CSCO · 10-Q · 2026Q2 · Full report
Operating Expense Trends
CISCO SYSTEMS, INC. · 2026-05-19 · Importance 42 · Surprise 14 · No source text
Combined R&D, sales and marketing, and G&A expenses declined to 37.2% of quarterly revenue from 41.0% and to 38.7% for nine months from 41.3%. Quarterly R&D increased primarily from discretionary spending and headcount-related AI investment, while sales and marketing increased from headcount-related expenses and contracted services. Nine-month R&D increased to $7.132 billion from $6.920 billion, and sales and marketing increased to $8.607 billion from $8.148 billion, while G&A decreased 9% to $2.082 billion. Foreign-currency fluctuations, net of hedging, increased combined operating expenses by $90 million in the quarter and $181 million for nine months.
Key facts
- Operating income for the three months ended April 25, 2026 was $3,960 million compared with $3,202 million for the three months ended April 26, 2025; operating income as a percentage of revenue was 25.0% versus 22.6%. source
- Operating income for the nine months ended April 25, 2026 was $11,104 million compared with $8,673 million for the nine months ended April 26, 2025; operating income as a percentage of revenue was 24.1% versus 20.7%. source
- Amortization of purchased intangible assets decreased in fiscal 2026 primarily due to certain purchased intangible assets that became fully amortized and because impairment charges of $19 million were recognized in the first nine months of fiscal 2025. source
- In the first nine months of fiscal 2026, foreign currency fluctuations, net of hedging, increased combined R&D, sales and marketing, and G&A expenses by approximately $181 million (1.0%) versus the prior-year period. source
- Foreign currency fluctuations, net of hedging, increased combined R&D, sales and marketing, and G&A expenses by approximately $90 million (1.6%) in the third quarter of fiscal 2026 versus the prior-year quarter. source
- As a percentage of revenue, R&D, sales and marketing, and G&A expenses collectively decreased by 3.8 percentage points in the third quarter of fiscal 2026. source
- Operating income as a percentage of revenue increased by 2.4 percentage points in the third quarter of fiscal 2026, primarily driven by revenue growth. source
- Other income (loss), net for the third quarter of fiscal 2026 was impacted primarily by higher gains on marketable and non-marketable equity securities. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | positive | realized | +15.3% | Operating income for the nine months ended April 25, 2026 was $11,104 million compared with $8,673 million for the nine months ended April… |
| operating_income | positive | realized | +4.8% | Operating income for the three months ended April 25, 2026 was $3,960 million compared with $3,202 million for the three months ended… |
| margin | positive | realized | +3.4% | Operating income for the nine months ended April 25, 2026 was $11,104 million compared with $8,673 million for the nine months ended April… |
| margin | positive | realized | +2.4% | Operating income for the three months ended April 25, 2026 was $3,960 million compared with $3,202 million for the three months ended… |