Cisco Cybersecurity Revenue Declines 2% as Cloud Shift Impacts Traditional Products
San Jose, CA – [Date] – Cisco Systems reported a 2% year-on-year decline in its cybersecurity revenue for Q1 FY2026, reaching $1.98 billion, driven partly by a shift among clients toward cloud subscriptions and away from traditional on-premises solutions like Splunk, as well as declining legacy product revenue.
Cisco’s cybersecurity offerings include network security, identity and access management, Secure Access Service Edge (SASE), threat intelligence, and threat detection & response services. The company expects that new and upgraded solutions—representing roughly one-third of its cybersecurity portfolio—will help restore revenue growth. These include Secure Access, XDR, HyperShield, and AI Defense, which have seen strong demand. During Q1, the company recorded double-digit growth in next-generation firewall adoption, with about 3,000 customers purchasing new products since launch.
Meanwhile, Splunk continues to gain traction, driven by recurring annual revenue and performance commitments, highlighting accelerated adoption of cloud-based products. Cisco is integrating its Extended Detection & Response (XDR) with Splunk Enterprise Security to offer a unified solution for complex cyber threat mitigation.
Cisco faces intense competition from Fortinet and Okta. Fortinet is expanding its AI-driven cybersecurity portfolio across 20+ solutions, including AI protection, AI operations, and large AI system security. It also launched the AI Secure Data Center, offering integrated infrastructure for intelligent workloads while reducing energy consumption by up to 69% compared to traditional solutions.
Okta provides AI-powered solutions such as advanced identity and access management, threat protection, and enterprise AI adoption to enhance cybersecurity and user experience. Okta projects 16% annual revenue growth from 2023–2026, with FY2026 revenue expected between $2.906–2.908 billion, reflecting an 11% year-on-year increase.
Stock Performance and Market Valuation
Cisco shares have gained 30.8% over the past year, outperforming the broader computing & technology sector, which rose 24.2%. Cisco stock trades at a 12-month price-to-book ratio of 6.49x, above the networking sector average of 6.13x, and currently holds a D rating from Zacks, indicating slight overvaluation.
Zacks estimates Q2 FY2026 EPS at $1.02, up 8.5% year-over-year, with full-year FY2026 EPS projected at $4.10, marking a 7.6% growth over FY2025. The company carries a #3 (Hold) rating from Zacks.
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