Cisco Systems, Inc. (CSCO): Business Model Canvas [Dec-2025 Updated]

You're looking at the engine room of one of tech's giants, and honestly, the story for Cisco Systems, Inc. in fiscal year 2025 is all about transformation, not just maintenance. With revenues hitting a powerful $56.7 billion, the real action isn't in the boxes they ship anymore; it's in the high-margin software and AI services they're stitching together, especially after bringing Splunk into the fold. If you want to see exactly how they're monetizing that massive 76% enterprise networking share and driving $22.3 billion in recurring software revenue, the detailed Business Model Canvas below breaks down every key partnership, resource, and revenue stream that makes this pivot work. Let's dive in and see the mechanics of their current strategy.

Cisco Systems, Inc. (CSCO) - Canvas Business Model: Key Partnerships

You're looking at the ecosystem Cisco Systems, Inc. builds around itself to deliver on its value propositions, especially in the high-growth AI space. Honestly, the scale of their channel reliance is massive, even if the exact partner count isn't public for late 2025.

The financial reality of this distribution network is clear in the working capital figures. For fiscal year 2025, the volume of channel partner financing reached $24.9 billion. That's a huge flow of capital facilitated to keep the sales pipeline moving smoothly through third-party arrangements.

The most aggressive partnership activity centers on AI infrastructure, where Cisco Systems, Inc. is locking in key component suppliers and system integrators. This is where the future revenue is being built, so you want to track these commitments closely.

Consider the strategic alliances driving massive compute capacity:

• AMD and HUMAIN joint venture targeting up to 1 GW of AI infrastructure by 2030.
• Phase one deployment for this JV is set at 100 MW, with operations planned to start in 2026.
• Cisco Systems, Inc. and NVIDIA are co-developing the Secure AI Factory architecture, with solutions expected available for purchase before the end of calendar year 2025.

Here's a snapshot of the key AI infrastructure commitments with these strategic partners:

The demand driving these partnerships is evident in the full-year results. For fiscal 2025, Cisco Systems, Inc.'s total revenue was $56.7 billion. AI infrastructure orders from webscale customers alone exceeded $2 billion for FY 2025, doubling the initial target. This AI focus is also reflected in the Security product category revenue growth of 59% for the year, largely due to the Splunk contribution.

Beyond the hardware and large-scale infrastructure plays, the standard cloud ecosystem remains critical for delivering hybrid and multi-cloud solutions. You'll find Cisco Systems, Inc. deeply integrated with major hyperscalers:

• Amazon Web Services (AWS) for integrated cloud offerings.
• Microsoft Azure for hybrid cloud deployments and management tools.

The G42 collaboration, for instance, builds on prior agreements to explore AI infrastructure development and co-develop cybersecurity solutions. This isn't just about selling boxes; it's about becoming the secure, trusted backbone for national and regional AI ambitions.

Finance: review Q1 FY2026 guidance against current RPO growth of 6% ($43.5 billion total).

Cisco Systems, Inc. (CSCO) - Canvas Business Model: Key Activities

You're looking at the core engine driving Cisco Systems, Inc.'s value creation right now, which is heavily weighted toward software, services, and high-end infrastructure for the AI era. Here's a breakdown of the essential activities keeping the lights on and pushing growth, grounded in the latest numbers.

Research and Development (R&D)

Cisco Systems, Inc. dedicates substantial resources to innovation, a non-negotiable activity given the pace of change in networking and security. The stated spending for fiscal year 2025 (FY 2025) on this front was $9.3 billion. To be fair, the trailing twelve months ending October 31, 2025, showed R&D expenses at $9.414B, reflecting a 12.66% increase year-over-year. This investment fuels the development of next-generation platforms, which is critical for maintaining differentiation.

Key R&D focus areas include:

• Developing the Deep Network Model for AgenticOps automation.
• Enhancing the AI Canvas real-time collaboration platform.
• Creating quantum-resistant security solutions.

Integrating Splunk to create a unified security and observability platform

A major ongoing activity is the deep integration of the recently acquired data analytics giant. This effort is focused on weaving Splunk's machine data analytics with Cisco's networking stack to form the "Cisco Data Fabric". This isn't just about combining products; it's about creating a unified view for security and observability. For instance, in September 2025, Cisco unveiled Splunk Federated Search for Snowflake, allowing customers to query data across both platforms seamlessly. The Splunk Partnerverse program is actively being merged into the new Cisco 360 Partner Program, scheduled to occur sometime after the February 2026 launch of the latter, with Splunk maintaining its identity as a distinct 'portfolio' group within the new structure.

Manufacturing and managing a complex global supply chain for networking hardware

Cisco Systems, Inc. continues to manufacture and manage the logistics for its vast portfolio of networking hardware, which remains a foundational part of its business. This activity involves navigating global sourcing, production schedules, and distribution channels to meet demand, especially for high-demand items like the Series 8K and C9000 Smart Switches.

The scale of the overall business requires constant supply chain oversight, as evidenced by the company's financial structure:

Developing AI-driven networking and security solutions for webscale customers

This activity has seen explosive growth and is a primary near-term focus. Cisco Systems, Inc. is actively developing and shipping infrastructure tailored for large language model (LLM) training clusters used by hyperscalers. The success here is clear in the order book; FY 2025 AI infrastructure orders from webscale customers surpassed $2 billion, which was more than double the initial $1 billion target. Q4 2025 alone contributed over $800 million in these AI orders. Furthermore, the company expects this segment to drive significant future revenue, projecting AI infrastructure to generate $3BN in revenue for fiscal year 2026.

Key development outcomes include:

• Integration of Nexus switches with NVIDIA's Spectrum-X architecture.
• Sales of the Hypershield network security product, with 80 sales noted.
• Two webscale customers each signed deals exceeding $1 billion for a mix of Cisco products.

Managing the transition to the new Cisco 360 Partner Program

Cisco Systems, Inc. is managing a significant overhaul of its channel strategy, moving to the new Cisco 360 Partner Program. This transition involves simplifying designations and shifting incentives toward specialization and lifecycle services. The program was co-designed with partners, who rated it as good to excellent by 49% as of a July 2025 survey, up from 42% in May 2025. The formal launch is slated for January 25, 2026, following a phased rollout through 2025. The company committed nearly $80 million to partner education to support this shift.

The new structure is measured by the Partner Value Index, which uses four key categories for assessment:

• Foundational elements.
• Capabilities, including new specializations like Secure AI Infrastructure.
• Performance metrics.
• Engagement, which covers lifecycle adoption and renewals.

Partners must achieve their desired position by August 2025 through January 2026 to lock in their status through August 2027. Finance: draft 13-week cash view by Friday.

Cisco Systems, Inc. (CSCO) - Canvas Business Model: Key Resources

When we look at the Key Resources for Cisco Systems, Inc. as of late 2025, we're really looking at the bedrock that supports its massive scale and recurring revenue shift. You need to see these numbers to understand the moat here.

First off, let's talk about where they sit in the market. The expectation, as outlined in your strategic review, is a dominant market share in enterprise networking, pegged at approximately 76% as of Q1 2025. That kind of control over the core infrastructure layer is a resource in itself, even if the traditional networking revenue segment saw a year-over-year decline in Q1 FY2025, which was expected as backlog normalized.

The intellectual property (IP) portfolio is definitely a fortress. While the most comprehensive public data is from the end of 2023, it shows the depth of their innovation pipeline. They held 12,118 patent families globally then, with 8,298 still active. More recently, they secured over 5,600 active US patents just between 2019 and 2024. This IP strength is what backs up their newer plays in AI infrastructure, where they secured AI infrastructure orders worth more than $1 billion by mid-2025.

Financially, Cisco Systems, Inc. is rock solid, which gives them massive flexibility for R&D and shareholder returns. Their balance sheet strength is evident in the full fiscal year 2025 results. Here's a quick look at the key financial anchors from the close of FY 2025:

That $43.5 billion in RPO is crucial; it's future recognized revenue that's already under contract, which really smooths out the revenue visibility, even if Q1 FY2026 RPO was slightly lower at $42.9 billion.

Finally, you can't discount the intangible assets that keep the engine running smoothly. The brand recognition is top-tier, which helps drive partner adoption. Speaking of partners, the vast, certified partner ecosystem is the primary distribution and implementation channel for their complex solutions. This network is what allows them to deploy and support infrastructure globally.

To summarize the innovation footprint, consider these points:

• Active US patents from 2019-2024: Over 5,600.
• AI infrastructure orders secured by mid-2025: More than $1 billion.
• Top CPC codes for IP focus include H04L41/12 (Network Topologies) with over 600 patents.
• Patent litigation activity in 2024: Over 30 cases.
• Total global patent families as of end-2023: 12,118.

If you're looking at the next step, Finance needs to model the impact of the Q1 FY2026 RPO mix shift-specifically the 10% growth in Product RPO versus 4% in Services RPO-on the Q3 FY2026 revenue recognition schedule. Finance: draft 13-week cash view by Friday.

Cisco Systems, Inc. (CSCO) - Canvas Business Model: Value Propositions

Digital Resilience through unified security and observability (Cisco + Splunk)

The integration of Splunk is a core value driver, moving Cisco beyond just connectivity to comprehensive data-driven security and operational trust. For the full fiscal year 2025, Cisco Systems, Inc. reported Security revenue at $8.09 B, a significant increase of 59.49% compared to fiscal 2024, largely fueled by the Splunk contribution. The Observability segment revenue reached $1.06 B in fiscal 2025, showing a growth of 26.05% year-over-year. This unified approach is highlighted by product announcements such as the ability to ingest Cisco firewall logs into Splunk at no cost starting in August 2025 (conditions apply). The goal is to empower organizations to maximize the trust and power of Artificial Intelligence by unlocking actionable insights from machine data.

AI-driven infrastructure and networking for high-performance computing

Cisco Systems, Inc. is positioning its networking gear as essential for the Artificial Intelligence boom, securing substantial orders from major cloud providers. For fiscal year 2025, the company secured over $2 billion in AI infrastructure orders from webscale customers, which more than doubled its original target. In the fourth quarter of fiscal 2025 alone, these AI infrastructure orders exceeded $800 million. The Networking segment, Cisco Systems, Inc.'s largest, generated $28.30 B in revenue in fiscal 2025, representing 44.53% of total revenue. This segment is seeing catalysts from AI spend, even as its overall revenue saw a slight decrease of -3.16% for the full year. The company launched the "Cisco Unified Edge" computing platform to run AI workloads at local entities like retail stores and healthcare facilities.

Secure, flexible solutions for the hybrid work environment (Webex Suite)

The Webex Suite provides an all-in-one, AI-powered collaboration platform designed for engagement from anywhere. Webex Calling has grown to support over 14 million users worldwide, and the platform hosts a record eight billion monthly calls. The platform supports 650 million monthly meeting participants. You can see customer confidence reflected in the Gartner Peer Insights data, where 87% of reviewers as of March 2025 would recommend the Webex Suite solution to their peers. Furthermore, Gartner recognized Cisco Systems, Inc. as a 2025 Customers' Choice for Contact Center as a Service.

Simplified IT management via cloud-managed platforms like Cisco Meraki

Cisco Meraki delivers out-of-the-box security, scalability, and management targeted at Small and Medium-sized Businesses (SMBs) through its cloud-first platform. The management is simplified via a single, simple, and secure web-based dashboard. Cisco Meraki now offers three distinct licensing models to provide greater control: Co-Termination, Per-Device Licensing (PDL), and Subscription Licensing, which allows for licensing terms ranging from 12 to 120 months. This cloud-managed approach reduces administrative complexity for IT teams managing multiple sites and devices.

End-to-end security that is defintely fused into the network fabric

Security is a major pillar, evidenced by the Security segment revenue reaching $8.09 B in fiscal 2025. The integration of security is a key differentiator, with the company claiming its new security strategy contributed to security orders having more than doubled year-over-year in a prior quarter. The value proposition includes Zero Trust Network Access (ZTNA) enforcement across over 1,200+ GenAI applications via ThousandEyes. The overall financial health supports these investments, with total fiscal year 2025 revenue at $56.7 billion, and operating cash flow increasing 30% to $14.2 billion.

Here's a quick math summary of the full fiscal year 2025 performance:

What this estimate hides is the ongoing integration complexity following the Splunk acquisition, which is a key factor in realizing the full security and observability value proposition.

Cisco Systems, Inc. (CSCO) - Canvas Business Model: Customer Relationships

You're looking at how Cisco Systems, Inc. manages its relationships with customers as of late 2025, which is heavily tilted toward recurring value and proactive service delivery.

The partner-led service model remains central for implementation, consulting, and managed services delivery. This channel is crucial for scaling specialized expertise across the installed base.

For your largest Enterprise and Service Provider customers, dedicated account management teams are in place. These teams focus on the entire customer lifecycle, especially as the business shifts further into software and subscription models.

Customer Success teams are specifically tasked with driving adoption of subscription services. This focus is necessary because Annual Recurring Revenue (ARR) ended Q4 Fiscal Year 2025 at $31.1 billion, marking a 5% increase. Total subscription revenue for the quarter was $7.9 billion, which is 54% of Cisco Systems, Inc.'s total revenue.

Here's a quick look at the financial scale of the recurring and service business as of the Q4 FY2025 close:

Procurement is streamlined through Enterprise Agreements (EAs), which simplify how customers buy software and services across the portfolio. For instance, partners utilizing the Cisco Enterprise Agreement 3.0 with a lifecycle approach have seen software growth that is 2.5x greater and renewal rates that are 3x higher.

Cisco Systems, Inc. is heavily investing in proactive and predictive support using Artificial Intelligence (AI) to resolve issues faster. This is a major focus area, especially given the high demand for AI infrastructure, which saw orders exceed $800 million in Q4 FY2025 alone.

The drive toward AI-enhanced support is based on customer expectations and internal metrics:

• 93% of surveyed respondents predict agentic AI will enable more personalized, proactive, and predictive services.
• 88% of respondents feel confident that agentic AI-led customer experience will help their organization meet its goals.
• Cisco Systems, Inc. expects agentic AI to handle 68% of customer experience interactions within three years (by late 2028).
• Queries through agentic AI were measured at 25x higher in network traffic than traditional chatbots during a recent earnings call.
• AI tools are expected to virtually eliminate network downtime caused by misconfiguration, which currently costs businesses 9% of their total annual revenue.

The company projects AI infrastructure revenue to reach $3 billion for fiscal year 2026, showing where future service and support integration will be concentrated. It's defintely a shift from reactive fixes to predictive maintenance.

Finance: draft 13-week cash view by Friday.

Cisco Systems, Inc. (CSCO) - Canvas Business Model: Channels

You're looking at how Cisco Systems, Inc. moves its massive portfolio of networking, security, and software solutions to the end customer as of late 2025. The channel remains the absolute backbone of their go-to-market strategy, even as the mix shifts toward recurring services.

Two-Tier Channel Partner model (Distributors to Resellers)

Cisco Systems, Inc. historically relies heavily on its indirect sales motion. For fiscal year 2025, the total revenue reached approximately $56.7 billion. Based on historical vendor statements that over 80 percent of revenue flows through partners, this implies that well over $45 billion in annual revenue was influenced or driven by the channel ecosystem in FY2025. This structure uses distributors to manage logistics and inventory for a vast network of resellers, ensuring broad market coverage across the globe.

Value-Added Resellers (VARs) and System Integrators (SIs) for complex solutions

VARs and SIs are critical for deploying the complex, integrated solutions that Cisco provides, especially as customers modernize infrastructure and adopt AI. These partners translate Cisco's broad portfolio into specific, high-value outcomes for large enterprises. The growth in specialized areas reflects their importance; for instance, product orders across all customer markets saw strong growth, with enterprise up 4% in Q3 FY25. The shift in partner designations under the upcoming Cisco 360 program-moving away from the old Gold designation to Cisco Partner and Cisco Preferred Partner-is designed to better measure the value these solution-focused partners bring, moving away from pure transaction volume.

Managed Service Providers (MSPs) for recurring, subscription-based services

The strategic push is clearly toward recurring revenue, which MSPs are perfectly positioned to deliver. The new Cisco 360 Partner Program, set to launch in February 2026, is explicitly built to attract more MSPs and MSSPs by focusing on value delivered rather than just upfront hardware sales. This aligns with the financial reality: Total subscription revenue reached $8 billion, making up 54% of total revenue in Q1 2026, the quarter immediately following FY2025. This signals that the channel strategy is successfully driving the subscription transition.

Direct sales force for strategic, large-scale Enterprise and Webscale accounts

Cisco Systems, Inc. maintains a focused direct sales force, historically numbering around 17,000 employees, to manage the most strategic accounts. The primary focus for this direct team is the high-end enterprise and, critically, the webscale customers driving AI build-outs. AI Infrastructure orders taken from webscale customers exceeded $2 billion in total for fiscal year 2025, more than doubling the initial $1 billion target. Furthermore, product orders from the service provider and cloud segment grew 45% year-over-year in Q3 FY25, indicating significant direct engagement in this high-growth area. The majority of direct sales historically sits within the service provider space.

Online portals and marketplaces for software and cloud product sales

While hardware sales are often partner-led, the digital storefronts are central to the software and subscription business. The move to a subscription model is substantial; in FY2021, 80% of Cisco software was sold as a subscription, a trend that has only accelerated into late 2025. These online platforms facilitate the consumption and management of recurring services, which now form a major part of the revenue base. The overall FY2025 revenue was $56.7 billion, with the Service segment alone accounting for $21.96 billion in FY2025.

Here is a snapshot of key channel and related financial metrics as of the end of fiscal year 2025:

The channel structure is evolving to support this subscription focus. You can see the key elements that define the partner engagement model:

• The transition to the Cisco Partner Incentive (CPI) structure, replacing VIP and CSPP, starting in February 2026.
• The new partner tiers will be Cisco Partner and Cisco Preferred Partner, replacing the Gold designation.
• The program emphasizes measuring partners on foundational, capabilities, performance, and engagement, not just transactions.
• The direct sales force prioritizes securing large deals, such as the two billion-dollar deals signed with web scale customers in FY2025.
• The company is actively managing the channel through platforms like the Partner Experience Platform (PXP) to model earnings with a new profitability estimator tool coming in May (2026).

Finance: draft the Q1 FY2026 channel revenue attribution model by next Tuesday.

Cisco Systems, Inc. (CSCO) - Canvas Business Model: Customer Segments

You're looking at the core buyers Cisco Systems, Inc. serves as of late 2025. It's a broad base, but the financial focus is clearly shifting toward high-growth areas like AI infrastructure and software-driven security.

The largest customer base, by far, remains Large Enterprises across every industry you can name, from Finance to Healthcare. These customers drive the bulk of the core Networking business. For the full fiscal year 2025, the Networking segment brought in $28.30 Billion, representing about 44.53% of the total revenue base of $56.65 Billion. Still, the growth story is elsewhere; Security revenue hit $8.09 Billion in FY 2025, showing massive expansion.

The Service Providers and Cloud/Webscale Customers segment is where the near-term excitement is, especially around AI. Cisco Systems, Inc. saw AI Infrastructure orders from these webscale customers exceed $800 million in the fourth quarter alone, pushing the total for fiscal year 2025 past $2 billion. Honestly, that's more than double the original $1 billion target they set out with. Product orders from this group were up a massive 49% year-over-year in Q4.

For the smaller and mid-sized organizations, the Small and Medium-sized Businesses (SMBs), Cisco relies heavily on its channel. You won't see a dedicated financial line item for them, but they are served almost entirely through the partner ecosystem. This channel strategy helps Cisco maintain reach without the high direct sales cost associated with smaller deals.

The Public Sector-think Government, Education, and Defense-is a steady but sometimes lumpy customer. In the first quarter of fiscal 2025, product orders for this group grew only 2% year-over-year, partly due to budgetary pressures in the US Federal space. Product revenue in the Americas was actually offset by a decline in the public sector market, even as enterprise demand grew.

Finally, don't forget the builders: Developers and DevOps teams. This group is targeted through platforms like Observability, which is a key growth area following the acquisition of Splunk for $28 billion in 2024. Observability revenue reached $1.06 Billion in FY 2025, a growth of over 26% compared to the prior year.

Here's a quick look at how the main product revenue categories mapped to the overall business in FY 2025:

You'll notice the core Networking revenue dipped slightly, but Security and Observability are pulling the weight for future-facing segments.

Finance: Finalize the FY2026 budget allocation model reflecting the shift from core Networking to Security/AI infrastructure by next Wednesday.

Cisco Systems, Inc. (CSCO) - Canvas Business Model: Cost Structure

You're looking at the expense side of the Cisco Systems, Inc. ledger for late 2025, and it's clear that building and selling complex, global-scale infrastructure requires significant upfront and ongoing investment. The cost structure is heavily weighted toward engineering the next generation of networking and security, plus the operational costs of a massive worldwide sales engine.

High cost of Goods Sold (COGS) for complex hardware manufacturing remains a core component, even as software and subscription revenue grows. While Cisco outsources much of its manufacturing, the Bill of Materials (BOM) for high-end routers, switches, and data center gear is substantial. For the full fiscal year 2025, with total revenue at $56.7 billion, the Cost of Goods Sold was approximately $19.91 billion, derived from the reported Gross Profit of $36.790 billion and a GAAP Gross Margin of 64.94% for the year. This margin, while strong for hardware, reflects the inherent material and production costs.

The commitment to future relevance shows up clearly in Research and Development (R&D). Cisco Systems, Inc. poured $9.3 billion into annual Research and Development expenses for fiscal year 2025, a notable increase that signals a deep focus on innovation, especially around AI infrastructure and security integration following the Splunk acquisition. This investment is critical to maintaining their competitive moat.

The global footprint necessitates large Sales, General, and Administrative (SG&A) spending. This covers the massive global sales force, which is reported to be around 25,000 strong across 90 countries, plus the overhead to run the entire enterprise. For fiscal year 2025, estimates show Sales and Marketing costs approaching nearly $11,000 million, while General and Administrative expenses were near $2,992 million.

The integration of major acquisitions like Splunk creates specific, non-cash charges that impact the cost base. Amortization costs related to acquired intangible assets are significant. For the first six months of fiscal 2025, the total amortization of purchased intangibles, including those from Splunk, reached $1,195 million. Furthermore, the estimated future amortization expense for finite-lived purchased intangible assets as of July 27, 2024, included a charge of $2,138 million expected to be recognized in fiscal year 2025.

Managing the ecosystem of resellers and integrators is another necessary cost. Costs associated with managing the global channel partner incentive programs, rebates, and support structures are embedded within the SG&A and sometimes the COGS structure, though a specific standalone figure isn't always broken out. You also have to account for restructuring charges, which in the first six months of fiscal 2025 included $675 million related to a plan announced to drive efficiencies.

Here's a quick look at the major operating expense buckets for FY 2025:

The overall operating expense (OPEX) for fiscal year 2025 was reported at $23.26 Billion. This figure bundles the R&D, SG&A, and other operating costs you're tracking. The trend shows these costs are rising, which is why operating income saw a dip in 2025 compared to its 2023 peak, even with strong revenue growth.

You should keep an eye on how these costs translate to the bottom line. The mix of expenses points to a strategy that prioritizes:

• Engineering Dominance: The $9.3 billion R&D spend is the price of staying ahead in networking and security.
• Market Penetration: The high SG&A reflects the necessary cost to service and sell to a massive, global customer base.
• Acquisition Integration: Amortization charges, like the $1,195 million in the first half of the year, are a direct consequence of growth-by-acquisition strategy.
• Channel Management: Incentive programs are a variable cost tied directly to the sales volume moving through partners.

Finance: draft 13-week cash view by Friday.

Cisco Systems, Inc. (CSCO) - Canvas Business Model: Revenue Streams

You're looking at how Cisco Systems, Inc. actually books its sales as of late 2025, which is a mix of big upfront hardware sales and increasingly important recurring software income. Honestly, the shift is the story here.

The total revenue for fiscal year 2025 hit approximately $56.654 billion, showing a 5% increase year-over-year, which is a solid number given the market complexity. This top line is carved up between hardware, software, and the support that keeps it all running.

Product Revenue, which covers the physical gear like switches and routers, was reported at $41.61 billion for FY 2025. That's the bulk of the business, representing the foundational networking hardware sales you'd expect from Cisco Systems, Inc. Still, the real momentum is elsewhere.

Services Revenue, covering things like technical support and professional services, brought in $15.04 billion in FY 2025. This stream is crucial for customer stickiness, ensuring ongoing relationships beyond the initial box sale.

The big financial move is in the recurring model. Software and Subscription Revenue reached $22.3 billion in FY 2025. That's a significant 21% increase, largely powered by the full-year contribution from the Splunk acquisition, which is a clear indicator of where the company is placing its strategic bets for future, predictable cash flow.

When we break down the product categories, you see the core strength and the growth areas. Core Networking Revenue, the bread and butter, stood at $28.30 billion in FY 2025. That segment is massive, but it actually saw a slight dip year-over-year, which you need to factor into your long-term growth assumptions.

The high-growth segments are where the future investment story is playing out. Security revenue was $8.09 billion, showing massive growth, largely due to integrating advanced threat intelligence and response capabilities. Observability revenue, while smaller, also posted strong growth, hitting $1.06 billion in the fiscal year.

Here's a quick look at how those key segments stacked up in FY 2025:

It's also helpful to see the recurring revenue components that underpin the subscription growth. The total Remaining Performance Obligations (RPO) ended the fiscal year strong, at $43.5 billion total, up 6% overall. This backlog is a great leading indicator for future recognized revenue.

You can see the subscription focus in the RPO breakdown:

• Total RPO was $43.5 billion, up 6%.
• Product RPO saw a stronger increase at 8%.
• Services RPO increased by 5%.

The focus on locking in future revenue is clear from the deferred revenue balance as well. Deferred Revenue stood at $28.0 billion at the end of Q1 FY 2026, which is up 2% total from the prior year period, showing customers are prepaying for services and software access. Finance: draft 13-week cash view by Friday.