Arista Networks (ANET) 16 Feb 182017 Q4 Earnings call transcript

Welcome to the fourth quarter 2017 Arista Networks Financial Results Earnings Conference Call.

During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. [Operator instructions] As a reminder, this conference is being recorded and will be available for replay from the Investor Relations section at the Arista website following this call. the to turn now will call Mr. over I and Elliott, Director Development. Business of Chuck Investor begin. may you Sir,

Thank December afternoon, are results announcing operator. and afternoon, With quarter Networks' you, Arista Good fourth and for Ita me XX, joining you President year a Financial and on its us. Brennan, for Networks Arista's fiscal today's Officer. Executive issued the call Chief Jayshree XXXX. Chief Arista everyone Ullal, ended Officer; and This thank release press

release, the the of can copy access at a like you'd online you company's it If website.

this cause today We call. certain charges. financial from These obligation to update call in to forward-looking Arista been Industry as to exclude During please a representing year. future. results including views discuss the the that conference which and apply have XX-K financial subject quarter anticipated this not statements forward adjusted these by these to the most the in risks course in Form of statements. first outlook fiscal our XXXX could differ statements you in with innovations, on relating we filed non-GAAP impact of our Networks of those call, Form note them that on we of management no SEC, certain documents specifically recent to and our the for the the our market use will rely uncertainties expressed which Also, after measures make are this and as detail litigation, opportunity on XX-Q should those our statements, and undertake basis and materially and are actual

will measures press that, measures reconciliations release. provided have over financial non-GAAP I financial call our earnings GAAP the Jayshree. of to in With We to turn these

joining you, and you earnings quarter fourth back. XXXX Chuck for this call. everyone welcome on us afternoon our Thank Thank

to growth million, combination Service lower mix. favorable a and again our of non-GAAP our see, demonstrated revenue. XX% at the grew Overall, XX.X% $XXX.X due of delivered of in was margins EPS while margin XXXX, our came to contributed We non-GAAP approximately gross titan in As revenue you gross once XX.X%. record cloud can profitability non-GAAP with cost $X.XX.

customer over we customers, of XX, with XX%, XXXX, In to Microsoft X,XXX at international December terms our year. of Americas XXXX acquired strongest revenue the date for now becoming have as contributing XX%. trends, XX% contribution of The QX with the was the total

was XX% the at For rest XX%. and of Americas full the International year, the

the our into verticals, of was of of largest terms some QX for public was time use QX cases first Enterprise where vertical XXXX. testing history. in spilled In Cloud company in certifications, XXX number legal vertical very XXXX, complex titans some one because our the second the

Arista Arista. partner, FlexRoute, delivery, cloud we and growth, technology rich from XX.X% example can address routing. terms cases In use generation Arista unveiled EOS content of December products, delivers and peering new of such of and its One now routing And a internet across version automation. grade X.XX transformative with cloud, next XXXX, in exchanges. with that, $X.XXX billion a X,XXX, access to Undoubtedly, significant traditional revenue. Harmonic. is end with with year head in to annual has our our cable together We employee service networks migrating sales XXXX operators increased virtualized strength for been myriad

of products. gigabit both layer I XXX XXXX, places-in-the-cloud ahead an with places inflection to PICs, traditional and converging Legacy IP, XXX wrong vendors elastic in year. side entry is are together X this gigabit For integration. growth important switching with layer pins been robust Arista for our trend, in and in with our Ethernet the Instead, into LAN, network. XXXX expect WAN, Arista continue on X is also two the offering an has compelling routing Ethernet of year the or time into that stagnant doing first decades what nearly is alternative. next

and a cloud an CloudVision, data see We meaningful innovations containerization, in Coupled hybrid emerging our traction of Equinix, software for any years. name in few. to as powerful offering we also with Google, software this with many us of a delivered analyzers, category Oracle Amazon, and couple Microsoft

number As a in we XXXX, share ports, we switching. have gigabit are exit of a XX now leader networking surpassed and million XXX also total cumulative Ethernet cloud market the one

across clear he’s third Officer, and Manny sales this known Today, our growth. comes Rivelo team tailored general Sadana as to all January. and to in boundaries. movement to for hired becoming recall Officer, Sales the time right goal have in at is be all and may and our software Scaling to Cisco. closely the hardware leadership brings and cloud John titans Arista. Chief as driven He also beyond formulate to my verticals. is and our verticals seasoned Many Manny leadership to Manny top in I for platforms of Enterprise Officer. even is joined SE is for it's me important models Anshul center financials will McCool a Customer adapt XXXX for manufacturing welcome XXXX, and international we way in place. Platform year five go years the us similar where service foresee officially the the to that this cloud focus providers, at and networking, working this balance cloud crystal our you drive to was personally number for the management data What expansion warmly XX who on Arista from pleasure to with We that forefront market continue year. and providers and Chief and FX Chief followed specialty Our to tied three by the the place, verticals one, second of an my

my leadership in the the you focused Arista Arista customers this to migration. for and supporting all dedicated and give in and I kudos of way. are results to And my partners typical united ecosystem Our special systematic, in and us want employees a thank team

Now, I'll to specifics. over more turn financial Ita? Ita for it

results, Thanks, non-GAAP XX.X% stock-based Jayshree with our the revenues came or non-GAAP quarter the to associated XXXX, costs of $XXX.X revenue, last A of in impacts, and with our This selected above and approximately with Total our ongoing revenue, the Tax year, $XXX our the full provided results year were XX% to charges $XXX for Act in compensation revenues of full legal XX% non-cash adoption on revenues and XXXX guidance analysis lawsuits and and and all QX excludes XXXX. from the GAAP release. and of tax at associated in up is based good XX% our afternoon. represented over million, guidance of million, is $XXX.X in one-time QX consistent of reconciliation million period. of QX Cuts Services prior year million. for total quarter. International earnings Jobs up

sales XX.X% was higher businesses from more R&D million, titan million in of solid XX%. quarter up midpoint were quarter at $XX The up geographical to came quarter. in XX.X% Operating mix X.X% million favorable or the gross revenue, our the up significantly Overall by contribution of and expense Sales reflected costs. prior of for revenue, on of was $XX.X of period. the related cloud guidance with million with $XX.X some customer spending, the XX% in expenses in a and lower marketing offsetting verticals, of revenues. XX.X%, This the gross down this continued combined timing a from shift experienced performance or While mix, million XXX above our healthy $XXX.X margin increased our quarter, quarter our from we with growth driven $XX.X with last qualifications in margin from another NRE $XXX.X in last the was enterprise period. reflected last spending and international million headcount demo customers, growth. reduced and from also US for QX

Other of $XXX.X was the the quarter resulted expense impact or increased the above. the and or for the favorable million million was a in international income discussed rate revenue. net revenue quarter for favorable tax income of reflecting This operating our for $XXX.X million, income XX.X% was $X.X effective XX.X%. mix quarter XX.X%, of Our

earnings year. from diluted for quarter number million in $X.XX, was Our share up share prior diluted per resulting shares, of XX.X% the the XX.XX number

excluded For the and those excess GAAP $X.X enacted Act. in associated share from of are Legal tax our awards from Tax the rates charges in based at GAAP the share tax impact related with for came and also reflected quarter, favorable results. on benefits of one-time with the benefit at $XX.X the This offset been focusing quarter rate in excluded additional favorable charges, came XX.X%. inclusion the combined and This mentioned quarter, results, associated for our expenses lawsuits discussed above. have above, the million tax the the of tax non-GAAP our significant ongoing mix on of you recently million non-GAAP the tax excess tax geographical with by

in timing supply turning balance Now in primarily cash DSOs X.X million turns This from quarter. a XX equivalents deferred the generated sheet. Inventory strong QX, the Inventory the optimize and our $XXX.X revenue reductions reflects decreases income in in in X.X We quarter from approximately performance, billion. XX period. combined to from in in-cash the capital, continue at up This from of came down days in $X.X December as million ended QX. times, operations the materials the billings supply to million with and at amounts. up chain. $XXX.X reflecting in quarter. reflects $XXX.X we investment working in from prior of Cash, the net quarter, raw chain decrease days, related were

consistent end deposits a maintained In other recorded last the the quarter. of addition, $XX assets with of and million quarter, we inventory further at

QX. down was revenue from total million Our in $XXX.X deferred balance $XXX.X million,

and deferred the Our days was new essentially were timing levels. quarter product days, the prior up acceptance new the payments. in of $X.X deferred and The from QX, XX of customer XX flat declined receipts XXXX reflecting expenditures revenue year to balance were million. Accounts balance end due the inventory for revenue expiration product product in XXXX period to clauses. Capital Payable quarter

outlook quarter our for to first beyond. turning Now the and

strong pleased financial are XX% XX% on underlying execution share earnings over our year basis. and with per the in performance, a XXXX revenue growth, growth with We year

tough for Jayshree’s a through reiterate revenue with some growth the this - in demand mind, drivers for from and over the face will the we to pleased are with cloud line we to that our networking benefit XXXX. as I the And to quarter typical for moderating the said, year more customer believe to year continuing positioned remain with business top in XXs base. mid move forward well are across we comments growth That Looking year. last from we we would comparables strong, XXXX, growth respect

the key front, of On of operate XX% supply outlook with the gross XX%, a we assumes outcome customer no where gross disruption being we margin driver This our range. to the positive matters, margin would mix this our to legal with within on chain. remaining reiterate

remain in expect marketing and model and gravitate will G&A. also we spending towards over ramp, we will XX% of XX% time, relation expense to our R&D, investments While our sales cautious long term X% operating our that

We quarter will in XXX adopt first of XXXX. ASC the

We new minimal this our impact have will model. guidance expect operating on

assets sheet. of a will quarter amount commissions retained on other CloudVision And liabilities first in the XXXX. small contract reported of the We from as amounts, balance will sales forward, our deferred revenue be re-class earnings going to

a stock follows. lawsuits, as our to as on quarter, of costs associated to first for $XXX the Revenues partially on following we the $XXX million, XX%, legislation approximately from any of approximately rate being our the foreign in go reflecting XX%, tax best our XX% This of by refined. this operating based December, the of results, to compensation and US current still With impact, backdrop, forward which Tax our any ongoing non-GAAP based that tax are margin Act of million represents with taxes XX%. non-GAAP lower non-cash the range of impacts guidance rate addition, gross the knowing estimate to earnings. business, approximately of elements excludes higher is all tax US legal XX% on and In the offset adoption margin expect is

ongoing Our back to diluted our the XX%, approximately the of turn shares the $XX be with now Chuck. $X tax rate Please lawsuits quarter. approximately for effective that based outlook, with million. approximately Chuck? call is to expect current we to I’ll note costs be million on expected associated

Thank you, Ita.

request single to Q&A a are the earnings themselves to now move like question. the going to Arista constraints, to Due please portion We limit call. time everyone of I'd that to

[Operator instructions].

Barclays. comes of Moskowitz first Your question the from line Mark from

Your line is open.

Thank you. Good afternoon.

with the mid question really path still my think verticals? be of around will vertical? enterprise respect And So Thank or composition Will other year should Enterprise adoption? within to continue full far about the your investors how growth that, as main is glide changes terms is to top you. then there in routing revenue XXs. Enterprise? for the important the two as to be one the How XXXX Or of

titans and number XXXX. four, our be go. I an Mark. titans, be three but cloud two, But I We quarter, was to was one to cloud between and this three provider had number different pretty I try providers, in same tell and each the XXXX, how in back vertical in just can't expect I to vertical one financials. unusual did exactly specialty go They much XXXX. tied service expect they’ll mix fully in QX. Thanks, may two number number bump cloud vertical my and script. Enterprise say for our was between on Enterprise, in our

So really a there has for X peering as Internet switching, routing you are Routing, more use. two in use across our on been remain routing. which a there's will going say cases. This And heavy which quite Flex of the duty of is X, all I is the mix the would of know two similar. for service frankly layer is horizontal verticals. routing, for customers terms transition majority There’s layer that years. largely our providers, And forms

our quickly base. now option base. terms But steadily our heavy we've is becoming what routing So is entire FlexRoute, duty we've an been of increasing in seen customer across customer

acquisitions. it customers and in of to to I customer in XX% We’re to continue somewhere be expect XXXX, new XX% XXX the over our well

Your Sachs. from next comes from question Rod Hall Goldman

is open. line Your

for Thanks guys. Hi Yes. taking question. the

related also you you I us in talk us how to help to think particularly just have for market might doing you than you AI that XXX impacted but a share question I And XXX. understand So then also workloads is cloud guys what do guidance. ask one Thank AI share Are you there XX% guess own wanted and see about feel anything you you workloads? can bit there One have you in what do the know Can I you to you like gig, talk data? two a - about, in little is? higher you. your the parts. and quantify how is some on XXX we the share are titan could of

take to then Taxay I’ll it Marc my here. Sachs. the general Goldman to and Rod counsel, Welcome, first question punt

QX PTAB’s elaborate In the that Day And about, XXX, patent, talking really XXX. the season, QX And QX, most that got cases patent XXXX and I and terms to XXXX that take to workaround some QX ones the to of revenue the the more itself. pretty impact into you're into the testing really news QX, four a simple But good affirms ran XXX ones more we of the on spilled Valentine’s XXXX weeks, than - should yesterday complex holiday to invalidate our XX the certifications, I’ll take the the really weeks. two on, complex have is expected use ACL patent. let there that much of we because couple we were decision think Marc should

will the complex be to add Marc, certifications the the there's legal of update? tunnel very at did take QX. in So do the completed most comfortable completed, and ones I'm longer. you been QX, but the have the of end cases want in a that to light

Yes, sure.

patent. I circuit of to the grateful the the decision affirmed we invalidate first very all, think that PTAB’s were yesterday XXX federal

towards this step case. the a very So XXX was important

decision of regardless that decision, outcome the this to a IPR despite that on that court the and appeal. on subject subject recent one, on We But that well. reminder alluding that the do The in other IPC stage, expires XX. At PTAB still remain We as last the about to also feel we patent order good is the XXX. was to, remaining (indiscernible) won patents year. June as the IPR that patent, the Jayshree federal

redesigns. continue to those sell we So

XXX. continue the recent with in We IPC modification move orders But seeking at the will with and to based we of suspension the we the interim, forward to upon redesigns respect XXX the a continue least be sell to decision, the proceeding.

know, huge more to we conference. you early too a this workloads, the cases AI in stage, Bechtolsheim as spoke switching our to driver. So technology cloud And require with see network going working still use at about to the experimental long but bandwidth. and Andy It’s vendors talk very about gears titans. Most more of NVidia as them clearly this are and term we in and are closely storage is

important XXX, XX analytics requirement on workloads vast for future crunching will AI data an amount in required and So the become Ethernet gigabit and workloads. the of

That’s Jayshree. great. you, Thank

from next comes question Your Stifel. from Pat Newton

Your is line open.

commentary or routers cloud your recent competitors that like guess scale routing from market NCS. in with is they're the architected addressing to economics disruption deliver I PPX the

So performance do differentiated? functionality, And comment state switching fundamentally the you spine then R and on side, routing cost competitors on as can FlexRoute their you view these support your competitive series? where solutions with is

Okay.

of So a going it's clear, architectural first one on. for all, noted, think of want my quarter. three transition there’s like and competitors on an years, some be have not routing shift been I I to just going

of gold and programmability. legacy performance, not switching and and cloud love routing. When unmatched XXXXR time, some routing to standard has performance, universal need spine the with and for availability for you Arista just So just and go to number for that, customers have large both quite a and kind migrating grade core that of Leaf the really routers Spine, the been but the XXXXR become and the both

a there's use across peering for use have entry across use because is, really and a architecture that not that doing cloud. routing to of market, Arista rather a company. people that the moving is Spine lot given box and and really across of is us are a reality natural has cases, the market. we're separate so cases peering case, us they the more the And tested Internet, more have have terms content, real In Leaf products What or to separate in in the don't our into functions. a qualified routers

for really switching. just occupying XXXXR but and I great in XXXXR for as And before, they’re said So being out positions cloud multiple the places think routing, great stand I that. and the not

like for well not unique comparison. there's last why a differentiated in truly been it’s this year. accepted and reflected We we've so think like So that's and

you Thank taking my question. for

question next Your JMP. Suppiger Eric comes from with

Your is line open.

I Coming to case, workarounds had quarter. the the XXX back the thought in you introduced September

I'm stalling little what's us a So the Can confused the walk some you titans? through on timing. of the on timing just

Yes.

first the but of was of in So them of of the absolutely little introduced were September. and of time majority over QX. maturity some in to we it did month it bit we spilled But September, really the a the completed certifications then QX, certifications,

September QX. few. So was want was Do to Majority and a QX you anything? add

of in additional are that some December said you quarter light in the quarter of fell on these September you business September of that. projects the and close in out business that? Did And had that top

that the complex September. testing Yes, in were September, in The QX. that's finish correct. more were exactly cases that Those couldn't we were we closed testing in we ones not

probably the QX. Okay. fall going And those correct? Is that are into to

QX We The say QX or the can't business or be may will QX completion testing or QX. QX. absolutely be of The exactly. in

you. Thank good. Very right. All

next comes UBS. Steve Milunovich Your from question with

line open. is Your

you. Thank

I the revenue, same would XX% was less. of You the it into think you're indicated number coming you was And suggested previous be that year. year, the which Microsoft

you was why expected. case what XXXX? in for did sounds that it than Can like it and looking So about the talk you're you better

shout We entire the in REs I out to although give engineering Anshul to And Microsoft use and are of in so mid-innings to many is expect to team No. be expansion two second Yes. my Microsoft cloud with Seattle. the into really didn't this strong. of Sadana, of spending in And is their the One to number our big Microsoft Azure. titans, itself we want a a success early Arista’s cases. expansion attribute we and things. still

tiers ranging tier all tier, is Sonic we going one, into layer which doing from three, way ourselves So number tiers, five. the find our a four, zero the to their of two,

for So well. as think and the for Microsoft Arista grew use grew I cases

So it was a win-win.

And expectation this your for year?

poorly from guessed still be concentration I since going last they'll refrain guessing. a I'm to think But year, Well, I XX% customer.

Thanks.

Henderson from Alex from comes Needham. question next Your

line is open. Your

But enterprise heard rate, I the some give the I My us Can us some you that don't earlier. hoping on tax rate give some of XXXX guidance how growth question I which on the side. granularity and just splits that primary is within internationally? you would think was on domestically,

Ita Actually, for Yes. stuff don’t tax rate you, while some the answer rummage why I I let question Alex. through

place start, said we Yes. XX%, range midpoint the XX% to new XX% it to know now that everything we will from about a at Alex, with we think rules. given the probably is good

Great. Thanks.

Okay.

like looking had in at sector, the we QX. did Enterprise just a strong very So we just sector,

very lots dollar Another record becoming neck of both million of was QX. is the of almost new customer and number purchase. and a it customer QX, with piece neck QX customers Enterprise to CloudVision important - in

So as but well something we launched XXXX, has XXX. been know, are in we this over now you

fact customer exceeds XXX cumulatively. count In our

I'm that customers. challenge double going Enterprise that large a XXXX. contribution And I in is to So to our team the think to

Mark is is Foss higher. of International terms mix, domestic international me here. helping and In

would approximately. our the I stats improved to to that split on overall say it's contributing is And So there. the Enterprise, from like speaks also a international Enterprise ’XX. in XXXX clearly way XX/XX

rough Could us is the of magnitude that too growth on any give asking the of rate much? or sense you that

- problem. I Alex, as I asking for but Thanks think no trying. the probably answers, I but don't always, too much have

Bye-bye. Thanks.

Your next Jaffrey. with comes question James from Fish Piper

Your line is open.

the very a then, flow quarter. point? sustainability we free to free it. update question. the free cash And you this these margins? flow How this forward guess of flow for the think about cash going should first had and appreciate Thanks cash Great. case strong any Really I XXX guys at

Yes.

of operating the follow adjustments right, going business. - income other to and performance, There’s cash the mean free cash question. much flow take that. the our little our performance that CapEx flow to and I'll pretty is happen I very So net our

deferred business income pretty much So that performance. outside it's the balance cash And question. Obviously flow I if you continue take generates the of that, net There’s closely. grow. free performs, as see But tied want you'll cash to that revenue sheet. services Marc, think the to well to follow will the that pretty off the other

Sure.

on the to decision a We in So the where with commission believe XXX, remand there went The that that in supposed June, and hearing upbeat continue was we litigation. by in judge is well we sit early feel January. about decision his final in to August, August. the issue

Thanks. Great.

Your next KeyBanc question Alex Kurtz comes with from Markets. Capital

Your open. line is

to to this Thanks. XXXX of just there? Hi what guys. Alex. is of How And that event? expecting you a anticipating also XXX rates of guys year. could kind clarify, better hoping are revenue more a growth a do get maybe glide wanted Steve I for year expect maybe trend This is path you a I from gigabit adoption understanding we over Enders was you’re on the or

take question. going the is Ita to first

I I guidance the mean you've seen Yes. for QX. think, Steve that

XX% obviously gave think comparables have QX guidance year you. that the over the guide upper growing with for of I we just So year, us the end the -

right? that the particular there’s for total see year. the XXs mid said any the two bookends, at we that’s of of the know to linearity we But stage. don’t think year, can that this of I for rest kind that kind I

XX as just XX very jumped long We of a a tail, a has gig. believe XX that an and you then I'll years, more step XX first did little all, gig had gig, XXX saw and Arista. on long tutorial. bit tail gig XXX into give vendors many unlike we But of gig extremely back for And Yes. almost

by IO use gig is be bandwidth working cases, it. Arista first gig, to as XXX the long going going service with you So XXX to even really or gigs. gig very at we market do trials take market. in comes be or gig just very gig time, to later. way to to doesn't is a gig but always And And be will be be early we'll tandem. do XXXX, gig, really on mainstream They’re we in XXX very to initial will The mainstream the The relevant will a I years. the more the believe think going and in more we going storage XX XXX of the gigs for is XXX XX be points is option the gig XXX goes market certain connections. can away. multiple also hard because mean expect XXX important do XX

It's together. really or. either they’re So not

Thank Great. you.

comes Your & with question Company. Cowen from Paul next Silverstein

line is open. Your

Thanks.

just I to Alex, your response Jayshree. can't Given I’m wait. kidding,

workaround, was going by that for quarter complex So the cloud in use mean displaced, delay the I the comments, to not connection back in to you can your it connection respect that of but more clearly boundaries you some Any this the last quarter revenue with can give the us and - the you cases. some with customers that referenced of displaced? a sense all the on growth? magnitude your got revenue of from put with

Yes.

everybody I to Paul, our that displaced reiterate revenue. competitor So not want for

displacement, Jayshree. I competitor suggest … to mean don't meant I just No.

Okay.

very terms sites to were operators going did complex in we’re say, especially titans into want the I so percentage, mission the that. use cases clear longer and use some testing would of out. it let’s XX% had extra - cloud I take was in really roughly But in. moved So of on the and cases as be that it these critical and production complex cloud

terms? in us that translate for you Can dollar

try. No. nice

If of on you've landscape periodically with in been kind the I update may, convertible us respect general. to cloud

there your well by either and as meaningful us calendar - since, what think us update periodically the Day collectively you've on specialty folks, Can to your skill folks you in you web terms has hyperscale of told Analyst any them you question they tell either at been as you XX% changes, give providers, among box I or solutions? to and competitors can other were competitive ’XX? or your an So And by any think the that us for my was your is, specialty thereabouts. displacement white I number as movement call

competitive no We or in titan in appreciable have our landscape seen cloud customers. change cloud

is no. change. we So in questions seen answer all to the any haven’t one your really nutshell,

the from And the ’XX for contribution hyperscale?

It The vertical was five. the the number out of one cloud our one was vertical. number titans

I Thank appreciate Okay. All it. you. right.

Your Citi Stanley Research, Kovler your next line from comes is with question open.

my for Thanks question. taking

the some spending. titans of to the CapEx spending your try be X% one US to That expect just front clout But to Just so XX% of US? in doubling you of the or was of curious being cloud think Thanks. that the you broader look are growing about that and that customers, at drive if if pushed cloud sounds qualification time. international between on part look makes question or titan revenue, like sense. will the your some out. context. more the business that about on mix XXs, of the business in how the international at Do we As titan you mid that their in workloads

Yes.

question. that’s I good a think really

the of the easy Arista point like So spend. again. it and correlation a to put I before CapEx cloud one it's one all, clearly and really made I’d make - first to between this I’ve know to

stronger our customers, very precisely I better, because lot a is look think to so point getting it's And second and still visibility is to of I with at has two for a make beyond the CapEx to piece. cloud that. one our much although want quarters nothing is and the networking important components it to not it cloud small the

more rest may expense though to cloud whole great, even of in have XXXX much - not the cap what two year. the the be happen quarters, for one not might visibility So we

important So that. I to it's think understand really

things in one one the all I lot is lot of continue the is, that of trend early noticed of cloud began sites. expansion in be a a will as in in we XXXX expansion we XXXX thing they US, will think international since with later say a titans, will the the the their Now,

titan/ from at contribution a So international we maybe a with expect even cloud least higher XX-XX, our

Thanks.

next from line Your Leopold is Simon Your comes James with Raymond open. question

that's if see understand catch an year. not up event your the in, but titans, cons quarter in the could would for of you assumption something, Arista or the question, of in reflects picture is I in whether that think wanted terms check I you're a the Just later about you of pros you. Thank strategically whether market. to forecast switching assume from on that. big how on or wanted And comment first an just frame that's not campus thoughts your participating to you the interested and something some

Simon. Thanks,

normal on think of It's nothing unusual as and the guidance slow our a and So titans guidance. seasonally an our usually year. that. not over It’s QX, immediate the impact have is always we of impact any more will It cloud quarter does. but completion our certifications toughest cooperate that rest in have know, doesn't it like first will gradual But reflects quarter. you

the data a I that are where changing. one box, branch campus, customers of is In opening pushing look really say I'm campus terms boxes do and a script, I well-defined in have as phenomenas or extension a center of of and And think the at a seeing box, what new you campus core to cloud, network tried look the this to in is the box, us at the campus. my is, places in drivers our an really box,

intention of we market have any every participating traditional And this defined. so at have markets, no as campus the disrupting intentions campus of of currently time while in traditional we kind

Thank you.

next comes Stanley. James Morgan Your question Faucette with from

Your line is open.

help just understand to you Can us how how think us those now. seeing markets, of up? amount wanted the in Thank opportunities also customers we and you internationally they’re should those you're right contribution about to evolution you insight outside fair of the geographies understand you us bouncing go help end which terms and where as of and very back around might international can think - much. to any the I types And US. maybe give a Thanks. - your

Yes.

the look think as at at I I way it. of definitely numbers looking the for year a better

we - kind XX% is up you were which typical XX% if got So international, it, at at from of our historically. look we've

about wings the couple of it the to I of than think on quarters, way better that's a think last some right.

we be we're carve if of growing we some talked business, what just APAC steady you in-region business But in-region would a is think That lumpy I is about, faster seeing at call I The small can some well, internationally. Europe. right? it are it growing that the even the effects out good relatively the growing titan cloud well progress time, look you between and business see and it's both at actually, US. still so over if like rate So than

you Thank much. very

comes with Bhagavath question Bank. from Deutsche Vijay Your next

open. is line Your

to our growth. and kind from is of like of get US. the in of Jayshree, phase your international the Good Ita. telcos a of view I sense like state next least that's afternoon, At you here in state also would

Any us international So give also the Thanks. how interesting you really sails. with of state and proceeding, is at us projects could a in telcos. business the markets how on it state share

Sure.

I than we acquiring we're countries. we tell are US. faster in international, well the would several in I in very are think in doing general, customers internationally And you

XXXX XX% think was I our of in customer acquisition international.

Leaf resemble their where service like cloud looking more more these traffic are bluntly, is the IP projects and just transformation and of terms cloud we're permeating by to are the with right? networks are Leaf engineering and view means deals those traditional and architectures in any we service small though, many what put providers, Spine. service the it Ethernet of start and midst to is and doing In So deal not the size providers. switching Spine and But going smaller, providers of a gears now

in RFPs big We’re some starting some XXXX. to and experienced we've see wins

will really on Manny. we what deterministic this year. XXXX And is working many see networks Spine important Ken we’re for is use out really entire and with Jonathan and tremendous worldwide an performance opportunity Lease to be layer this the that for hard going getting think cases. SP Kiser, of I the layer transform And is peering team, X the of X a is us.

expect contribute provider XXXX to XXXX. than in see we better service So

Okay. Thanks, Jayshree.

Wells comes with question Aaron from next Your Fargo. Rakers

Your line is open.

but the flow deferred like short odd that to want deferred have or I expected answered. percent and of XXXX. answered, and questions But revenue term for It of some already about here as that down can kind you've effect you decline guidance the forward. the thinking back you're would how XX of progress asked A to looks through question. sequentially. was I we - communicated been lot deferred Thanks revenue appreciate taking to go of kind going through

revenue So to I'm the just curious of that quarters. of how the we about think expectations couple next over relative should

product it’s with Yes. time historically what balance I much with were we've back consistent think is in the kind balance, of we this mean and year. that deferred the where pretty line seen last I now deferred at

We’re have guide back associated et movements of that kind going through worked We’ve the just - had the honestly the level. cetera, not R we’re to try product deferred it acceptances, think around that that we so a with through to move with the much. forward. of the in kind theories to and to deferred caused now it’s But going normal I

as So I'm fork going we're not to sure that we out that go forward.

very you much. Thank Okay.

Your next Jefferies. Notter question from with George comes

Your open. line is

up last much. that question. very Thanks follow I on Hi. guess just wanted to I

of correct? largely were Was deferred R deferred looking step that assume I the product Series you And down sequentially? the that was that revenue quarter? for consistent all is out number that also what now. So of in then into with the Is coming guys

qualification the in of - stage, expecting balance is during other kind that’s stuff. revenue been of of in. then the that this think portion that coming year, was at a type what I a of processed it R and stuff a lot But pretty much lot at mean there this I new going concentration were Yes. what’s line of we definitely related, to deferred Series point. some with XXX product the be left in

Okay, thanks very much.

Kisner Loop Capital from question Your with next James comes Markets.

Your line is open.

question. Thank you for the

factors I I your could CapEx, you any lead factors talk to silicon. major to XXXX, been it you upside tough conversely, talk about whether in your upside and XX% can you you optics, if wonder understand growth about of you’ve or address constraints availability would opportunities. gating just comps whether internal, to of back forecast growth and XXXX, in in on constraints comment any your screen going comment, external be whether Just see stretched any Thanks. XXXX. perhaps to could to have your and that availability potential

call. book of intimacy deal know first what on. sometimes kind planning We’ve gone great let don't top on that's orders major. they lot and James, Arista With and from work customers, there's inventory been the they chain forecasting expect. anything perspective, our welcome No, good we we of forecast a a they to and supply a before of demand us have our a job your of see done even

good place and change the we can right we're projects it feel ahead for course and ahead, in Of the the But opportunity dramatically. it. all plans about putting

Maybe you’re optics. you perhaps all XXX Thank there difference the in of in clarification like I but it's not clarify that XX. gig, a the in and you. are looking going I’m obviously up quite a offloaded kind little guess they’re at looking than seems in wondering advance and I’m switches of I volumes. in gap the for mean And I'm at there. growth if lot bit. And a because optics obviously to more example reports a XXXX, be just

optics aren't layer one conjunction with routing. decisions in and always the made switching So Arista’s

center together decisions. they’re like sometimes and separate, they're data interconnect Sometimes entirely

sometimes a to from the secondly, see optics they correlation. because vendor, - one a won't applications in one That’s you our one So acquired one may see may correlation they already another or failed. to have only you’ll have

and can’t one area the between that's accessories. you correlate So where lot really a routers the

Okay. Thank you.

from comes question next from Jeff Nomura/Instinet. Your Kvaal

is line Your open.

of going dramatically but as quite awfully written buildup it the have not you Thank the - deceleration. to noted. ask CapEx much? don't in so I the March with, that you why XX% mean Starting that much. I you very it migration for up number why from an might work in is like down previously XXXX quarter, market the we're have the I might was XXXG about that sharp get to same outlook wanted seems mid the XXXX. XX%-ish

is look mean, saw you growth for this in the I I mean spike kind And last think again slightly today. a XX% we we plus different the I right? our base, really is if year, Yes. of at sit happened in think outlook I rate the the comparables as starting right? middle at growth So Jeff, of off year, kind here of the QX

kind year next We outlook then a It’s we where all that from We and information go have. about see the that. good of haven't we’ll of for looked at good, there. solid feel we

Okay.

don't to So with visibility biggest maybe that accounts. beyond of some you be the say have would fair the it mid-year

normal, is therefore which window the so So beyond proceed pretty take how might of visibility. cautious view of things a

to came to hard it. out, the out in and case I we'd certainly titans a have because - go cloud increases use XX% suddenly and we the didn't if it's plan - back Yes. upon year me think had suddenly you us It forecast really whether I linearity growth let a Ita mean right? XXXX, asked me application.

would really predicting that's at happens, overall that, be. year, It’s and look So you a something something at happens we like Hope in when very, a if the effort to realistic, the strategy. is really cautious. to we'll XXs growth rate is think that at in what growth rate. we plan Or not best a let not beyond with just XXs our the It’s an and This when year we we good is XXXX, very did bad good average great. XX% know. how growth of look

catch Yes. XX% I didn’t either, property growth growth. the

Okay, thank you very much.

Susanto question next Your Gabelli. comes from from Hendi

Your line is open.

about strong of you future? as million has cash and Good in grown Good cash over investors billion Ita. evening, finish How $XXX results free in to should think XXXX. generated Arista and XXXX. $X.X it the of Jayshree the cash flow use

mean at this in of still we're in mode growing I Yes. investing I Hendi, and think stage, the the business.

something we look business. the to think that for I as and that continue at generate use will So

just high opposed we’re But stage, not right? to - early too We’re capital still we're some that, allocation philosophically. early, later growth relatively on stuff sort company. it’s at Beyond of looking

as that So near hold we’ll cash we think about that in business term. the the for

Thank you.

been and invest systems continue we've execution, and which in strong our marketing. is to always And to and where I engineers you're and to think market going our go sales R&D

than So good a lot saw you spending us QX. you certainly And probably in to more we’ll use. it forecasted put

Jayshree it. Ita. Thanks, and Got

with comes Lynch. Your Tal Merrill next LIani question Banc from America of

open. Your line is

Hi.

of I’m down? or following driving announcements What’s deferred. on features, recognition trying clarification there here. because approvals orderly the one there revenue are to is deferred orders a things. of if an on of Is maybe and following you Just in get it odd - certain other trends the hand, timing of the manner, workaround? understand fluctuation is like two timing of hand, there On

and if the what the not if it's So in it, you are revenues. differed takes Thanks. explain puts just can

on I mean the acceptances and year we're that there's we needed probably two and factors, market in had right? features, One cetera, is The that a is on et to out R now. over deliver closing in we Series contract.

So we’re seeing a lot out. of those close

generating of So deferred because as that. we’re revenue much not

we secondly, that and think rounds I these still fourth qualifying designer quarter the in did of were stuff. some the of and affect linearity invoicing

the shipments how the think solid. and to underlying it’s business It’s is timing of more I long the billing deferred.

to level, said would do forward, expect in what you deferred is, the the you to and recognized line goes normal versa? of kind think deferred the you and these of orders more recognize, of go forward the to need If with up you do go you're features getting? bookings I be with - up approvals? understand orders backlog you that can of things it expect timing going going still have because vice Or I'm but trying So and

No. Yes.

was in It customers engaging factor same the the revenue future. very prior in accounting features going an very rules, more under to product recognition of the That new deferred towards earlier amount that XXXX. conversation geared XXX, is product a ’XX. we the - it's forward guidance think revenue were I a much new deferred with topic of under the was even Actually, and drive never of to deferred of that not a would transition revenue. new similar much

deferred a be revenue hence topic to as and forward, will I revenue grow. go of the think So continue deferred product we see much less services you’ll perspective, a from

you. Thank

on our you want of us for our This which XXXX a information access we've I the today. the investor also on call. which you presentation fiscal everyone joining results, to earnings posted section to Arista additional QX that can provides mention concludes website. Thank

Thank you everyone.

gentlemen. concludes This and joining, you Thank for call. ladies today's

You now disconnect. may