, pursuant to stock units or pursuant to the settlement of dividend equivalents are counted against shares available for issuance under the 2005 Plan on a 1.5-to-1 ratio. For each share awarded as restricted stock or a restricted stock unit award under the 2005 Plan, 1.5 shares was deducted from the available share-based award balance. If awards issued under the 2005 Plan are forfeited or terminated for any reason before being exercised or settled, then the shares underlying such awards, plus the number of additional shares, if any, that counted against shares available for issuance under the 2005 Plan at the time of grant as a result of the application of the share ratio described above, will become available again for issuance under the 2005 Plan. As of October 25, 2025, 90 million shares were authorized for future grant under the 2005 Plan.

(b)Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan under which eligible employees are offered shares through a 24-month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited amount of shares of our stock at a discount of up to 15% of the lesser of the fair market value at the beginning of the offering period or the end of each 6-month purchase period. The Employee Stock Purchase Plan is scheduled to terminate on the earlier of (i) January 3, 2030 and (ii) the date on which all shares available for issuance under the Employee Stock Purchase Plan are sold pursuant to exercised purchase rights. No shares were issued under the Employee Stock Purchase Plan during the ~~third~~first quarter of each of fiscal ~~2025~~2026 and ~~2024. We issued 8 million shares during the first nine months of fiscal~~ 2025 ~~and 10 million shares during the first nine months of fiscal 2024~~. As of ~~April~~October 2625, 2025, 6050 million shares were available for issuance under the Employee Stock Purchase Plan.

(c)Summary of Share-Based Compensation Expense

Share-based compensation expense consists of expenses for RSUs and stock purchase rights, granted to employees or assumed from acquisitions. The following table summarizes share-based compensation expense and the income tax benefit for share-based compensation (in millions):

Three Months Ended

~~Nine Months Ended~~

April 26, 2025

April 27, 2024

April 26, 2025

April 27, 2024

October 25, 2025

October 26, 2024

Cost of sales—product

6768

~~189~~

~~157~~

Cost of sales—services

8582

8274

~~245~~

~~224~~

Share-based compensation expense in cost of sales

~~152~~150

~~139~~131

~~434~~

~~381~~

Research and development

~~422~~484

~~349~~354

~~1,189~~

~~967~~

Sales and marketing

~~235~~269

~~221~~210

~~676~~

~~628~~

General and administrative

~~121~~131

95115

~~357~~

~~282~~

Restructuring and other charges

1521

717

Share-based compensation expense in operating expenses

~~793~~905

~~672~~696

~~2,259~~

~~1,893~~

Total share-based compensation expense

~~945~~1,055

~~811~~827

~~2,693~~

~~2,274~~

Income tax benefit for share-based compensation

~~218~~241

~~179~~174

~~616~~

~~524~~

As of April 26, 2025, the total compensation cost related to unvested share-based awards not yet recognized was $4.4 billion which is expected to be recognized over approximately 1.7 years on a weighted-average basis. 30

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(Unaudited)

As of October 25, 2025, the total compensation cost related to unvested share-based awards not yet recognized was $4.2 billion which is expected to be recognized over approximately 1.9 years on a weighted-average basis.

(d)Restricted Stock Unit Awards

A summary of the restricted stock and stock unit activity, which includes time-based and performance-based or market-based RSUs, is as follows (in millions, except per-share amounts):

	Restricted Stock/Stock Units	Weighted-AverageGrant Date FairValue per Share		Aggregate Fair Value
Unvested balance at July 29, 2023	122	$	44.04
Granted and assumed	63	48.97
Vested	(58)	43.46		$	2,906
Canceled/forfeited/other	(10)	45.65
Unvested balance at July 27, 2024	117	$	46.86
Granted and assumed	5370	5355.6973
Vested	(5265)	4746.3895		$	23,~~664~~707
Canceled/forfeited/other	(89)	4748.3704
Unvested balance at April 26, 2025	110	$	49.87
Unvested balance at July 26, 2025	113	52.26
Granted and assumed	11	64.74
Vested	(12)	46.35		$	851
Canceled/forfeited/other	4	48.91
Unvested balance at October 25, 2025	116	$	53.91

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(Unaudited)

17.Accumulated Other Comprehensive Income (Loss)

The components of AOCI, net of tax, and the other comprehensive income (loss), for the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 and ~~2024~~2025 are summarized as follows (in millions):

	Net Unrealized Gains (Losses) on Available-for-Sale Investments		Net Unrealized Gains (Losses) Cash Flow Hedging Instruments		Cumulative Translation Adjustment and Actuarial Gains (Losses)		Accumulated Other Comprehensive Income (Loss)
Balance at July 27, 2024	$	(241)	$	79	$	(1,268)	$	(1,430)
Balance at July 26, 2025	$	(57)	$	65	$	(962)	$	(954)
Other comprehensive income (loss) before reclassifications	~~126~~48		~~(5)~~42		~~188~~(41)		~~309~~49
(Gains) losses reclassified out of AOCI	754		(399)		—		36(5)
Tax benefit (expense)	(5811)		10(8)		—(1)		(4820)
Balance at April 26, 2025	$	(98)	$	45	$	(1,080)	$	(1,133)
Balance at October 25, 2025	$	(16)	$	90	$	(1,004)	$	(930)

	Net Unrealized Gains (Losses) on Available-for-Sale Investments		Net Unrealized Gains (Losses) Cash Flow Hedging Instruments		Cumulative Translation Adjustment and Actuarial Gains (Losses)		Accumulated Other Comprehensive Income (Loss)
Balance at July 29, 2023	$	(440)	$	18	$	(1,153)	$	(1,575)
Balance at July 27, 2024	$	(241)	$	79	$	(1,268)	$	(1,430)
Other comprehensive income (loss) before reclassifications	7471		~~122~~9		(~~223~~19)		~~(27)~~61
(Gains) losses reclassified out of AOCI	5725		(369)		~~(2)~~—		1916
Tax benefit (expense)	(2623)		~~(20)~~—		~~(1)~~—		(4723)
Balance at April 27, 2024	$	(335)	$	84	$	(1,379)	$	(1,630)
Balance at October 26, 2024	$	(168)	$	79	$	(1,287)	$	(1,376)

3731

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(Unaudited)

18.Income Taxes

The following table provides details of income taxes (in millions, except percentages):

	Three Months Ended						~~Nine Months Ended~~
	April 26,2025			April 27,2024			April 26,2025			April 27,2024
	October 25,2025			October 26,2024
Income before provision for income taxes	$	2,947		$	2,235		$	8,101		$	9,838
Income before provision for (benefit from) income taxes	$	3,391		$	2,267
Provision for income taxes	$	456		$	349		$	471		$	1,680
Provision for (benefit from) income taxes	531			(444)
Effective tax rate	15.57		%	15(19.6)		%	~~5.8~~		%	~~17.1~~		%

As of ~~April~~October 2625, 2025, we had $2.23 billion of unrecognized tax benefits, of which $1.6 billion, if recognized, would favorably impact the effective tax rate. We regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We believe it is reasonably possible that certain federal, foreign, and state tax matters may be concluded in the next 12 months. Specific positions that may be resolved include issues involving transfer pricing and various other matters.

On August 26, 2024, the U.S. Tax Court issued an opinion in Varian Medical Systems, Inc. v. Commissioner. The opinion related to the U.S. taxation of deemed foreign dividends in the transition year of the Tax Cuts and Jobs Act (our fiscal 2018). While we were not a party to the case, the opinion resulted in a change to our tax position. As such, we recorded a tax benefit of $720 million as a reduction to the provision for income taxes in the first quarter of fiscal 2025 due to this U.S. Tax Court opinion.

19.Segment Information and Major Customers

(a)Revenue and Gross Margin by Segment

We conduct business globally and are primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. Our ~~management~~chief ~~makes~~executive ~~financial~~officer ~~decisions~~is ~~and allocates resources based on~~ the ~~information~~chief itoperating ~~receives~~decision ~~from~~maker ~~our~~(CODM). ~~internal~~The ~~management~~CODM ~~system.~~reviews ~~Sales~~certain ~~are~~financial ~~attributed~~information tofor aeach segment, ~~based~~to onevaluate ~~the~~performance ~~ordering~~and ~~location of the customer. We do not~~ allocate ~~research~~resources ~~and~~by ~~development,~~comparing ~~sales~~actual ~~and~~performance ~~marketing, or general and administrative expenses~~ to our ~~segments~~annual ~~in this internal management system because management does not include the information in our measurement of the performance of the operating segments~~targets. InPerformance ~~addition, we do not allocate amortization and impairment~~ of ~~acquisition-related~~each ~~intangible~~segment ~~assets,~~is ~~share-~~measured based ~~compensation~~on ~~expense,~~segment ~~significant~~revenue ~~litigation settlements~~ and ~~other~~segment ~~contingencies,~~gross ~~charges~~margin. ~~related~~Sales toare ~~asset~~attributed ~~impairments and restructurings, and certain other charges~~ to ~~the~~a ~~gross margin for each~~ segment ~~because~~based ~~management~~on ~~does not include this information in our measurement of~~ the ~~performance~~location of the ~~operating segments~~customer.

~~Summarized~~We ~~financial~~do ~~information~~not byallocate ~~segment~~research ~~for~~and ~~the~~development, ~~third~~sales ~~quarter~~and marketing, or general and ~~first~~administrative ~~nine~~expenses ~~months~~to our segments because the CODM does not include this information in our measurement of ~~fiscal~~performance ~~2025~~of the operating segments. In addition, we do not allocate amortization and ~~2024~~impairment of acquisition-related intangible assets, share-based oncompensation ~~our~~expense, ~~internal~~significant ~~management~~litigation ~~system~~settlements and asother ~~utilized~~contingencies, bycharges ~~our~~related ~~Chief~~to ~~Operating~~asset ~~Decision~~impairments ~~Maker~~and ~~(“CODM”)~~restructurings, isand ascertain ~~follows~~other (charges to the cost of sales and gross margin for each segment because the CODM does not include this information in ~~millions):~~the measurement of the performance of our operating segments.

	Three Months Ended				Nine Months Ended
	April 26,2025		April 27,2024		April 26,2025		April 27,2024
Revenue:
Americas	$	8,380	$	7,372	$	24,834	$	23,904
EMEA	3,736		3,458		11,179		10,606
APJC	2,034		1,873		5,968		5,652
Total	$	14,149	$	12,702	$	41,981	$	40,161
Gross margin:
Americas	$	5,676	$	5,006	$	16,960	$	15,906
EMEA	2,659		2,406		7,931		7,324
APJC	1,367		1,262		4,016		3,816
Segment total	9,703		8,673		28,907		27,046
Unallocated corporate items	(425)		(400)		(1,397)		(999)
Total	$	9,278	$	8,273	$	27,510	$	26,047

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(Unaudited)

The following summarizes our revenue and gross margin by segment and the significant expenses by each segment (in millions):


	Three Months Ended
	October 25, 2025		October 26, 2024
Revenue:
Americas	$	8,989	$	8,252
EMEA	3,784		3,588
APJC	2,111		2,001
Total	$	14,883	$	13,841
Gross margin:
Americas	$	6,001	$	5,740
EMEA	2,722		2,522
APJC	1,413		1,328
Segment total	10,136		9,590
Unallocated corporate items	(391)		(469)
Total	$	9,745	$	9,121

Supplemental information about our significant expenses:
Americas:
Cost of sales — product	$	2,349	$	1,877
Cost of sales — services	639		635
Segment total	$	2,988	$	2,512
EMEA:
Cost of sales — product	$	768	$	778
Cost of sales — services	294		288
Segment total	$	1,062	$	1,066
APJC:
Cost of sales — product	$	514	$	490
Cost of sales — services	184		183
Segment total	$	698	$	673

Amounts may not sum due to rounding.

38Revenue in the United States was $8.1 billion and $7.4 billion for the first quarter of fiscal 2026 and 2025, respectively.

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(Unaudited)

Revenue in the United States was $7.6 billion and $6.6 billion for the third quarter of fiscal 2025 and 2024, respectively, and $22.4 billion and $21.4 billion for the first nine months of fiscal 2025 and 2024, respectively.

(b)Revenue for Groups of Similar Products and Services

We design and sell ~~Internet Protocol (~~IP)-based networking and other products related to the communications and IT industry and provide services associated with these products and their use.

The following table presents revenue for groups of similar products and services (in millions):

Three Months Ended

~~Nine Months Ended~~

April 26,2025

April 27,2024

April 26,2025

April 27,2024

October 25,2025

October 26,2024

Revenue:

Networking

7,~~068~~768

6,~~522~~753

~~20,671~~

~~22,425~~

Security

21,~~013~~980

12,~~304~~017

~~6,142~~

~~3,288~~

Collaboration

1,~~031~~055

~~987~~1,085

~~3,112~~

~~3,093~~

Observability

~~261~~274

~~211~~258

~~796~~

~~589~~

Total Product

1011,~~374~~077

910,~~024~~114

~~30,722~~

~~29,395~~

Services

3,~~775~~806

3,~~678~~727

~~11,259~~

~~10,766~~

Total

14,~~149~~883

1213,~~702~~841

~~41,981~~

~~40,161~~

Amounts may not sum due to rounding.

20.Net Income per Share

The following table presents the calculation of basic and diluted net income per share (in millions, except per-share amounts):

	Three Months Ended				~~Nine Months Ended~~
	April 26,2025		April 27,2024		April 26,2025		April 27,2024
	October 25,2025		October 26,2024
Net income	$	2,~~491~~860	$	12,~~886~~711	$	~~7,630~~	$	~~8,158~~
Weighted-average shares—basic	3,~~972~~956		43,~~042~~990		~~3,981~~		~~4,051~~
Effect of dilutive potential common shares	3037		1823		23		20
Weighted-average shares—diluted	43,~~002~~993		4,~~060~~013		~~4,004~~		~~4,071~~
Net income per share—basic	$	0.6372	$	0.4768	$	~~1.92~~	$	~~2.01~~
Net income per share—diluted	$	0.6272	$	0.4668	$	~~1.91~~	$	~~2.00~~
Antidilutive employee share-based awards, excluded	11—		1113		61		58

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Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “momentum,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified below under “Part II, Item 1A. Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

OVERVIEW

Cisco designs and sells a broad range of technologies that help to power, secure, and draw insights from the Internet. We are ~~integrating~~incorporating artificial intelligence (AI) into our product portfolios across networking, security, collaboration and observability toas ~~simplify~~well as integrating our products more tightly together. We are simplifying how our technology is delivered, managed and optimized and tohelping ~~help~~ customers maximize the business value of their technology investments ~~and accelerate their digital transformation~~.

A summary of our results is as follows (in millions, except percentages and per-share amounts):

	Three Months Ended									~~Nine Months Ended~~
	April 26,2025			April 27,2024			% Variance			April 26, 2025			April 27, 2024			% Variance
	October 25,2025			October 26,2024			% Variance
Revenue	$	14,~~149~~883		$	1213,~~702~~841		118	%		$	~~41,981~~		$	~~40,161~~		5	%
Gross margin percentage	65.65		%	65.19		%	(0.54)		pts	~~65.5~~		%	~~64.9~~		%	~~0.6~~		~~pts~~
Research and development	$	2,~~335~~400		$	12,~~948~~286		205	%		$	~~6,920~~		$	~~5,804~~		19	%
Sales and marketing	$	2,~~724~~871		$	2,~~559~~752		64	%		$	~~8,148~~		$	~~7,523~~		8	%
General and administrative	$	~~739~~733		$	~~736~~795		—(8)	%		$	~~2,286~~		$	~~2,050~~		12	%
Total research and development, sales and marketing, general and administrative	$	56,~~798~~004		$	5,~~243~~833		113	%		$	~~17,354~~		$	~~15,377~~		13	%
Total as a percentage of revenue	4140.03		%	4142.31		%	(01.38)		pts	~~41.3~~		%	~~38.3~~		%	~~3.0~~		~~pts~~
Restructuring and other charges included in operating expenses	$	34		$	542		(94)	%		$	709		$	677		5	%
Operating income as a percentage of revenue	22.6		%	17.0		%	5.6		pts
Operating income as a percentage of revenue	22.6		%	17.2		%	5.4		pts	20.7		%	23.8		%	(3.1)		pts
Interest and other income (loss), net	$	28		$	(91)		NM
Interest and other income (loss), net	$	(255)		$	44		NM			$	(572)		$	275		NM
Income tax percentage	15.7		%	(19.6)		%	35.3		pts
Income tax percentage	15.5		%	15.6		%	(0.1)		pts	5.8		%	17.1		%	(11.3)		pts
Net income	$	2,860		$	2,711		5	%
Net income	$	2,491		$	1,886		32	%		$	7,630		$	8,158		(6)	%
Net income as a percentage of revenue	19.2		%	19.6		%	(0.4)		pts
Net income as a percentage of revenue	17.6		%	14.8		%	2.8		pts	18.2		%	20.3		%	(2.1)		pts
Earnings per share—diluted	$	0.72		$	0.68		6	%
Earnings per share—diluted	$	0.62		$	0.46		35	%		$	1.91		$	2.00		(5)	%

NM – Not Meaningful

Percentages may not recalculate due to rounding.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Three Months Ended ~~April~~October 2625, 2025 Compared with Three Months Ended ~~April~~October 2726, 2024

In the ~~third~~first quarter of fiscal ~~2025~~2026, we delivered strong revenue growth across all geographies and solid margins as we saw a positive demand environment. Total revenue increased by 118% compared with the ~~third~~first quarter of fiscal ~~2024. Our results for the third quarter of fiscal~~ 2025, ~~include~~driven aby ~~full~~revenue ~~quarter~~from ofNetworking, ~~Splunk's~~particularly ~~results~~within ~~compared~~our toAI ~~six~~Infrastructure ~~weeks~~and ~~for~~Campus ~~the~~Networking ~~third quarter of fiscal 2024~~solutions. Within total revenue, product revenue increased by 1510% and services revenue increased by 32%. In the ~~third~~first quarter of fiscal ~~2025~~2026, total software revenue was $5.67 billion across all product areas and services, an increase of 253%~~, primarily driven by the contribution of Splunk~~. Total subscription revenue increased 152%~~, primarily driven by the contribution of Splunk~~.

Total gross margin ~~increased~~decreased by 0.54 percentage points. Product gross margin ~~increased~~decreased by 0.96 percentage points, primarily driven by ~~benefits~~negative impacts from ~~productivity~~product ~~improvements~~mix and ~~Splunk~~pricing, partially offset by ~~pricing~~productivity ~~erosion~~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 01.38 percentage points. Operating income as a percentage of revenue increased by 5.46 percentage points primarily driven by lower restructuring and other charges and ~~the~~revenue ~~gross~~growth ~~margin improvement~~ in the ~~third~~first quarter of fiscal ~~2025~~2026. Diluted earnings per share increased 356%, driven by anthe ~~increase~~revenue ofgrowth ~~32%~~and inoperating ~~net~~margin ~~income~~improvement, ~~and~~partially aoffset ~~decrease~~by inthe ~~diluted~~income ~~share~~tax ~~count~~benefit of 58$720 million ~~shares~~we had in the first quarter of fiscal 2025.

In terms of our geographic segments, revenue from the Americas increased by $1.0.7 billion, EMEA revenue increased by $~~278~~0.2 ~~million~~billion and APJC revenue increased by $~~161~~0.1 ~~million~~billion. From a customer market standpoint, we experienced product revenue growth across all of our customer markets. From a product category perspective, the product revenue increase of 1510% was driven by growth in Networking of 815%, ~~Security~~and Observability of 546%, ~~Observability~~partially ofoffset ~~24%~~by ~~and~~declines in Collaboration of 43%. ~~The~~and ~~product revenue growth in~~ Security ~~and Observability were each driven in large part by the contribution~~ of ~~Splunk~~2%.

We continue to operate in a highly competitive environment, and ~~the~~one ~~overall~~that ~~macroeconomic~~is ~~environment~~complex ~~remains challenging and uncertain,~~ especially with respect to tariffs and trade policy. ~~Despite~~We ~~this uncertainty, we~~ plan to continue to invest in key priority areas with the objective of driving profitable growth over the long term. 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.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

Total revenue increased 5%, with product revenue and service revenue each increasing by 5%, driven by Splunk. Total gross margin increased 0.6 percentage points due to benefits from Splunk, productivity improvements, and favorable product mix, partially offset by pricing erosion. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, increased by 3.0 percentage points. Operating income as a percentage of revenue decreased by 3.1 percentage points primarily due to increases in cash compensation expenses from acquisitions, amortization of purchased intangible assets, and share-based compensation expense in the first nine months of fiscal 2025. Diluted earnings per share decreased 5%, driven by a decrease of 6% in net income, partially offset by a decrease in diluted share count of 67 million shares.

Strategy and Priorities

~~Across~~In ~~the~~today’s ~~globe~~digital-first world, businesses and organizations ofglobally ~~every size~~ are ~~leveraging~~deploying ~~Cisco~~ technology to ~~transform~~pursue ~~and~~their ~~drive~~strategic ~~better~~objectives, ~~outcomes~~from ~~and~~accelerating ~~experiences.~~growth Weto ~~also~~enhancing ~~help~~operational ~~customers~~efficiency ~~navigate~~and ~~emerging~~fostering ~~technological shifts~~innovation. Our strategy is to securely connect everything to make those desired outcomes ~~and experiences~~ possible ~~for our customers~~.

For additional discussion of our strategy and priorities, see Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended July 2726, ~~2024~~2025.

Other Key Financial Measures

The following is a summary of our other key financial measures for the ~~third~~first quarter of fiscal ~~2025~~2026 (in millions):

April 26,2025

July 27,2024

October 25,2025

July 26,2025

Cash and cash equivalents and investments

15,~~642~~736

1716,~~854~~110

Remaining performance obligations

4142,~~667~~873

4143,~~048~~533

Inventories

23,~~832~~395

3,~~373~~164

Total debt

2928,~~279~~089

3028,~~962~~093

Nine Months Ended

Three Months Ended

April 26,2025

April 27,2024

October 25,2025

October 26,2024

Cash provided by operating activities

93,~~959~~212

73,~~150~~661

Repurchases of common stock—stock repurchase program

42,~~743~~001

32,~~762~~003

Dividends paid

41,~~812~~617

41,~~778~~592

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions, and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended July 2726, ~~2024~~2025, as updated as applicable in Note 2 to the Consolidated Financial Statements herein, describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. The accounting policies described below are significantly affected by critical accounting estimates. Such accounting policies require significant judgments, assumptions, and estimates used in the preparation of the Consolidated Financial Statements, and actual results could differ materially from the amounts reported based on these policies.

Revenue Recognition

We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations~~. As a result~~, ~~our~~resulting in contracts that may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and SaaS as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis.

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 ~~end~~ customers that we sell to directly. 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 ~~distributors~~customers under these programs were to deviate significantly from our estimates, which are based on historical experience, our revenue could be adversely affected.

See Note 3 to the Consolidated Financial Statements for more details.

Inventory Valuation and Liability for Purchase Commitments with Contract Manufacturers and Suppliers

Inventory is written down based on excess and obsolete inventories, determined primarily by future demand forecasts. Inventory write-downs are measured as the difference between the cost of the inventory and net realizable value, based upon assumptions about future demand, and are charged to the provision for inventory~~, which is a component of our cost of sales~~. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

We record a ~~liability~~provision for firm, noncancelable, and unconditional purchase commitments with contract manufacturers and suppliers for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. Both provisions are a component of cost of sales.

Our ~~provision~~total provisions for inventory ~~was $593 million~~ and ~~$348 million for~~ the ~~first nine months of fiscal 2025 and 2024, respectively. The provision/benefit from the~~ liability related to purchase commitments with contract manufacturers and suppliers ~~was~~were ~~a benefit of~~ $~~134~~ 63 million and ~~a provision of~~ $~~213~~ 201 million for the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 and ~~2024~~2025, respectively. If there were to be a sudden and significant decrease in demand for our products, ifor ~~there were~~ a higher incidence of inventory obsolescence because of rapidly changing technology or customer requirements, orthen ~~if supply constraints were to continue,~~ 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.”

Loss Contingencies

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.

Third parties, including customers, have in the past and may in the future assert claims or initiate litigation related to exclusive patent, copyright, trademark, and other intellectual property rights to technologies and related standards that are relevant to us. These assertions have increased over time as a result of our growth and the general increase in the pace of patent claims assertions, particularly in the United States. If any infringement or other intellectual property claim made against us by any third party is successful, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions, our business, operating results, and financial condition could be materially and adversely affected.

Valuation of Goodwill and Purchased Intangible Assets

Goodwill

Our methodology for allocating the purchase price relating to purchase acquisitions is determined through established valuation techniques. Goodwill represents a residual value as of the acquisition date, which in most cases results in measuring goodwill as an excess of the purchase consideration transferred plus the fair value of any noncontrolling interest in the acquired company over the fair value of net assets acquired, including contingent consideration. We perform goodwill impairment tests on an annual basis in the fourth fiscal quarter and between annual tests in certain circumstances for each reporting unit. The assessment of fair value for goodwill and purchased intangible assets is based on factors that market participants would use in an orderly transaction in accordance with the guidance for the fair value measurement of nonfinancial assets.

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 ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 and ~~2024~~2025.

Purchased Intangible Assets

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 would 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

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

~~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.

Income Taxes

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 ~~15.5%~~a ~~and~~tax provision of 15.67% inand ~~the~~a ~~third~~benefit ~~quarter~~ of ~~fiscal 2025 and 2024, respectively and 5~~19.86% ~~and 17.1%~~ in the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 and ~~2024~~2025, respectively.

Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. Although we believe our reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in our historical income tax provisions and accruals. We adjust these reserves indue ~~light~~to of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, asand ~~well as~~ the related net interest and penalties.

Significant judgment is also required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, we consider all available evidence, including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. If we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

Our provision for income taxes is subject to volatility and could be adversely 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, 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 attributes 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. 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 (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 operating results and financial condition.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS

Revenue

The following table presents the breakdown of revenue between product and services (in millions, except percentages):

	Three Months Ended										~~Nine Months Ended~~
	April 26,2025			April 27,2024			Variancein Dollars		Variance in Percent		April 26, 2025			April 27, 2024			Variance in Dollars		Variance in Percent
	October 25,2025			October 26,2024			Variancein Dollars		Variance in Percent
Revenue:
Product	$	1011,~~374~~077		$	910,~~024~~114		$	~~1,350~~963	1510	%	$	~~30,722~~		$	~~29,395~~		$	~~1,327~~	5	%
Percentage of revenue	7374.34		%	7173.01		%					~~73.2~~		%	~~73.2~~		%
Services	3,~~775~~806			3,~~678~~727			9779		32	%	~~11,259~~			~~10,766~~			~~493~~		5	%
Percentage of revenue	2625.76		%	2926.09		%					~~26.8~~		%	~~26.8~~		%
Total	$	14,~~149~~883		$	1213,~~702~~841		$	1,~~447~~042	118	%	$	~~41,981~~		$	~~40,161~~		$	~~1,820~~	5	%

Amounts may not sum and percentages may not recalculate due to rounding.

We manage our business primarily on a geographic basis, organized into three geographic segments. Our revenue, which includes product and services for each segment, is summarized in the following table (in millions, except percentages):

	Three Months Ended										~~Nine Months Ended~~
	April 26,2025			April 27,2024			Variancein Dollars		Variance in Percent		April 26,2025			April 27,2024			Variance in Dollars		Variance in Percent
	October 25,2025			October 26,2024			Variancein Dollars		Variance in Percent
Revenue:
Americas	$	8,~~380~~989		$	78,~~372~~252		$	~~1,008~~737	149	%	$	~~24,834~~		$	~~23,904~~		$	~~930~~	4	%
Percentage of revenue	5960.24		%	5859.16		%					~~59.2~~		%	~~59.5~~		%
EMEA	3,~~736~~784			3,~~458~~588			~~278~~196		85	%	~~11,179~~			~~10,606~~			~~573~~		5	%
Percentage of revenue	2625.4		%	2725.29		%					~~26.6~~		%	~~26.4~~		%
APJC	2,~~034~~111			12,~~873~~001			~~161~~110		95	%	~~5,968~~			~~5,652~~			~~316~~		6	%
Percentage of revenue	14.42		%	14.75		%					~~14.2~~		%	~~14.1~~		%
Total	$	14,~~149~~883		$	1213,~~702~~841		$	1,~~447~~042	118	%	$	~~41,981~~		$	~~40,161~~		$	~~1,820~~	5	%

Amounts may not sum and percentages may not recalculate due to rounding.

Three Months Ended ~~April~~October 2625, 2025 Compared with Three Months Ended ~~April~~October 2726, 2024

Total revenue increased by 118%. Product revenue increased by 1510% and services revenue increased by 32%. Our total revenue reflected growth across each of our geographic segments.

In addition to the impact of macroeconomic factors, including the IT spending environment and the level of spending by government entities, revenue by segment in a particular period may be significantly impacted by the timing of revenue recognition for complex transactions with multiple performance obligations. In addition, certain customers tend to make large and sporadic purchases, and the revenue related to these transactions may also be affected by the timing of revenue recognition, which in turn would impact the revenue of the relevant segment.

~~Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024~~40

Total revenue increased by 5%, with product and services revenue each increasing by 5%, driven by Splunk. Our total revenue reflected growth across each of our geographic segments.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Product Revenue by Segment

The following table presents the breakdown of product revenue by segment (in millions, except percentages):

	Three Months Ended										~~Nine Months Ended~~
	April 26,2025			April 27,2024			Variancein Dollars		Variance in Percent		April 26,2025			April 27,2024			Variance in Dollars		Variance in Percent
	October 25,2025			October 26,2024			Variancein Dollars		Variance in Percent
Product revenue:
Americas	$	6,~~125~~706		$	56,~~155~~002		$	~~970~~704	1912	%	$	~~18,075~~		$	~~17,352~~		$	~~723~~	4	%
Percentage of product revenue	5960.15		%	5759.13		%					~~58.8~~		%	~~59.0~~		%
EMEA	2,~~805~~846			2,~~580~~686			~~225~~160		96	%	~~8,417~~			~~8,058~~			~~359~~		4	%
Percentage of product revenue	2725.07		%	2826.6		%					~~27.4~~		%	~~27.4~~		%
APJC	1,~~444~~525			1,~~289~~426			~~155~~99		127	%	~~4,230~~			~~3,985~~			~~245~~		6	%
Percentage of product revenue	13.98		%	14.31		%					~~13.8~~		%	~~13.6~~		%
Total	$	1011,~~374~~077		$	910,~~024~~114		$	~~1,350~~963	1510	%	$	~~30,722~~		$	~~29,395~~		$	~~1,327~~	5	%

Amounts may not sum and percentages may not recalculate due to rounding.

Three Months Ended October 25, 2025 Compared with Three Months Ended October 26, 2024

Americas

~~Three~~Product ~~Months~~revenue ~~Ended~~in ~~April~~the ~~26,~~Americas ~~2025~~segment ~~Compared~~increased by 12%, with ~~Three~~growth ~~Months~~across ~~Ended~~each ~~April~~of 27our customer markets, ~~2024~~led by the Service Provider and Cloud customer market which was largely driven by revenue from our AI Infrastructure solutions. From a country perspective, product revenue increased in the United States and Mexico by 13% and 25%, respectively, partially offset by declines in Brazil and Canada of 28% and 3%, respectively.

Product revenue in the Americas segment increased by 19%, with growth across each of our customer markets. From a country perspective, product revenue increased in the United States, Brazil, and Canada by 21%, 13%, and 1%, respectively, partially offset by a decline in Mexico of 7%.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

Product revenue in the Americas segment increased by 4%, with growth in the enterprise market, partially offset by declines in the public sector and service provider and cloud markets. From a country perspective, product revenue increased in the United States, Canada, and Brazil by 5%, 4%, and 9%, respectively, partially offset by a decline in product revenue in Mexico of 17%.

EMEA

~~Three~~Product ~~Months~~revenue ~~Ended~~in ~~April~~the ~~26,~~EMEA ~~2025~~segment ~~Compared~~increased by 6%, with ~~Three~~growth ~~Months~~across ~~Ended~~each ~~April~~of 27our customer markets. From a country perspective, ~~2024~~product revenue increased in the Netherlands, United Kingdom and Saudi Arabia by 35%, 6% and 9%, respectively.

Product revenue in the EMEA segment increased by 9%, with growth in the enterprise and public sector markets, partially offset by a decline in the service provider and cloud market. From a country perspective, product revenue increased in Saudi Arabia, the United Kingdom and Germany by 20%, 9% and 5%, respectively.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

Product revenue in the EMEA segment increased by 4%, driven by growth in the public sector and enterprise markets, partially offset by a decline in the service provider and cloud market. From a country perspective, product revenue increased in the United Kingdom, France, and Germany by 10%, 7%, and 5%, respectively.

APJC

~~Three~~Product ~~Months~~revenue ~~Ended~~in ~~April~~the ~~26,~~APJC ~~2025~~segment ~~Compared~~increased by 7%, with ~~Three~~growth ~~Months~~across ~~Ended~~each ~~April~~of 27our customer markets. From a country perspective, ~~2024~~product revenue increased in Japan, Singapore and China by 12%, 50%, and 15%, respectively, partially offset by a decline in Australia of 11%.

Product revenue in the APJC segment increased by 12%, with growth in the enterprise and service provider and cloud markets, partially offset by a slight decline in the public sector market. From a country perspective, product revenue increased in Japan, Australia, India and China by 9%, 24%, 2%, and 9%, respectively.41

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

Product revenue in the APJC segment increased by 6%, with growth across each of our customer markets. From a country perspective, product revenue increased in Japan, Australia, India and China by 12%, 19%, 4%, and 8%, respectively.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Product Revenue by Category

In addition to the primary view on a geographic basis, we also prepare financial information related to product categories and customer markets for various purposes.

The following table presents product revenue by category (in millions, except percentages):

	Three Months Ended								~~Nine Months Ended~~
	April 26,2025		April 27,2024		Variancein Dollars		Variance in Percent		April 26,2025		April 27,2024		Variance in Dollars		Variance in Percent
	October 25,2025		October 26,2024		Variancein Dollars		Variance in Percent
Product revenue
Networking	$	7,~~068~~768	$	6,~~522~~753	$	~~546~~1,015	815	%	$	~~20,671~~	$	~~22,425~~	$	~~(1,754)~~	~~(8)~~	%
Security	21,~~013~~980		12,~~304~~017		~~709~~(37)		54(2)	%	~~6,142~~		~~3,288~~		~~2,854~~		87	%
Collaboration	1,~~031~~055		~~987~~1,085		44(30)		4(3)	%	~~3,112~~		~~3,093~~		19		1	%
Observability	~~261~~274		~~211~~258		5016		246	%	~~796~~		~~589~~		~~207~~		35	%
Total	$	1011,~~374~~077	$	910,~~024~~114	$	~~1,350~~963	1510	%	$	~~30,722~~	$	~~29,395~~	$	~~1,327~~	5	%

Amounts may not sum and percentages may not recalculate due to rounding.

Three Months Ended October 25, 2025 Compared with Three Months Ended October 26, 2024

Networking

~~Three~~The ~~Months~~Networking ~~Ended~~product ~~April~~category 26consists of our core networking technologies of switching, ~~2025~~routing, ~~Compared~~wireless, ~~with~~and ~~Three~~servers. ~~Months~~Revenue ~~Ended~~from ~~April~~the 27Networking product category increased by 15%, ~~2024~~or $1.0 billion. The increase was primarily driven by double digit revenue growth in Service Provider Routing, particularly within our AI Infrastructure solutions, Data Center Switching, and Enterprise Routing. We also experienced revenue growth in Campus Switching.

The Networking product category consists of our core networking technologies of switching, routing, wireless, and servers. Revenue from the Networking product category increased by 8%, or $546 million. We experienced double digit revenue growth in Switching and Enterprise Routing. We also experienced revenue growth in Internet Infrastructure and Wireless, partially offset by a revenue decline in Servers.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

Revenue from the Networking product category decreased by 8%, or $1.8 billion. Revenue declined in Switching, as a result of a decline in campus switching, primarily driven by a decline in our Catalyst 9000 series offerings. We also experienced revenue declines in Servers, Internet Infrastructure, Enterprise Routing, and Wireless.

Security

~~Three~~The ~~Months~~Security ~~Ended~~product ~~April~~category 26consists of our Network Security, ~~2025~~Identity ~~Compared~~and ~~with~~Access ~~Three~~Management, ~~Months~~SASE ~~Ended~~and ~~April~~Threat 27Intelligence, ~~2024~~Detection, and Response offerings. Revenue in our Security product category decreased by 2%, or $37 million. The decline was driven in part due to a change in how our customers consumed Splunk offerings, shifting from fewer on-premise deals to more cloud subscriptions. We also experienced a revenue decline in our prior generation products. These declines were partially offset by growth in Secure Firewall, Duo, and SASE offerings.

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 increased by 54%, or $709 million, primarily driven by Threat Intelligence, Detection, and Response offerings, which includes the offerings from Splunk, and growth in our SASE offerings.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

Revenue from the Security product category increased by 87%, or $2.9 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.

Collaboration

~~Three~~The ~~Months~~Collaboration ~~Ended~~product ~~April~~category 26consists of our Webex Suite, ~~2025~~Collaboration ~~Compared~~Devices, ~~with~~Contact ~~Three~~Center ~~Months~~and ~~Ended~~CPaaS ~~April~~offerings. 27Revenue in our Collaboration product category decreased by 3%, ~~2024~~or $30 million, primarily driven by declines in our Devices and Webex Suite offerings.

The Collaboration product category consists of our Webex Suite, Collaboration Devices, Contact Center and CPaaS offerings. Revenue in our Collaboration product category increased by 4%, or $44 million, primarily driven by growth in our Collaboration Devices, CPaaS, and Webex Suite offerings.Observability

~~Nine~~The ~~Months~~Observability ~~Ended~~product ~~April~~category 26consists of our network assurance, ~~2025~~monitoring ~~Compared~~and ~~with~~analytics ~~Nine~~and ~~Months~~observability ~~Ended~~suite ~~April~~offerings. 27Revenue in our Observability product category increased by 6%, ~~2024~~or $16 million, primarily driven by growth in ThousandEyes.

Revenue from our Collaboration product category increased by 1%, or $19 million, primarily driven by revenue growth in our Collaboration Devices, CPaaS and Contact Center offerings, partially offset by a decline in our Webex Suite offerings.42

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Observability

Three Months Ended April 26, 2025 Compared with Three Months Ended April 27, 2024

The Observability product category consists of our network assurance, monitoring and analytics and observability suite offerings. Revenue in our Observability product category increased 24%, or $50 million, primarily driven by our Observability Suite offerings from Splunk and growth in our ThousandEyes network services offerings, partially offset by a decline in monitoring and analytics.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

Revenue from the Observability product category increased by 35%, or $207 million, driven by primarily by our Observability Suite offerings from Splunk and growth in our ThousandEyes network services offerings, partially offset by a decline in monitoring and analytics.

Services Revenue by Segment

The following table presents the breakdown of services revenue by segment (in millions, except percentages):

	Three Months Ended										~~Nine Months Ended~~
	April 26,2025			April 27,2024			Variancein Dollars		Variance in Percent		April 26,2025			April 27,2024			Variance in Dollars		Variance in Percent
	October 25,2025			October 26,2024			Variancein Dollars		Variance in Percent
Services revenue:
Americas	$	2,~~254~~283		$	2,~~217~~249		$	3734	2	%	$	~~6,759~~		$	~~6,552~~		$	~~207~~	3	%
Percentage of service revenue	5960.70		%	60.3		%					~~60.0~~		%	~~60.9~~		%
EMEA	~~931~~938			~~878~~903			5335		64	%	~~2,762~~			~~2,548~~			~~214~~		8	%
Percentage of service revenue	24.76		%	2324.92		%					~~24.5~~		%	~~23.7~~		%
APJC	~~590~~586			~~584~~575			611		12	%	~~1,738~~			~~1,667~~			71		4	%
Percentage of service revenue	15.64		%	15.85		%					~~15.5~~		%	~~15.4~~		%
Total	$	3,~~775~~806		$	3,~~678~~727		$	9779	32	%	$	~~11,259~~		$	~~10,766~~		$	~~493~~	5	%

Amounts may not sum and percentages may not recalculate due to rounding.

Services revenue increased 32% in the ~~third~~first quarter of fiscal ~~2025~~2026 compared with the ~~third~~first quarter of fiscal ~~2024~~2025, ~~primarily~~with the growth driven by ~~Splunk~~higher revenue from professional and support services. Services revenue increased across all of our geographic segments for the ~~third~~first quarter of fiscal ~~2025~~2026.

Services revenue increased 5% in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024, primarily driven by Splunk and revenue growth in our solution support offerings, network support offerings and advisory services. Services revenue increased across each of our geographic segments.

Gross Margin

The following table presents the gross margin for products and services (in millions, except percentages):

Three Months Ended

~~Nine Months Ended~~

AMOUNT

PERCENTAGE

~~AMOUNT~~

~~PERCENTAGE~~

April 26,2025

April 27,2024

April 26,2025

April 27,2024

April 26,2025

April 27,2024

April 26,2025

April 27,2024

October 25,2025

October 26,2024

October 25,2025

October 26,2024

Gross margin:

Product

67,~~686~~143

56,~~729~~588

64.45

6365.51

~~19,795~~

~~18,700~~

~~64.4~~

~~63.6~~

Services

2,~~592~~602

2,~~544~~533

68.74

6968.20

~~7,715~~

~~7,347~~

~~68.5~~

~~68.2~~

Total

9,~~278~~745

89,~~273~~121

65.65

65.19

~~27,510~~

~~26,047~~

~~65.5~~

~~64.9~~

49Product Gross Margin

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


	Product Gross Margin Percentage
Fiscal 2025	65.1	%
Productivity (1)	1.7	%
Product pricing	(1.1)	%
Mix of products sold	(2.2)	%
Amortization of purchased intangible assets	1.1	%
Others	(0.1)	%
Fiscal 2026	64.5	%

(1) Productivity includes overall manufacturing-related costs, such as component costs, 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.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

~~Product~~Three ~~Gross~~Months ~~Margin~~Ended October 25, 2025 Compared with Three Months Ended October 26, 2024

~~The~~Product ~~following~~gross ~~table~~margin ~~summarizes~~decreased ~~the~~by ~~key~~0.6 ~~factors~~percentage ~~that~~points ~~contributed~~primarily todriven ~~the~~by ~~change~~negative inimpacts from product ~~gross~~mix ~~margin~~and ~~percentage~~pricing, ~~for~~partially ~~the~~offset ~~third~~by ~~quarter~~productivity improvements and ~~first~~lower ~~nine~~amortization ~~months~~ of ~~fiscal~~purchased ~~2025,~~intangible ~~as compared with the corresponding prior year periods:~~ assets.

	Product Gross Margin Percentage
	Three Months Ended		Nine Months Ended
Fiscal 2024	63.5	%	63.6	%
Productivity (1)	1.5	%	1.2	%
Product pricing	(1.3)	%	(1.6)	%
Mix of products sold	0.5	%	2.2	%
Amortization of purchased intangible assets	0.2	%	(0.9)	%
Others	—	%	(0.1)	%
Fiscal 2025	64.4	%	64.4	%

(1) Productivity includes overall manufacturing-related costs, such as component costs, warranty expense, provision for inventory, freight, logistics, shipment volume, and other items not categorized elsewhere.

Three Months Ended April 26, 2025 Compared with Three Months Ended April 27, 2024

Product gross margin increased by 0.9 percentage points primarily driven by benefits from productivity improvements and Splunk, partially offset by negative impacts from pricing.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

Product gross margin increased by 0.8 percentage points primarily driven by benefits from Splunk, productivity improvements, and favorable product mix, partially offset by negative impacts from pricing and the amortization of purchased intangible assets primarily related to Splunk.

Supply Chain Impacts and Risks

InWe ~~past~~regularly ~~periods,~~enter weinto ~~took~~purchase ~~multiple~~commitments ~~actions~~with incontract ~~order~~manufacturers toand ~~mitigate~~suppliers ~~component shortages~~ and ~~address~~in ~~significant~~recent ~~supply~~periods ~~constraints.~~have ~~These~~increased ~~supply~~such ~~constraints~~commitments ~~resulted~~related ~~in the need~~ to ~~secure~~manufacturing ~~long-term~~Cisco ~~supply~~Silicon One and ~~increased~~other ~~inventory~~products ~~supply~~to ~~chain~~meet ~~balances~~demand ~~compared~~from tohyperscalers ~~historical~~and ~~levels~~other customers. ~~This~~We inexpect ~~turn~~to ~~has~~continue ~~significantly~~entering ~~increased~~into ~~our~~these ~~supply~~additional ~~chain~~purchase ~~exposure,~~commitments ~~which has resulted~~ in ~~negative~~fiscal ~~impacts~~2026. toThese ~~our~~purchase ~~product~~commitments ~~gross~~have ~~margin~~ in ~~recent~~turn ~~periods~~significantly ~~and~~increased ~~may~~our ~~result~~supply inchain ~~further negative impacts in future periods~~exposure. This exposure includes 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 ~~the~~this ~~remaining supply chain exposures~~exposure. Additionally, while we are exposed to new and proposed tariffs and other trade policies, the extent of such exposure is uncertain but could be significant if the exposure remains and we are unable to mitigate it.

Services Gross Margin

Three Months Ended ~~April~~October 2625, 2025 Compared with Three Months Ended ~~April~~October 2726, 2024

Our services gross margin percentage ~~decreased~~increased by 0.54 percentage points primarily due to ~~higher~~cost ~~headcount-related costs, partially offset by increased volume and lower delivery costs~~efficiencies.

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

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

Services gross margin percentage increased by 0.3 percentage points primarily due to higher sales volume and lower delivery costs, partially offset by higher headcount-related costs and an unfavorable mix of service offerings.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Gross Margin by Segment

The following table presents the total gross margin for each segment (in millions, except percentages):

Three Months Ended

~~Nine Months Ended~~

AMOUNT

PERCENTAGE

~~AMOUNT~~

~~PERCENTAGE~~

April 26,2025

April 27,2024

April 26,2025

April 27,2024

April 26,2025

April 27,2024

April 26,2025

April 27,2024

October 25,2025

October 26,2024

October 25,2025

October 26,2024

Gross margin:

Americas

56,~~676~~001

5,~~006~~740

6766.78

6769.96

~~16,960~~

~~15,906~~

~~68.3~~

~~66.5~~

EMEA

2,~~659~~722

2,~~406~~522

71.29

6970.63

~~7,931~~

~~7,324~~

~~70.9~~

~~69.1~~

APJC

1,~~367~~413

1,~~262~~328

6766.29

6766.4

~~4,016~~

~~3,816~~

~~67.3~~

~~67.5~~

Segment total

910,~~703~~136

89,~~673~~590

68.61

6869.3

~~28,907~~

~~27,046~~

~~68.9~~

~~67.3~~

Unallocated corporate items (1)

(~~425~~391)

(~~400~~469)

~~(1,397)~~

~~(999)~~

Total

9,~~278~~745

89,~~273~~121

65.65

65.19

~~27,510~~

~~26,047~~

~~65.5~~

~~64.9~~

(1) The unallocated corporate items include the effects of amortization and impairments of acquisition-related intangible assets, share-based compensation expense, significant litigation settlements 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.

Amounts may not sum and percentages may not recalculate due to rounding.

Three Months Ended ~~April~~October 2625, 2025 Compared with Three Months Ended ~~April~~October 2726, 2024

We experienced a ~~slight~~ gross margin percentage decrease in our Americas segment due to ~~pricing~~negative ~~erosion~~impacts ~~and~~from ~~unfavorable~~ product mix and pricing, partially offset by positive impacts from productivity improvements.

Gross margin percentage in our EMEA segment increased primarily due to productivity improvements ~~and favorable product mix~~, partially offset by negative impacts from pricing ~~erosion~~and product mix.

The ~~slight~~increase ~~decrease~~ in the APJC segment gross margin percentage was primarily due to ~~pricing~~productivity ~~erosion and lower services gross margin~~improvements, partially offset by ~~positive~~negative impacts from ~~favorable~~pricing ~~product mix~~ and ~~productivity~~product ~~improvements~~mix.

~~Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024~~44

The Americas segment had a gross margin percentage increase driven by positive impacts from productivity improvements and favorable product mix, partially offset by pricing erosion.

The gross margin percentage increase in our EMEA segment was primarily due to positive impacts from favorable product mix and productivity improvements, partially offset by pricing erosion.

The APJC segment had a slight gross margin percentage decrease driven primarily by pricing erosion and lower services gross margin, partially offset by positive impacts from productivity improvements and favorable product mix.

Research and Development (“R&D”), Sales and Marketing, and General and Administrative (“G&A”) Expenses

R&D, sales and marketing, and G&A expenses are summarized in the following table (in millions, except percentages):

	Three Months Ended										Nine Months Ended
	April 26,2025			April 27,2024			Variancein Dollars		Variance in Percent		April 26,2025			April 27,2024			Variance in Dollars		Variance in Percent
Research and development	$	2,335		$	1,948		$	387	20	%	$	6,920		$	5,804		$	1,116	19	%
Percentage of revenue	16.5		%	15.3		%					16.5		%	14.5		%
Sales and marketing	2,724			2,559			165		6	%	8,148			7,523			625		8	%
Percentage of revenue	19.3		%	20.1		%					19.4		%	18.7		%
General and administrative	739			736			3		—	%	2,286			2,050			236		12	%
Percentage of revenue	5.2		%	5.8		%					5.4		%	5.1		%
Total	$	5,798		$	5,243		$	555	11	%	$	17,354		$	15,377		$	1,977	13	%
Percentage of revenue	41.0		%	41.3		%					41.3		%	38.3		%

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Research and Development (“R&D”), Sales and Marketing, and General and Administrative (“G&A”) Expenses

R&D, sales and marketing, and G&A expenses are summarized in the following table (in millions, except percentages):


	Three Months Ended
	October 25, 2025			October 26, 2024			Variance in Dollars		Variance in Percent
Research and development	$	2,400		$	2,286		$	114	5	%
Percentage of revenue	16.1		%	16.5		%
Sales and marketing	2,871			2,752			119		4	%
Percentage of revenue	19.3		%	19.9		%
General and administrative	733			795			(62)		(8)	%
Percentage of revenue	4.9		%	5.7		%
Total	$	6,004		$	5,833		$	171	3	%
Percentage of revenue	40.3		%	42.1		%

Three Months Ended October 25, 2025 Compared with Three Months Ended October 26, 2024

R&D Expenses

~~Three~~R&D ~~Months~~expenses ~~Ended~~increased ~~April~~primarily ~~26,~~due ~~2025~~to ~~Compared~~higher ~~with~~headcount-related ~~Three~~expenses ~~Months~~reflecting ~~Ended~~our ~~April~~investments 27in AI and higher share-based compensation expense, ~~2024~~partially offset by lower acquisition-related costs.

R&D expenses increased primarily due to higher headcount-related expenses, higher share-based compensation expense, and higher cash compensation expenses from acquisitions.

We continue to invest in R&D in order to bring a broad range of products to market in a timely fashion. If we believe that we are unable to enter a particular market in a timely manner with internally developed products, we may purchase or license technology from other businesses, or we may partner with or acquire businesses as an alternative to internal R&D.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

R&D expenses increased primarily due to higher headcount-related expenses, higher cash compensation expenses from acquisitions, higher share-based compensation expense and higher discretionary spending.

Sales and Marketing Expenses

~~Three~~Sales ~~Months~~and ~~Ended~~marketing ~~April~~expenses ~~26,~~increased ~~2025~~primarily ~~Compared~~due ~~with~~to ~~Three~~higher ~~Months~~share-based ~~Ended~~compensation ~~April~~expense, 27higher contracted services spending, ~~2024~~higher headcount-related expenses, and higher discretionary spending.

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

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

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

G&A Expenses

~~Three~~G&A ~~Months~~expenses ~~Ended~~decreased ~~April~~primarily ~~26,~~due ~~2025~~to ~~Compared~~lower ~~with~~acquisition-related ~~Three~~costs ~~Months~~and ~~Ended~~lower ~~April~~headcount-related ~~27, 2024~~expenses.

G&A expenses were flat primarily due to higher headcount-related expenses, higher discretionary spending, and higher share-based compensation expense, offset by lower acquisition-related costs and lower contracted services spending.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

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

Effect of Foreign Currency

In the ~~third~~first quarter of fiscal ~~2025~~2026, foreign currency fluctuations, net of hedging, ~~decreased~~increased the combined R&D, sales and marketing, and G&A expenses by approximately $3936 million, or 0.76%, compared with the ~~third~~first quarter of fiscal ~~2024~~2025.

In the first nine months of fiscal 2025, foreign currency fluctuations, net of hedging, decreased the combined R&D, sales and marketing, and G&A expenses by approximately $50 million, or 0.3%, compared with the first nine months of fiscal 2024.

Amortization of Purchased Intangible Assets

The following table presents the amortization of purchased intangible assets including impairment charges (in millions):

Three Months Ended

~~Nine Months Ended~~

April 26,2025

April 27,2024

April 26,2025

April 27,2024

October 25,2025

October 26,2024

Amortization of purchased intangible assets:

Cost of sales

~~269~~240

~~254~~325

~~934~~

~~620~~

Operating expenses

~~244~~231

~~297~~265

~~774~~

~~430~~

Total

~~513~~471

~~551~~590

~~1,708~~

~~1,050~~

~~Three~~For ~~Months~~the ~~Ended~~first ~~April~~quarter 26of fiscal 2026, ~~2025~~the ~~Compared~~decrease ~~with~~in ~~Three~~amortization ~~Months~~of ~~Ended~~purchased ~~April~~intangible ~~27,~~assets ~~2024~~was primarily due to certain purchased intangible assets that became fully amortized.

~~The~~Restructuring ~~decrease~~and inOther amortization of purchased intangible assets was primarily due to lower impairment charges related to purchased intangible assets for the current period. Impairment charges related to purchased intangible assets were $139 million for the third quarter of fiscal 2024. Charges

52In the first quarter of fiscal 2025, we announced a restructuring plan in order to allow us to invest in key growth opportunities and drive more efficiencies in our business. This restructuring plan is expected to impact approximately 7% of our global workforce with estimated pre-tax charges of approximately $1 billion. In connection with this restructuring plan, we incurred charges of $147 million in the first quarter of fiscal 2026. We expect this plan to be completed by the end of the second quarter of fiscal 2026.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

The increase in amortization of purchased intangible assets was primarily due to the acquisition of Splunk and other recent acquisitions, partially offset by certain purchased intangible assets that became fully amortized and lower impairment charges in fiscal 2025. Impairment charges related to purchased intangible assets were $19 million for the first nine months of fiscal 2025 and $145 million for the first nine months of fiscal 2024. The impairment charges were as a result of declines in estimated fair values resulting from the reductions in or the elimination of expected future cash flows associated with certain in-process research and development and technology intangible assets.

Restructuring and Other Charges

In the first quarter of fiscal 2025, we announced a restructuring plan in order to allow us to invest in key growth opportunities and drive more efficiencies in our business. This restructuring plan is expected to impact approximately 7% of our global workforce with estimated pre-tax charges of approximately $1 billion. In connection with this restructuring plan, we incurred charges of $34 million and $709 million in the third quarter and first nine months of fiscal 2025. We expect this plan to be substantially completed by the end of the first quarter of fiscal 2026. We expect to reinvest substantially all of the cost savings from this restructuring plan in our key growth opportunities. As a result, the overall cost savings from this restructuring plan is not expected to be material for future periods.

In the third quarter of fiscal 2024, we initiated a restructuring plan in order to realign the organization and enable further investment in key priority areas. In connection with this restructuring plan, we incurred charges of $542 million in the third quarter and the first nine months of fiscal 2024. This plan was completed in fiscal 2024.

Operating Income

The following table presents our operating income and our operating income as a percentage of revenue (in millions, except percentages):

Three Months Ended

~~Nine Months Ended~~

April 26,2025

April 27,2024

April 26,2025

April 27,2024

October 25,2025

October 26,2024

Operating income

3,~~202~~363

2,~~191~~358

~~8,673~~

~~9,563~~

Operating income as a percentage of revenue

22.6

17.20

~~20.7~~

~~23.8~~

Three Months Ended ~~April~~October 2625, 2025 Compared with Three Months Ended ~~April~~October 2726, 2024

Operating income increased by 4643%, and operating income as a percentage of revenue increased by 5.46 percentage points. These changes primarily resulted from alower ~~revenue~~restructuring ~~increase,~~and aother ~~higher~~charges ~~gross~~and ~~margin~~revenue ~~percentage,~~growth ~~and~~in ~~lower~~the ~~restructuring~~first ~~and~~quarter ~~other~~of ~~charges~~fiscal 2026.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

Operating income decreased by 9%, and operating income as a percentage of revenue decreased by 3.1 percentage points. These changes resulted primarily from higher cash compensation expenses from acquisitions, higher amortization of purchased intangible assets, and higher share-based compensation expense in the first nine months of fiscal 2025.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Interest and Other Income (Loss), Net

Interest Income (Expense), Net The following table summarizes interest income and interest expense (in millions):

Three Months Ended

~~Nine Months Ended~~

April 26,2025

April 27,2024

Variancein Dollars

April 26,2025

April 27,2024

Variance in Dollars

October 25,2025

October 26,2024

Variancein Dollars

Interest income

~~250~~222

~~411~~286

(~~161~~64)

~~774~~

~~1,095~~

~~(321)~~

Interest expense

(~~403~~350)

(~~357~~418)

~~(46)~~68

~~(1,225)~~

~~(588)~~

~~(637)~~

Interest income (expense), net

(~~153~~128)

54(132)

~~(207)~~4

~~(451)~~

~~507~~

~~(958)~~

Three Months Ended ~~April~~October 2625, 2025 Compared with Three Months Ended ~~April~~October 2726, 2024

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 ~~increase~~decrease in interest expense was driven by ~~higher~~a ~~interest~~lower ~~expense~~average ~~from~~balance ~~issuances~~ of ~~senior~~debt ~~notes,~~outstanding ~~partially~~and ~~offset by~~ lower effective interest ~~expense~~rate on commercial paper during the period.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

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 increase in interest expense was primarily driven by issuances of senior notes and commercial paper.

Other Income (Loss), Net The components of other income (loss), net, are summarized as follows (in millions):

Three Months Ended

~~Nine Months Ended~~

April 26,2025

April 27,2024

Variancein Dollars

April 26,2025

April 27,2024

Variance in Dollars

October 25,2025

October 26,2024

Variancein Dollars

Gains (losses) on investments, net:

Available-for-sale debt investments

(304)

(1425)

~~(16)~~21

~~(75)~~

~~(57)~~

~~(18)~~

Marketable equity investments

~~(36)~~31

1924

~~(55)~~7

~~(26)~~

Privately held investments

10163

~~(8)~~74

1889

~~(163)~~

~~220~~

Net gains (losses) on investments

~~(56)~~190

~~(3)~~73

~~(53)~~117

~~(9)~~

~~(185)~~

~~176~~

Other gains (losses), net

(4634)

(732)

(392)

~~(112)~~

~~(47)~~

~~(65)~~

Other income (loss), net

~~(102)~~156

~~(10)~~41

~~(92)~~115

~~(121)~~

~~(232)~~

~~111~~

Three Months Ended ~~April~~October 2625, 2025 Compared with Three Months Ended ~~April~~October 2726, 2024

The change in our other income (loss), net was primarily driven by higher unrealized ~~losses~~gains on ~~marketable~~privately ~~equity~~held investments ~~and unfavorable impacts from foreign exchange~~.

~~Nine~~Provision ~~Months~~for ~~Ended~~(Benefit ~~April~~from) ~~26,~~Income ~~2025 Compared with Nine Months Ended April 27, 2024~~Taxes

~~The~~Three ~~change~~Months inEnded ~~our~~October ~~other income (loss)~~25, ~~net~~2025 ~~was~~Compared ~~primarily~~with ~~driven~~Three byMonths ~~lower~~Ended ~~impairment~~October ~~charges and higher unrealized gains on our privately held investments~~26, ~~partially offset by lower gains on our marketable equity investments and unfavorable impacts from foreign exchange.~~2024

~~Provision~~The provision for ~~Income~~(benefit ~~Taxes~~from) income taxes resulted in an effective tax rate of 15.7% for the first quarter of fiscal 2026, compared with an effective tax rate of (19.6)% for the first quarter 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 (“Tax Act”) (our fiscal 2018).

~~Three Months Ended April 26, 2025 Compared with Three Months Ended April 27, 2024~~46

The provision for income taxes resulted in an effective tax rate of 15.5% for the third quarter of fiscal 2025, relatively unchanged compared with an effective tax rate of 15.6% for the third quarter of fiscal 2024.

Nine Months Ended April 26, 2025 Compared with Nine Months Ended April 27, 2024

The provision for income taxes resulted in an effective tax rate of 5.8% for the first nine months of fiscal 2025 compared with 17.1% for the first nine months of fiscal 2024. The decrease in the effective tax rate was primarily due to a $720 million benefit related to a 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 Cuts and Jobs Act (our fiscal 2018).

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

LIQUIDITY AND CAPITAL RESOURCES

The following sections discuss the effects of changes in our balance sheet, our capital allocation strategy including stock repurchase program and dividends, our contractual obligations, and certain other commitments and activities on our liquidity and capital resources.

Balance Sheet and Cash Flows

Cash and Cash Equivalents and Investments The following table summarizes our cash and cash equivalents and investments (in millions):

April 26,2025

July 27,2024

Increase (Decrease)

October 25,2025

July 26,2025

Increase (Decrease)

Cash and cash equivalents

8,~~161~~400

78,~~508~~346

~~653~~54

Available-for-sale debt investments

76,~~194~~942

97,~~865~~381

(~~2,671~~439)

Marketable equity securities

~~287~~394

~~481~~383

~~(194)~~11

Total

15,~~642~~736

1716,~~854~~110

(~~2,212~~374)

The net decrease in cash and cash equivalents and investments in the first ~~nine~~quarter ~~months~~ of fiscal ~~2025~~2026 was primarily driven by cash returned to stockholders in the form of cash dividends of $41.86 billion and repurchases of common stock of $42.70 billion, ~~net repayments of short-term borrowing~~ and ~~debt of $1.6 billion,~~ capital expenditures of $0.~~7 billion, and net cash paid for acquisitions and divestitures of $0.~~3 billion. These uses of cash were partially offset by net cash provided by operating activities of $103.2 billion and the release to us of approximately $0.6 billion of restricted cash previously held in escrow.

We maintain an investment portfolio of various holdings, types, and maturities. We classify our investments as short-term investments based on their nature and their availability for use in current operations. We believe the overall credit quality of our portfolio is strong, with our cash equivalents and our available-for-sale debt investment portfolio consisting primarily of high quality investment-grade securities. We believe that our strong cash and cash equivalents and investments position allows us to use our cash resources for strategic investments to gain access to new technologies, for acquisitions, for customer financing activities, for working capital needs, and for the repurchase of shares of common stock and payment of dividends as discussed below.

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 ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025, we had no outstanding securities lending transactions.

Free Cash Flow and Capital Allocation As part of our capital allocation strategy, we target to return a minimum of 50% of our free cash flow annually to our stockholders through cash dividends and repurchases of common stock.

We define free cash flow as net cash provided by operating activities less cash used to acquire property and equipment. The following table reconciles our net cash provided by operating activities to free cash flow (in millions):

	Nine Months Ended
	Three Months Ended
	April 26,2025		April 27,2024
	October 25,2025		October 26,2024
Net cash provided by operating activities	$	93,~~959~~212	$	73,~~150~~661
Acquisition of property and equipment	(~~688~~323)		(~~472~~217)
Free cash flow	$	92,~~271~~889	$	63,~~678~~444

We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, the rate at which products are shipped during the quarter (which we refer to as shipment linearity), the timing and collection of accounts receivable and financing receivables, inventory and supply chain management, deferred revenue, and the timing and amount of tax and other payments. For additional discussion, see “Part II, Item 1A. Risk Factors” in this report.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

We consider free cash flow to be a liquidity measure that provides useful information to management and investors because of our intent to return a stated percentage of free cash flow to stockholders in the form of dividends and stock repurchases. We further regard free cash flow as a useful measure because it reflects cash that can be used to, among other things, invest in our business, make strategic acquisitions, repurchase common stock, and pay dividends on our common stock, after deducting capital investments. A limitation of the utility of free cash flow as a measure of financial performance and liquidity is that the free cash flow does not represent the total increase or decrease in our cash balance for the period. In addition, we have other required uses of cash, including repaying the principal of our outstanding indebtedness. Free cash flow is not a measure calculated in accordance with U.S. generally accepted accounting principles and should not be regarded in isolation or as an alternative for net cash provided by operating activities or any other measure calculated in accordance with such principles, and other companies may calculate free cash flow in a different manner than we do.

The following table summarizes the dividends paid and stock repurchases (in millions, except per-share amounts):

	DIVIDENDS				STOCK REPURCHASE PROGRAM
Quarter Ended	Per Share		Amount		Shares	Weighted-Average Price per Share		Amount		TOTAL
Fiscal 2026
October 25, 2025	$	0.41	$	1,617	29	$	68.28	$	2,001	$	3,618
Fiscal 2025
July 26, 2025	$	0.41	$	1,625	19	$	64.65	$	1,252	$	2,877
April 26, 2025	$	0.41	$	1,627	25	$	59.78	$	1,504	$	3,131
January 25, 2025	$	0.40	$	1,593	21	$	58.58	$	1,236	$	2,829
October 26, 2024	$	0.40	$	1,592	40	$	49.56	$	2,003	$	3,595
Fiscal 2024
July 27, 2024	$	0.40	$	1,606	43	$	46.80	$	2,002	$	3,608
April 27, 2024	$	0.40	$	1,615	26	$	49.22	$	1,256	$	2,871
January 27, 2024	$	0.39	$	1,583	25	$	49.54	$	1,254	$	2,837
October 28, 2023	$	0.39	$	1,580	23	$	54.53	$	1,252	$	2,832

The remaining authorized amount for stock repurchases under this program is approximately $1512.42 billion, with no termination date.

Accounts Receivable, Net The following table summarizes our accounts receivable, net (in millions):

April 26,2025

July 27,2024

Increase (Decrease)

October 25,2025

July 26,2025

Increase (Decrease)

Accounts receivable, net

54,~~277~~827

6,~~685~~701

(1,~~408~~874)

Our accounts receivable net, as of ~~April~~October 2625, 2025 decreased by approximately 2128%, as compared with the end of fiscal ~~2024~~2025, primarily due to timing and amount of product and service billings in the ~~third~~first quarter of fiscal ~~2025~~2026 compared with the fourth quarter of fiscal ~~2024~~2025.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Inventory Supply Chain The following table summarizes our inventories and ~~inventory~~balances ~~purchase commitments~~ with contract manufacturers and suppliers (in millions):

April 26,2025

July 27,2024

July 29,2023

Variance vs. July 27, 2024

Variance vs. July 29, 2023

October 25,2025

July 26,2025

Variance vs. July 26, 2025

Inventories

23,~~832~~395

3,~~373~~164

~~3,644~~231

~~(541)~~

~~(812)~~

Inventory purchase commitments

68,~~345~~321

57,~~158~~599

~~7,253~~722

~~1,187~~

~~(908)~~

Inventory deposits and prepayments

1,~~101~~023

~~973~~825

~~1,109~~198

~~128~~

~~(8)~~

The following table summarizes our inventory purchase commitments with contract manufacturers and suppliers by period (in millions):

April 26,2025

July 27,2024

July 29,2023

Variance vs. July 27, 2024

Variance vs.July 29, 2023

October 25,2025

July 26,2025

Variance vs. July 26, 2025

Less than 1 year

57,~~773~~879

37,~~952~~202

~~5,270~~677

~~1,821~~

~~503~~

1 to 3 years

~~509~~396

~~1,085~~320

~~1,783~~76

~~(576)~~

~~(1,274)~~

3 to 5 years

6346

~~121~~77

~~200~~(31)

~~(58)~~

~~(137)~~

Total

68,~~345~~321

57,~~158~~599

~~7,253~~722

~~1,187~~

~~(908)~~

Inventory as of ~~April~~October 2625, 2025 ~~decreased~~increased by 167% and inventory purchase commitments with contract manufacturers and suppliers increased by 2310% from our balances at the end of fiscal ~~2024~~2025. ~~This~~The combined increase of 9% in our inventory and inventory purchase commitments as compared with the end of fiscal 2025 was primarily related to commitments with contract manufacturers and suppliers related to manufacturing Cisco Silicon One and other products to meet ~~customer~~the demand. ~~The~~from ~~combined~~hyperscalers ~~increase~~and inother customers. We expect our inventory ~~and~~balances ~~inventory~~may ~~purchase~~increase ~~commitments~~in ~~was~~future 8%quarters as ~~compared~~we ~~with~~work ~~the~~to ~~end~~fulfill ofthis ~~fiscal 2024~~demand.

In recent periods, we have increased our levels of inventory and purchase commitments with contract manufacturers and suppliers primarily related to Cisco Silicon One. The increases were primarily due to arrangements to secure supply and pricing for certain product components and commitments with contract manufacturers to meet customer demand and help manage lead times. Our risks of future material excess and obsolete inventory and related losses are further outlined in the Result of Operations—Product Gross Margin section.

Our inventory purchase commitments are for short-term product manufacturing requirements as well as for commitments to suppliers to secure manufacturing capacity. Certain of our inventory purchase commitments are entered into directly with suppliers and relate to fixed-dollar commitments to secure supply and pricing for certain product components for multi-year periods. A significant portion of our reported purchase commitments arising from these agreements are firm, noncancelable, and unconditional commitments. 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.

Inventory and supply chain management remain areas of focus as we balance the need to maintain supply chain flexibility to help ensure competitive lead times with the risk of inventory obsolescence because of supply constraints, rapidly changing technology and customer requirements. We believe the amount of our inventory and inventory purchase commitments is appropriate for our current and expected customer demand and revenue levels.

Financing Receivables and Guarantees The following table summarizes our financing receivables (in millions):

April 26,2025

July 27,2024

Increase (Decrease)

October 25,2025

July 26,2025

Increase (Decrease)

Loan receivables, net

5,~~232~~789

5,~~808~~591

~~(576)~~198

Lease receivables, net

~~973~~1,015

~~906~~936

6779

Total, net

6,~~205~~804

6,~~714~~527

~~(509)~~277

Financing Receivables Our financing arrangements include loans and leases. Our loan receivables include customer financing for purchases of our hardware, software and services (including technical support and advanced services), and also may include additional funds for other costs associated with network installation and integration of our products and services. Lease receivables include sales-type leases. Arrangements related to leases are generally collateralized by a security interest in the underlying assets. Financing receivables decreased by 8% as compared with the end of fiscal 2024.49

Financing Guarantees In the normal course of business, third parties may provide financing arrangements to our customers and channel partners under financing programs. The financing arrangements provided by third parties are related to leases and loans and typically have terms of up to three years. In some cases, we provide guarantees to third parties for these lease and

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

~~loan~~Financing ~~arrangements.~~Receivables Our ~~The~~ financing arrangements toinclude ~~channel~~loans ~~partners~~and ~~consist~~leases. ofOur ~~revolving~~loan ~~short-term~~receivables include customer financing ~~provided~~for bypurchases ~~third~~of ~~parties~~our hardware, ~~with~~software ~~payment~~and ~~terms~~services ~~generally~~(including ~~ranging~~technical ~~from 60~~support toand 90advanced ~~days.~~services), Inand ~~certain~~also ~~instances,~~may ~~these~~include ~~financing~~additional ~~arrangements~~funds ~~result~~for inother acosts ~~transfer~~associated ofwith ~~our~~network ~~receivables~~installation toand ~~the~~integration ~~third~~of ~~party~~our products and services. ~~The~~Lease receivables ~~are~~include ~~derecognized~~sales-type ~~upon~~leases. ~~transfer,~~Arrangements asrelated ~~these~~to ~~transfers~~leases ~~qualify~~are asgenerally ~~true~~collateralized ~~sales,~~by ~~and~~a wesecurity ~~receive~~interest ~~payments~~in ~~for~~ the underlying assets. Financing receivables ~~from~~increased ~~the~~by ~~third~~4% ~~party~~as ~~based~~compared onwith ~~our~~the ~~standard~~end ~~payment~~of ~~terms.~~fiscal 2025.

~~The~~Financing ~~volume~~Guarantees In ~~of channel partner financing was $18.1 billion and $20.9 billion for~~ the ~~first~~normal ~~nine~~course ~~months~~ of ~~fiscal~~business, ~~2025~~third ~~and~~parties ~~2024,~~may ~~respectively.~~provide ~~These~~ financing arrangements ~~facilitate~~to ~~the~~our ~~working~~customers ~~capital~~and ~~requirements of the~~ channel partners, ~~and~~under infinancing ~~some cases, we guarantee a portion of these arrangements~~programs. The ~~balance~~financing ofarrangements ~~the~~provided ~~channel~~by ~~partner~~third ~~financing~~parties ~~subject~~are related to ~~guarantees~~leases ~~was~~and ~~$1.2~~loans ~~billion~~and astypically ofhave ~~each~~terms of ~~April 26,~~up ~~2025~~to ~~and~~three ~~July 27, 2024~~years. WeIn ~~could~~some becases, ~~called~~we ~~upon~~provide guarantees to ~~make~~third ~~payments~~parties ~~under~~for these ~~guarantees~~lease inand ~~the~~loan ~~event~~arrangements. ofThe ~~nonpayment~~financing byarrangements ~~the~~to channel partners. ~~Historically,~~consist ~~our~~of ~~payments~~revolving ~~under~~short-term ~~these~~financing ~~arrangements~~provided ~~have~~by ~~been~~third ~~immaterial. Where we provide a guarantee~~parties, ~~we defer the revenue associated~~ with ~~the~~payment ~~channel~~terms ~~partner~~generally ~~financing~~ranging ~~arrangement~~from 60 into ~~accordance~~90 ~~with~~days. ~~revenue~~In ~~recognition~~certain ~~policies~~instances, orthese wefinancing ~~record~~arrangements aresult ~~liability~~in ~~for~~a ~~the~~transfer ~~fair value~~ of ~~the~~our ~~guarantees.~~receivables Into ~~either case,~~ the ~~deferred~~third ~~revenue~~party. isThe ~~recognized~~receivables asare ~~revenue~~derecognized ~~when~~upon ~~the~~transfer, ~~guarantee~~as isthese ~~removed.~~transfers Asqualify ofas ~~April 26,~~true ~~2025~~sales, ~~the~~and ~~total~~we ~~maximum~~receive ~~potential future~~ payments ~~related~~for tothe ~~these~~receivables ~~guarantees~~from ~~was~~the ~~approximately~~third ~~$116~~party ~~million,~~based ofon ~~which~~our ~~approximately~~standard ~~$10~~payment ~~million was recorded as deferred revenue~~terms.

The volume of channel partner financing was $6.7 billion and $6.0 billion for the first quarter of fiscal 2026 and 2025, respectively. These financing arrangements facilitate the working capital requirements of the channel partners, and in some cases, we guarantee a portion of these arrangements. The balance of the channel partner financing subject to guarantees was $1.5 billion and $1.3 billion as of October 25, 2025 and July 26, 2025, respectively. We could be called upon to make payments under these guarantees in the event of nonpayment by the channel partners. Historically, our payments under these arrangements have been immaterial. Where we provide a guarantee, we defer the revenue associated with the channel partner financing arrangement in accordance with revenue recognition policies, or we record a liability for the fair value of the guarantees. In either case, the deferred revenue is recognized as revenue when the guarantee is removed. As of October 25, 2025, the total maximum potential future payments related to these guarantees was approximately $134 million, of which approximately $17 million was recorded as deferred revenue.

Borrowings

Senior Notes The following table summarizes the principal amount of our senior notes (in millions):

	Maturity Date	~~April~~October 2625,2025		July 2726,~~2024~~2025
Senior notes:
Fixed-rate notes:
3.50%	June 15, 2025	$	500	$	500
4.90%	February 26, 2026	$	1,000	$	1,000
4.90%	February 26, 2026	1,000		1,000
2.95%	February 28, 2026	750		750
2.50%	September 20, 2026	1,500		1,500
4.80%	February 26, 2027	2,000		2,000
4.55%	February 24, 2028	1,000		—1,000
4.85%	February 26, 2029	2,500		2,500
4.75%	February 24, 2030	1,000		—1,000
4.95%	February 26, 2031	2,500		2,500
4.95%	February 24, 2032	1,000		—1,000
5.05%	February 26, 2034	2,500		2,500
5.10%	February 24, 2035	1,250		—1,250
5.90%	February 15, 2039	2,000		2,000
5.50%	January 15, 2040	2,000		2,000
5.30%	February 26, 2054	2,000		2,000
5.50%	February 24, 2055	750		—750
5.35%	February 26, 2064	1,000		1,000
Total		$	2524,~~250~~750	$	2024,~~250~~750

InInterest ~~February~~is ~~2025,~~payable wesemiannually ~~issued~~on each class of the senior fixed-rate notes, ~~for~~each anof ~~aggregate~~which ~~principal~~is ~~amount~~redeemable ofby $5us at any time, subject to a make-whole premium.0 We were in compliance with all debt covenants as of October ~~billion~~25, 2025.

Interest is payable semiannually on each class of the senior fixed-rate notes, each of which is redeemable by us at any time, subject to a make-whole premium. We were in compliance with all debt covenants as of April 26, 2025.50

Commercial Paper We have a short-term debt financing program in which up to $15.0 billion is available through the issuance of commercial paper notes. We use the proceeds from the issuance of commercial paper notes for general corporate purposes. We had $4.2 billion and $10.9 billion in commercial paper notes outstanding as of April 26, 2025 and July 27, 2024, respectively.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

~~Credit~~Commercial ~~Facility~~Paper OnWe ~~February~~have 2,a ~~2024,~~short-term wedebt ~~entered~~financing ~~into~~program anin ~~amended~~which ~~and~~up ~~restated~~to ~~5-year~~ $515.0 billion ~~unsecured~~is ~~revolving~~available ~~credit~~through ~~agreement. The interest rate for~~ the ~~credit~~issuance ~~agreement~~of iscommercial ~~determined~~paper ~~based on a formula using certain market rates~~notes. ~~The~~We ~~credit~~use ~~agreement~~the ~~requires~~proceeds ~~that~~from wethe ~~comply~~issuance ~~with~~of ~~certain~~commercial ~~covenants,~~paper ~~including~~notes ~~that~~for wegeneral ~~maintain~~corporate anpurposes. ~~interest~~We ~~coverage~~had ~~ratio~~$3.5 ~~(defined~~billion in ~~the~~commercial ~~agreement~~paper asnotes ~~the~~outstanding ~~ratio~~as of ~~consolidated~~each ~~EBITDA to consolidated interest expense)~~ of ~~not less than 3.0 to 1.0. As of April~~October 2625, 2025, ~~we were in compliance with all associated covenants~~ and weJuly 26, ~~had not borrowed any funds under our credit agreement~~2025.

Credit Facility On February 2, 2024, we entered into an amended and restated 5-year $5.0 billion unsecured revolving credit agreement. The interest rate for the credit agreement is determined based on a formula using certain market rates. The credit agreement requires that we comply with certain covenants, including that we maintain an interest coverage ratio (defined in the agreement as the ratio of consolidated EBITDA to consolidated interest expense) of not less than 3.0 to 1.0. As of October 25, 2025, we were in compliance with all associated covenants and we had not borrowed any funds under our credit agreement.

Remaining Performance Obligations The following table presents the breakdown of remaining performance obligations (in millions):

April 26,2025

July 27,2024

Increase (Decrease)

October 25,2025

July 26,2025

Increase (Decrease)

Product

2021,~~752~~904

2021,~~055~~572

~~697~~332

Services

20,~~915~~969

2021,~~993~~961

(78992)

Total

4142,~~667~~873

4143,~~048~~533

~~619~~(660)

Short-term RPO

2120,~~066~~971

2021,~~882~~723

~~184~~(752)

Long-term RPO

2021,~~601~~902

2021,~~166~~810

~~435~~92

Total

4142,~~667~~873

4143,~~048~~533

~~619~~(660)

Total remaining performance obligations as of ~~April~~October 2625, 2025 ~~increased~~decreased 2% compared to the end of fiscal ~~2024~~2025. Remaining performance obligations for product increased by 32% compared to the end of fiscal ~~2024.~~2025, ~~Remaining~~of ~~performance~~which ~~obligations~~long-term ~~for~~product ~~services~~RPO ~~were~~was ~~flat~~$11.8 Webillion, ~~expect~~up ~~approximately 51~~3%. ofRemaining ~~total remaining~~ performance obligations tofor beservices ~~recognized~~decreased ~~as revenue over the next 12 months~~5%.

Deferred Revenue The following table presents the breakdown of deferred revenue (in millions):

April 26,2025

July 27,2024

Increase (Decrease)

October 25,2025

July 26,2025

Increase (Decrease)

Product

13,~~170~~252

13,~~219~~490

(49238)

Services

14,~~821~~717

15,~~256~~289

(~~435~~572)

Total

27,~~991~~969

28,~~475~~779

(~~484~~810)

Reported as:

Current

1615,~~081~~801

16,~~249~~416

(~~168~~615)

Noncurrent

1112,~~910~~168

12,~~226~~363

(~~316~~195)

Total

27,~~991~~969

28,~~475~~779

(~~484~~810)

Total deferred revenue decreased 23% compared to the end of fiscal ~~2024~~2025. Within total deferred revenue, deferred product revenue ~~was~~decreased ~~flat~~by 2% and deferred services revenue decreased by 34%. The decrease in deferred services revenue was driven by lower business volume and ongoing amortization of deferred services revenue.

~~Contractual Obligations~~51

The impact of contractual obligations on our liquidity and capital resources in future periods should be analyzed in conjunction with the factors that impact our cash flows from operations discussed herein. In addition, we plan for and measure our liquidity and capital resources through an annual budgeting process. Our contractual obligations consist of operating leases, purchase commitments with contract manufacturers and suppliers, other purchase obligations, long-term debt, the transition tax payable, and other long-term liabilities. Our contractual obligations were approximately $47 billion as of April 26, 2025, compared to approximately $38 billion as of July 27, 2024. For additional information on our contractual obligations see our Annual Report on Form 10-K for the fiscal year ended July 27, 2024.

Other Commitments

In connection with our acquisitions, we have agreed to pay certain additional amounts contingent upon the continued employment with us of certain employees of the acquired entities. See Note 4 to the Consolidated Financial Statements.

We also have certain funding commitments primarily related to our privately held investments. The funding commitments were $0.3 billion and $0.2 billion as of April 26, 2025 and July 27, 2024, respectively.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

InContractual the ordinary course of business, we have privately held investments and provide financing to certain customers. Certain of these investments are considered to be variable interest entities. We evaluate on an ongoing basis our privately held investments and customer financings, and we have determined that as of April 26, 2025 there were no material unconsolidated variable interest entities.Obligations

OnThe animpact ~~ongoing~~of ~~basis,~~contractual weobligations ~~reassess~~on our ~~privately~~liquidity ~~held~~and ~~investments~~capital ~~and~~resources ~~customer~~in ~~financings~~future toperiods ~~determine~~should ifbe ~~they~~analyzed ~~are~~in ~~variable~~conjunction ~~interest~~with ~~entities~~the ~~and~~factors ifthat impact our cash flows from operations discussed herein. In addition, we ~~would~~plan befor ~~regarded~~and asmeasure ~~the~~our ~~primary~~liquidity ~~beneficiary~~and ~~pursuant~~capital toresources ~~the~~through ~~applicable~~an ~~accounting~~annual ~~guidance~~budgeting process. AsOur acontractual ~~result~~obligations consist of ~~this~~operating ~~ongoing~~leases, ~~assessment~~purchase commitments with contract manufacturers and suppliers, weother ~~may~~purchase beobligations, ~~required~~long-term todebt, ~~make~~the ~~additional~~transition ~~disclosures~~tax orpayable, ~~consolidate~~and ~~these~~other ~~entities~~long-term liabilities. ~~Because~~For weadditional ~~may~~information ~~not~~on ~~control~~our ~~these~~contractual ~~entities,~~obligations wesee ~~may~~our ~~not~~Annual ~~have~~Report on Form 10-K for the ~~ability~~fiscal toyear ~~influence~~ended ~~these~~July ~~events~~26, 2025.

Transition Tax Payable

The income tax payable outstanding as of October 25, 2025 for the U.S. transition tax on accumulated earnings for foreign subsidiaries was $2.3 billion and is payable in the second quarter of fiscal 2026.

Other Commitments

Of the total carrying value of our investments in privately held companies as of October 25, 2025, $0.8 billion of such investments are considered to be in variable interest entities which are unconsolidated. We have total funding commitments of $0.5 billion related to privately held investments. The carrying value of these investments and the additional funding commitments, collectively, represent our maximum exposure related to privately held investments. See Note 10 to the Consolidated Financial Statements.

We provide financing guarantees, which are generally for various third-party financing arrangements extended to our channel partners. We could be called upon to make payments under these guarantees in the event of nonpayment by the channel partners. See the previous discussion of these financing guarantees under “Financing Receivables and Guarantees.”

Liquidity and Capital Resource Requirements

Based on past performance and current expectations, we believe our cash and cash equivalents, investments, cash generated from operations, and ability to access capital markets and committed credit lines will satisfy, through at least the next 12 months, our liquidity requirements, both in total and domestically, including the following: working capital needs (including inventory and other supply related payments), capital expenditures, investment requirements, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on debt, pending acquisitions, future customer financings, and other liquidity requirements associated with our operations. There are no other transactions, arrangements, or relationships with unconsolidated entities or other persons that are reasonably likely to materially affect the liquidity and the availability of, as well as our requirements for, capital resources.

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Item 3.			Quantitative and Qualitative Disclosures About Market Risk

Our financial position is exposed to a variety of risks, including interest rate risk, equity price risk, and foreign currency exchange risk.

Interest Rate Risk

Available-for-Sale Debt Investments We maintain an investment portfolio of various holdings, types, and maturities. Our primary objective for holding available-for-sale debt investments is to achieve an appropriate investment return consistent with preserving principal and managing risk. At any time, a sharp rise in market interest rates could have a material adverse impact on the fair value of our available-for-sale debt investment portfolio. Conversely, declines in interest rates, including the impact from lower credit spreads, could have a material adverse impact on interest income for our investment portfolio. Our available-for-sale debt investments are held for purposes other than trading. Our available-for-sale debt investments are not leveraged as of ~~April~~October 2625, 2025. We monitor our interest rate and credit risks, including our credit exposures to specific rating categories and to individual issuers. We believe the overall credit quality of our portfolio is strong.

Financing Receivables Our financing receivables had a carrying value of $6.28 billion and $6.75 billion as of ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025. As of ~~April~~October 2625, 2025, a hypothetical 50 basis points (“BPS”) increase or decrease in market interest rates would change the fair value of our financing receivables by a decrease or increase of approximately $0.1 billion, respectively.

Debt As of ~~April~~October 2625, 2025, we had $2524.38 billion in principal amount of senior fixed-rate notes outstanding. The carrying amount of the senior notes was $2524.16 billion, and the related fair value based on market prices was $25.5 billion. As of ~~April~~October 2625, 2025, a hypothetical 50 BPS increase or decrease in market interest rates would change the fair value of the fixed-rate debt, ~~excluding the $0.5 billion of hedged debt,~~ by a decrease or increase of approximately $0.8 billion, respectively. However, this hypothetical change in interest rates would not impact the interest expense on the fixed-rate debt ~~that is not hedged~~.

At any time, a sharp rise in market interest rates could cause us to incur additional interest expense to the extent we issue additional commercial paper or other debt.

Equity Price Risk

Marketable Equity Investments The fair value of our marketable equity investments is subject to market price volatility. We hold equity securities for strategic purposes or to diversify our overall investment portfolio. These equity securities are held for purposes other than trading. The total fair value of our marketable equity securities was $~~287~~394 million and $~~481~~383 million as of ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025, respectively.

Privately Held Investments These investments are recorded in other assets in our Consolidated Balance Sheets. The total carrying amount of our privately held investments was $2.01 billion and $1.89 billion as of ~~April~~October 2625, 2025 and July 2726, ~~2024~~2025, respectively. Some of these companies in which we invested are in the startup or development stages. These investments are inherently risky because the markets for the technologies or products these companies are developing are typically in the early stages and may never materialize. We could lose our entire investment in these companies. Our evaluation of privately held investments is based on the fundamentals of the businesses invested in, including, among other factors, the nature of their technologies and potential for financial return.

Foreign Currency Exchange Risk

Our foreign exchange forward contracts outstanding as of the respective period-ends are summarized in U.S. dollar equivalents as follows (in millions):

	April 26, 2025				July 27, 2024
	October 25, 2025				July 26, 2025
	Notional Amount		Fair Value		Notional Amount		Fair Value
Forward contracts:
Purchased	$	3,~~835~~816	$	20(56)	$	34,~~586~~498	$	(5921)
Sold	$	4,~~016~~190	$	~~(5)~~53	$	34,~~848~~480	$	6022

We conduct business globally in numerous currencies. The direct effect of foreign currency fluctuations on revenue has not been material because our revenue is primarily denominated in U.S. dollars. However, if the U.S. dollar strengthens relative to other currencies, such strengthening could have an indirect effect on our revenue to the extent it raises the cost of our products to non-U.S. customers and thereby reduces demand. A weaker U.S

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