Cisco’s latest quarterly earnings reveal a company holding its ground in Collaboration while accelerating sharply in AI infrastructure, a combination that could reshape its enterprise value proposition.
Collaboration revenue rose 2 percent year-on-year to $1.1 billion, with Webex remaining the linchpin of Cisco’s UC offering. That performance is steady rather than spectacular, reflecting both market saturation and inevitably intense competition from Microsoft Teams and Zoom. Cisco’s pitch remains focused on enterprise-grade security, compliance, and integrations, but with the UCaaS market maturing, incremental gains will be harder won.
The real momentum came from AI infrastructure, which generated $2 billion in revenue for the first time, more than doubling from the previous quarter. Cisco CEO Chuck Robbins framed this as a pivotal moment:
Our strategy of delivering AI infrastructure at scale is clearly resonating with customers.”
The Competitive Webex Landscape
Cisco’s modest Collaboration growth stands out in a market where Teams dominates daily active usage and Zoom continues to innovate at speed. However, Cisco retains a defensible niche with regulated industries, government contracts, and hybrid workplace integrations. The challenge and opportunity lie in using its AI capabilities to differentiate Webex beyond reliability and compliance.
Webex has recently added AI-powered meeting summaries, noise suppression, and real-time translation, but the earnings call suggested that future enhancements will be powered not just by application-layer AI, but by network-level intelligence delivered via Cisco’s infrastructure backbone.
AI Infrastructure: Beyond the Data Centre
The $2 billion AI revenue is primarily driven by hyperscaler and enterprise demand for AI-ready networking, switching, and compute. For UC buyers, the significance lies in Cisco’s ability to control both the plumbing (infrastructure) and the experience layer (Webex). This vertical integration could lead to faster rollout of advanced features, more predictable performance, and tighter data security.
Robbins positioned this as a structural advantage over pure-play UC vendors:
When we bring AI capabilities from the network to the application, we can deliver unique value no one else can.”
Why This Matters for IT and C-Suite Leaders
IT Strategy Alignment
CIOs and CTOs evaluating UC roadmaps should view Cisco’s AI investments as more than a networking play. A network-optimised AI stack can reduce latency in video calls, improve meeting transcription accuracy, and enable adaptive bandwidth allocation for hybrid workforces.
Risk Management
Cisco’s deep enterprise and government relationships make it a lower-risk choice for organisations with stringent compliance needs. Integrating AI at the network layer also reduces dependency on third-party AI providers, potentially limiting exposure to data governance issues.
Total Cost of Ownership
If Cisco can bundle AI-enhanced Collaboration features into existing Webex subscriptions, rather than charging separately, the net effect could be improved ROI compared to adding standalone AI tools on top of UCaaS platforms.
Procurement Leverage
The combined purchase of AI infrastructure and UC licences could strengthen large enterprises’ negotiating positions with Cisco, especially for multi-year contracts.
Financial Health Snapshot
Cisco closed the quarter with total revenue of $14.8 billion, up 4 percent year-on-year, and net income of $3.5 billion. Gross margins held steady at 64 percent, reflecting disciplined cost management despite aggressive AI infrastructure expansion.
The company maintains over $19 billion in cash and short-term investments, providing flexibility for M&A, R&D acceleration, and shareholder returns. Debt levels remain manageable, with a debt-to-equity ratio under 0.3.
While AI infrastructure growth is currently offsetting slower segments like networking hardware, Cisco’s balance sheet strength gives it room to pivot strategically, whether that means doubling down on AI, bolstering Webex competitiveness, or pursuing acquisitions in adjacent markets.
Bottom Line
Cisco’s quarter underscores a pivotal shift. While Webex remains a steady, if unspectacular, performer in the Collaboration market, AI infrastructure has become the company’s real growth engine. For enterprise tech buyers, the convergence of these two capabilities could signal a new competitive chapter — one in which Cisco’s control of both the network and the meeting room creates tangible advantages in performance, security, and cost predictability.
If Cisco’s real velocity lies in AI infrastructure, will Webex ride the coattails or evolve into the ultimate showcase for those AI capabilities?
The Lowdown on Last Quarter
Cisco’s Q3 earnings exceeded expectations, with revenue up 11 percent year over year to $14.1B and Webex showing strong momentum.
AI-powered features, expanded integrations, and a sharper focus on security drove the UC portfolio’s growth. Key updates included certificate-based OAuth2 authentication for Webex Contact Center integrations, call-handling efficiencies, and blind transfer support. Cisco also launched Cisco Spatial Meetings for Apple Vision Pro, enabling immersive collaboration.
Security remained central, with January’s AI Defense protecting AI development and use. Robbins said safety will be the defining challenge of agentic AI, positioning Cisco to meet enterprise demands for secure, scalable collaboration.
