Good morning, ladies and gentlemen. Welcome to Cisco's 2025 Annual Meeting of Stockholders. This is Sami Badri, Head of Investor Relations, and I'm joined by Chuck Robbins, our Chair and CEO, and Evan Sloves, Secretary of the Company. The matters we'll be discussing today include forward-looking statements, which are subject to the risks and uncertainties that we discussed in detail in our documents filed with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements. You will also find full GAAP to non-GAAP reconciliation information in the financial information section of our Investor Relations website. I will now turn the meeting over to Chuck.
Good morning. It is now 8:00 A.M., and the 2025 Annual Meeting of the Stockholders of Cisco Systems Incorporated will please come to order. I am Chuck Robbins, Chair and CEO, and I will chair this meeting. On behalf of all of us at Cisco, I want to welcome you and thank you for your attendance. We're holding our annual meeting in a virtual format, and copies of the agenda and rules of conduct are available on the virtual meeting site. With that, it is my pleasure to turn the meeting over to Evan to lead the business portion of the meeting.
Thank you, Chuck. I will conduct the formal portion of this meeting. The polls are open and will close after the presentation of our formal business matters. If you previously voted via the internet, phone, or mail, you do not need to take any additional action. If you have not already voted or you wish to change your vote, please do so before the closing of the polls by using the voting buttons on the portal. After the polls close, we will announce the preliminary results of the vote. After the formal portion of this meeting, we will have a business review presented by Chuck, followed by a Q&A session. During the Q&A session, we will be answering previously submitted questions as well as questions submitted online during today's meeting.
Any stockholder who would like to ask a question can do so by typing the question in the Ask a Question box and clicking Submit. If we receive similar written questions, we may group such questions together and provide a single response to avoid repetition. If we are unable to respond to a stockholder's properly submitted question due to time constraints, we'll respond directly to that stockholder after the meeting using the contact information provided. I would like to acknowledge Cisco's officers that are joining us on the call. Kevin Healy of PricewaterhouseCoopers, the company's independent registered public accounting firm, has also called in today, and I would also like to thank the directors that have joined us. The board of directors has fixed the close of business on October 17, 2025, as the record date for the determination of stockholders entitled to vote at this meeting.
We have an affidavit from Broadridge certifying that notice of the meeting was duly given to all stockholders of record commencing on or about October 28, 2025. American Election Services has been appointed as the inspector of election for the meeting. Mr. Jim Raitt, who is representing American Election Services, has also called into the meeting. Mr. Raitt has informed me that stockholders owning a majority of the outstanding shares of Common Stock are present in person or represented by proxy, and as a result, there is a quorum of stockholders for this meeting. Therefore, this meeting is now open to proceed with its business. We will now proceed to the items of business set forth in the agenda. The first matter to be considered is the election of directors of the company.
The following individuals have been nominated by the board upon recommendation of the Nomination and Governance Committee to serve as directors until the next annual meeting of stockholders and until their successors are elected and qualified: Michael Capellas, Mark Garrett, John Harris, Kristina Johnson, Sarah Rae Murphy, Chuck Robbins, Dan Schulman, Marianna Tessel, and Kevin Weil. No other nominations were received by the deadline of August 19, 2025. Therefore, the nominations are closed. The board of directors recommends that the stockholders vote for the election of each of the nominees. Our next item of business is the approval of the amendment and restatement of the 2005 Stock Incentive Plan. This proposal asks stockholders to approve an increase in the number of shares authorized for issuance under the plan, which is intended to allow Cisco to continue to grant equity awards to attract, retain, and motivate employees and directors.
The board of directors recommends stockholders vote for this proposal. Our next item of business is the advisory resolution to approve executive compensation. This is a non-binding advisory resolution that the stockholders approve the compensation of Cisco's named executive officers as disclosed pursuant to the SEC's compensation disclosure rules. The board of directors recommends that the stockholders vote for this proposal. Next is the ratification of the appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for the fiscal year ending July 25, 2026. The board of directors recommends stockholders vote for this proposal. I will now introduce the stockholder resolution proposed by the National Center for Public Policy Research to ask Cisco's board to conduct an evaluation and issue a report assessing how the company's inclusion programs provide positive value to stockholders. Operator, please play the pre-recorded statement by the shareholder proposing this resolution.
My name is Stefan Padfield, and I am the Executive Director of the Free Enterprise Project, which is part of the National Center for Public Policy Research. The National Center is the proponent of Proposal 5, which asks Cisco to issue a report assessing how the company's inclusion programs provide positive financial value to shareholders, accounting for cognizable litigation risk. In the proposal, we note specifically that shareholders deserve to know how corporate leadership evaluates the return on investment of its inclusion programs. This proposal is pro-capitalism. To paraphrase Winston Churchill, it has been said that capitalism is the worst way to organize an economy, except for all the other ways that have been tried. The incentives inherent in capitalism drive the innovations that solve our most pressing problems.
Because of capitalism, we have almost eradicated poverty in the world to the point that leftist agitators now focus almost exclusively on inequality rather than poverty. And it is true that our alternatives to capitalism, most notably communism and socialism, are better at forcing equal outcomes. It's just that those outcomes are poverty, misery, and death. But in order for capitalism to produce its fruits of abundance, the profit motive must remain the true North Star for capitalists because when profit is marginalized, we get so-called leaders who prioritize their personal reputation and ideological commitments and use shareholders' money to do so. And this has, in fact, been happening for far too long now. We have arrived at a point where one can read 50-page ESG reports filled with platitudes and utopian agendas that never once mention net present value or return on investment.
But that time is coming to an end. The ESG ROI reckoning is at hand. To paraphrase another well-known line, "Show us the money." So here we are discussing Cisco's DEI ROI. Note that Cisco can't even bring itself to say return on investment in its opposition statement. Instead, we get yet another round of management by platitude. But platitudes about the alleged value of DEI can't cover up the reality that DEI divides people on the basis of race and sex in ways that have been justified by DEI proponents as discrimination in the name of anti-discrimination. And in addition to the obvious reputational and legal risks that come from such discrimination, no less an authority than Alex Edmans, Professor of Finance at London Business School, has noted that there is no link between demographic diversity and performance despite many flimsy reports claiming the contrary.
Indeed, the evidence is that quota-driven demographic diversity reduces performance. And in response to the trope that demographic diversity can serve as a proxy for viewpoint diversity, Professor Edmans recently noted that while many argue that cognitive diversity can be approximated by demographics, the evidence says otherwise. Race, gender, and age alone are poor proxies for how people think. More generally, it may be worth quoting from a piece published by the National Center's Project 21, which is a network of Black leaders whose views are often marginalized by mainstream media and DEI activists. The piece is titled, "Rolling Back DEI Rewards Black Americans Instead of Crippling Them." In it, Brandon Brice, former head of a statewide DEI program, notes that DEI goes directly against Dr. Martin Luther King Jr.'s vision for a world where people are judged based on the content of their character.
Meanwhile, April Chapman, host of the Unshakeable podcast, notes that DEI is contrary to the views of Booker T. Washington, who taught that free markets, hard work, and the belief in one's own ability to be the best will dictate success. Perhaps most importantly, Priscilla Rahn, former vice chair of the Colorado Republican Committee, notes that focusing on skills, education, and economic policies that benefit all Americans will do more to lift Black families than race-based programs. All the foregoing helps explain precisely why we've seen some of the largest corporations in America turn their back on DEI recently. Lest the board or anyone else be tempted to argue that past votes on anti-DEI proposals somehow prove that shareholders support DEI, consider that over 90% of shareholders recently voted against pro-DEI proposals at Berkshire, Netflix, and Walmart.
Allow me to conclude by addressing the argument that because Cisco has been outperforming the market, its inclusion efforts don't need additional transparency. The problem with that narrative is that Cisco's overall profitability doesn't exclude the possibility of DEI being a luxury good, which is to say a virtue-signaling bauble that profitable firms can waste money on. So shareholders still need to see the DEI ROI.
Thank you. The board of directors recommends that stockholders vote against this proposal for the reasons set forth in the proxy statement. The business matters for stockholder consideration have been completed, and the polls are now closed. I'll share with you the preliminary voting tabulation. Final vote tallies will be posted in a Form 8-K, which will be filed with the SEC within four business days from today and available on our investor relations website. According to the preliminary report of the inspector of elections, each of the persons nominated as a director has been elected. Each nominee received the support of at least 90% of the shares voted with approximately 96% average support. The proposal to approve the amendment and restatement of the 2005 Stock Incentive Plan has been approved with the support of approximately 97% of the shares voted.
The advisory resolution regarding executive compensation has been approved with support of approximately 89% of the shares voted. The proposal to ratify the appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm has been approved with the support of approximately 91% of shares voted. The stockholder proposal submitted by the National Center for Public Policy Research was not approved with approximately 99% of shares voted voting against this proposal. I will now turn the meeting back over to Chuck.
Thank you, Evan. The matters for which this annual meeting of the stockholders was called to consider have been completed. Since we have received no notice of any other business to come before the meeting, the 2025 annual meeting of stockholders is hereby adjourned. I will now proceed with a business review presentation. The question-and-answer session will follow my presentation. Eric, if you could guide slides for me, that would be great. First of all, I want to just touch on fiscal year 2025. It was a defining year for Cisco. Against the backdrop of a very complex environment, we delivered strong financial results, completed the successful integration of Splunk, and positioned Cisco at the heart of the AI transition.
Our performance was driven by our team's precise execution, the continued growth of our software and subscriptions, which now make up more than half of our revenue, and our focus on delivering a world-class innovation at an unprecedented speed. To recap our fiscal 2025 results, our revenue was $56.7 billion, up 5% year-over-year, non-GAAP EPS of $3.81, up 2% year-over-year, non-GAAP gross margins of 68.7%, non-GAAP operating income of $19.5 billion, up 6% year-over-year, and non-GAAP net income of $15.2 billion, flat year-over-year. Our strong performance in fiscal 2025 has set the stage for a great start to fiscal 2026, where we delivered record Q1 revenue and are on track to deliver our strongest year yet. Next slide, please. In Q1, we saw a strong start to FY 2026 with revenue and EPS above the high end of our guidance ranges.
Revenue was $14.9 billion, up 8% year-over-year, driven by robust demand for our AI infrastructure and campus networking solutions. Product orders grew a solid 13% year-over-year with growth across all geographies and customer markets. Non-GAAP EPS was $1, up 10% year-over-year as we continued to grow earnings faster than revenue. Our other key metrics were also strong, with non-GAAP gross margins at 68.1%, non-GAAP operating income at $5.1 billion, non-GAAP net income at $4 billion, up 9% year-over-year. And we're confident in the foundational strength of our business and future growth opportunities fueled by our leadership in AI and secure networking. These results position our business for what we expect to be Cisco's strongest year yet, as indicated in our full-year guidance. As it relates to capital allocation, our priorities are the following. Number one, grow the business organically and inorganically, as we always have.
Number two, continue the growth of our dividend. Number three, continue to buy back shares, offsetting dilution. Number four, returning excess cash to shareholders. In fiscal year 2025, we had an annualized dividend per share of $1.64 and almost six billion of share repurchases, resulting in diluted shares outstanding of four billion. We plan to continue to return more than 50% of free cash flow to shareholders. In fiscal year 2025, we returned 94% of free cash flow. Next slide, please. I wanted to touch briefly on our AI advantage. We are really at the heart of the most significant technology transition of our lifetime, playing a critical role in helping our customers power, connect, and protect the AI era. We're doing this across five major categories. First, AI infrastructure. We're reimagining the data center for both hyperscalers and enterprises, and the demand is clear.
We took $1.3 billion in AI infrastructure orders from hyperscalers in Q1 alone and expect to recognize roughly $3 billion in revenue from them in fiscal year 2026. With our secure AI factory with NVIDIA, we also bring the full-stack enterprises' need to securely accelerate their adoption of AI. Beyond the data center, we are bringing AI inferencing to the edge with Cisco Unified Edge, which integrates compute, networking, and storage for real-time inferencing of agentic and physical AI workloads. Secondly, security for AI. AI brings with it many new opportunities, but also new security risks. We're delivering AI-native security platforms like Hypershield and AI Defense to protect the entire stack. Third, data. This is essential because you can't create great AI without great data.
With our new Cisco Data Fabric powered by Splunk, we provide an architecture that unifies and manages machines' data across our customers' entire digital footprint, enabling them to build powerful AI models using their previously unused proprietary data. Fourth, AI-native products. We're embedding AI across our portfolio to increase productivity and streamline operations. For example, AgenticOps leverages AI agents for intelligent IT operations automation, while Cisco AI Canvas provides a generative UI that unifies telemetry, AI insights, and collaboration into a shared workspace for faster cross-domain problem-solving. And finally, services. We're wrapping our powerful customer experience engine around all of this, helping our customers design, deploy, and maximize the value of their AI investments with confidence. Next slide, please.
Our customers also need three things to thrive in this AI era: to efficiently power and secure AI workloads, modernize how and where work happens, and keep their entire operation secure and reliable. We are bringing the full power of our portfolio together to deliver these outcomes. First, we're helping customers build AI-ready data centers to power workloads anywhere from public and private clouds to on-premises and at the edge. Second, we're delivering future-proof workplaces by modernizing everywhere people and technology work and serve their customers. Third, we're delivering digital resilience by helping to keep the data center, workplace, and entire digital footprint securely up and running in the face of any disruption. With the integration of Splunk, we're providing unparalleled security and observability for our customers. I am incredibly optimistic about the opportunities ahead. Our technology will be a driver of economic growth and productivity in the AI era.
We look forward to the tailwinds across our business that will enable us to deliver for our customers, partners, and communities and stockholders in the remainder of fiscal 2026 and into the future. It is now my pleasure to turn the meeting over to Sami to lead the Q&A portion. Sami, over to you.
Thank you, Chuck. We will now address questions which have been submitted by stockholders. As mentioned earlier, any stockholder who would like to ask a question can do so by typing the question in the Ask a Question box and clicking Submit. If we are unable to respond to a stockholder's properly submitted question due to time constraints, we will respond directly to the stockholder after the meeting using the contact information provided. Chuck, I will be moving to the first question we have picked up in the queue. It is in regards to recent company results. And here's the question. Your recent earnings report showed strong growth. Can you discuss the key trends you are seeing with your customers and what is driving this performance?
Thank you, Sami. Yeah, we saw strong Q1 performance with 8% revenue growth, as I said, driven by strength in networking and revenue growth of 15% year-over-year in Q1 in networking itself. Within networking, SP routing was the biggest driver of growth. We saw strong demand from hyperscalers for AI infrastructure as they scale data centers, as well as telcos, which are increasing their network capacity to handle the increases in AI traffic that they're experiencing. We also saw strong demand from our enterprise customers with our refreshed product portfolio. We see most every customer now modernizing their networks for AI. Even if they don't understand exactly what their AI investments or applications will be in the future, they're very clear that they need modern infrastructure to support that. So those are some of the highlights that we saw with Sami.
Great. Thank you, Chuck. We're going to move to the next question, which is referring to artificial intelligence. Artificial intelligence is a major focus. Can you discuss Cisco's overall strategy for capitalizing on the AI opportunity and how the integration of Splunk is enhancing your position?
Yeah, thank you, Sami. As I said earlier, we see broad AI opportunities broader than just the AI infrastructure for hyperscalers that I highlighted. As I also said, we see customers bolstering networks and building out their infrastructure for incoming AI workloads. We think this will bring vast increases in network traffic, which will continue to require customers to upgrade. It really is a fundamental shift here where customers are going to be looking at not only upgrading their networks, but embedding security deeply into the fabric of the network, and this is where Cisco is uniquely positioned. We've announced smart switches, advanced security. We build our own silicon and software and really do provide the critical infrastructure for this AI era. As it relates to the integration of Splunk, this is crucial for the digital resilience portion of our strategy that I spoke about a few minutes ago.
We're building a comprehensive data fabric that really will allow our customers to unify their own proprietary data and build AI models and gain insights to monitor, protect, and see what's going on across their entire AI ecosystem.
Got it. And then the next question is in regards to the company purpose and impact. Cisco's stated purpose is to power an inclusive future for all. Can you discuss how this guiding principle influences your business strategy and helps create long-term value for your stockholders and communities?
Yeah. If you really think about what we do, it does guide everything that we do, whether it's helping build massive telecom networks in India to connect rural villages or working on community resilience. There are really four interconnected pillars. One is community resilience. We think that having healthy communities where we operate and around the world is important, and we focus on digital readiness, crisis response, and strategic investments in those areas. Second pillar is our people. We have new guiding principles for how our teams operate around really thinking big and playing to win and really focused on driving durable growth, which we think is obviously really good for our shareholders as well. We think about responsible innovation, prioritizing security, privacy, trust, and ethics in how we build our products, and then finally, focus on energy and sustainability.
We all know that some of these emerging trends are going to require massive amounts of energy, and so our ability to build products and technologies that help them reduce their energy consumption, we think, is going to be very important as we go forward, and I think that running a successful business with a commitment to doing good helps make progress in all these areas possible, and we'll be publishing our purpose report in mid-January of 2026 for your review.
Thank you, Chuck, for addressing those questions. That is all the time we have today for questions. Thank you for attending this meeting.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.