CSCO · Forward model
Revenue by vertical, 20 quarters out
Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.
Quarter labels are Cisco FISCAL quarters, so 2026 Q4 is the thirteen weeks ended 25 July 2026, reported 12 August 2026. The five verticals are exactly the groups of similar products and services Cisco discloses — Networking, Security, Collaboration, Observability, Services — and they sum to reported consolidated revenue in all twelve quarters, with a maximum residual of $1M, which is the rounding Cisco itself discloses. Ten of the twelve quarters are read from the filed disaggregation-of-revenue note; FY2024 Q4 and FY2025 Q4 are fiscal year less nine months and are flagged estimated. AI infrastructure is NOT a vertical: it is disclosed annually only (about $4bn of FY2026 revenue, $7.5bn guided for FY2027, $9.3bn of FY2026 orders) and sits inside Networking. Every vertical margin is assumed, because Cisco discloses gross margin by geography and never by product category; the 0.5% corporate overhead is the plug that reconciles the revenue-weighted assumed margins ($22,351M) to the disclosed FY2026 non-GAAP operating income of $22,040M. Segment 'EBITDA' here therefore tracks Cisco's non-GAAP operating margin, which excludes share-based compensation of $3,830M. Tax 18.5% is the company's own FY2027 non-GAAP assumption. netCash is cash $7,218M plus investments $8,700M less short-term debt $10,161M and long-term debt $19,372M, so Cisco is $13.6bn net DEBT. Shares are the 3,941,434,665 on the Q3 FY2026 10-Q cover; the FY2026 10-K was not filed as of 2026-08-27. Price is the 26 August 2026 close of $112.36. The engine carries no seasonality, and Cisco's fiscal Q1 is seasonally its weakest quarter, so the base case is calibrated to the FULL-YEAR guide: FY2027 lands at $73.3bn inside the guided $72.2-73.4bn, with the first projected quarter at $17.9bn just under the guided $18.0-18.2bn. Reading the quarter alone would have broken the year.
Latest: $22.64B (2031Q4E)
| Period | Value |
|---|---|
| 2024Q1 | $14.67B |
| 2024Q2 | $12.79B |
| 2024Q3 | $12.70B |
| 2024Q4 | $13.64B |
| 2025Q1 | $13.84B |
| 2025Q2 | $13.99B |
| 2025Q3 | $14.15B |
| 2025Q4 | $14.67B |
| 2026Q1 | $14.88B |
| 2026Q2 | $15.35B |
| 2026Q3 | $15.84B |
| 2026Q4 | $17.25B |
| 2027Q1E | $17.87B |
| 2027Q2E | $18.23B |
| 2027Q3E | $18.50B |
| 2027Q4E | $18.74B |
| 2028Q1E | $18.97B |
| 2028Q2E | $19.19B |
| 2028Q3E | $19.42B |
| 2028Q4E | $19.65B |
| 2029Q1E | $19.88B |
| 2029Q2E | $20.12B |
| 2029Q3E | $20.36B |
| 2029Q4E | $20.60B |
| 2030Q1E | $20.84B |
| 2030Q2E | $21.09B |
| 2030Q3E | $21.34B |
| 2030Q4E | $21.60B |
| 2031Q1E | $21.85B |
| 2031Q2E | $22.11B |
| 2031Q3E | $22.38B |
| 2031Q4E | $22.64B |
What drives each segment
Networking
Growth pathSwitching, routing, wireless and servers: $9,791M in the basis quarter, 56.8% of revenue and all of the growth. Q4 +28% year over year and FY2026 +22% after two down years, on networking product orders +40% and an eighth consecutive quarter of double-digit order growth. The hyperscaler AI infrastructure business lands here — about $4bn of FY2026 revenue against $9.3bn of FY2026 orders, guided to $7.5bn in FY2027. Cisco publishes no units, ports or capacity for this line, so sequential growth on the reported category is the only honest driver.
Latest: $13.38B (2031Q4E)
| Period | Value |
|---|---|
| 2024Q1 | $8.82B |
| 2024Q2 | $7.08B |
| 2024Q3 | $6.52B |
| 2024Q4 | $6.80B |
| 2025Q1 | $6.75B |
| 2025Q2 | $6.85B |
| 2025Q3 | $7.07B |
| 2025Q4 | $7.63B |
| 2026Q1 | $7.77B |
| 2026Q2 | $8.29B |
| 2026Q3 | $8.81B |
| 2026Q4 | $9.79B |
| 2027Q1E | $10.33B |
| 2027Q2E | $10.61B |
| 2027Q3E | $10.80B |
| 2027Q4E | $10.95B |
| 2028Q1E | $11.10B |
| 2028Q2E | $11.24B |
| 2028Q3E | $11.38B |
| 2028Q4E | $11.52B |
| 2029Q1E | $11.67B |
| 2029Q2E | $11.81B |
| 2029Q3E | $11.96B |
| 2029Q4E | $12.11B |
| 2030Q1E | $12.26B |
| 2030Q2E | $12.42B |
| 2030Q3E | $12.57B |
| 2030Q4E | $12.73B |
| 2031Q1E | $12.89B |
| 2031Q2E | $13.05B |
| 2031Q3E | $13.21B |
| 2031Q4E | $13.38B |
Assumptions & reasoning
- AI infrastructure is modelled inside this line and never as its own vertical. Cisco discloses AI revenue and AI orders once a year, so a quarterly AI series would be an invented sub-line that double-counts against Networking.
- The order book runs above recognised revenue: $9.3bn of FY2026 AI orders against about $4bn of AI revenue, and product RPO of $23,436M, +9%. Orders are visibility, not revenue, so they inform the growth path rather than set it.
- Opening 5.5% sequential puts FY2027 networking near $42.7bn, +23% on FY2026's $34,668M, which is the growth the consolidated $72.2-73.4bn guide needs given a flat Services line and a 2% Security year.
- Margin 37% is assumed: non-GAAP product gross margin less consolidated operating expense, with the terminal at 34% because the hardware mix that took Q4 non-GAAP gross margin from 68.4% to 66.3% is treated as permanent.
- Every vertical margin here is assumed. Cisco discloses gross margin by geography (Americas 64.5%, EMEA 70.1%, APJC 67.3% in the basis quarter) and product-versus-services gross margin, and never operating profit, capex or headcount by product category.
- The two July quarters are derived, not printed: FY2024 Q4 and FY2025 Q4 are the fiscal-year column of the 10-K less the nine-month column of that year's Q3 10-Q, and both reconcile to the quarterly totals Cisco printed later, so they carry estimated: true.
- Capex intensity is the consolidated rate applied to every line: FY2026 property and equipment $1,410M on $63,325M of revenue is 2.2%, and Cisco publishes no capex by product category to split it with.
Security
Growth pathThe Splunk line. $2,226M in the basis quarter, +14% year over year, but only +2% for FY2026 at $8,232M once the acquisition anniversary washed through. Cisco publishes no security ARR, no seats and no Splunk-versus-legacy split, so this is a reported-category growth line and not a subscription model.
Latest: $3.00B (2031Q4E)
| Period | Value |
|---|---|
| 2024Q1 | $1.01B |
| 2024Q2 | $973M |
| 2024Q3 | $1.30B |
| 2024Q4 | $1.79B |
| 2025Q1 | $2.02B |
| 2025Q2 | $2.11B |
| 2025Q3 | $2.01B |
| 2025Q4 | $1.95B |
| 2026Q1 | $1.98B |
| 2026Q2 | $2.02B |
| 2026Q3 | $2.01B |
| 2026Q4 | $2.23B |
| 2027Q1E | $2.26B |
| 2027Q2E | $2.29B |
| 2027Q3E | $2.33B |
| 2027Q4E | $2.36B |
| 2028Q1E | $2.40B |
| 2028Q2E | $2.43B |
| 2028Q3E | $2.47B |
| 2028Q4E | $2.51B |
| 2029Q1E | $2.55B |
| 2029Q2E | $2.58B |
| 2029Q3E | $2.62B |
| 2029Q4E | $2.66B |
| 2030Q1E | $2.70B |
| 2030Q2E | $2.74B |
| 2030Q3E | $2.78B |
| 2030Q4E | $2.82B |
| 2031Q1E | $2.87B |
| 2031Q2E | $2.91B |
| 2031Q3E | $2.95B |
| 2031Q4E | $3.00B |
Assumptions & reasoning
- FY2026 grew 2%; strip the Q4 +14% and the line is flat. The model takes the middle of those two facts rather than extrapolating the quarter, because Cisco publishes nothing that would show whether Splunk is compounding.
- Margin 25% is assumed and is the lowest of the four product lines: this line carries the heaviest purchased-intangible amortisation and the Splunk cost base. The terminal 28% assumes that integration cost is absorbed, not that it disappears.
- Every vertical margin here is assumed. Cisco discloses gross margin by geography (Americas 64.5%, EMEA 70.1%, APJC 67.3% in the basis quarter) and product-versus-services gross margin, and never operating profit, capex or headcount by product category.
- The two July quarters are derived, not printed: FY2024 Q4 and FY2025 Q4 are the fiscal-year column of the 10-K less the nine-month column of that year's Q3 10-Q, and both reconcile to the quarterly totals Cisco printed later, so they carry estimated: true.
- Capex intensity is the consolidated rate applied to every line: FY2026 property and equipment $1,410M on $63,325M of revenue is 2.2%, and Cisco publishes no capex by product category to split it with.
Collaboration
Growth pathWebex meetings, calling, contact centre and collaboration devices. $1,167M in the basis quarter, +12% year over year, $4,300M and +4% for FY2026. A mature category that stopped shrinking against Teams and Zoom. No seats and no ARPU are published, so growth on the reported line is the only defensible driver.
Latest: $1.29B (2031Q4E)
| Period | Value |
|---|---|
| 2024Q1 | $1.12B |
| 2024Q2 | $989M |
| 2024Q3 | $987M |
| 2024Q4 | $1.02B |
| 2025Q1 | $1.08B |
| 2025Q2 | $996M |
| 2025Q3 | $1.03B |
| 2025Q4 | $1.04B |
| 2026Q1 | $1.05B |
| 2026Q2 | $1.05B |
| 2026Q3 | $1.02B |
| 2026Q4 | $1.17B |
| 2027Q1E | $1.17B |
| 2027Q2E | $1.18B |
| 2027Q3E | $1.18B |
| 2027Q4E | $1.19B |
| 2028Q1E | $1.20B |
| 2028Q2E | $1.20B |
| 2028Q3E | $1.21B |
| 2028Q4E | $1.21B |
| 2029Q1E | $1.22B |
| 2029Q2E | $1.23B |
| 2029Q3E | $1.23B |
| 2029Q4E | $1.24B |
| 2030Q1E | $1.25B |
| 2030Q2E | $1.25B |
| 2030Q3E | $1.26B |
| 2030Q4E | $1.26B |
| 2031Q1E | $1.27B |
| 2031Q2E | $1.28B |
| 2031Q3E | $1.28B |
| 2031Q4E | $1.29B |
Assumptions & reasoning
- Quarterly revenue has sat between $987M and $1,167M for twelve straight quarters, so a flat sequential path is the honest projection; the Q4 +12% is read as a device quarter rather than as a new trend.
- Margin 30% is assumed, fading to 28%, on a mature software-and-device mix whose price is capped by competitors that bundle the same functionality into a suite. Cisco discloses no profitability for this category.
- Every vertical margin here is assumed. Cisco discloses gross margin by geography (Americas 64.5%, EMEA 70.1%, APJC 67.3% in the basis quarter) and product-versus-services gross margin, and never operating profit, capex or headcount by product category.
- The two July quarters are derived, not printed: FY2024 Q4 and FY2025 Q4 are the fiscal-year column of the 10-K less the nine-month column of that year's Q3 10-Q, and both reconcile to the quarterly totals Cisco printed later, so they carry estimated: true.
- Capex intensity is the consolidated rate applied to every line: FY2026 property and equipment $1,410M on $63,325M of revenue is 2.2%, and Cisco publishes no capex by product category to split it with.
Observability
Growth pathThe smallest disclosed line: $275M in the basis quarter, $1,095M and +4% for FY2026, +6% in Q4. ThousandEyes, AppDynamics and now Galileo Technologies. Subscale against Datadog and Dynatrace, and it matters to this model as an option rather than as a driver. No ARR and no customer count are published.
Latest: $350M (2031Q4E)
| Period | Value |
|---|---|
| 2024Q1 | $190M |
| 2024Q2 | $188M |
| 2024Q3 | $211M |
| 2024Q4 | $248M |
| 2025Q1 | $258M |
| 2025Q2 | $277M |
| 2025Q3 | $261M |
| 2025Q4 | $259M |
| 2026Q1 | $274M |
| 2026Q2 | $277M |
| 2026Q3 | $269M |
| 2026Q4 | $275M |
| 2027Q1E | $277M |
| 2027Q2E | $279M |
| 2027Q3E | $282M |
| 2027Q4E | $285M |
| 2028Q1E | $288M |
| 2028Q2E | $291M |
| 2028Q3E | $294M |
| 2028Q4E | $298M |
| 2029Q1E | $301M |
| 2029Q2E | $305M |
| 2029Q3E | $309M |
| 2029Q4E | $313M |
| 2030Q1E | $317M |
| 2030Q2E | $322M |
| 2030Q3E | $326M |
| 2030Q4E | $331M |
| 2031Q1E | $335M |
| 2031Q2E | $340M |
| 2031Q3E | $345M |
| 2031Q4E | $350M |
Assumptions & reasoning
- At 1.6% of revenue this line cannot move the valuation: even doubling its terminal growth changes fair value by cents. It is carried because Cisco reports it, not because it drives the answer.
- Margin 15% rising to 22% is assumed: a subscale software line still absorbing acquisitions, reaching software scale economics without a step-change in size. Nothing in the filings discloses this line's profitability.
- Every vertical margin here is assumed. Cisco discloses gross margin by geography (Americas 64.5%, EMEA 70.1%, APJC 67.3% in the basis quarter) and product-versus-services gross margin, and never operating profit, capex or headcount by product category.
- The two July quarters are derived, not printed: FY2024 Q4 and FY2025 Q4 are the fiscal-year column of the 10-K less the nine-month column of that year's Q3 10-Q, and both reconcile to the quarterly totals Cisco printed later, so they carry estimated: true.
- Capex intensity is the consolidated rate applied to every line: FY2026 property and equipment $1,410M on $63,325M of revenue is 2.2%, and Cisco publishes no capex by product category to split it with.
Services
Growth pathTechnical support, software maintenance and advanced services: $3,793M in the basis quarter and $15,030M for FY2026, against $15,046M in FY2025 — exactly flat while the company grew 12%. Services RPO is $23,298M, +6%, so the book is growing faster than recognised revenue. There is no ARR and no renewal rate, so this is a growth line anchored to a backlog observation rather than a subscription driver.
Latest: $4.63B (2031Q4E)
| Period | Value |
|---|---|
| 2024Q1 | $3.53B |
| 2024Q2 | $3.56B |
| 2024Q3 | $3.68B |
| 2024Q4 | $3.78B |
| 2025Q1 | $3.73B |
| 2025Q2 | $3.76B |
| 2025Q3 | $3.77B |
| 2025Q4 | $3.79B |
| 2026Q1 | $3.81B |
| 2026Q2 | $3.71B |
| 2026Q3 | $3.72B |
| 2026Q4 | $3.79B |
| 2027Q1E | $3.83B |
| 2027Q2E | $3.87B |
| 2027Q3E | $3.91B |
| 2027Q4E | $3.95B |
| 2028Q1E | $3.99B |
| 2028Q2E | $4.03B |
| 2028Q3E | $4.07B |
| 2028Q4E | $4.11B |
| 2029Q1E | $4.15B |
| 2029Q2E | $4.19B |
| 2029Q3E | $4.23B |
| 2029Q4E | $4.27B |
| 2030Q1E | $4.32B |
| 2030Q2E | $4.36B |
| 2030Q3E | $4.40B |
| 2030Q4E | $4.45B |
| 2031Q1E | $4.49B |
| 2031Q2E | $4.54B |
| 2031Q3E | $4.58B |
| 2031Q4E | $4.63B |
Assumptions & reasoning
- The single largest judgement in this model. Services was flat to the dollar in FY2026 while its RPO grew 6%, and the release does not say whether that is recognition timing or price erosion in support renewals. The base takes a partial catch-up at 4% a year; the bear case takes none.
- Half of the recurring base sits here and it contributed nothing to a +12% year, which is why hardware mix, not services, is what moves the margin line in every scenario below.
- Margin 40% flat is assumed from non-GAAP services gross margin of 71.2% less consolidated operating expense. It is the most stable line Cisco has and no visible margin lever attaches to it.
- Every vertical margin here is assumed. Cisco discloses gross margin by geography (Americas 64.5%, EMEA 70.1%, APJC 67.3% in the basis quarter) and product-versus-services gross margin, and never operating profit, capex or headcount by product category.
- The two July quarters are derived, not printed: FY2024 Q4 and FY2025 Q4 are the fiscal-year column of the 10-K less the nine-month column of that year's Q3 10-Q, and both reconcile to the quarterly totals Cisco printed later, so they carry estimated: true.
- Capex intensity is the consolidated rate applied to every line: FY2026 property and equipment $1,410M on $63,325M of revenue is 2.2%, and Cisco publishes no capex by product category to split it with.
Where each case comes from
Supercycle case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Supercycle column is what happens if they are taken at face value.
Cisco FY2026 Q4 results, 8-K Exhibit 99.1, 12 August 2026
- Aug 12, 2026 We believe the accelerating adoption of agentic AI is fueling a networking super cycle, and we are very early in this transition.
- Aug 12, 2026 Networking product orders grew 40% year over year in Q4, marking the eighth consecutive quarter of double-digit growth.
- Aug 12, 2026 Delivered approximately $4 billion of AI infrastructure revenue in FY 2026, with $7.5 billion expected in FY 2027.
- Aug 12, 2026 FY 2027 Revenue $72.2 billion - $73.4 billion; Non-GAAP EPS $5.05 - $5.11.
Reuters, carrying the LSEG consensus, 12 August 2026
From cash flow to fair value
| Present value of free cash flow, 20 quarters | $84.69B |
| Terminal-year revenue | $88.98B |
| Terminal-year EBITDA | $29.90B |
| Exit multiple, on revenue | 4.5x |
| Terminal value | $400.42B |
| Discounted at 8.5% a year, terminal value becomes | $266.30B |
| Enterprise value | $350.99B |
| Net cash | -$13.62B |
| Equity value | $337.37B |
| Shares | 3.94B |
| Fair value per share | $85.60 |
| Against the current price of $112.15 | -24% |
4.5x terminal-year revenue. Cisco trades at 7.17x FY2026 sales today — EV $456.5bn on a $442.9bn market cap and $13.6bn of net debt, 24.4x EV/EBITDA and 33.4x trailing earnings — after a 52-week run from $66.13 to $130.37. That is roughly double the multiple it carried through its flat years, and the exit is deliberately a de-rate toward what a mature networking incumbent earns once it is no longer priced on an order book: 4.5x sales is about 13x the terminal EBITDA this model projects, against 16x if the AI mix holds and 24.4x today. Arista is the pure-play comparable at 23.0x sales and 52.3x EBITDA; Cisco is already carrying an AI multiple on a business where AI was about 6% of FY2026 revenue. Move the exit multiple before anything else — it is worth more than any growth assumption here. The discount rate is 8.5%, an investment-grade mega-cap cost of capital on a levered balance sheet.
Read the other way round: at $112.15 the market is paying 6.3x terminal-year revenue, holding every other assumption on this page fixed. That is the number to argue about.
The projected path
| Quarter | Networking | Security | Collaboration | Observability | Services | Revenue | YoY | EBITDA | Capex | FCF | R40 | PV of FCF |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2027 Q1E | $10.33B | $2.26B | $1.17B | $277M | $3.83B | $17.87B | +20% | $6.20B | $393M | $4.73B | +47 | $4.64B |
| 2027 Q2E | $10.61B | $2.29B | $1.18B | $279M | $3.87B | $18.23B | +19% | $6.30B | $401M | $4.81B | +45 | $4.62B |
| 2027 Q3E | $10.80B | $2.33B | $1.18B | $282M | $3.91B | $18.50B | +17% | $6.38B | $407M | $4.86B | +43 | $4.58B |
| 2027 Q4E | $10.95B | $2.36B | $1.19B | $285M | $3.95B | $18.74B | +9% | $6.44B | $412M | $4.91B | +35 | $4.53B |
| 2028 Q1E | $11.10B | $2.40B | $1.20B | $288M | $3.99B | $18.97B | +6% | $6.50B | $417M | $4.96B | +32 | $4.48B |
| 2028 Q2E | $11.24B | $2.43B | $1.20B | $291M | $4.03B | $19.19B | +5% | $6.56B | $422M | $5.00B | +31 | $4.43B |
| 2028 Q3E | $11.38B | $2.47B | $1.21B | $294M | $4.07B | $19.42B | +5% | $6.62B | $427M | $5.05B | +31 | $4.38B |
| 2028 Q4E | $11.52B | $2.51B | $1.21B | $298M | $4.11B | $19.65B | +5% | $6.69B | $432M | $5.10B | +31 | $4.33B |
| 2029 Q1E | $11.67B | $2.55B | $1.22B | $301M | $4.15B | $19.88B | +5% | $6.76B | $437M | $5.15B | +31 | $4.29B |
| 2029 Q2E | $11.81B | $2.58B | $1.23B | $305M | $4.19B | $20.12B | +5% | $6.82B | $443M | $5.20B | +31 | $4.24B |
| 2029 Q3E | $11.96B | $2.62B | $1.23B | $309M | $4.23B | $20.36B | +5% | $6.89B | $448M | $5.25B | +31 | $4.20B |
| 2029 Q4E | $12.11B | $2.66B | $1.24B | $313M | $4.27B | $20.60B | +5% | $6.97B | $453M | $5.31B | +31 | $4.16B |
| 2030 Q1E | $12.26B | $2.70B | $1.25B | $317M | $4.32B | $20.84B | +5% | $7.04B | $459M | $5.36B | +31 | $4.11B |
| 2030 Q2E | $12.42B | $2.74B | $1.25B | $322M | $4.36B | $21.09B | +5% | $7.12B | $464M | $5.42B | +31 | $4.07B |
| 2030 Q3E | $12.57B | $2.78B | $1.26B | $326M | $4.40B | $21.34B | +5% | $7.19B | $470M | $5.48B | +31 | $4.04B |
| 2030 Q4E | $12.73B | $2.82B | $1.26B | $331M | $4.45B | $21.60B | +5% | $7.27B | $475M | $5.54B | +30 | $4.00B |
| 2031 Q1E | $12.89B | $2.87B | $1.27B | $335M | $4.49B | $21.85B | +5% | $7.35B | $481M | $5.60B | +30 | $3.96B |
| 2031 Q2E | $13.05B | $2.91B | $1.28B | $340M | $4.54B | $22.11B | +5% | $7.43B | $486M | $5.66B | +30 | $3.92B |
| 2031 Q3E | $13.21B | $2.95B | $1.28B | $345M | $4.58B | $22.38B | +5% | $7.52B | $492M | $5.73B | +30 | $3.89B |
| 2031 Q4E | $13.38B | $3.00B | $1.29B | $350M | $4.63B | $22.64B | +5% | $7.60B | $498M | $5.79B | +30 | $3.85B |
Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.
Model revisions
Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.
| Date | Changed | Fair value then | Note |
|---|---|---|---|
| 2026-08-27 | all | $85.60 | Initial model. Five verticals on Cisco's disclosed groups of similar products and services, basis FY2026 Q4 at $17,252M, FY2027 calibrated to the guided $72.2-73.4bn with Networking carrying the AI step-up and Services taking a partial RPO catch-up. Exit 4.5x terminal revenue against 7.17x today. |