Arista Networks (ANET) 3 Aug 182018 Q2 Earnings call transcript

Welcome to the Second Quarter 2018 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.

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

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

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

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

million afternoon pleased a million guidance year-over-year report surpassing everyone, than more for $XXX.X $XXX Chuck. for as the QX, XX% revenue I'm of XXXX. we mark. quarter comparisons Thank this non-GAAP you, XXXX despite our comfortably We that to with had we Thank record earnings grew call. tough our a us of joining from second you, exceeded

$X.XX, sales. perspective, contribution XX% was forecast We non-GAAP the rest XX.X% in share our per revenue, overall Americas with gross earnings theaters a reasonably XX.X% geographic non-GAAP international total our well. the performed of dynamic the at delivered services while of a Our of industry, mix. our due margins customers contributed to customer of in From exceeding

ranked by and number vertical, vertical trends, one of terms top providers contributed Tier all customers financials Titans included Cloud third cloud In and five Tier two, XX enterprises and as X, for X at providers number followed our strongly in specialized service verticals. and our QX place. tied

customer be Our healthy million-dollar be the to And CloudVision software we're and customers. our pleased with to brisk continue new customers especially and with acceptance well. as acquisition services continues

an XXXX. we with Plane products our Analyst in Management had of introduced the formal In into entry QX, Arista Spline on architecture. and Cognitive introductions X, May terms our new Day campus market the

been Engineering the this campus Cognitive have so, such disrupting a edge. Pravin WiFi this Arista us Mojo They of whereby complement will is parameters welcome our resilience, natural you our segmentation profile-based inter-packet enter team opportunity believe, Arista on such as Mojo switching size, discovers streaming the speed a of co-layers WiFi go into Bhagwat, Campus wire to the is XXXX devices Ken? and Chief available could Management ports, state-driven also the and into white Mojo the family. the first et our say close diverse packet Officer strategy aggregation announcing the Mojo; collapsing words. works to Today, the different and Duda, CEO The Arista transaction Networks, bandwidth, its incumbents, in suite guest, networking from LX range campus as acquisition, the of X in the single lists, EOS advantage is I take on factors Founder take We LX. few Layer cloud entire I and data. edge to example like accretive a three-tiered XX legacy and invite as open XXXX. would high I QX of of our quality and Software Technology scale of also options applications a software model Arista architecture. another devices, Overcoming market Cognitive gap, cognitive Layer in of We're At status on, connected and This Spline quo. and our VP so Arista, the did been use thinking suite asking to this protocols the is in And based might and I of with to the to and cases Wilmer, fact for architecture, over Arista are simple products campus campus do expect to some chief our very deploying our QX CTO LX, Chassis Rick as third-party. for we expand now cloud-managed for control, secure market. to CloudVision, configlets, and to and X, customers a Senior already form be XXXX, Cognitive Networks; cetera. to and but of tier. And rates core why want assesses fixed be have Cognitive including LX is warmly portfolio. auto powerful next-generation with time. by of Arista network well Ken the CMP,

Jayshree. Thanks,

full it a is things that the are devices Arista brings; keeping managed. and all historical gathers What that policy long across compliance and confidence Plane, to implemented into way and compliance. the to wants CloudVision advancing confidence workflows and CloudVision you is CloudVision analyzing as entire single all approval that network-wide operated fundamentally the as policy the and information state from working plugging enforce that customer back any network With state. place, apart creating working issues ensures Management are correctly on it CloudVision centrally, network, Operators way autonomously is the learning and expect. sets applied networks bring Cognitive of the

compliance you even centralized technology. issues. points now can also performance Mojo Networks it's across operational switches edge were planning, in helping source connection both are WiFi from through costs telemetry operators, generates WiFi for alerts the WiFi, bringing better. can for of access compliance switches single way upgrades, or level, providing to apply can that higher on, They which everything security can high-quality, is a the pane They open and campus strategy is unauthorized and They to center client or image their all again, a through physical the it's about operations in CloudVision's consistency system virtual. wired, glass devices, extend itself, all benefits enterprise analysis. to see help from the which to policies data benefits automation to we customers misbehaving and ensure CloudVision switching features. advanced the at a reach can pioneered Cognitive Arista's whether network. for however simplicity the single data software big connected. now issues. and But delighted security edge, campus wireless These that how CloudVision, monitor and integrate they data center use with imagine same the gives streams combination through for So the By and one cloud. network enterprise visibility across trouble-free network with But wherever capacity campus. state a for troubleshooting We're management, enterprise-wide very WiFi devices, We going Mojo to store This can lowering and of a of our simple. cognitive end-to-end, IoT

Thank you, Ken.

on technology infectious. is enthusiasm always and passion Your

to right that it at now want get I CMP So install and home.

at center or customers. witnessing really to you the with step an years evolution what cloud-first it's are When as architectural our or to silo PICs, important of an We places-in-the-cloud, campus in to to an places-in-the-network, shift what's we're these strategy doing, data similar the yester migration. the taking PINs, important look that's

Layer advanced on programmable partnership Examples XX inspection. features customers make PX the XXXX packet EOS is without tunnel this network to this Ethernet, programmable to to rack form NIC multi-tenant all security XXXX XXXX. mutual leaf filtering, at Gigabit deeper using and tradition. previously address XXXX, fixed a Barefoot chip the for XXX cases such Arista termination, suite data telemetry, so generation of Traditionally, into our host committed vendor, interoperability. that fast also doable and with of scaling tunnel we language. capture. factor with Use capabilities But The one single, time-stamping, building this exciting network and include segmentation, Networks, embodies bringing a promote in During The In we It's of silicon new and possible. of switch. a remain integrating and extremely visibility X open network Series ports a an trade-off. both packet Arista's Layer unit product, processors center, wasn't time, new ran programmability new HPE/Aruba traffic or scale a this VM multi-vendor programmable was include merchant introduced or QX, applying a packet single, and features, defies also X real-time modern translation Arista to that with cognitive

for for by was consecutive metrics. best-of-breed (XX:XX) the June networking Ita? Financial fourth pleased in on Arista XXXX I'd run of platforms Magic in in back progress Quadrant by progress our for by leader from rate recent and reflect for XXXX capabilities. future the on Category Leader Chief from Gartner Data half fronts fastest we Clearly, with in top as I to well step gratified that, revenue annual Ita, with I'm companies time the the Hardware XXXX. definitely QX As look billion with the our Forbes like growing the Global cloud the as Center at by Networking excited as profitability their first We're in have turn more our our to I'm Forrester's XXXX, specifics. Company products achieving in financial With as first over history recognized point a the it score. in recognition Officer, to Wave moved we're year, of software-driven fact also ahead. many as $X and continued one

down our from reconciliation revenues is quarter for XXXX $XXX our revenue, million. titan XX.X% in strength up ongoing with QX million were million, We for based of guidance our A activity. our for renewal revenues at our XX% $XXX.X results quarter-over-quarter quarter, period. and excludes or legal impacts some of $XXX selected to equity international the inclusion Thanks, the XX% Jayshree, and analysis the in cloud from up all cloud associated of basis above vertical. prior timing of stock-based in were lawsuits. and $XXX results non-GAAP Total afternoon. some full approximately GAAP the higher in and demand and revenue, with earnings a and periods investments deals our overall from in-region non-GAAP ongoing total International the with primarily pleased of good non-cash the last the XX% private deployments reflected on on The quarter. of million quarter year-over-year mix release. and is Service impairment of of prior reflecting and costs QX came revenues lower to This our were EMEA provided in company larger guidance compensation QX

in Overall came $XXX.X or base marketing for were with quarter. million leverage a increased is some demo-related million, were expenses. million and quarter. of reflecting XX%. our of period the QX gross up develops. Sales in increased volatility international up up increased experience midpoint and count Operating guidance from quarter, up will on R&D $XX.X the of This $XX.X or the relatively million base primarily last still small the were revenue, business quarter in $XX.X margins and quarterly last outperformance from our and guidance on versus XX.X% the cost reflected to $XXX.X XX% from million $XX.X expense quarter of above related expenses XX.X% in XX.X%, fixed basis head as expenses. Our spending X.X% marketing at and from prior million last revenue,

G&A and legal Our accounting the Mojo costs some associated fees with acquisition included today. announced

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

million ongoing Our with million diluted the prior diluted XX% the resulting for at quarter shares, number of number the associated expenses per in earnings a in share was year. Legal $X.X lawsuits for came $X.XX, share from XX.X up the quarter.

from funding In non-GAAP addition, based on private recent $X.X adjustment our are excluded results round. valuation impairment million these investments of a amounts Both above. our of a equity we recorded company discussed reflecting the

collections from our the quarter. turns primarily in $XXX.X the billings reflecting to the as and XX quarter income X.X in of finished This XX inventory in prior in billion. performance, to from requirements. times And at X.X $XXX.X investments from the strong net the times, in generated sheet. Cash, timing of up the supply quarter. chain. in days the capital This turning goods, QX, were and Now, ended DSOs million up cash operations came offset $X.X in days, working equivalents June balance $XXX.X to reflects reflects QX. changes we Inventory in million by cash period. down in quarter, optimize reductions, at from approximately We decreased continue million

maintained compared $XX million million recorded we quarter. addition, further of other a to $XX.X inventory deposits In last assets, in

Accounts timing on And down reflecting quarter-by-quarter deferred balance deferred At somewhat in from normalized deferred $XX of quarter, days, in the declined balance XX and point, the $XXX.X by reached of we transactions revenue the with this the QX, we've receipts XXX $XXX.X stabilize. basis, of in Product total the believe level final quarter million for XX days inventory QX. Our down revenue. million, magnitude a million. will was while $X.X related product days the customers payments. cycle from qualifications. a revenue expenditures completing million were were Capital should underlying payable

guidance. Now, turning to

from across look As to networking of we the continuing to forward in XXXX, believe cloud base. benefit that are we remainder the customer well-positioned growth we our

our that caused team potential attempt working tariff any play an growth for love and Our follows: Networks. We the beginning We're quarter, acquisition recorded for understand announced headwinds role second guidance mid-XX% into expansion quarter. is a be costs Mojo excludes gross any overall quarter which non-cash gross revenue the accounting million stock-based for customers. the lawsuits, this small, the We mitigate guidance just This ongoing transaction currently non-GAAP backdrop, XX% represents and operating our a consistent is pass earlier operations and we of will to would associated campus. a for is $XXX the XX%; in compensation to we're approximately to business third based our margin impacts The outlook to trade third the to and of announcements. on revenues which with approximately the any which financials $XXX margin the revenue ultimately the third with any as today half related previous to and cost is of expect XX%. to to our margin With to integration legal million; year. unremediated strategic of as but on approximately important acquiring in XX%

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

Thank you, Ita.

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

We call. of will earnings portion the Q&A Arista now begin the

with Your Fish Piper first comes question James Jaffray. from

line open. Your is

Thank it we investments on the of congrats guess you. for off, quarter the in one with the and start the seeing with we campus and requested. just buildup as deal on Mojo sales here maybe and the you're Congrats to talk well Networks. are enterprise campus? traction I'll what just Hey. where in I about keep terms can to as question,

James. you, Thank

a want tied and common customers to if been half. said and directly edge. here a know, a you in be and us in already Many lot the we customers. would data out, have our vision for in interest we center their point as edge is you to data have their EOS campus enterprise May, announced products As both with architecture really rightly campus center enterprise Spline the the were second using And you of in

rolling are products out in those So QX.

early And the expect with that very in but we're with So half, a will second of engagement material customer really be material the next I customers. I expect in interest. of impact them And don't lot sampling year.

is are of with sure make Aruba promising. a it's MLAGs, and far, lot well early VLAN all protocols we're with the back in their There work did of campus. they in the we doing switches is as old very POE plain So There a And in a what fashioned interest. our HPE to protocols, years, with wireless EVPN, we're with also lot VxLAN, commonality the work applicable working also and because and BGP Spline. closely looking

of investment on And Okay. that? the side

What was the question?

along far How of... terms we are in

It's is investment, just expanding we're sales would strong in and both starting. No, lot a of the in region investment driving that putting part this May. every in say, our is a there. since already marketing Manny enterprise. Rivelo I presence Yeah. more of investment. activity and we've making to And channels general, started

Thank it. you. Got

Faucette question next Morgan comes Your from James Stanley. from

line is Your open.

I comment to general keep I'm macro Thanks. please. will environment. on Jayshree, also my if because mainly said wondering you the Chuck can just one, question

lot side of hyperscale, is, demand the And kind how picture, of kind from investors We both what demand to and competitive or conversations environment from looks of like viewing market, the with white hyperscale existing customers? you're there just competition particularly what have changes if particularly for a about is So like? the there box? the of competitive from hear

and good to QX, and to both the So for the our same They I name so James that's vertical anticipate cloud healthy. one going be half. second in titan, in for is environment general, macro hyperscale number Is questions? James. you, be in QX, today Thank cloud popular continue

of worst of available, it's considered important But spend behind the Arista dynamic. an competitive, partner strongly it's and I to considered continues always and us the for it cloud certifications, the the be much think always titan. vendor With cloud is and

So any I competitive have the in change not landscape. appreciable seen

there And this have them was own sites captive their that can And in with think even and of tiers, spending but before from new throughout is as had white several we year. it to founded. the strong work have a them well. implementations have I some Meaning, Arista we in continue box nothing expect we box. them white

you. Thank

James. Thank you,

question next Samik Your JPMorgan. comes with from Chatterjee

open. Your line is

Hi. Can you from ask wanted the question. details this terms some and Thanks acquisition. And share to Mojo customers of synergies kind on revenue my of taking working I they're is the pipeline with? expectation just what in for of your on transaction? Networks already that

I'll to know, is, is my the we the fascinated class a significantly. edge you always Mojo citizen days. cognitive It's very shot. give campus past, wired. changing second best in What's for was as And it early about us believe WiFi the

in very You never like multi-gigabit or is performance and about WiFi is speed what was And is. with performances XXX.XAX approaching wired small talked we're gigabits. general of in megabits just speed. now WiFi always It seeing

also to So the is architecture. of care the time. think about of has to on the words security edge. to focus have cognitive and of on you're What of diligence. WiFi control, that? importance the Spline, point acquisition, just the is? their been want around Protection us integration spent more you Ken's and They Mojo bringing time services. all software-based where few The WiFi, this only a in CloudVision, a with the making do access Maybe into to less deep a room company not Mojo a control Wireless you really about not promise And, expertise us due long on we but the Ken, you add for synergy and the the Intrusion CMP but amount is to with fair a care we cognitive the And in

team That pioneered WiFi management approach EOS, point We technical that the the management just have architecture done they've felt state on view. in very side. Mojo something similar we good alignment of the with from a

together And it's our a make be so, seamless group. we as going exciting felt products to like work just really to

Thank you.

you. Thank

you, Samik. Thank

with Badri Your Credit Suisse. next question comes from Sami

– you Credit LLC question scaling or as you to operating line the has opportunity, the given to to will on guided corporate Day, on channel down and the get came margin know is and given Securities campus far more Just sales given spend, it Analyst Badri above – level (USA) in to switching marketing open. you. Suisse you to your Your an with do want And at XX% XX%? operating My converge be plan should the we to in more range? XX% Sami just opportunity - that some Thank margins. expect I where perspective the as

– we've model XX%. sales think the still of Yeah. I within talked XX% over being with see we the marketing revert to the about XX% happen back I right? we'd the to into being and range. mean, long-term investment to the overnight, in have different That it. I level grow that, is doesn't And we mean

going in time. time. plus or business. parts obviously, and an doing the the it would minus perspective still the different that is same is that, sales we and longer-term it model kind line of enterprise/campus And, just to take the be sales marketing investment. that top the investment given of think, think that's XX%, of it on can I So at support depends part the But is business, And a from the adequate with what marketing

to you day, than be the this Analyst may in shared recall, expect And marketing, higher that international enterprise at Ita the the sales in we averages. and

We and it's expect the a sales averages very be lower support model. cloud to the than because technology-driven

peers your they'll that Networks similar with Arista obviously, - Is on (USA) key pushed then, a seeing there. LLC out. to deals different noting moving follow-up Badri related very one And got Securities So, one Suisse customers? Credit Sami be just Got it. cloud verticals parts dynamic of

Credit Badri you. Got (USA) it. - Sami LLC Thank Suisse No. Securities

you. Thank

question Leopold Raymond James. next Simon Your with from comes

open. is line Your

for you Thank my taking question.

of in bit on made could about, had if On inflection ports, whether inflection helping XXX-gig the cloud little element get And color seeing Meeting, your the whether XXX-gig. your terms helps point a And this you're more an comments some of business? we kind last guess, whether this point? overall call ASPs and some trends grow? an is wondering Andy Analyst I'm I in overall at your

Simon. Arista the emerged XXX-gig. When in anywhere last say I ASPs, to year – market analysts think most a some in market look have from has we're you Well, me us Thanks, it's all driving ports and Mark the showing at to in XX-plus-percent the XX% Okay. really as Foss – safe would leader associated was data market share.

So we are the number one entire been XXXX. in for XXX-gig and the have

We haven't seen that change in XXXX.

for a it I spine are campus, for Andy cases. think of many, the is being up (XX:XX) that can storage, can server reasons denominator just aggregation can ends be many of be correct. security. It it it be and absolutely that be common aggregation, XXX-gig use value can that's aggregation perfect

in, infecting here. point, guess for the say a is we the would it, quite XXX-gig and just vibrant. that point way be XXXX XXXX, see a that see while I So to when years, I continues continued inflection is you comes And for inflection in next several XXX-gig probably as

So And... we very, currently later in XXX-gig working tandem but the is the see years, in very two strong.

Are help us there understand ports, terms percent sales something share of percent of of you or can metrics that? to in

in can't you But important adopters can quickly XX-gig. XXX-gig. they it a leaf the the case and at extremely in starting enterprise, we're look on But XXX-gig vertical. embrace also vertical, we depends deploy where give can be then the XXX-gig a general may use I single sometimes vary. important. So can or where little the cloud a don't to early of discuss, bit. implement spine. In to the is But enterprise XX-gig cloud or think sense, of vary it that's very see

quite we're is cloud thing operators big ports. other the a lining XXX-gig see base large on cloud on in the an you which excitement modular particularly environment scale amount can of large with The is, seeing stronger,

XXX-gig So the lot is same the a at residential homes some time, the in you seeing of providers, we're X, far the Tier data as when X center the scale XXX-gig well. Tier or of But go of service into in greater.

much is, itself. the suite high-performance XX-gig, XXX-gig a XX-gig, much So with I in guess this that of very net is see XXX-gig XX-gig, Arista's position strong we stronger

Thank you.

Simon. Thanks,

Henderson comes question from next Alex Your Needham. from

Your line is open.

Great. not granularity third it? that contribution, I'm included a for you or will going acquisition's point I press in looking given the the it's quarter. close, more the the hoping And fact to the aggregate on the What guidance us according other Thanks. is the little bit enterprise for business. release, data give to included was in was

you the various rate enterprise in all enterprise aggregate If Thanks. was the what reported? just the in growth of year-over-year quarter verticals,

a ratable numbers, continued think to a model; two growth this in to know for software going – model. I verticals healthily, When enterprise the Yeah. the we're number was in and slot acquisition but – quarter-over-quarter, right? give was it's it grow our that don't into you exact about the kind tied right? the it are and rate is healthy, the it I incorporating mean of

in as impact work particularly not through et you purchase significant numbers a in cetera, very So the have accounting, QX. some it's going to of the

it just is. software it just is and I you you to ratable forward, of take contributor change acquisition. So I think, expect in stream the because should for the be guidance our as future. obviously, guidance, QX to going the as take the for think the mean, will can guidance But not now, revenue and I a

cost the are equation already of for there? on I about side that assume the costs What that?

the right, it's I'd – have in won't there we effectively cost be it will be similar, inclined We whole less something quarter, for it's because quarter. for the the – to right? there say

So it will be already. easily absorbed into you the we guidance gave that

Okay. Thank you.

with William Blair. Jason comes from question Your next Ader

open. is line Your

Yeah, thanks. guys. Hi,

Mojo you acquisition wireless closets wiring For bolster Arista, to The the think wiring we your Should how see from campus campus closet? felt offering. strategy, to shows needed your ultimately? that switches should about we expect you that obviously

Jason, to center. the the way similar systematic in did we approaching we're steady, the manner data think I campus, very a

we're So Arista. is not the us. partner HPE entire married good to a campus for coming portfolio from

Spline. first Plane the Management Cognitive be approach our So and will

And that. any end on announcements be that Our do, entering depending Phase of in we're possibility we suggestions market. wireless in But out will not deeper here. we making X map rule points the don't or approach require or edges the how road

Okay.

How just respond this? Sorry, to did quick Aruba one.

a the closely is well together This friendship. will is we three, a This and partnership, four-year work is as the continue We've to had a also working in the data Mojo We're campus partnership. center very deep and very well. beyond professional in partnership acquisition. there

our together. theirs, is and we it strategy work we of understand XX% they So and complementary. understand And

Thank you.

you. Thank

Aaron from Your next comes Rakers Wells question with Fargo.

Your line is open.

question. Thank taking Yeah. for the you

next if or that could we X lot things at of hear silicon the hey, update we as didn't about will, look the in Is to tied like this things in there expansion have a is or this if point that router phase, so in that market? on at business. to any things has opportunities router of And you think curious months just particular, should over relates to it how router I'm the next been of further? that, expanding the traction you market? I of Jericho the XX is your One call then, other Arista say

I more. bit No. Thanks, should Aaron. little have said a

of on proud We are our very routing. focus

great need to don't and has inroads FlexRoute already we quarter-over-quarter. As grown wait with it X. licenses is Arista know, making have, we the steadily for you Jericho

we to XXX cloud, variety you no come area service we new, I we I'll expect challenge every tested quarter. enterprises, that over know The and to patience. reporting categories. Tier X certainly little told If do fully use They will rather year I customers quarter-over-quarter, an the I and in a of there the see it like probably is do might I longer team Tier we double licenses. And to were will of you new customers that terms continue to of the You a end to, than last at and more providers. since reporting cases service expect in provider. come of take course, new in They that. back it's better, Arista's myself ended it's come the new guys year. it would fully And we X FlexRoute

deploy. and but longer we're technologically well takes very, operationally very it them, think I test doing to with

Thank you.

Aaron. you, Thank

next Suva Citi. comes Jim question from with Your

Your line open. is

you Thank thus for so details much the far.

correctly, an way. Organically, no I'm if trying from added that's bridge beat it impressive XXXX the pieces I in QX, but very But close the QX on you change to acquisition outlook. a you different going here, was comments question no just to kind me. really (XX:XX) one heard XXXX. to And to you in Just change or of mentioned prepared just

trying seeing in saying those softness your some you acquisition going some your together. all down you revenues am just to change, came much. mean yet so put an and (XX:XX), deferred so are you have forward? you are I Thank pieces no order book I So

Yes.

see at is look the we'll I we QX. we what then, we like of said, it guided you did, do If model. upper range. a And the grew what software of end there. in acquisition, We XX% XX% The from

it So rev rec model. will be a ratable

on range accounting at it some to think model we've mid-XX% don't the of have will softness ratable So a of we through it's think then driver to right? particular any on, a of of see think likely work we'll – in – do need the of upper our looking from not back half upper we seen we're line for guidance we're some of purchase deferred to because that. end there. XX% and year. there is consistent But big what rate, then But their I growth But be the to business. top the end be do still the and just we from we'll The the the I

my deferred heard revenue. have comments on would You

I think now. the deferred revenue is stabilized

a the own. should stand guide not in benefit on decline – So from its should It deferred product deferred. or QX from

we'll think I with as from and up there. we're guidance go pretty then So case, that a happy

for you your appreciated. much details. Much Thank so Great.

Thanks, James.

from Your KeyBanc. Kurtz with next comes Alex question

Your open. is line

Enders Hi. cloud Alex. about Or expansion question. on This footprint? coming my Steve categorize Is point? you could if is build-outs? for more in was this Thanks taking from is new transitioning it data more spend for wondering at titan the of I existing center it

both. of combination a always it's Steve,

of back titan incrementally data centers to incrementally data have our constructing are in customers majority add. and new also always know, growing. existing cloud not centers, their go you but As they They're

combination seeing we're So a both. of nice

well. put one sides versus other. So the Both are I wouldn't on weightage doing

there the Has over or? change mix the year any there been past in

examples. XXX-gig onset, both biggest because the is more of I in Well, XXX-gig think the change to the mix

big that, Beyond no change.

Okay, great. Thank you.

Steve. you, Thank

comes Your next question Cowen. from Paul with Silverstein

line is Your open.

questions. love to after going these me you're sure I'm

off... First

question, one Paul, right? Just

slow little a I'm uptake. in the Well,

I'm some So just for clarify hoping things you'll me.

Okay.

in question revenue saying include does that guidance revenue you're include not the merger about Simon's any guidance, quarter On third or does from Mojo?

Yeah. ratable mid-QX get model. software it's sometime incorporated a I mean, it's to going and

is So what really going it's the we're not needle saying. move to

right. right, All all

and the it well the it's doesn't or a within net small of is so acquisition is revenue whether saying does our guidance. small, area We're

it's not to going Yeah, move.

right. got Got it. it, All

guidance, year mid-XXs calendar opposed mid-XXs for expecting the of the you're revenue saying half the for year? the XXXX you're whole back On as to

Correct.

for real now, the Pricing, or other? All one any right. And change questions. way the

this said No aggressive situation before. dramatic change, we've seen. I've always same competitive Paul,

than So no quarter. last different

All right.

of that way, Now, clarifications the these I've got that... out appreciate

All right.

Next question?

question. to... With respect my ...to final

for let's Paul, callback the please. hold it

worries. No

Thanks, Paul.

Mitch with Steves question next Capital Your from Markets. RBC comes

Your line open. is

one for Hey, my actually. guys. taking I Thanks had question. just

the So name. CEO's (XX:XX) Google to

supposed of about about million this like it in dated run So says is that get January rate two XXXX. Mojo is years to to of article Network $XXX and

Networks my So any together? integrated synergies to be there being that with and reason is why Mojo any is, Arista you Arista? there sales with question due is to able working exceed expectation I.e., wouldn't

their boy, revenue. sounds an ambitious Oh that goal from like current

That on Rick back I'll after integration? have his. So one better on we my you about how to come But speak know high forecasting talents like number. to versus about very we a to sounds that

it. got Okay,

owe I you Thanks, an answer. Mitch.

from Rod Goldman Sachs. next Hall question Your comes from

open. Your line is

cloud maybe questions a Hi. they of around Thanks an patent as your a question. having they And and that maybe theory large -we've unwinding Yeah. that have short-term. to a to back that's is floating the lot some sales the inventories cases investors inventories about I are from result in I had at the wanted guess of titan incoming effect for maybe on there come just customers.

on toward second so your the seasonality if the revenue more growth half, comment XX% rate year. year wonder back bit of even and we that the that the you the in half see I at more fact also So end of in Normally, normal. could the significantly the has first shifted than pretty

maybe for So if curious me? those could you weave together I'm things two just

easier year-over-year that point. just think much I quarter I mean necessarily obviously in because revenue think trends, this QX first the let's calling just first. least don't I that comp anything at we at we're seasonality last was mean the I out take a Yeah, of year, off grew XX-plus-percent that different right? So

at end the I Like it's for saying from upper of of back So we're we the for year. QX go XX% said, mid-XXs range see again, the the we'll half and there. where

to Ita we're cloud So feeling Rod, about reiterate just what said, spending. very good

definitely QX. results in in is half and second do QX have strong. We the looking the We

they And there right issue so a I some they you mean this we always that did order category..... mix? say have is as when the don't But of inventory see

saying they inventory. asking just you you if not I'm have I'm they have think inventory. really

right. Yes, All okay.

So I they is buying We're And wouldn't demand. would be probably they we're seeing. had Rod, what speculation probably more. inventory, say, healthy that not seeing if

it's you strongly. hiccup QX, in was kind And when QX for which so, from cloud of are through back a certifications and that us last our perspective the is going

Thank Helpful. Great. you.

you. Thank

Instinet. with next Nomura comes Your Jeff question from Kvaal

open. is line Your

versus obviously so share. you favorable tech with certainly sedate has of maybe Thank in front this transition gain was more gained share you stayed far a that lead another your there your year, relative happening all. Last in in for got XXX-gig? and Should there so Or Thanks. competition? take? you competitive the think more With to situation? the share of transition same XXX-gig out we the you is year that lot XXX-gig a were is the very, And your perhaps very talk the very you We've Can XXX-gig for XXXX. about much. one, about another positioning a all positioning

you, Thank Jeff.

in to case. would have sedate me we ask a perhaps thought have again would XXX-gig, would share be whether you I that If the predict

I So excellent and other did the that pleasantly as the And as XXX-gig. reasons: surprised the market not well did. two building gains share to competition to were team we we and XXX-gig dramatic in see to one, attribute respond would products; our Ken

continue question. is as infection. additional We're to said strength, the factors of option. going the and So to XXX-gig view switch form density, form in and options of of now form the in I a multiyear My to let's inflection form your XXX-gig going higher XXX-gig this in often see gears the be to is quite is

be the really of XXX-gig in think changes anyway don't important is and because is to largest the This XXX-gig. market. to know, the I this So onset remember momentum on going

support is we this instead in And product trials capabilities We're any will and expect you XXX-gig we the will its hyping And Arista are sure customers. pre-announcements, why see us. I first to market XXX-gig, don't that Now, as naturally of with architecture capable. leader see time. and wouldn't making usually market. absolutely and works to be from making

first Okay. when might a to earlier first And XXXX little perhaps? be, market a is that or half

introduce I it. When it, you'll about hear

all All right, right, Jayshree. Thanks.

we that will out the is samples unit know also how vendors and we not It's right X,XXX quality, we're the nicely just of can a sure with you chip matters. as making A say we real that. get (XX:XX). we matters ramp because that it's lot put I how putting and product, this one dependent Ken that unit And put not production-worthy why on

Thank you.

Jeff. Thank you,

comes question Macquarie Srini from Securities. next with Your Pajjuri

Pajjuri open. a on Ita. is have - Capital (USA), Srini you. line Thank Your I Inc. margins, Macquarie question

to So I cloud negative thought the strength titan gross margin. is somewhat

was XXX gross Thank going somewhat the trying operating simply guidance else anything along what's of I And surprised decline? So on margin I'm you. strength. the spending same to Is understand basis or there? a by points lines, almost margin it driving the higher

Yeah.

that depending a a I job did offset content to right? contributed higher stand service pressuring bit But obviously, little range, to pretty heavier on to statement, where this on of focus Still and that on quarter. the XX% help for margin, the as a where cost right? to general XX% you should you're cloud nice they quarter that within gross And, a we with cetera, XX% and in would by and So mix, et our have guided margin gross did to We the to right? task quarter XX% expect focus to we're that cloud we that, too, lower the control, had that. a in end pressure team correct

into for time, I quarter model, long-term the we we at to look that's to that really not it. where over happen right, right? The will to out, the guide thesis the grow the XX%. you which think operating when think longer-term. But that's the in the we way It's we'll be about margin investment laid XX% is straightaway. And is going think

the employees with And going we're amount of acquisition, fair absorb right? to a

Right.

So we - Macquarie expense. (USA), Inc. Capital Srini will more have Pajjuri

Okay.

the acquisition the including but the OpEx from you're in outlook, revenue? So not the

definitely model growing We're to into. the would about I we're including XX% think Yeah. But as longer-term again, that XX% a some there. expense

happen won't Inc. overnight. Capital (USA), Srini Macquarie it - Pajjuri So

got Thank you. Okay, it.

Capital the revenue Inc. expense guaranteed, (USA), Pajjuri Macquarie - is is Srini not. The

Makes Okay. sense. Thank you.

All right, Srini.

question comes Your Bhagavath Bank. Deutsche Vijay from next with

Your line is open.

Hi. Thanks. Hi, hi, Ita. Jayshree;

Hi. Hi, Vijay.

Vijay. Hi,

fortunately. I'm not James Yeah.

you your to bigger Jayshree, Thank So, and sales your a you campus have like wireless scale direct has Jayshree, sell, how also so footprint, kind switching? core asset a sale, And build now do question. honestly channel? on plan that you. And get channel picture viewpoint, you of to a campus been to have

we good to and get you, is Yeah, one overnight. won't a that question Thank Vijay.

Day, natural Analyst first campus us in our observed, already customers own us for you our synergy know probably the and be EOS. who you will As love were the at

will order would Our sales and internationally already where out second presence. force, be have And focus especially we will as be, the customer that that third driven expect channel driven. probably be we build our enterprise a direct channel fully we

work is time. Manny this working So progress something Rivelo and But very Anshul take will are it's on. and in closely

Okay. Thank you.

Thank you, Vijay.

comes with Securities. JMP next Your Suppiger Erik question from

line Your open. is

Erik, are you there?

we I Erik. lost think

part. Sorry, we first the missed

all me hear you Can right?

We can now.

hear can You me okay?

hear restart. can but to you you need we now, Yes,

the but XX% had should how to that. about be guidance to long-term sorry near-term? we to is that you're is noted XX% Is be just I there about that right, XX%, that guiding suggest that wanted to QX understand thinking All in upside you XX%. QX to for right. Is guidance? the your All to that

think that's acquisition, et absorb guide. from to the I And, on some that. top have costs cetera, will I mean, of the obviously, we

the reserving to spend we to that. need we're to do right what So spend

the this about into that's the So think investments. talked will I guide, we've think grow I those past, in but but we

invest keep all to also going to need invest in and We're we Exactly. me, And enterprise as continue in channel. the asking R&D. to and marketing aggressively sales you

it one expect do you that; hand, why higher. the hand, on gee, isn't say, us to on you So other

higher, don't be we we'd but if to we execute. So execute, want

Can you Mojo is many tell us Networks? people how

XXX Yeah. employees. It's over

campus software that's real lead Then solution be products the aspect might your you just this product portion Okay. in strategy? just is software-based that your quick, we software, to solution. more Might will and portfolio a box a make Mojo that's – only will that the the campus longer-term of be it your assume of white reflective

I'll off-line, question this a to short give but take We'll it. you answer

the First of software not product. Mojo first all, product our is

have We four aggregation already TAP or FlexRoute five in DANZ CloudVision, product. security, licenses, our our flight, our macro-segmentation

a optics at for hardware, you software-only, look of disruptive which matter plus best options, And software that. it at no way a the hardware-only. hardware. case number given I and think the is something, run any to And look to this software-only So we or of does have in probably packaged, way it's on lot time technology, run of CloudVision is and software it's cables, of the example has on

with products software-based synergy So and we such haven't have do nice sense. formed case, we but a CloudVision the with really very thing this this in cognitive that And we natural a of cloud-managed right strategy we it makes software-only, was vision a is the which acquisition. the campus have

you. Thank good. Very

Thank you, Erik.

Jefferies. comes next with George from Notter question Your

open. Your line is

very Hi, guys. Thanks much.

wiring looking website at right the closet they make and I'm points switches. says here access now, So Mojo it

seems when or understand kind to continue trying just the mean am but of trying Cognitive to for were be want likely guys your going then broadly, guess bigger in marketplace? business. Or And I like really you how going focused assume switch more campus. that And more hardware-based compete you Arista. where terms those here had understand data guess notion the And kinds I pioneer, will you're see you I'm you are of to the picture products? about you core the the discontinue campus is I sell center more understand kind where synergies understand pushing it on lines talked to in Thanks. you're then, you're And now, you going of to just in focused saying guess I I the to into on to into broadly I of campus, going I what I WiFi longer-term? with you so, some natural the those guys

question to a That's I'll concise. Sure. and loaded long Thanks, be George. try

or combination natural Ken there primary Spline. strategy, the no alluded Management Cognitive as is our And So extension expect we center. edges with suite come diverse that. of That's our is edges. leading where our a the strength. partners It's is from our of data competitors. of to that even Plane That's We're the and Majority a there succeed to, question probably from third-party, first. will then,

declaration not capabilities no statement software we're bought associated with Mojo There switches. Mojo's their WiFi, making was their So this or PoE for here. access WiFi our any PoE the stated on on is we switches the or Cognitive points. intent at time and What

the what So give don't Mojo acquisition switches; do the of decide it. really we understand us a epicenter chance WiFi. it's But the do we the how to and do and that is integrate not and

question last Susanto from & Your with comes Gabelli Company. Hendi

Your line is open.

about sales point gigs we believe after XXX mid-XX%. may is still rationale at last was call, demand in for the gigs questions. Good that its gigs in very long-tailed and concern XXXX to the of that be strong growth sounded inflection may my and main in a some Jayshree, should evening, expectation thank question you you watchful see upside XXXX. is My that Today, I for normalize? we in point. the QX XXX optimistic XXX there normalize

Yeah.

question me obviously, still to market, year we available this Arista's a nothing going growth was literally don't a it's Is halves, demand, everything. take see got XXXX because of It's and Hendi. right? seeing Let grow. multi-year We're lot much normalizing? from position, Both in continuing and to a total real two normalization. No. XXX-gig were Now, from I escalation

very rate very and and large dollars rich be the the the slower, of but for healthy So will growth Arista. very years, next maybe few

of off The more if some So Then exceptional back mid-XXs, again. more had look last growth year. to to normalized And that of growth the broadly, come extremely is, base rate that you that's thing the has second rate two is fact quarters one. do with numbers. the of very large to the we

So about we're a north of talking now $XXX quarter. million

be we'll we that well XXX-gig. fact continue do So can shouldn't that to in do well with and confused the

Got it. Jayshree. That's very Thank helpful. you,

Hendi. you, Thank

Hendi. Thanks,

also Thank posted QX This XXXX which the you forward which quarter. Arista concludes want call. with you presentation on information you. provides to earnings for and We that results, corporate the our you section on conversation can good highlight access the continuing look website. all questions to financial our to opportunity of the achievements for results for I we've mention and fiscal additional Investor the a our during

and this you concludes today's joining. gentlemen, Thank for Ladies call.

You disconnect. may now