Cisco's Record Revenue Falls Short as Memory Costs Bite

Cisco Systems (CSCO) reported record revenue of $17.3 billion in its fiscal Q4, exceeding Wall Street expectations by 18%. Despite this impressive growth, the company's stock fell 8.4% on Thursday.

The drop was attributed to a shift in the product mix towards hardware and increased memory costs, which compressed the margin by 270 basis points year over year.

Management expects a similar gross margin headwind in fiscal 2027 as the hardware mix continues to build. The CFO noted that the decline is partly offset by productivity and price increases, but also warned of a slight gross margin headwind through fiscal 2027.