CSCO · 10-K · 2026A · Full report

Gross Margin Drivers

CISCO SYSTEMS, INC. · 2026-09-02 · Importance 13 · Surprise 6

Total gross margin declined 0.4 percentage points to 64.5% in fiscal 2026, as product gross margin fell 0.5 points to 63.2% while services gross margin increased 0.3 points to 68.8%. Product mix reduced product gross margin by 3.6 points, primarily because higher Networking revenue carried lower margins, while productivity added 1.1 points and pricing added 0.2 points. Lower purchased-intangible amortization added 0.9 points and the nonrecurrence of a fiscal 2025 supplier-dispute charge added 0.8 points, but higher memory costs adversely affected productivity benefits. Americas gross margin declined to 65.1% from 68.2%, while EMEA increased to 71.2% and APJC increased to 66.6%.

Key facts

• Product gross margin amount for fiscal 2026 was $30,514 million and product gross margin percentage was 63.2%. source
• Total gross margin for fiscal 2026 was $40,860 million and 64.5% of revenue. source
• Services gross margin amount for fiscal 2026 was $10,346 million and services gross margin percentage was 68.8%. source
• Product gross margin decreased by 0.5 percentage points in fiscal 2026 primarily driven by negative impacts from product mix and higher memory costs. source
• Product gross margin percentage components show productivity benefit of 1.1% and mix of products sold negative impact of (3.6)% between fiscal 2025 and fiscal 2026. source
• Total gross margin decreased by 0.4 percentage points in fiscal 2026 primarily driven by a decline in product gross margin. source