Item 1. Financial Statements (Unaudited)

CISCO SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except par value)

(Unaudited)

			October 25, 2025						July 26, 2025
ASSETS
Current assets:
Cash and cash equivalents			$	8,400					$	8,346
Investments			7,336						7,764
Accounts receivable, net of allowance of $62 at October 25, 2025 and $69 at July 26, 2025			4,827						6,701
Inventories			3,395						3,164
Financing receivables, net			3,085						3,061
Other current assets			5,833						5,950
Total current assets			32,876						34,986
Property and equipment, net			2,248						2,113
Financing receivables, net			3,719						3,466
Goodwill			59,119						59,136
Purchased intangible assets, net			8,713						9,175
Deferred tax assets			7,314						7,356
Other assets			7,113						6,059
TOTAL ASSETS			$	121,102					$	122,291
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt			$	6,725					$	5,232
Accounts payable			2,418						2,528
Income taxes payable			2,471						1,857
Accrued compensation			3,064						3,611
Deferred revenue			15,801						16,416
Other current liabilities			4,972						5,420
Total current liabilities			35,451						35,064
Long-term debt			21,364						22,861
Income taxes payable			2,172						2,165
Deferred revenue			12,168						12,363
Other long-term liabilities			3,074						2,995
Total liabilities			74,229						75,448
Commitments and contingencies (Note 14)
Equity:
Cisco stockholders’ equity:
Preferred stock, $0.001 par value: 5 shares authorized; none issued and outstanding			—						—
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 3,938 and 3,960 shares issued and outstanding at October 25, 2025 and July 26, 2025, respectively			48,167						47,747
Retained earnings (Accumulated deficit)			(364)						50
Accumulated other comprehensive loss			(930)						(954)
Total equity			46,873						46,843
TOTAL LIABILITIES AND EQUITY			$	121,102					$	122,291

See Notes to Consolidated Financial Statements.

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per-share amounts)

(Unaudited)

			Three Months Ended
			October 25, 2025						October 26, 2024
REVENUE:
Product			$	11,077					$	10,114
Services			3,806						3,727
Total revenue			14,883						13,841
COST OF SALES:
Product			3,934						3,526
Services			1,204						1,194
Total cost of sales			5,138						4,720
GROSS MARGIN			9,745						9,121
OPERATING EXPENSES:
Research and development			2,400						2,286
Sales and marketing			2,871						2,752
General and administrative			733						795
Amortization of purchased intangible assets			231						265
Restructuring and other charges			147						665
Total operating expenses			6,382						6,763
OPERATING INCOME			3,363						2,358
Interest income			222						286
Interest expense			(350)						(418)
Other income (loss), net			156						41
Interest and other income (loss), net			28						(91)
INCOME BEFORE PROVISION FOR INCOME TAXES			3,391						2,267
Provision for (benefit from) income taxes			531						(444)
NET INCOME			$	2,860					$	2,711
Net income per share:
Basic			$	0.72					$	0.68
Diluted			$	0.72					$	0.68
Shares used in per-share calculation:
Basic			3,956						3,990
Diluted			3,993						4,013

See Notes to Consolidated Financial Statements.

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(Unaudited)

			Three Months Ended
			October 25, 2025						October 26, 2024
Net income			$	2,860					$	2,711
Available-for-sale investments:
Change in net unrealized gains and losses, net of tax benefit (expense) of $(10) and $(17) for the first quarter of fiscal 2026 and 2025, respectively			38						54
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $(1) and $(6) for the first quarter of fiscal 2026 and 2025, respectively			3						19
			41						73
Cash flow hedging instruments:
Change in unrealized gains and losses, net of tax benefit (expense) of $(10) and $(2) for the first quarter of fiscal 2026 and 2025, respectively			32						7
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $2 for each of the first quarter of fiscal 2026 and 2025			(7)						(7)
			25						—
Net change in cumulative translation adjustment and actuarial gains and losses, net of tax benefit (expense) of $(1) and $0 for the first quarter of fiscal 2026 and 2025, respectively			(42)						(19)
Other comprehensive income			24						54
Comprehensive income			$	2,884					$	2,765

See Notes to Consolidated Financial Statements.

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

			Three Months Ended
			October 25, 2025						October 26, 2024
Cash flows from operating activities:
Net income			$	2,860					$	2,711
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other			606						789
Share-based compensation expense			1,055						827
Benefit from receivables			(3)						(1)
Deferred income taxes			25						(281)
(Gains) losses on divestitures, investments and other, net			(178)						(60)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable			1,857						2,227
Inventories			(234)						229
Financing receivables			(312)						173
Other assets			(592)						(190)
Accounts payable			(108)						(269)
Income taxes, net			(128)						(806)
Accrued compensation			(539)						(754)
Deferred revenue			(723)						(971)
Other liabilities			(374)						37
Net cash provided by operating activities			3,212						3,661
Cash flows from investing activities:
Purchases of investments			(1,984)						(1,775)
Proceeds from sales of investments			1,269						1,490
Proceeds from maturities of investments			1,222						1,164
Acquisitions, net of cash and cash equivalents acquired and divestitures			(7)						(217)
Purchases of investments in privately held companies			(18)						(42)
Return of investments in privately held companies			19						77
Acquisition of property and equipment			(323)						(217)
Other			(22)						(1)
Net cash provided by investing activities			156						479
Cash flows from financing activities:
Repurchases of common stock—repurchase program			(1,992)						(2,003)
Shares repurchased for tax withholdings on vesting of restricted stock units			(284)						(165)
Short-term borrowings, original maturities of 90 days or less, net			1,260						68
Issuances of debt			1,559						5,732
Repayments of debt			(2,788)						(4,821)
Dividends paid			(1,617)						(1,592)
Other			(1)						(3)
Net cash used in financing activities			(3,863)						(2,784)
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents			(14)						10
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents			(509)						1,366
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period			8,910						8,842
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period			$	8,401					$	10,208
Supplemental cash flow information:
Cash paid for interest			$	616					$	545
Cash paid for income taxes, net			$	634					$	643

See Notes to Consolidated Financial Statements.

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except per-share amounts)

(Unaudited)

Three Months Ended October 25, 2025			Shares of Common Stock						Common Stock and Additional Paid-In Capital						Retained Earnings (Accumulated Deficit)						Accumulated Other Comprehensive Loss						Total Equity
Balance at July 26, 2025			3,960						$	47,747					$	50					$	(954)					$	46,843
Net income															2,860												2,860
Other comprehensive income (loss)																					24						24
Issuance of common stock			12						—																		—
Repurchase of common stock			(29)						(354)						(1,647)												(2,001)
Shares repurchased for tax withholdings on vesting of restricted stock units and other			(5)						(282)																		(282)
Cash dividends declared ($0.41 per common share)															(1,617)												(1,617)
Share-based compensation									1,055																		1,055
Other									1						(10)												(9)
Balance at October 25, 2025			3,938						$	48,167					$	(364)					$	(930)					$	46,873

Three Months Ended October 26, 2024			Shares of Common Stock						Common Stock and Additional Paid-In Capital						Retained Earnings						Accumulated Other Comprehensive Loss						Total Equity
Balance at July 27, 2024			4,007						$	45,800					$	1,087					$	(1,430)					$	45,457
Net income															2,711												2,711
Other comprehensive income (loss)																					54						54
Issuance of common stock			11						—																		—
Repurchase of common stock			(40)						(462)						(1,541)												(2,003)
Shares repurchased for tax withholdings on vesting of restricted stock units and other			(4)						(174)																		(174)
Cash dividends declared ($0.40 per common share)															(1,592)												(1,592)
Share-based compensation									827																		827
Other									—						(3)												(3)
Balance at October 26, 2024			3,974						$	45,991					$	662					$	(1,376)					$	45,277

See Notes to Consolidated Financial Statements.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

**1.**Organization and Basis of Presentation

The fiscal year for Cisco Systems, Inc. (the “Company,” “Cisco,” “we,” “us,” or “our”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2026 and fiscal 2025 are each 52-week fiscal years. The Consolidated Financial Statements include our accounts and those of our subsidiaries and those of our investments consolidated under the voting interest method. All intercompany accounts and transactions have been eliminated. We conduct business globally and are primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).

We have prepared the accompanying financial data as of October 25, 2025 and for the first quarter of fiscal 2026 and 2025, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. The July 26, 2025 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 26, 2025.

In the opinion of management, all normal recurring adjustments necessary to state fairly the consolidated balance sheet as of October 25, 2025, the results of operations, the statements of comprehensive income, the statements of cash flows and the statements of equity for the first quarter of fiscal 2026 and 2025, as applicable, have been made. The results of operations for the first quarter of fiscal 2026 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

**2.**Recent Accounting Pronouncements

**(a)**Recent Accounting Standards or Updates Not Yet Effective

Improvements on Income Tax Disclosures In December 2023, the FASB issued an accounting standard update expanding the requirements for disclosure of disaggregated information about the effective tax rate reconciliation and income taxes paid. The accounting standard update will be effective for our fiscal 2026 Form 10-K. We are currently evaluating the impact of this accounting standard update on our income tax disclosures.

Disaggregation of Income Statement Expenses In November 2024, the FASB issued an accounting standard update expanding the disclosure requirements about specific expense categories, primarily through disaggregated information on income statement line items. The accounting standard update will be effective for our fiscal 2028 Form 10-K, and early adoption is permitted. We are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.

Targeted Improvements to the Accounting for Internal-Use Software In September 2025, the FASB issued an accounting standard update to modernize the accounting for internal-use software costs and clarify the criteria for capitalization. The accounting standard update will be effective for our interim and annual reporting periods of fiscal 2029, with early adoption permitted. We are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.

**3.**Revenue

We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers. Revenue from subscription offers includes revenue recognized over time as well as upfront.

We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment, electronic delivery (or when the software is available for download by the customer), or once title and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements do not include the right for the customer to take possession of the software during the term, and therefore have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes. An allowance for future sales returns is established based on historical trends in product return rates and the related provision is recorded as a reduction to revenue.

Significant Judgments

Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.

We assess relevant contractual terms in our customer contracts to determine the transaction price. We apply judgment in identifying contractual terms and determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes potential contractual penalties and various rebate, cooperative marketing and other incentive programs that we offer to our distributors, channel partners and direct sale customers. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers’ right of return in determining the transaction price, where applicable.

We assess certain software licenses, such as for security software, that contain critical updates or upgrades which customers can download throughout the contract term. Without these updates or upgrades, the functionality of the software would diminish over a relatively short time period. These updates or upgrades provide the customer the full functionality of the purchased security software licenses and are required to maintain the security license’s utility as the risks and threats in the environment are rapidly changing. In these circumstances, the revenue from these software arrangements is recognized as a single performance obligation satisfied over the contract term.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

**(a)**Disaggregation of Revenue

We disaggregate our revenue into groups of similar products and services that depict the nature, amount, and timing of revenue and cash flows for our various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies differ for each of our product categories, resulting in different economic risk profiles for each category. The following table presents this disaggregation of revenue (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Product revenue:
Networking			$	7,768					$	6,753
Security			1,980						2,017
Collaboration			1,055						1,085
Observability			274						258
Total Product			11,077						10,114
Services			3,806						3,727
Total revenue			$	14,883					$	13,841

Amounts may not sum due to rounding.

Networking consists of our core networking technologies of switching, routing, wireless, and servers. These technologies consist of both hardware and software offerings, including software licenses and SaaS. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Security consists of our Network Security, Identity and Access Management, Secure Access Service Edge (SASE) and Threat Intelligence, Detection, and Response offerings. These products consist of both hardware and software offerings, including software licenses and SaaS. Updates and upgrades for the term software licenses are critical for our software to perform its intended commercial purpose because of the continuous need for our software to secure our customers’ network environments against frequent threats. Therefore, security software licenses are generally represented by a single distinct performance obligation with revenue recognized ratably over the contract term. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Collaboration consists of our Webex Suite, Collaboration Devices, Contact Center and Communication Platform as a Service (CPaaS) offerings. These products consist primarily of software offerings, including software licenses and SaaS, as well as hardware. Our perpetual software and hardware in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Observability consists of our network assurance, monitoring and analytics and observability suite offerings. These products consist primarily of software offerings, including software licenses and SaaS. Our perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

In addition to our product offerings, we provide a broad range of service and support options for our customers, including technical support services and advanced services. Technical support services represent the majority of these offerings which are distinct performance obligations that are satisfied over time with revenue recognized ratably over the contract term. Advanced services are distinct performance obligations that are satisfied over time with revenue recognized as services are delivered.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The sales arrangements as discussed above are typically made pursuant to customer purchase orders based on master purchase or partner agreements. Cash is received based on our standard payment terms which is typically 30 days. We provide financing arrangements to customers for our hardware, software and service offerings. Refer to Note 9 for additional information. For these arrangements, cash is typically received over time.

Subscription revenue includes revenue recognized from our term software licenses, security software licenses, SaaS, and associated service arrangements. Our subscription revenue is recorded in product and services revenue in our Consolidated Statements of Operations as follows (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Product			$	4,500					$	4,419
Services			3,500						3,425
Total			$	8,000					$	7,844

The majority of our product subscription revenue is recognized over time and the remainder is recognized upfront. Substantially all of our services subscription revenue is recognized over time based on the contract term.

**(b)**Contract Balances

Accounts Receivable

Accounts receivable, net was $4.8 billion as of October 25, 2025 compared to $6.7 billion as of July 26, 2025, as reported on the Consolidated Balance Sheets.

The allowances for credit loss for our accounts receivable are summarized as follows (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Allowance for credit loss at beginning of period			$	69					$	87
Provisions			(4)						—
Write-offs, net of recoveries			(3)						(9)
Allowance for credit loss at end of period			$	62					$	78

Contract Assets and Liabilities

Gross contract assets by our internal risk ratings are summarized as follows (in millions):

			October 25, 2025						July 26, 2025
1 to 4			$	1,379					$	1,358
5 to 6			2,001						1,868
7 and Higher			75						73
Total			$	3,455					$	3,299

Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to software and service arrangements where transfer of control has occurred but we have not yet invoiced. Our contract assets for these unbilled receivables, net of allowances, were $3.4 billion as of October 25, 2025 and $3.2 billion as of July 26, 2025, of which $1.8 billion and $1.7 billion, respectively, were included in other current assets, with remaining balances included in other assets.

Contract liabilities consist of deferred revenue. Deferred revenue was $28.0 billion as of October 25, 2025 compared to $28.8 billion as of July 26, 2025. We recognized approximately $5.4 billion of revenue during the first quarter of fiscal 2026 that was included in the deferred revenue balance at July 26, 2025.

**(c)**Capitalized Contract Acquisition Costs

We capitalize direct and incremental costs incurred to acquire contracts, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. We incur these costs in connection with both initial contracts and renewals. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

the period of benefit. Capitalized contract acquisition costs were $1.5 billion as of each of October 25, 2025 and July 26, 2025, and were included in other current assets and other assets. The amortization expense associated with these costs was $234 million and $208 million for the first quarter of fiscal 2026 and 2025, respectively, and was included in sales and marketing expenses.

**4.**Acquisitions

Allocation of the total purchase consideration for an acquisition we completed during the first quarter of fiscal 2026 is summarized as follows (in millions):

			Purchase Consideration						Net Tangible Assets Acquired (Liabilities Assumed)						Purchased Intangible Assets						Goodwill
Allocation of purchase consideration			$	10					$	1					$	4					$	5

The total purchase consideration related to this acquisition consisted primarily of cash consideration. Total transaction costs related to acquisition activities were $3 million and $9 million for the first quarter of fiscal 2026 and 2025, respectively. These transaction costs were expensed as incurred in general and administrative expenses (“G&A”) in the Consolidated Statements of Operations.

The purchase price allocation for acquisitions completed during recent periods is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information that existed as of the acquisition date but is currently unknown to us may become known during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date.

The goodwill generated from the acquisition completed during the first quarter of fiscal 2026 is primarily related to expected synergies. The goodwill is generally not deductible for income tax purposes.

The Consolidated Financial Statements include the operating results of each acquisition from the date of acquisition. Pro forma results of operations and the revenue and net income subsequent to the acquisition date for the acquisition completed during the first quarter of fiscal 2026 have not been presented because the effects of the acquisition was not material to our financial results.

Compensation Expense Related to Acquisitions

In connection with our acquisitions, we have agreed to pay certain additional amounts contingent upon the continued employment with Cisco of certain employees of the acquired entities.

The following table summarizes the compensation expense related to acquisitions (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Compensation expense related to acquisitions			$	110					$	297

As of October 25, 2025, we estimated that future cash compensation expense of up to $502 million may be required to be recognized pursuant to applicable acquisition agreements.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

**5.**Goodwill and Purchased Intangible Assets

**(a)**Goodwill

The following table presents the goodwill allocated to our reportable segments as of October 25, 2025 and changes to goodwill during the first quarter of fiscal 2026 (in millions):

			Balance at July 26, 2025						Acquisitions, net of Divestitures						Foreign Currency Translation and Other						Balance at October 25, 2025
Americas			$	36,468					$	3					$	(14)					$	36,457
EMEA			14,397						1						(5)						14,393
APJC			8,271						1						(3)						8,269
Total			$	59,136					$	5					$	(22)					$	59,119

**(b)**Purchased Intangible Assets

The following table presents details of our intangible assets acquired through acquisitions completed during the first quarter of fiscal 2026 (in millions, except years):

			FINITE LIVES																																				INDEFINITE LIVES						TOTAL
			CUSTOMER RELATED												TECHNOLOGY												TRADE NAME												IPR&D
			Weighted- Average Useful Life (in Years)						Amount						Weighted- Average Useful Life (in Years)						Amount						Weighted- Average Useful Life (in Years)						Amount						Amount						Amount
Total			—						$	—					3.0						$	4					—						$	—					$	—					$	4

The following tables present details of our purchased intangible assets with finite lives (in millions):

October 25, 2025						Gross						Accumulated Amortization						Net
Customer related						$	6,340					$	(1,488)					$	4,852
Technology						5,209						(1,791)						3,418
Trade name						526						(83)						443
Total						$	12,075					$	(3,362)					$	8,713

July 26, 2025						Gross						Accumulated Amortization						Net
Customer related						$	6,341					$	(1,268)					$	5,073
Technology						5,254						(1,606)						3,648
Trade name						526						(72)						454
Total						$	12,121					$	(2,946)					$	9,175

Purchased intangible assets include intangible assets acquired through acquisitions as well as through direct purchases or licenses.

The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Amortization of purchased intangible assets:
Cost of sales			$	240					$	325
Operating expenses			231						265
Total			$	471					$	590

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The estimated future amortization expense of purchased intangible assets with finite lives as of October 25, 2025 is as follows (in millions):

Fiscal Year			Amount
2026 (remaining nine months)			$	1,359
2027			1,481
2028			1,403
2029			1,277
2030			993
Thereafter			2,200
Total			$	8,713

**6.**Restructuring and Other Charges

In the first quarter of fiscal 2025, we announced a restructuring plan (the “Fiscal 2025 Plan”), in order to allow us to invest in key growth opportunities and drive more efficiencies in our business, of which approximately 7% of our global workforce would be impacted with estimated pre-tax charges of up to $1 billion. In connection with the Fiscal 2025 Plan, we incurred charges of $147 million in the first quarter of fiscal 2026, and the plan is expected to be completed in the second quarter of fiscal 2026. These aggregate pre-tax charges are primarily cash-based and consist of severance and other one-time termination benefits, and other costs.

The following table summarizes the activities related to our restructuring liability, which was included in other current liabilities on our Consolidated Balance Sheets (in millions):

						FISCAL 2025 PLAN
						Employee Severance						Other						Total
Liability as of July 26, 2025						$	66					$	46					$	112
Charges						113						34						147
Cash payments						(61)						(21)						(82)
Non-cash and other						(1)						(35)						(36)
Liability as of October 25, 2025						$	117					$	24					$	141

**7.**Balance Sheet and Other Details

The following tables provide details of selected balance sheet and other items (in millions, except percentages):

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

						October 25, 2025						July 26, 2025
Cash and cash equivalents						$	8,400					$	8,346
Restricted cash and restricted cash equivalents included in other current assets						1						564
Total						$	8,401					$	8,910

Our restricted cash and restricted cash equivalents are funds primarily related to contractual obligations with suppliers.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Inventories

						October 25, 2025						July 26, 2025
Raw materials						$	1,758					$	1,744
Work in process						411						261
Finished goods						985						933
Service-related spares						236						220
Demonstration systems						5						6
Total						$	3,395					$	3,164

Property and Equipment, Net

						October 25, 2025						July 26, 2025
Gross property and equipment:
Land, buildings, and building and leasehold improvements						$	4,062					$	4,045
Production, engineering, computer and other equipment and related software						5,232						5,178
Operating lease assets						49						51
Furniture, fixtures and other						318						316
Total gross property and equipment						9,661						9,590
Less: accumulated depreciation and amortization						(7,413)						(7,477)
Total						$	2,248					$	2,113

Remaining Performance Obligations (RPO)

						October 25, 2025						July 26, 2025
Product						$	21,904					$	21,572
Services						20,969						21,961
Total						$	42,873					$	43,533
Short-term RPO						$	20,971					$	21,723
Long-term RPO						21,902						21,810
Total						$	42,873					$	43,533
Amount to be recognized as revenue over the next 12 months						49		%				50		%
Deferred revenue						$	27,969					$	28,779
Unbilled contract revenue						14,904						14,754
Total						$	42,873					$	43,533

Unbilled contract revenue represents noncancelable contracts for which we have not invoiced, have an obligation to perform, and revenue has not yet been recognized in the financial statements.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Deferred Revenue

						October 25, 2025						July 26, 2025
Product						$	13,252					$	13,490
Services						14,717						15,289
Total						$	27,969					$	28,779
Reported as:
Current						$	15,801					$	16,416
Noncurrent						12,168						12,363
Total						$	27,969					$	28,779

Transition Tax Payable/Receivable

Our income tax payable and receivable associated with the one-time U.S. transition tax on accumulated earnings for foreign subsidiaries as a result of the Tax Cuts and Jobs Act are as follows:

						October 25, 2025						July 26, 2025
Current income taxes payable						$	2,273					$	1,595
Less: Noncurrent income tax receivable included in other assets						(678)						—
Net						$	1,595					$	1,595

The income tax receivable as of October 25, 2025 reflects the transition tax benefit of the U.S. Tax Court opinion in Varian Medical Systems, Inc. v. Commissioner. See Note 18.

**8.**Leases

**(a)**Lessee Arrangements

The following table presents our operating lease balances (in millions):

			Balance Sheet Line Item						October 25, 2025						July 26, 2025
Operating lease right-of-use assets			Other assets						$	1,303					$	1,301
Operating lease liabilities			Other current liabilities						$	403					$	375
Operating lease liabilities			Other long-term liabilities						1,145						1,175
Total operating lease liabilities									$	1,548					$	1,550

The components of our lease expenses were as follows (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Operating lease expense			$	131					$	114
Short-term lease expense			25						18
Variable lease expense			72						46
Total lease expense			$	228					$	178

Supplemental information related to our operating leases is as follows (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Cash paid for amounts included in the measurement of lease liabilities — operating cash flows			$	131					$	114
Right-of-use assets obtained in exchange for operating leases liabilities			$	123					$	127

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The weighted-average lease term was 5.3 years and 5.7 years as of October 25, 2025 and July 26, 2025, respectively. The weighted-average discount rate was 3.9% and 4.1% as of October 25, 2025 and July 26, 2025, respectively.

The maturities of our operating leases (undiscounted) as of October 25, 2025 are as follows (in millions):

Fiscal Year			Amount
2026 (remaining nine months)			$	360
2027			346
2028			262
2029			209
2030			183
Thereafter			374
Total lease payments			1,734
Less: interest			(186)
Total			$	1,548

**(b)**Lessor Arrangements

Our leases primarily represent sales-type leases with terms of four years on average. We provide leasing of our equipment and complementary third-party products primarily through our channel partners and distributors, for which the income arising from these leases is recognized through interest income. Interest income was $16 million and $17 million for the first quarter of fiscal 2026 and 2025, respectively, and was included in interest income in the Consolidated Statement of Operations. The net investment of our lease receivables is measured at the commencement date as the gross lease receivable, residual value less unearned income and allowance for credit loss. For additional information, see Note 9.

Future minimum lease payments on our lease receivables as of October 25, 2025 are summarized as follows (in millions):

Fiscal Year			Amount
2026 (remaining nine months)			$	303
2027			346
2028			171
2029			180
2030			60
Total			1,060
Less: Present value of lease payments			(962)
Unearned income			$	98

Actual cash collections may differ from the contractual maturities due to early customer buyouts, refinancings, or defaults.

**9.**Financing Receivables

**(a)**Financing Receivables

Financing receivables primarily consist of loan receivables and lease receivables. Loan receivables represent financing arrangements related to the sale of our hardware, software, and services (including technical support and advanced services), and also may include additional funding for other costs associated with network installation and integration of our products and services. Loan receivables have terms of one year to three years on average. Lease receivables represent sales-type leases resulting from the sale of Cisco’s and complementary third-party products and are typically collateralized by a security interest in the underlying assets. Lease receivables consist of arrangements with terms of four years on average.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

A summary of our financing receivables is presented as follows (in millions):

October 25, 2025			Loan Receivables						Lease Receivables						Total
Gross			$	5,826					$	1,060					$	6,886
Residual value			—						67						67
Unearned income			—						(98)						(98)
Allowance for credit loss			(37)						(14)						(51)
Total, net			$	5,789					$	1,015					$	6,804
Reported as:
Current			$	2,714					$	371					$	3,085
Noncurrent			3,075						644						3,719
Total, net			$	5,789					$	1,015					$	6,804

July 26, 2025			Loan Receivables						Lease Receivables						Total
Gross			$	5,628					$	982					$	6,610
Residual value			—						66						66
Unearned income			—						(99)						(99)
Allowance for credit loss			(37)						(13)						(50)
Total, net			$	5,591					$	936					$	6,527
Reported as:
Current			$	2,715					$	346					$	3,061
Noncurrent			2,876						590						3,466
Total, net			$	5,591					$	936					$	6,527

**(b)**Credit Quality of Financing Receivables

The tables below present our gross financing receivables, excluding residual value, less unearned income, categorized by our internal credit risk rating by period of origination (in millions):

October 25, 2025									Fiscal Year																								Three Months Ended
Internal Credit Risk Rating			Prior						July 30, 2022						July 29, 2023						July 27, 2024						July 26, 2025						October 25, 2025						Total
Loan Receivables:
1 to 4			$	58					$	186					$	306					$	1,003					$	1,361					$	662					$	3,576
5 to 6			38						36						131						466						1,137						400						2,208
7 and Higher			—						6						7						4						22						3						42
Total Loan Receivables			$	96					$	228					$	444					$	1,473					$	2,520					$	1,065					$	5,826
Lease Receivables:
1 to 4			$	6					$	21					$	110					$	194					$	218					$	35					$	584
5 to 6			4						20						70						117						103						50						364
7 and Higher			—						1						2						6						2						3						14
Total Lease Receivables			$	10					$	42					$	182					$	317					$	323					$	88					$	962
Total			$	106					$	270					$	626					$	1,790					$	2,843					$	1,153					$	6,788

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

July 26, 2025									Fiscal Year
Internal Credit Risk Rating			Prior						July 31, 2021						July 30, 2022						July 29, 2023						July 27, 2024						July 26, 2025						Total
Loan Receivables:
1 to 4			$	2					$	83					$	236					$	371					$	1,258					$	1,556					$	3,506
5 to 6			2						56						53						167						561						1,248						2,087
7 and Higher			—						—						6						9						4						16						35
Total Loan Receivables			$	4					$	139					$	295					$	547					$	1,823					$	2,820					$	5,628
Lease Receivables:
1 to 4			$	—					$	9					$	23					$	112					$	187					$	207					$	538
5 to 6			—						6						25						77						120						103						331
7 and Higher			—						—						1						3						8						2						14
Total Lease Receivables			$	—					$	15					$	49					$	192					$	315					$	312					$	883
Total			$	4					$	154					$	344					$	739					$	2,138					$	3,132					$	6,511

The following tables present the aging analysis of gross receivables as of October 25, 2025 and July 26, 2025 (in millions):

			DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
October 25, 2025			31-60						61-90						91+						Total Past Due						Current						Total						120+ Still Accruing						Nonaccrual Financing Receivables						Impaired Financing Receivables
Loan receivables			$	46					$	27					$	31					$	104					$	5,722					$	5,826					$	8					$	3					$	3
Lease receivables			12						2						16						30						932						962						5						1						1
Total			$	58					$	29					$	47					$	134					$	6,654					$	6,788					$	13					$	4					$	4

			DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
July 26, 2025			31-60						61-90						91+						Total Past Due						Current						Total						120+ Still Accruing						Nonaccrual Financing Receivables						Impaired Financing Receivables
Loan receivables			$	18					$	18					$	16					$	52					$	5,576					$	5,628					$	4					$	5					$	5
Lease receivables			7						3						6						16						867						883						4						1						1
Total			$	25					$	21					$	22					$	68					$	6,443					$	6,511					$	8					$	6					$	6

Past due financing receivables are those that are 31 days or more past due according to their contractual payment terms. The data in the preceding tables is presented by contract, and the aging classification of each contract is based on the oldest outstanding receivable, and therefore past due amounts also include unbilled and current receivables within the same contract.

**(c)**Allowance for Credit Loss Rollforward

The allowances for credit loss and the related financing receivables are summarized as follows (in millions):

Three Months Ended October 25, 2025			CREDIT LOSS ALLOWANCES
			Loan Receivables						Lease Receivables						Total
Allowance for credit loss as of July 26, 2025			$	37					$	13					$	50
Provisions (benefits)			—						1						1
Allowance for credit loss as of October 25, 2025			$	37					$	14					$	51

Three Months Ended October 26, 2024			CREDIT LOSS ALLOWANCES
			Loan Receivables						Lease Receivables						Total
Allowance for credit loss as of July 27, 2024			$	50					$	15					$	65
Provisions (benefits)			(1)						—						(1)
Allowance for credit loss as of October 26, 2024			$	49					$	15					$	64

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

**10.**Investments

**(a)**Summary of Available-for-Sale Debt Investments

The following tables summarize our available-for-sale debt investments (in millions):

October 25, 2025			Amortized Cost						Gross Unrealized Gains						Gross Unrealized and Credit Losses						Fair Value
U.S. government securities			$	1,637					$	7					$	(4)					$	1,640
U.S. government agency securities			49						—						—						49
Non-U.S. government and agency securities			409						1						—						410
Corporate debt securities			2,979						14						(44)						2,949
Mortgage- and asset-backed securities			270						—						(16)						254
Commercial paper			884						—						—						884
Certificates of deposit			756						—						—						756
Total			$	6,984					$	22					$	(64)					$	6,942

July 26, 2025			Amortized Cost						Gross Unrealized Gains						Gross Unrealized and Credit Losses						Fair Value
U.S. government securities			$	1,971					$	2					$	(12)					$	1,961
U.S. government agency securities			67						—						—						67
Non-U.S. government and agency securities			458						—						—						458
Corporate debt securities			3,138						13						(61)						3,090
Mortgage- and asset-backed securities			320						—						(34)						286
Commercial paper			950						—						—						950
Certificates of deposit			569						—						—						569
Total			$	7,473					$	15					$	(107)					$	7,381

The following table presents the gross realized gains and gross realized losses related to available-for-sale debt investments (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Gross realized gains			$	10					$	8
Gross realized losses			(14)						(33)
Total			$	(4)					$	(25)

The following tables present the breakdown of the available-for-sale debt investments with gross unrealized losses and the duration that those losses had been unrealized at October 25, 2025 and July 26, 2025 (in millions):

			UNREALIZED LOSSES LESS THAN 12 MONTHS												UNREALIZED LOSSES 12 MONTHS OR GREATER												TOTAL
October 25, 2025			Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
U.S. government securities			$	—					$	—					$	436					$	(4)					$	436					$	(4)
U.S. government agency securities			5						—						—						—						5						—
Corporate debt securities			63						—						1,583						(18)						1,646						(18)
Mortgage- and asset-backed securities			4						—						160						(16)						164						(16)
Commercial paper			10						—						—						—						10						—
Total			$	82					$	—					$	2,179					$	(38)					$	2,261					$	(38)

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

			UNREALIZED LOSSES LESS THAN 12 MONTHS												UNREALIZED LOSSES 12 MONTHS OR GREATER												TOTAL
July 26, 2025			Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
U.S. government securities			$	1,076					$	(6)					$	302					$	(6)					$	1,378					$	(12)
U.S. government agency securities			8						—						21						—						29						—
Non-U.S. government and agency securities			292						—						—						—						292						—
Corporate debt securities			106						—						1,800						(35)						1,906						(35)
Mortgage- and asset-backed securities			5						—						279						(34)						284						(34)
Commercial paper			30						—						—						—						30						—
Total			$	1,517					$	(6)					$	2,402					$	(75)					$	3,919					$	(81)

The following table summarizes the maturities of our available-for-sale debt investments as of October 25, 2025 (in millions):

			Amortized Cost						Fair Value
Within 1 year			$	3,925					$	3,883
After 1 year through 5 years			2,768						2,784
After 5 years through 10 years			21						21
Mortgage- and asset-backed securities with no single maturity			270						254
Total			$	6,984					$	6,942

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.

**(b)**Marketable Equity Securities

We held marketable equity securities of $394 million and $383 million as of October 25, 2025 and July 26, 2025, respectively. We recognized net unrealized gains of $30 million and $25 million during the first quarter of fiscal 2026 and fiscal 2025, respectively, on our marketable securities still held as of the reporting date.

**(c)**Investments in Privately Held Companies

The carrying value of our investments in privately held companies was $2.1 billion and $1.9 billion as of October 25, 2025 and July 26, 2025, respectively. As of October 25, 2025, we have total funding commitments of $0.5 billion related to privately held investments. The carrying value of these investments and the additional funding commitments, collectively, represent our maximum exposure related to privately held investments.

Investments in privately held companies measured using the measurement alternative had a carrying value of $0.7 billion and $0.6 billion as of October 25, 2025 and July 26, 2025, respectively. We have recorded cumulative adjustments to the carrying value of our investments in privately held companies measured using the measurement alternative as follows (in millions):

			October 25, 2025						July 26, 2025
Cumulative upward adjustments			$	277					$	195
Cumulative downward adjustments, including impairments			(595)						(597)
Net adjustments			$	(318)					$	(402)

We held equity interests in certain private equity funds of $0.7 billion as of each of October 25, 2025 and July 26, 2025, which are accounted for under the NAV practical expedient.

Of the total carrying value of our investments in privately held companies as of October 25, 2025, $0.8 billion of such investments are considered to be in variable interest entities which are unconsolidated.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Certain of our investments in privately held companies are required to be consolidated under the voting interest entity model. The noncontrolling interest attributed to these investments was $206 million and $162 million as of October 25, 2025 and July 26, 2025, respectively, and is included in the equity section of the Consolidated Balance Sheets. The share of earnings attributable to the noncontrolling interest attributed to these investments is not material for any of the periods presented and is included in other income (loss), net in the Consolidated Statements of Operations.

**11.**Fair Value

**(a)**Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):

			OCTOBER 25, 2025																		JULY 26, 2025
			FAIR VALUE MEASUREMENTS																		FAIR VALUE MEASUREMENTS
			Level 1						Level 2						Total Balance						Level 1						Level 2						Total Balance
Assets:
Cash equivalents:
Money market funds			$	6,082					$	—					$	6,082					$	5,885					$	—					$	5,885
Commercial paper			—						149						149						—						336						336
Corporate debt securities			—						—						—						—						1						1
Available-for-sale debt investments:
U.S. government securities			—						1,640						1,640						—						1,961						1,961
U.S. government agency securities			—						49						49						—						67						67
Non-U.S. government and agency securities			—						410						410						—						458						458
Corporate debt securities			—						2,949						2,949						—						3,090						3,090
Mortgage- and asset-backed securities			—						254						254						—						286						286
Commercial paper			—						884						884						—						950						950
Certificates of deposit			—						756						756						—						569						569
Equity investments:
Marketable equity securities			394						—						394						383						—						383
Other current assets:
Money market funds			—						—						—						563						—						563
Derivative assets			—						55						55						—						32						32
Total			$	6,476					$	7,146					$	13,622					$	6,831					$	7,750					$	14,581
Liabilities:
Derivative liabilities			$	—					$	58					$	58					$	—					$	31					$	31
Total			$	—					$	58					$	58					$	—					$	31					$	31

Level 1 marketable equity securities are determined by using quoted prices in active markets for identical assets. Level 2 available-for-sale debt investments are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. We use inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. We use such pricing data as the primary input to make our assessments and determinations as to the ultimate valuation of our investment portfolio and have not made, during the periods presented, any material adjustments to such inputs. We are ultimately responsible for the financial statements and underlying estimates. Our derivative instruments are primarily classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. We did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

**(b)**Assets Measured at Fair Value on a Nonrecurring Basis

Our non-marketable equity securities using the measurement alternative are adjusted to fair value on a non-recurring basis. Adjustments are made when observable transactions for identical or similar investments of the same issuer occur, or due to impairment. These securities are classified as Level 3 in the fair value hierarchy because we estimate the value based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs such as volatility, rights, and obligations of the securities we hold.

(c) Other Fair Value Disclosures

The fair value of our short-term loan receivables approximates their carrying value due to their short duration. The aggregate carrying value of our long-term loan receivables was $3.1 billion and $2.9 billion as of October 25, 2025 and July 26, 2025, respectively. The estimated fair value of our long-term loan receivables approximates their carrying value. We use unobservable inputs in determining discounted cash flows to estimate the fair value of our long-term loan receivables, and therefore they are categorized as Level 3.

As of October 25, 2025, the estimated fair value of our short-term debt approximates its carrying value due to the short maturities. As of October 25, 2025, the fair value of our senior notes was $25.5 billion, with a carrying amount of $24.6 billion. This compares to a fair value of $25.0 billion and a carrying amount of $24.6 billion as of July 26, 2025. The fair value of the senior notes was determined based on observable market prices in a less active market and was categorized as Level 2.

**12.**Borrowings

**(a)**Short-Term Debt

The following table summarizes our short-term debt (in millions, except percentages):

			October 25, 2025												July 26, 2025
			Amount						Effective Rate						Amount						Effective Rate
Current portion of senior notes			$	3,249					3.41		%				$	1,749					4.15		%
Commercial paper			3,476						4.09		%				3,482						4.37		%
Current portion of other debt			—						—						1						1.13		%
Total			$	6,725											$	5,232

We have a short-term debt financing program of up to $15.0 billion through the issuance of commercial paper notes. We use the proceeds from the issuance of commercial paper notes for general corporate purposes.

The effective rates for the short- and long-term debt include the interest on the notes, the accretion of the discount, the issuance costs, and, if applicable, adjustments related to hedging.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

**(b)**Long-Term Debt

The following table summarizes our long-term debt (in millions, except percentages):

									October 25, 2025												July 26, 2025
			Maturity Date						Amount						Effective Rate						Amount						Effective Rate
Senior notes:
Fixed-rate notes:
4.90%			February 26, 2026						$	1,000					5.00%						$	1,000					5.00%
2.95%			February 28, 2026						750						3.01%						750						3.01%
2.50%			September 20, 2026						1,500						2.55%						1,500						2.55%
4.80%			February 26, 2027						2,000						4.90%						2,000						4.90%
4.55%			February 24, 2028						1,000						4.61%						1,000						4.61%
4.85%			February 26, 2029						2,500						4.91%						2,500						4.91%
4.75%			February 24, 2030						1,000						4.73%						1,000						4.73%
4.95%			February 26, 2031						2,500						5.04%						2,500						5.04%
4.95%			February 24, 2032						1,000						4.94%						1,000						4.94%
5.05%			February 26, 2034						2,500						4.97%						2,500						4.97%
5.10%			February 24, 2035						1,250						5.11%						1,250						5.11%
5.90%			February 15, 2039						2,000						6.11%						2,000						6.11%
5.50%			January 15, 2040						2,000						5.67%						2,000						5.67%
5.30%			February 26, 2054						2,000						5.28%						2,000						5.28%
5.50%			February 24, 2055						750						5.49%						750						5.49%
5.35%			February 26, 2064						1,000						5.42%						1,000						5.42%
Other debt									2						1.13%						3						1.13%
Total									24,752												24,753
Unaccreted discount/issuance costs									(139)												(142)
Total									$	24,613											$	24,611
Reported as:
Current portion of long-term debt									$	3,249											$	1,750
Long-term debt									21,364												22,861
Total									$	24,613											$	24,611

Interest is payable semiannually on each class of the senior fixed-rate notes. Each of the senior fixed-rate notes is redeemable by us at any time, subject to a make-whole premium. The senior notes rank at par with the commercial paper notes that have been issued pursuant to our short-term debt financing program, as discussed above under “(a) Short-Term Debt.” As of October 25, 2025, we were in compliance with all debt covenants.

As of October 25, 2025, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):

Fiscal Year			Amount
2026 (remaining nine months)			$	1,750
2027			3,502
2028			1,000
2029			2,500
2030			1,000
Thereafter			15,000
Total			$	24,752

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

**(c)**Credit Facility

On February 2, 2024, we entered into an amended and restated 5-year $5.0 billion unsecured revolving credit agreement. The interest rate for the credit agreement is determined based on a formula using certain market rates. The credit agreement requires that we comply with certain covenants, including that we maintain an interest coverage ratio (defined in the agreement as the ratio of consolidated EBITDA to consolidated interest expense) of not less than 3.0 to 1.0. As of October 25, 2025, we were in compliance with all associated covenants and we had not borrowed any funds under our credit agreement.

**13.**Derivative Instruments

**(a)**Summary of Derivative Instruments

We use derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates, interest rates, and equity prices. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We seek to mitigate such risks by limiting our counterparties to major financial institutions and requiring collateral in certain cases. In addition, the potential risk of loss with any one counterparty resulting from credit risk is monitored. Management does not expect material losses as a result of defaults by counterparties.

The fair values of our derivative instruments and the line items on the Consolidated Balance Sheets to which they were recorded are summarized as follows (in millions):

			DERIVATIVE ASSETS																		DERIVATIVE LIABILITIES
			Balance Sheet Line Item						October 25, 2025						July 26, 2025						Balance Sheet Line Item						October 25, 2025						July 26, 2025
Derivatives designated as hedging instruments:
Foreign currency derivatives			Other current assets						$	27					$	17					Other current liabilities						$	1					$	2
Foreign currency derivatives			Other assets						27						10						Other long-term liabilities						—						2
Total									54						27												1						4
Derivatives not designated as hedging instruments:
Foreign currency derivatives			Other current assets						1						3						Other current liabilities						30						17
Foreign currency derivatives			Other assets						—						2						Other long-term liabilities						27						10
Total									1						5												57						27
Total									$	55					$	32											$	58					$	31

The effect on the Consolidated Statements of Operations of derivative instruments not designated as hedges is summarized as follows (in millions):

												GAINS (LOSSES) FOR THE THREE MONTHS ENDED
Derivatives Not Designated as Hedging Instruments						Line Item in Statements of Operations						October 25, 2025						October 26, 2024
Foreign currency derivatives						Other income (loss), net						$	(46)					$	(32)
Total return swaps—deferred compensation						Operating expenses and other						54						22
Total												$	8					$	(10)

The notional amounts of our outstanding derivatives are summarized as follows (in millions):

			October 25, 2025						July 26, 2025
Foreign currency derivatives			$	8,006					$	8,978
Total return swaps—deferred compensation			1,195						1,087
Total			$	9,201					$	10,065

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

**(b)**Offsetting of Derivative Instruments

We present our derivative instruments at gross fair values in the Consolidated Balance Sheets. However, our master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty.

**(c)**Foreign Currency Exchange Risk

We conduct business globally in numerous currencies. Therefore, we are exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, we enter into foreign currency contracts. We do not enter into such contracts for speculative purposes.

We may hedge forecasted foreign currency transactions related to certain revenues, operating expenses and service cost of sales with currency options and forward contracts. These currency options and forward contracts, designated as cash flow hedges, generally have maturities of less than 24 months. The derivative instrument’s gain or loss is initially reported as a component of accumulated other comprehensive income (AOCI) and subsequently reclassified into earnings when the hedged exposure affects earnings.

We enter into foreign exchange forward and option contracts to reduce the short-term effects of foreign currency fluctuations on assets and liabilities such as foreign currency receivables, long-term customer financings and payables. These derivatives are not designated as hedging instruments. Gains and losses on the contracts are included in other income (loss), net, and substantially offset foreign exchange gains and losses from the remeasurement of monetary assets and liabilities denominated in currencies other than the functional currency of the reporting entity.

We hedge certain net investments in our foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on our net investment in those foreign subsidiaries. These derivative instruments generally have maturities of up to six months.

**(d)**Interest Rate Risk

We periodically enter into treasury lock agreements, designated as cash flow hedges, in order to hedge the impact of changes in the U.S. benchmark interest rate on future interest payments in anticipation of future debt offerings. Changes in the fair value of treasury lock agreements are recorded to AOCI and reclassified into earnings when the hedged exposure affects earnings.

**(e)**Equity Price Risk

We are exposed to variability in compensation charges related to certain deferred compensation obligations to employees and directors. Although not designated as accounting hedges, we utilize derivatives such as total return swaps to economically hedge this exposure and offset the related compensation expense.

**14.**Commitments and Contingencies

**(a)**Purchase Commitments with Contract Manufacturers and Suppliers

We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that allow them to procure inventory based upon criteria as defined by us or establish the parameters defining our requirements. A significant portion of our reported purchase commitments arising from these agreements consists of firm, noncancelable, and unconditional commitments. Certain of these inventory purchase commitments are directly with suppliers, and relate to fixed-dollar commitments to secure supply and pricing for certain product components for multi-year periods. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed.

The following table summarizes our inventory purchase commitments with contract manufacturers and suppliers by period (in millions):

			October 25, 2025						July 26, 2025
Less than 1 year			$	7,879					$	7,202
1 to 3 years			396						320
3 to 5 years			46						77
Total			$	8,321					$	7,599

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of October 25, 2025 and July 26, 2025, the liability for these purchase commitments was $185 million and $206 million, respectively, and was included in other current liabilities.

**(b)**Other Commitments

We have certain funding commitments, primarily related to our privately held investments. The funding commitments were $0.5 billion and $0.3 billion as of October 25, 2025 and July 26, 2025, respectively.

**(c)**Product Warranties

The following table summarizes the activity related to the product warranty liability (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Balance at beginning of period			$	399					$	362
Provisions for warranties issued			104						105
Adjustments for pre-existing warranties			—						1
Settlements			(111)						(111)
Balance at end of period			$	392					$	357

We accrue for warranty costs as part of our cost of sales based on associated material product costs, labor costs for technical support staff, and associated overhead. Our products are generally covered by a warranty for periods ranging from 90 days to five years, and for some products we provide a limited lifetime warranty.

**(d)**Financing and Other Guarantees

In the ordinary course of business, we provide financing guarantees for various third-party financing arrangements extended to channel partners customers. Payments under these financing guarantee arrangements were not material for the periods presented.

Channel Partner Financing Guarantees We facilitate arrangements for third-party financing extended to channel partners, consisting of revolving short-term financing, with payment terms generally ranging from 60 to 90 days. These financing arrangements facilitate the working capital requirements of the channel partners, and, in some cases, we guarantee a portion of these arrangements. The volume of channel partner financing was $6.7 billion and $6.0 billion for the first quarter of fiscal 2026 and 2025, respectively. The balance of the channel partner financing subject to guarantees was $1.5 billion and $1.3 billion as of October 25, 2025 and July 26, 2025, respectively.

Financing Guarantee Summary The aggregate amounts of channel partner financing guarantees outstanding at October 25, 2025 and July 26, 2025, representing the total maximum potential future payments under financing arrangements with third parties along with the related deferred revenue, are summarized in the following table (in millions):

			October 25, 2025						July 26, 2025
Maximum potential future payments			$	134					$	123
Deferred revenue			(17)						(13)
Total			$	117					$	110

**(e)**Indemnifications

In the normal course of business, we have indemnification obligations to other parties, including customers, lessors, and parties to other transactions with us, with respect to certain matters. We have agreed to indemnify against losses arising from a breach of representations or covenants or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time or circumstances within which an indemnification claim can be made and the amount of the claim.

It is not possible to determine the maximum potential amount for claims made under the indemnification obligations due to uncertainties in the litigation process, coordination with and contributions by other parties and the defendants in these types of

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

cases, and the unique facts and circumstances involved in each particular case and agreement. Historically, indemnity payments made by us have not had a material effect on our Consolidated Financial Statements.

In addition, we have entered into indemnification agreements with our officers and directors, and our Amended and Restated Bylaws contain similar indemnification obligations to our agents.

**(f)**Legal Proceedings

Brazil Brazilian authorities have investigated our Brazilian subsidiary and certain of its former employees, as well as a Brazilian importer of our products, and its affiliates and employees, relating to alleged evasion of import taxes and alleged improper transactions involving the subsidiary and the importer. Brazilian tax authorities have assessed claims against our Brazilian subsidiary based on a theory of joint liability with the Brazilian importer for import taxes, interest, and penalties. In addition to claims asserted by the Brazilian federal tax authorities in prior fiscal years, tax authorities from the Brazilian state of Sao Paulo have asserted similar claims on the same legal basis in prior fiscal years. The remaining asserted claims by Brazilian federal tax authorities are for calendar years 2004 through 2007, and the remaining asserted claims by the tax authorities from the state of Sao Paulo are for calendar years 2005 through 2007. The total remaining asserted claims by Brazilian state and federal tax authorities aggregate to $145 million for the alleged evasion of import and other taxes, $851 million for interest, and $298 million for various penalties, all determined using an exchange rate as of October 25, 2025.

We have completed a thorough review of the matters and believe the asserted claims against our Brazilian subsidiary are without merit, and we are defending the claims vigorously. While we believe there is no legal basis for the alleged liability, due to the complexities and uncertainty surrounding the judicial process in Brazil and the nature of the claims asserting joint liability with the importer, we are unable to determine the likelihood of an unfavorable outcome against our Brazilian subsidiary and are unable to reasonably estimate a range of loss, if any. We do not expect a final judicial determination for several years.

Centripetal On February 13, 2018, Centripetal Networks, Inc. (“Centripetal”) asserted patent infringement claims against us in the U.S. District Court for the Eastern District of Virginia, alleging that several of our products and services infringe eleven Centripetal U.S. patents. After two bench trials and various administrative actions and appeals, we have been found either to not have infringed any of the patents or the patents have been invalidated. Centripetal appealed one of the Patent Trial and Appeal Board’s (“PTAB”) invalidity decisions and on October 22, 2025, the Federal Circuit vacated the decision and remanded the case to the PTAB for further consideration. Centripetal’s appeal of the non-infringement judgment of the District Court is ongoing.

Between April 2020 and February 2022, Centripetal also filed complaints in the District Court of Dusseldorf in Germany (“German Court”), asserting five patents and one utility model. Centripetal sought damages and injunctive relief in all cases. In various proceedings in 2021, 2022, and 2023, we have been found to have not infringed three patents, one patent was invalidated, and the utility model was invalidated. The infringement action on the final patent is stayed due to an invalidity action heard on June 6, 2024 in the Federal Patent Court, in which all claims, aside from one auxiliary claim, were found invalid, and for which we are awaiting a decision on appeal from the German Federal Court of Justice. Centripetal’s appeals of two of the non-infringement findings remain pending and, on March 27, 2024, the Court of Appeals rejected Centripetal’s appeal of the third non-infringement finding. In an appellate decision on December 11, 2024, the German Federal Court of Justice revoked one of the two patents for which Centripetal appealed the finding of non-infringement, rendering moot the noninfringement appeal of that patent.

On July 10, 2023, Centripetal filed a complaint in the Paris Judiciary Court asserting the French counterpart of a European Patent. Centripetal seeks damages and injunctive relief in the case. Centripetal previously asserted the German counterpart of the same European Patent in Germany and the German Court rejected Centripetal’s complaint finding no infringement. We have filed our response and defenses to the complaint and the case briefing is ongoing. While the Court has not set a final hearing date, we anticipate that it will occur in the third calendar quarter of 2026.

Due to uncertainty surrounding patent litigation processes in the U.S. and Europe, we are unable to reasonably estimate the ultimate outcome of the litigations at this time. If we do not prevail in these litigations, we believe that any damages ultimately assessed would not have a material effect on our Consolidated Financial Statements.

Ramot On June 12, 2019 and on February 26, 2021, Ramot at Tel Aviv University Ltd. (“Ramot”) asserted patent infringement claims against Cisco and Acacia in the U.S. District Court for the Eastern District of Texas (“E.D. Tex.”) and in the District of Delaware (“D. Del.”), respectively. Ramot is seeking damages, including enhanced damages, and a royalty on future sales. Ramot alleges that certain optical transceiver modules and line cards infringe three patents. We challenged the validity of the patents in the U.S. Patent and Trademark Office (“PTO”) and the pending District Court cases have been stayed. On September 28, 2021 and May 24, 2022, Cisco and Acacia filed two declaratory judgment actions of noninfringement against Ramot in D.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Del. on other Ramot patents and those proceedings are ongoing. The Court rescheduled the trial date in the D. Del. cases for December 1, 2025.

While we believe that we have strong non-infringement and invalidity arguments in these litigations, and that Ramot’s damages theories in such cases are not supported by prevailing law, we are unable to reasonably estimate the ultimate outcome of these litigations at this time due to uncertainties in the litigation processes. If we do not prevail in court in these litigations, we believe any damages ultimately assessed would not have a material effect on our Consolidated Financial Statements.

In addition to the above matters, we are subject to other legal proceedings, claims, and litigation arising in the ordinary course of business, including intellectual property litigation. While the outcome of these matters is currently not determinable, we do not believe that the ultimate costs to resolve these matters will have a material effect on our Consolidated Financial Statements.

**15.**Stockholders’ Equity

**(a)**Stock Repurchase Program

In September 2001, our Board of Directors authorized a stock repurchase program. As of October 25, 2025, the remaining authorized amount for stock repurchases under this program was approximately $12.2 billion, with no termination date. The stock repurchase activity for fiscal 2026 and 2025 under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):

Quarter Ended						Shares						Weighted-Average Price per Share						Amount
Fiscal 2026
October 25, 2025						29						$	68.28					$	2,001
Fiscal 2025
July 26, 2025						19						$	64.65					$	1,252
April 26, 2025						25						$	59.78					$	1,504
January 25, 2025						21						$	58.58					$	1,236
October 26, 2024						40						$	49.56					$	2,003

There were stock repurchases of $29 million and $20 million that were pending settlement October 25, 2025 and July 26, 2025, respectively.

The purchase price for the shares of our stock repurchased is reflected as a reduction to stockholders’ equity. We are required to allocate the purchase price of the repurchased shares as (i) a reduction to retained earnings or an increase to accumulated deficit and (ii) a reduction of common stock and additional paid-in capital.

(b) Dividends Declared

On November 12, 2025, our Board of Directors declared a quarterly dividend of $0.41 per common share to be paid on January 21, 2026, to all stockholders of record as of the close of business on January 2, 2026. Future dividends will be subject to the approval of our Board of Directors.

(c) Preferred Stock

Under the terms of our Amended and Restated Certificate of Incorporation, the Board of Directors is authorized to issue preferred stock in one or more series and, in connection with the creation of such series, to fix by resolution the designation, powers (including voting powers (if any)), preferences and relative, participating, optional or other special rights, if any, of such series, and any qualifications, limitations or restrictions thereof, of the shares of such series. As of October 25, 2025, we have not issued any shares of preferred stock.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

**16.**Employee Benefit Plans

**(a)**Employee Stock Incentive Plans

We have one stock incentive plan: the 2005 Stock Incentive Plan (the “2005 Plan”). In addition, we have, in connection with our acquisitions of various companies, assumed the share-based awards granted under stock incentive plans of the acquired companies or issued share-based awards in replacement thereof. Share-based awards are designed to reward employees for their long-term contributions to us and provide incentives for them to remain with us. The number and frequency of share-based awards are based on competitive practices, our operating results, government regulations, and other factors.

The 2005 Plan provides for the granting of stock options, stock grants, stock units and stock appreciation rights (SARs), the vesting of which may be time-based or upon satisfaction of performance goals, or both, and/or other conditions. Time-based and performance-based RSUs generally vest over three years with certain awards containing retirement eligible provisions. Employees (including employee directors and executive officers) and consultants of Cisco and its subsidiaries and affiliates and non-employee directors of Cisco are eligible to participate in the 2005 Plan. The 2005 Plan may be terminated by our Board of Directors at any time and for any reason, and is currently set to terminate at the 2030 Annual Meeting unless re-adopted or extended by our stockholders prior to or on such date.

Under the 2005 Plan’s share reserve feature, a distinction is made between the number of shares in the reserve attributable to (i) stock options and SARs and (ii) “full value” awards (i.e., stock grants and stock units). Shares issued as stock grants, pursuant to stock units or pursuant to the settlement of dividend equivalents are counted against shares available for issuance under the 2005 Plan on a 1.5-to-1 ratio. For each share awarded as restricted stock or a restricted stock unit award under the 2005 Plan, 1.5 shares was deducted from the available share-based award balance. If awards issued under the 2005 Plan are forfeited or terminated for any reason before being exercised or settled, then the shares underlying such awards, plus the number of additional shares, if any, that counted against shares available for issuance under the 2005 Plan at the time of grant as a result of the application of the share ratio described above, will become available again for issuance under the 2005 Plan. As of October 25, 2025, 90 million shares were authorized for future grant under the 2005 Plan.

**(b)**Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan under which eligible employees are offered shares through a 24-month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited amount of shares of our stock at a discount of up to 15% of the lesser of the fair market value at the beginning of the offering period or the end of each 6-month purchase period. The Employee Stock Purchase Plan is scheduled to terminate on the earlier of (i) January 3, 2030 and (ii) the date on which all shares available for issuance under the Employee Stock Purchase Plan are sold pursuant to exercised purchase rights. No shares were issued under the Employee Stock Purchase Plan during the first quarter of each of fiscal 2026 and 2025. As of October 25, 2025, 50 million shares were available for issuance under the Employee Stock Purchase Plan.

**(c)**Summary of Share-Based Compensation Expense

Share-based compensation expense consists of expenses for RSUs and stock purchase rights, granted to employees or assumed from acquisitions. The following table summarizes share-based compensation expense and the income tax benefit for share-based compensation (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Cost of sales—product			$	68					$	57
Cost of sales—services			82						74
Share-based compensation expense in cost of sales			150						131
Research and development			484						354
Sales and marketing			269						210
General and administrative			131						115
Restructuring and other charges			21						17
Share-based compensation expense in operating expenses			905						696
Total share-based compensation expense			$	1,055					$	827
Income tax benefit for share-based compensation			$	241					$	174

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As of October 25, 2025, the total compensation cost related to unvested share-based awards not yet recognized was $4.2 billion which is expected to be recognized over approximately 1.9 years on a weighted-average basis.

**(d)**Restricted Stock Unit Awards

A summary of the restricted stock and stock unit activity, which includes time-based and performance-based or market-based RSUs, is as follows (in millions, except per-share amounts):

			Restricted Stock/ Stock Units						Weighted-Average Grant Date Fair Value per Share						Aggregate Fair Value
Unvested balance at July 27, 2024			117						$	46.86
Granted and assumed			70						55.73
Vested			(65)						46.95						$	3,707
Canceled/forfeited/other			(9)						48.04
Unvested balance at July 26, 2025			113						52.26
Granted and assumed			11						64.74
Vested			(12)						46.35						$	851
Canceled/forfeited/other			4						48.91
Unvested balance at October 25, 2025			116						$	53.91

**17.**Accumulated Other Comprehensive Income (Loss)

The components of AOCI, net of tax, and the other comprehensive income (loss), for the first quarter of fiscal 2026 and 2025 are summarized as follows (in millions):

			Net Unrealized Gains (Losses) on Available-for-Sale Investments						Net Unrealized Gains (Losses) Cash Flow Hedging Instruments						Cumulative Translation Adjustment and Actuarial Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Balance at July 26, 2025			$	(57)					$	65					$	(962)					$	(954)
Other comprehensive income (loss) before reclassifications			48						42						(41)						49
(Gains) losses reclassified out of AOCI			4						(9)						—						(5)
Tax benefit (expense)			(11)						(8)						(1)						(20)
Balance at October 25, 2025			$	(16)					$	90					$	(1,004)					$	(930)

			Net Unrealized Gains (Losses) on Available-for-Sale Investments						Net Unrealized Gains (Losses) Cash Flow Hedging Instruments						Cumulative Translation Adjustment and Actuarial Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Balance at July 27, 2024			$	(241)					$	79					$	(1,268)					$	(1,430)
Other comprehensive income (loss) before reclassifications			71						9						(19)						61
(Gains) losses reclassified out of AOCI			25						(9)						—						16
Tax benefit (expense)			(23)						—						—						(23)
Balance at October 26, 2024			$	(168)					$	79					$	(1,287)					$	(1,376)

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

**18.**Income Taxes

The following table provides details of income taxes (in millions, except percentages):

			Three Months Ended
			October 25, 2025						October 26, 2024
Income before provision for (benefit from) income taxes			$	3,391					$	2,267
Provision for (benefit from) income taxes			531						(444)
Effective tax rate			15.7		%				(19.6)		%

As of October 25, 2025, we had $2.3 billion of unrecognized tax benefits, of which $1.6 billion, if recognized, would favorably impact the effective tax rate. We regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We believe it is reasonably possible that certain federal, foreign, and state tax matters may be concluded in the next 12 months. Specific positions that may be resolved include issues involving transfer pricing and various other matters.

On August 26, 2024, the U.S. Tax Court issued an opinion in Varian Medical Systems, Inc. v. Commissioner. The opinion related to the U.S. taxation of deemed foreign dividends in the transition year of the Tax Cuts and Jobs Act (our fiscal 2018). While we were not a party to the case, the opinion resulted in a change to our tax position. As such, we recorded a tax benefit of $720 million as a reduction to the provision for income taxes in the first quarter of fiscal 2025 due to this U.S. Tax Court opinion.

**19.**Segment Information and Major Customers

**(a)**Revenue and Gross Margin by Segment

We conduct business globally and are primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. Our chief executive officer is the chief operating decision maker (CODM). The CODM reviews certain financial information for each segment, to evaluate performance and allocate resources by comparing actual performance to our annual targets. Performance of each segment is measured based on segment revenue and segment gross margin. Sales are attributed to a segment based on the location of the customer.

We do not allocate research and development, sales and marketing, or general and administrative expenses to our segments because the CODM does not include this information in our measurement of performance of the operating segments. In addition, we do not allocate amortization and impairment of acquisition-related intangible assets, share-based compensation expense, significant litigation settlements and other contingencies, charges related to asset impairments and restructurings, and certain other charges to the cost of sales and gross margin for each segment because the CODM does not include this information in the measurement of the performance of our operating segments.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following summarizes our revenue and gross margin by segment and the significant expenses by each segment (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Revenue:
Americas			$	8,989					$	8,252
EMEA			3,784						3,588
APJC			2,111						2,001
Total			$	14,883					$	13,841
Gross margin:
Americas			$	6,001					$	5,740
EMEA			2,722						2,522
APJC			1,413						1,328
Segment total			10,136						9,590
Unallocated corporate items			(391)						(469)
Total			$	9,745					$	9,121
Supplemental information about our significant expenses:
Americas:
Cost of sales — product			$	2,349					$	1,877
Cost of sales — services			639						635
Segment total			$	2,988					$	2,512
EMEA:
Cost of sales — product			$	768					$	778
Cost of sales — services			294						288
Segment total			$	1,062					$	1,066
APJC:
Cost of sales — product			$	514					$	490
Cost of sales — services			184						183
Segment total			$	698					$	673

Amounts may not sum due to rounding.

Revenue in the United States was $8.1 billion and $7.4 billion for the first quarter of fiscal 2026 and 2025, respectively.

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

**(b)**Revenue for Groups of Similar Products and Services

We design and sell IP-based networking and other products related to the communications and IT industry and provide services associated with these products and their use.

The following table presents revenue for groups of similar products and services (in millions):

			Three Months Ended
			October 25, 2025						October 26, 2024
Revenue:
Networking			$	7,768					$	6,753
Security			1,980						2,017
Collaboration			1,055						1,085
Observability			274						258
Total Product			11,077						10,114
Services			3,806						3,727
Total			$	14,883					$	13,841

Amounts may not sum due to rounding.

**20.**Net Income per Share

The following table presents the calculation of basic and diluted net income per share (in millions, except per-share amounts):

			Three Months Ended
			October 25, 2025						October 26, 2024
Net income			$	2,860					$	2,711
Weighted-average shares—basic			3,956						3,990
Effect of dilutive potential common shares			37						23
Weighted-average shares—diluted			3,993						4,013
Net income per share—basic			$	0.72					$	0.68
Net income per share—diluted			$	0.72					$	0.68
Antidilutive employee share-based awards, excluded			—						13