Cisco Systems Inc. (NASDAQ:CSCO) shares rose in premarket trading Thursday after the networking equipment maker reported stronger-than-expected third-quarter results, raised its fiscal 2026 guidance and highlighted accelerating demand for artificial intelligence infrastructure.

Strong Quarterly Results Beat Expectations

Revenue for the quarter increased to $15.84 billion, topping analyst estimates of $15.56 billion. Adjusted earnings came in at $1.06 per share, ahead of Wall Street expectations of $1.03 per share.

Annual recurring revenue rose 2% year over year to $31.2 billion, while product ARR increased 4%. Adjusted gross margin declined 260 basis points from a year earlier to 66%, primarily due to shifts in product mix and higher memory costs.

Cisco ended the quarter with $16.6 billion in cash, cash equivalents and investments.

Customer Growth And Subscription Expansion

The company said it added more than 1,000 new customers during the quarter across products including Secure Access, XDR, HyperShield and AI Defense, bringing the total customer base for those offerings to about 5,000 since launch.

Subscription revenue totaled $7.8 billion, accounting for 49% of total quarterly revenue.

AI Infrastructure And Networking Demand Accelerate

Product revenue climbed 17% year over year to $12.1 billion, driven by demand for AI infrastructure, campus networking, data center switching and wireless ...