CSCO · 10-K · 2025A · Full report
Operating Expense Trends
CISCO SYSTEMS, INC. · 2025-09-03 · Importance 63 · Surprise 50
Combined R&D, sales and marketing, and G&A expenses increased by $2,098 million to $23,258 million, rising from 39.3% to 41.1% of revenue. R&D alone increased $1,317 million (to $9,300 million), driven by investments in AI, higher headcount costs, share‑based compensation, cash compensation from acquisitions, and discretionary spending. Sales and marketing and G&A also increased, primarily from higher headcount and acquisition‑related compensation. The increases reflect a strategic shift to invest in AI and other priority areas despite margin pressures from amortization and acquisition costs.
Key facts
- Combined R&D, sales and marketing, and G&A expenses in fiscal 2025: $23,258 million, increased $2,098 million versus fiscal 2024 and represented 41.1% of revenue, up 1.8 percentage points as a percent of revenue.
- R&D expense in fiscal 2025: $9,300 million, increased $1,317 million versus fiscal 2024 and represented 16.4% of revenue.
- Operating income in fiscal 2025: $11,760 million, decreased from $12,181 million in fiscal 2024; operating income as a percentage of revenue was 20.8% in fiscal 2025 versus 22.6% in fiscal 2024 (decrease of 1.8 percentage points).
- Sales and marketing expense in fiscal 2025: $10,966 million, increased versus $10,364 million in fiscal 2024 and represented 19.4% of revenue.
- General and administrative expense in fiscal 2025: $2,992 million, increased versus $2,813 million in fiscal 2024 and represented 5.3% of revenue.
- Diluted earnings per share in the fourth quarter of fiscal 2025 increased by 19% year over year, primarily driven by revenue increase and higher operating margin percentage.
- Diluted earnings per share was flat in fiscal 2025 compared with fiscal 2024 for the full year.
- Foreign currency fluctuations, net of hedging, decreased combined R&D, sales and marketing, and G&A expenses by approximately $16 million (0.1%) in fiscal 2025 versus fiscal 2024.
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | negative | realized | -3.5% | Combined R&D, sales and marketing, and G&A expenses in fiscal 2025: $23,258 million, increased $2,098 million versus fiscal 2024 and… |
| operating_income | negative | realized | -1.0% | Sales and marketing expense in fiscal 2025: $10,966 million, increased versus $10,364 million in fiscal 2024 and represented 19.4% of… |
| operating_income | negative | realized | -0.7% | Operating income in fiscal 2025: $11,760 million, decreased from $12,181 million in fiscal 2024; operating income as a percentage of… |
| operating_income | negative | realized | -0.3% | General and administrative expense in fiscal 2025: $2,992 million, increased versus $2,813 million in fiscal 2024 and represented 5.3% of… |