CSCO · 10-K · 2025A · Full report
Gross Margin Drivers
CISCO SYSTEMS, INC. · 2025-09-03 · Importance 49 · Surprise 32
Total gross margin was $36,790 million, or 64.9% of revenue, in fiscal 2025, up 0.2 percentage points versus fiscal 2024 (64.7%).,Product gross margin rose 0.2 percentage points to 63.7% primarily due to benefits from Splunk and productivity improvements, partially offset by pricing pressure, a legal-dispute-related charge with a supplier, and amortization of purchased intangible assets primarily related to Splunk.,The company quantified product-margin drivers: productivity contributed +2.0 percentage points, pricing was -1.6 points, product mix was +1.1 points, the legal dispute was -0.8 points, and amortization of purchased intangibles was -0.4 points in the change from fiscal 2024 to fiscal 2025.,Services gross margin increased 0.4 percentage points to 68.5% in fiscal 2025, driven by higher sales volume and lower delivery costs, partially offset by higher headcount-related costs.
Key facts
- Americas segment gross margin dollar amount in fiscal 2025: $22,962 million and gross margin percentage 68.2%, up from 66.8% in fiscal 2024.
- Total gross margin dollar amount in fiscal 2025: $36,790 million, compared with $34,828 million in fiscal 2024.
- EMEA segment gross margin dollar amount in fiscal 2025: $10,545 million and gross margin percentage 71.1%, up from 69.1% in fiscal 2024.
- Product gross margin dollar amount in fiscal 2025: $26,487 million, compared with $24,914 million in fiscal 2024.
- Product gross margin drivers: productivity benefit of 2.0 percentage points, pricing headwind of (1.6) percentage points, product mix benefit of 1.1 percentage points, legal dispute charge of (0.8) percentage points, amortization of purchased intangible assets of (0.4) percentage points from fiscal 2024 to fiscal 2025.
- Unallocated corporate items reduced total gross margin by $2,148 million in fiscal 2025 (unallocated corporate items were $(2,148) million).
- Total unallocated corporate items were $(2,148) million in fiscal 2025, compared with $(1,484) million in fiscal 2024 and $(1,035) million in fiscal 2023.
- APJC segment gross margin dollar amount in fiscal 2025: $5,431 million and gross margin percentage 66.4%, down from 67.2% in fiscal 2024.
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | negative | realized | -3.5% | Unallocated corporate items reduced total gross margin by $2,148 million in fiscal 2025 (unallocated corporate items were $(2,148) million). |
| operating_income | positive | realized | +3.2% | Total gross margin dollar amount in fiscal 2025: $36,790 million, compared with $34,828 million in fiscal 2024. |
| margin | positive | realized | +2.0% | EMEA segment gross margin dollar amount in fiscal 2025: $10,545 million and gross margin percentage 71.1%, up from 69.1% in fiscal 2024. |
| margin | positive | realized | +2.0% | Product gross margin drivers: productivity benefit of 2.0 percentage points, pricing headwind of (1.6) percentage points, product mix… |
| margin | negative | realized | -1.6% | Product gross margin drivers: productivity benefit of 2.0 percentage points, pricing headwind of (1.6) percentage points, product mix… |
| margin | positive | realized | +1.4% | Americas segment gross margin dollar amount in fiscal 2025: $22,962 million and gross margin percentage 68.2%, up from 66.8% in fiscal 2024. |
| margin | negative | realized | -1.2% | Fourth quarter fiscal 2025 total gross margin decreased by 1.2 percentage points year over year, driven primarily by a charge from a legal… |
| margin | positive | realized | +1.1% | Product gross margin drivers: productivity benefit of 2.0 percentage points, pricing headwind of (1.6) percentage points, product mix… |
| margin | negative | realized | -0.8% | Product gross margin drivers: productivity benefit of 2.0 percentage points, pricing headwind of (1.6) percentage points, product mix… |
| margin | negative | realized | -0.8% | APJC segment gross margin dollar amount in fiscal 2025: $5,431 million and gross margin percentage 66.4%, down from 67.2% in fiscal 2024. |
| margin | negative | realized | -0.4% | Product gross margin drivers: productivity benefit of 2.0 percentage points, pricing headwind of (1.6) percentage points, product mix… |