Arista Networks (ANET) 2 Nov 182018 Q3 Earnings call transcript

Welcome to the Third 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 of the Arista website following this call. the to turn now will call Mr. over I and Yager, Director Advocacy. Product of Charles Investor begin. may you Sir,

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

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

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

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

non-GAAP QX, third report grew Thank tough once everyone XXXX we had joining I our quarter as to record pleased Thank a comparisons our us that the guidance of We consensus XX.X% this for QX estimates. you, Charles. with $XXX.X am for of despite from exceeded revenue again XXXX. million, a call. year-over-year, surpassing afternoon you earnings comfortably we

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

by contributed verticals. third number all at well Our our top Titans number in providers service and and two Cloud enterprises at tied customers one vertical, XX cloud included followed extremely tied as and five providers specialized and ranked QX financials spot; place. the

networks. load-balancing includes traffic supported it single routing on in customers XXX-gigabit efficiency, proven performance, with power form with also month, We eases well. Our XX.X in QX, brings as superior RU the and based Tomahawk latency Last image FlexRoute of all and on differentiated in cloud buffer density with and management, the delivers the new Series. for a nanoseconds accuracy. a timestamping latency a our single expectations. the factor EOS. qualification continues Metamako Metamako in predictable Sydney, in low million-dollar low CloudVision Mojo customers both new customer ultra-low next-generation and closed resilience, our Australia. unique And EOS our memory, price exceeds and is buffering This with Broadcom and fixed to of acquisition acquisitions latency our solid the Metamako's improvements. adoption focus significant scale acquisition with switches and software introduced for X X to two capacity first Arista's heritage XXXXXX Networks picosecond Arista of be terabytes defining plays based silicon WiFi designs based platforms. deepening FPGA merchant XX role XX new The Cognitive It

customer to and like Officer, to in I this production invite to details. mainstream take on would early this Chief Chairman XXXX. the Andy? elaborate trials in expect Andy, more QX quarter Development our begin and We opportunity to

Ethernet, next Jayshree. density the two XXX-gig scalability step to Thanks, in times price is existing the Ethernet times evolution our XXX-gig four delivering efficiency power and the Ethernet performance of up and better and products. of

supported Ethernet things new really it is to switches switch great can bring the silicon that customers is of market-leading One networks to network rapidly their production means that that operating EOS in deploy our confidence. latest with system. Arista about fully ability XXX-gig E by showcases our market This XXX-gig the

rapid silicon new expect we forward, evolution merchant of Going for XXX-gig.

new quickly merchant competitive EOS based the switch key merchant software release advantage short with is with Our ability supported a lifecycles. on silicon latest to silicon switches fully

are XXX-gig to half XXX-gig of XXXX, first we a the XXXX by mind not very do for XXX-gig which so While the qualification are of XXX-gig volume prototype their growth to in opportunity, are excited the in The keep activity XXX-gig in deployments out production optics, build second see available we half. about Please in XXX-gig of lot in networks. the constrained expect is initial customers quantities. also availability ramp only waiting that far with

which million expecting still are to XX ramp XXXX, more compared with the year, in shipments next to ports less of X reports. network XXX-gig analysts upgrade of is than industry a cycle expected midst million to XXX-gig We to major than strongly Ethernet, in XXX-gigabit continue

leading of XXX-gig at the the beyond. XXXX clearly, about In in ramp Arista time in for and to very are So, Ethernet rollout will summary, role a take our excited customers expect up. we XXX-gig and XXX-gig it offers take we benefits to some to

optics to the for really driving cloud entire multi-year midst that high-performance the do we think spines. only emerging your Arista, tenacity for clear cycle are XXX-gigabit a that Thanks, but XXX-gig. both you in not XXX-gig Andy. for Ethernet in of What and networking is And industry. is I appreciate and I us

can reducing tariffs implemented the planning being capacity since could platforms, to reflect in are fronts, of over judicious years strategy, as shipped across some X.X% manufacturing partnerships which ports. I we as five the XX have as a results. and with to innovative incurred by on our well XX year. and next coping ports startup I which quite Azure. executing With micro-segmentation and and the perspective teams, our VMware took years think or them decade, XXXX in exceeded affecting transformed segmentation this Arista's XXXX, a silo we phase the teamwork QX in for think proud networking well in tariff a give year. becoming manufacturing execution short-term our and I Arista cloud and segmentation, our million us with we first Google, the that between the support on And products. cloud USTR mitigate our ramp China-sourced have magnitude a our X%, XXXX holistic now China Arista accurately XX% also securities by traction, multi-cloud quality XXX so, XXXX, of future. mandating we products. obtain and a predicted five our X we as networking including gold expectation September prestige to technology, I reflect Amazon It And means standard it exponential the any our the next our we am has I are have an from zone of migration networking upon years very Arista's million In past outside many been don't with you us a the To effected particular, plus shipping In XXXX XX% is on dependency AWS, pace customers costs of Zscaler, started are of by of S&P XX, We're support. cumulative absorbing components company GCP fee of face Meanwhile, gradually we from increasing forever a our of employees, leadership, the indeed. our in the board, this XXXX Microsoft

peering but We not to and this centers, call momentum NFV, sector, these principles legacy in WAN, providers propagation with the into attributes, cloud routing places and continue campus of cloud, we data as enterprises PICs next-generation to it. LAN, PINs in the or service turning experience vital only

over Now, XXXX. our turn Ita? Ita, with it on details for greater that, I'd QX like to CFO, to

last the and results our guidance and reconciliation guidance XX.X% from quarter, impacts, of in QX analysis $XXX business. quarter selected and the for strength million, with were $XXX charges acquisition-related at our GAAP with Jayshree, of of the International quarter down prior lawsuit-related in had from XX% is This is and total renewal our release. revenue, to in QX activity. XX.X% overall international up revenues was year-over-year level full good $XXX QX earnings our or pleased XXXX non-GAAP on of of an came ongoing Service million to provided included excludes We certain in-region approximately were for unusually million afternoon. stock-based slightly in A strength compensation period, in Total non-GAAP across based above costs. our which and for XX% Thanks, the non-cash the million. of up results businesses. $XXX.X revenue our high reflecting all revenues quarter revenue, demand

experience marketing customers. slightly primarily in XX.X% million prototype Our This period, count and million from to of and in of of develops. million, business $XX.X and QX up reflecting quarter. came small last for relatively the new $XXX.X last expenses a million Operating above XX.X%, head million up support volatility in at XX% last incremental a of gross count. international quarter $XX.X the were spending due XX.X% million or to midpoint prior will $XX up NRE and from basis still quarter non-cloud Sales XX%. R&D the the or Overall spending head higher from mix $XXX.X our guidance was of revenue, some revenue, and higher from up $XXX.X as our increased X.X% is revenue was products. on guidance in outperformance from versus margin expense quarter base quarterly reflected

Our of fees, legal G&A and X.X% costs accounting described acquisition-related some excluded below. revenue as and were

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

from the the expense number Metamako and the share for acquisitions million was $X.XX, in of the amounts prior shares, completed for year. revenue up purchase our of with share quarter and XX% XX for earnings Mojo a period the diluted included We in quarter. per in resulting results immaterial accounting non-GAAP number diluted Our third

excluded For our million amortization and from nature our in recorded which which you of been $X.X of who acquisition-related $X.X we of million the those acquisition-related be with in GAAP results. together tax we expenses one-time acquired million non-GAAP results, period, charge and focus to of on intangibles consider of have $X.X

turning Now cash to billion, quarter. last balance quarter the $X.X billion ended and approximately equivalents the investments from Cash, at $X.X sheet. down

a as until for million not with to lawsuit the our reminder, was the of non-GAAP cash amount expense occur $XXX the in quarter. As a related although charge Cisco payment QX settlement reported XXXX, did third the this

supply of period, from continue times, $XXX.X reflecting $XXX.X XX days quarter. generated operations reductions performance payment, period. the in to at raw prior we million up and in primarily billings working XX down QX. in came Inventory net DSOs our of Cisco materials strong in the in X.X decreased $XXX the metrics. from QX, Excluding X.X we timing reflects in income reflecting to million cash from in capital quarter, optimize were up collections the the the Inventory and times This buffers from improved turns million chain. as days, in

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

And million, the the in the and following invalidation certification up revenue days were the increased from Capital in of $XXX.X Accounts reintroduced total expiration balance million. into were to inventory patents. lawsuit-related expenditures reflecting XX in payable $XX from turning features now up $X.X the certain $XXX.X QX. quarter, quarter receipts days, for timing related days guidance. deferred approximately QX, of to deferred Our payments. XX million Product largely of and was revenue million by customer product

across fourth fourth believe revenue of growth XX%. As verticals. remain we quarter our guidance our key the beyond, full-year in positioned other results of in with continue approximately million $XXX of to $XXX and to cloud we customers revenue presence the the for midpoint million well our we look quarter XXXX The our and to that grow

of the impact diligently customers. the announcements. Turning to tariff to working margin operations gross and our The and is the optimize incremental for chain supply both and recent costs Arista team our mitigate

of effect to ramp of In introduced take the completion supply. new XXXX chain a we to throughout costs will sources a (XX:XX). adder, We of modifications pass these expect our customers as these portion tariff we the supply pending interim, we've whereby

XX%. of intangibles approximately this impacts, With approximately $XXX costs, follows: We in and this everything gross ability $XXX assume the our to cetera, be million in quarter, and on know the our operating for goods excludes the margins expect XX%; amortization component the midpoint our which typical margin non-cash as stock-based XX% ship now, impacts, that that range. to XXXX range limit is non-GAAP outperform to is XX%, acquisition-related of margin we would on margin to quarter approximately revenues backlog backdrop, and Based XX% impact somewhat the of guidance we will on gross million; lawsuit-related fourth certain any inventories. based XX% tariff of finished reiterate knowing of as compensation muted et and we pre-tariff gross of fourth to

tax approximately turn Our be call to XX.X% approximately of I shares. Charles? XX.X expected shares is Charles. back with rate the will million to diluted effective now

Thank you, Ita.

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

Rod first with Sachs. question comes Hall Goldman from Your

Your line open. is

engineering with had or this like of they had keeping Hi. you the competitive Cisco's you you it the a at up. we they've And Balaji guys characterize changes? for also XXXG least And if engagement. keeping This would lot could how as are I on maybe Clearly, at describe looks is on into Hall. Rod move question deployments. a landscape up the point

also So maybe is you commentary that on just there any supply shortages is there any there? the between difference And difference and optics said, OSFP QSFP-DD?

Balaji, this. I'll Andy, entrenched and much to, it of kick in it course, then is more off, hand I'll who deeply

in seen We any significant competitive haven't change landscape.

silicon these they I Ethernet, we're we are in of But our capabilities and importance and as can underestimate differentiated Inconsistent leader XXX-gig of declared differentiators. very the operating what cumbersome drivers outstanding market Time their real of will the products discontinuity of right with customers. be right in and the for OS the confident everybody's XXX-gig. extremely and introductions the how products and did As think Particularly, don't system just tell capabilities match. and features. combining

So, qual of as (XX:XX) well. very ease is important

not to with you want in merchant We keeping silicon the also firmly that market. believe internally-developed and are not often XXX-gig ASICs are Andy, up add that? competitive to

Yeah.

from is The there's in customers solutions. from prefer primarily to greatly other platforms with Cloud cloud enterprise a for software the the and we for experimenting comes demand little have XXX-gig with footprint clearly particular where go thing strong time and legacy virtually trusted for no have XXX-gig. new demand

And optics, Andy? the what about

not volume are in be Oh. here. The remains quickly up ramp to optics and they yet it how seen production

supply and parts, the a purchase vendors the orders. there's models whole waiting for the make have order cycle realize You the they to ramp-up for are have so chain, to optics on, they

consider will only the is belief half that second reach volume supply year. what of the next our current in So you would

neutral. very team Andy And both DD-QSFP. and and supporting OSFP the Switzerland are and we are

have advantages depending starting from. both you're So, where on

Arista So, both. support will

Thanks.

question from Securities. next Your Erik JMP comes with Suppiger

open. Your line is

on the one, is adding your Thanks you're that question. just clear, internally-developed XXX-gig on points. how secondly, on tariff just the last And then, Two well? the it Yeah. is tariff I is your you're competitor that for a One, to be is your want or customers, Broadcom U.S. for impression using on for charge impact? silicon the taking front, as X% approaching based the

Okay.

hand on clarification both Ita me further try to and let take needed. I'll if it questions So, for and

the announcement only obviously, was yesterday. of best implementation. On our experts to on the But the front, made understanding, the not we're competitive

silicon. the of internal silicon models them merchant use some and of use Some non-Broadcom

So Arista's worldwide they really comparison of our we're well adder lot a are not side, our a to tariff worldwide And applying are components yes, direct a introductions. affected as on X.X% the as PCBs. because universal

So it's just U.S. not

Thank Very you. good.

Thanks, Erik.

with Macquarie Pajjuri Srini from comes question next Securities. Your

very But Macquarie obviously, overall you definitely I slowdown, CapEx - few year, Pajjuri of Srini your in do you'll next community times what CapEx, before out said market. impact in of many are your seeing we (USA), you. is, concerns correlation next down quarters. cloud you're to the your are the just open. business? Thank you think your were the given if what there anything? is the the between want there about slowing terms the where customers hear to see it is about What the about business not investor in lot in of thoughts telling Inc. how high And if line high. a Your kind CapEx that are CapEx you and Capital over Jayshree,

Sure. still asked the most though it gets remains even Srini, popularly one questions. It It's question, times. good asked a many of

our you don't the It's Cloud that you. track early phenomena. five continued years. cloud CapEx. don't XX-quarter (USA), signs As know, It's our of comfortable this Inc. many the with Arista there we spend It see And because despite true been that concerns. to nor the with and adopting of lumpiness for near-term cloud Pajjuri Srini predicted remember over not one-to-one unabated quarter of continue are a and Capital expect have cases. a Macquarie their one-quarter we changing that is this customers we Thank two-quarter And given We now phenomena. them, - we typical are visibility. XXXX, the multiple Titans, have use any

Srini. you, Thank

Ittai comes Your Oppenheimer. next question with Kidron from

line Your is open.

small Andy, ones. quarter. a two on Thanks. I good ladies And and had congrats,

campus, all, quarter. that (XX:XX) First that the little talked in about you of haven't thing product

mean, trying revenue than the to to would tariff if about captures sure, a can clarification, you the didn't volume, guidance how again. I'm I talk then look? that your really pipeline, I activity, an just X% extra you business on us does understand on activity from it make perspective? what guidance be adder, maybe X% want just there, whether put just trial help Ita, is? tariff Thanks. So, just lower And the

out Yeah. goal us customers X%. aggregate got I and start we the prior cost I forward, normalize really backlog tariff, just to possible much for that to the trying in mean as can time. think the And go as I of don't that think and remediate for but over we start and particular, have in to is that to was QX kind booked obviously carve we as

say it's top So to to I try an wouldn't somehow line. the adder

It's take hit otherwise margin. in an we a offset – more bigger to

So absorbing costs and the at the on it, of we're to look some passing is some Ittai. way

is So, Ittai, often Having as excitement said, excitement half our of is been Mojo, that the of this statement, on consistent on not a true. or lot to we've has address your of campus the question, of that, acquisition revenue the XXXX material in and lot said our first last year architecture, since we about cases both Spline early used form and we update, XX and Customers introduced well very are modular call campus the have in center been and trials in campus. This cases, received comes that. is in factor, has in excited it. data the as a fixed in use that and

good. Very Good luck.

you. Thank

Thanks, Ittai.

next comes from Badri Sami Your with Credit Suisse. question

Could the revenue, Credit in Hi. material is the - line Thank Badri on you. LLC tell Suisse what us deferred open. you drove Sami color any Your step-up? just (USA) Securities strength

access us invalidated some product, technology mean, patents lawsuit, that redesigned re-qualify access had to we design, customers, some some a think get Credit we Securities follow-up we And switches have in and came that Arista a doing it. simply you we're – the new customer driver competing kind any (USA) patents the the actually I tariff tariffs the your Thank favorable of Badri we to the obviously product Could the Yeah. that because some we'd some had is because of be that there's around expire. that that previously. gave - need Have engaged relates technology. a I and we behavior? more Sami regarding customers for And rather on put as had from switching out biggest to into that now out And of the it of currently. we've Networks pricing rate? And that product seeing is new to campus and switching LLC might side, Got opting and rollout. you. Suisse to heard into just color mainly that then, products campus than adopt back higher

no, choose I business, not to Arista data mean, in not particular products. majority the of I choose is is the that on tariff a the our reason is think general or And campus, all, center. answer almost

center it. the Badri correlation Thank there's be Got (USA) no you. campus Securities Suisse or Credit Sami data on to LLC - So tariffs, to products Sam. made products

Thank you.

from next Your with Nomura Kvaal Jeff question comes Instinet.

line Your is open.

Yeah.

mix cycle you you then, and in XXXX's as guess I Andy, your question of along those a margin much sounded we wouldn't please. from but lines versus better wondering powerful? Titan I'm in So, me, thoughts then as this the comparing I to would XXX-gig? Cloud and contrasting expect wasn't And Cloud mind be share? Do what sounded as gain to mix if XXX-gig like Ita, a was explanation. helpful. gross for Titan expect clarification it Any ought as Is out away it the Jayshree's though initial quite clear was it remarks, upgrade

could I'd grateful. So, for that if me, you clarify be

Yeah.

mixed if was that you I saw basis like very pick the just one And mean, points. towards slightly first. it was non-cloud. XX me margin, the it Let up gross

big So the or shift it way other. a wasn't one

that Okay. And analysts between modeled fair others refer that shift the in on can XXX-gig XXX-gig expectations, One I is the the Dell'Oro XXX-gig to in and would I here be predicted bandwidth on have then in XXXX. like question market and and projected the like currently this is your thing mention to to crossover detail. you

extremely to it's to is reports, based the at of for ramping qualified look fully that strongly if et fact you same (XX:XX) level bandwidth for the XXX-gig, time available, come the XXX-gig. some optics as XXX-gig So on cetera. it will fully take volumes, up these

way get will the choice. side, some because so center can kind deploy XXX-gig and will a optics today really buy or to wants to deploy customer a company those no cloud new the Whereas they this thousands volumes. time They only of it on of quarter. large that's a has data on XXX-gig each that hundred So, as to take

addition, would easy observe the throughout brownfield to with centers, to centers, meaning existing stay like center. upgrade you data I data the data speed In an if for it's that same

will those for So, XXX-gig most with data some time. stay centers likely

a For greenfield center, choice. you data a have

You available with only can components start volume. XXX-gig when but, those are in sufficient again,

Thank you, Okay. all.

Thank you, Jeff.

next from with question comes Your Faucette James Stanley. Morgan

Your is line open.

in about hyperscale to Arista requirements just is I of how clarifying Thanks. contribute they're question build to taking to customers customers terms looking on changing? advantage quarter, the formulation ask for one the are that wanted in or same Andy And traditional question that closed what has can Ittai's customers call I Thanks. how on be much customers? And that Hi. acquisitions you to number And how little from being third of is newer from of the today, and for what different Andy, for you here consider the of more the the from Ita, the that in that's changing December talk is your importantly, bit for guidance a then, quarter? hyperscale Arista? the the guess, how contemplated or

Yeah.

So, remind again that James, I the you a on Mojo SaaS think acquisitions, model. I'd is

us. rev ratable model to going that's for be So, rec a

a that's contribution. small So, relatively

really and with to there we're planning already But been impactful rolled of kind house. part combined And Metamako not and single-digit the is a financials ratable kind have the of You've On of the opportunities then offering impact customers you it's track customers. with out that side, Mojo becoming vertical. the Metamako amount definitely the then into got I'll It's that's side small, our the quarter we separately. of now tell SaaS is right? coming revenue stuff the that on of and being

So it's point. at a small this contribution

Yeah.

resilience, this I On which Obviously, And the in said cannot the my cloud our operating of cloud our those reliability, repeatedly cetera. the our EOS belief qualities. about fundamental disclose have cloud But et is name market hasn't customers. that extremely every think changed. advantage competitive is network we customer customer system really concerned question, up-time, we is competitive that delivers environment

Thanks.

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

open. is Your line

Hey, guys. small Great quarter. I ones. two actually just had

financials. on the cloud first, just enterprise So,

So, fastest-growing kind enterprise, of for that the kind for secondly, those three, trajectory. that. benefiting a just way around then you I'm a million, growth few And just not get is looking case the of a actually is acquisition And looking segment? a how guys, cloud it of exact rates, to much the is was still then, just number

the X Let those cloud, There's faster growing the the question. doubt Tier X both you together. others, me if that any no has than take two Tier vertical and been put cloud segment,

and interest second next to However, the much where and which the of customers question your a was? is million-dollar base and into there's the accumulating we both on starting enterprise hope rapidly fastest and side, we're it's smaller success the lot convert installing, data and campus because And year. off very a accounts there center side, we're succeeding

mean in very just Metamako the kind think of only I acquisitions contributed was it I little, came right? Yeah. in The QX, – half...

Two weeks.

September.

Yeah.

that, was ratable bit but acquisition they got SaaS a again a a contributed to model, was very than And again, we Mojo probably the whole more little So month little it or QX. right? probably –

you. Got

point just guess, clarify I to that than real getting quick, So quarter, for less X roughly next is correct?

like really to we in start going individually, said, portfolio. the tracking as products Again, roll I the to we're particularly this Yeah. not

think for said I I contribution. QX low-single-digit was what

one already it helping help our will in these as and tuck-in overall to going look and high-frequency of financials is one's perhaps Mitch, trading both campus already. help if acquisitions, our we're And at since you to low-latency applications

helpful. you. Okay. Thank Perfect. That's very

Thanks, Mitch.

Mitch. Thank you,

with William Blair. Jason from comes question next Your Ader

open. is line Your

up starting that We there. Yeah. picked vertical. Thank the I to you. had to wanted traction guys gain ask federal about some are you

in of talk So you And where couple you're a that federal? you years? of can with seeing? where type this could be What business momentum about are

more Yeah. committed more think but is in No, to and the not market, becoming only Arista U.S. federal I the worldwide.

We have important of certifications. completed lot a

public, we'll wins So about won't rumors we we Until see we in. invest one on opportunity Obviously, a something's and to responsible fully and reporting be protests. as comment or intend big this really losses.

So, can't definitely theaters worldwide. but us in say losses, and and many for well. segment about doing as important We're an specific many international well wins anything parts

Thank you.

Jason. Thanks,

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

open. Your is line

Yeah. Thanks here, and congrats on solid a team. Jayshree quarter and

clarification a the cloud business. Just about

I kind about to Microsoft historically range. XX% this think talked of you've XX%

above your things shaping think XX% that Is are it's this that how is up? expectation year. still I

Thanks, Alex. Yeah.

composition will very number our a continue Although customers, believe well a be number one the be one and solid Cloud Titans and is I been always many XX%. fashion in over it'll Microsoft has our customer XXXX of in to

take just some compared Okay. you early you've of far. with kind of Great. you've what projects, size, enterprise through deals and what enterprise done compare scope sort Jayshree, are how it's could campus in contrast the deal reaching products before? us of Just and to these know customers products? I seen you but days on of early the so

single-tier for little to match I'll to in and year classic and see three-tiered like want then data shift have a of them probably The I it's looking that I this. question And is involved Alex, answer level personally pattern the been many you detail promise device early where of connectivity. at. are And next I've the change, center, Spline they need or have, the to they've model move different and an often leaf a spine architectural edge the model got better.

that to they're looking make So change.

it's And sometimes after construct to going or year or a year they're new brownfield. it's next a a building brand

whether for footprint separate security design can we're I plane with comfortable being And third you our the is will I it's features us VXLAN thing want geez, customers they're expand they and three enable pattern campus. some Splines, there. very already fantastic Jeff Gartner seeing the they're The seeing capability and a is EOS. Arista's I architecturally. the about. so John demonstrated or box. same a And Spline job build changing, need management the their very anchors, using really campus see I'm something the oh, going, or campus is excited We to and spines And as that center have Raymond CloudVision team on that routing these architecture, the they're don't the at think of or spine that McCool campus done to and or our data with the second box, Conference. are tunneling and into features, cognitive is the use BGP

Thank you.

Thank you, Alex.

question Wells comes Rakers Aaron with next Your Fargo. from

Your is open. line

can longer-term wanted clearly Thanks you I as a little taking Metamako congratulations the now differentiated acquisition. the I'm on ask Yeah. with and merchant into for that see maybe the silicon? you of question just and of fold be? subset to curious, what its as quarter you strategic acquisition, well. relative question couldn't previously a that do market is certain around how product that And size to and kind would FPGAs a address in there addressable or portfolio, bit FPGAs, you the that fitting that usage

is thought-provoking. question your very Aaron, think, I

state the trading. more extensible to Arista's core may you our to electronic As One really you require and capture and silicon Andy, would software. want FPGA for comment definitely the in merchant to PX verticals certain deeply of these there do the allows been the But programmability. the be And get deeper you've are Barefoot improve in on of to know programmability involved. know, being go before Metamako silicon. our latency, us many use customers deploy is heart and this. application that massively I adopt example cases on and even we

applications the applications. applications type network you very Wall an meaning, types FPGA both Yeah, visibility those and Street beat which of of and monitoring traffic include can't precise also kind latency of for

it's market key of our market, many it very So the customers. be it's a not may but one, for a biggest important

And the broadening do this time? product portfolio you across see over

big at keep this cases. it would I it use focused specific point depend on think But the we'll on how think market the gets. application-driven I

you. Thank Okay.

Aaron. Thank you,

from JPMorgan. with Chatterjee next comes question Your Samik

open. is line Your

opportunity mentioned wanted like taking competitive question. understand Thanks how just those for think Cisco, I for think keeping to being related cetera. the an How you gain XXX-gig, that of to to about have my should I with differentiation Particularly, related white-box? or dynamics your competitors kind into should share? of this plays is to you some I of Hi. the et technology manufacturers XXX-gig from the up you

white-box. XX-gig, the cloud are to There's tangential discussion looking a types who captive any of deploy try or people and they're et it's the same in that bit may players to build going really is XXX-gig customers XXX-gig XXX-gig. white-box and XX-gig, experimental thing, white-box really cetera, HPC this. whether second think their a is We of see that where I Samik, deployment clusters, One do the a two is own And on don't speed. maybe connected.

combination. will In and the hardware best for you best I performance software predictable the compromising require tell would requirement fact, that is and place one speeds that not

that's XXX-gig. that the case use a mind So, to for combination comes as first not

if it. And it. on can I Got the... Got follow-up just then

Thanks, Samik.

to one We're I'm next sorry, we Can question. take one? just the Samik. restricted

and next question from Fahad with Your Najam Cowen comes Company.

Your open. line is

your my in you in exceeding at that you you is I recall, are your routing any target the $XX Can expect if tracking revenue Thank for if you're taking traction the us on market you that, least that going target? routing. I to still routing how or think, adoption? commentary hit indicated hitting and you you Are question. annual million to from remind

way you give results. revenue, we service do provider better. in on the to well Especially going in service that well. It's licenses. and got enterprise the market can go numbers. by The FlexRoute it track some we like more we by year-end have license, we it, the will think really particularly three even in I provider and it and I of that acceptance I cloud, would improved But we Sure. markets. track it doing routing are licenses do customers We've don't

still you're So, taking market any in the share right as think in is in is cloud... terms or you update of now this do routing

We share Taking routing switch market. participate designs. we platforms classic in taking routing absolutely and market share displacing that are applying our switching would we're our router track onto and market. we traditional in believe share don't increasing do But mean We cases. the use

you Thank very much.

you. Thank

Thanks, Fahad.

Your Leopold comes Simon next Raymond from question with James.

open. is line Your

because for confused. for versus the as of (XX:XX) own XXX-gig data they the your I'm look broad and hard IHS, wondering XXXX seems Appreciate as to Andy, at on on seem Great. year. have from commentary, perspective biased offered the I I'm partly in range, if market, the being a $X.X billion XXX-gig particular high believe. the you question. taking Dell'Oro this half second the my be towards market timing very quoted When to the Thanks how to size

hoping was some price. and get that you starting perspective a also clarification about your I on the price So – talked on to at that's low $X,XXX,

you. understand what's getting to for Thank want the Just that? customer

Yeah. that connected I include numbers the believe port. to optics the lower

$X,XXX, talk when that's excluding purely port optics. switch the we the So, about

Exactly.

very difference. a important That's

Yeah.

significantly typically, more in cost cases optics switch the port more. than some The

a there's right? So market But read do back there, thing you I question, going best gap is multiple the to your think can reports. research

XXX-gig right lot quarter. to and right more people the a Some is can or them in of than on optics only the a large of particular others. cloud the volume a the quarter, be is the momentum can't systems perhaps high once a are on And volume, in because also reflected XXX-gigabit, is reality which optics now you right? There's deployed cloud a developments customer ports XXX,XXX all And in for more deployment top of talk just these the now XXX,XXX reports. available cloud buy like

kind are systems and in chain with the of catch and So with available ramping. the all volume optics numbers. it up simply to while supply those all the today XXX-gig, And for takes high a

say displacing the time. already. they other one growing to So incremental But are each other. are is takes it and both one I wouldn't

point I that think it's Andy important a really made.

whole how early If XX got, there's parallels. the some to share come We play. had on months took took for XX But lead trials did it striking we into to XXXX, you some market the we go in and XXX-gig, because with ecosystem XXXX. had pattern-match

takes you the that similar see ramp. which comes with as XX-gig Something to months, X happened don't place, well. Until ecosystem entire to XX

or market think ramp the pointing all that to XXXX XXXX. in are I So studies

a Thank you. ton it. Appreciate of That makes sense.

Simon. Thanks,

Thanks, Simon.

comes Piper Your Jaffray. next from question with James Fish

line open. is Your

Hey. and of look on low-double-digit a compared for one the well, mid-single like spending quarter, kind looks the caution as you into Is increase. and there? is increase impact Andy. product related Ita, tax any a for Congrats to reason low- is there Or more sequential specifically is implies for typically digit to It it revenue ladies QX hyperscaler the this you. conservatism? Thanks. or XXXX? And there a as QX around more concern guide to

No, if we upper year-over-year at mean, the I the rate. guidance, largely the at think guidance of are the growth XX% look end of you I

about had kind think in think that guidance what I I is the that's sense. we of the And in line said with unusual don't anything expectations. there's

of much perspective middle pretty I the we right the that's and from think the we're comfortable of a actually beginning, in where line we've with laid business year. kind what from out from are certainly

don't guidance. any trying key particular the not I driver. So think really there's about unusual It's reflect anything to

for on the of any and XXXX? And clarity hyperscaler the QX spending

usual. think we said, Yeah. I positioned have comfortable what we We we'll to business that well in we are. what I of where mean, I'd go have for I think with we the visibility see Jayshree back kind that to, of different But It's and where anything in business go seen kind from as been we're visibility. there. timeframe haven't we're think we

Thanks. it. Got

Yes.

comes with Citi. Suva question next Your from James

open. is line Your

sales at think you about that it is you just the top you. Can have at still once? question Arista campus and is, XX Thank And know would you correct? targeting your how your much. are things, about about a Ita, that it see a tariff deployment, ban increase? how or favorably will first force is bit or need then the take tariffs for for When But quite successful positioned update maybe I we are all of like certain X.X% supply least would ITC the to have chain of your going us very Thanks not. little the I accounts do sourcing regions you to your time you thought or

Yeah.

five conversation the with the use because our to verticals are of us natural The us new actually So, campus customers. is all and getting know with to exposure cases. most us familiar conversation already see is just, next can they address Mojo, we're with your question, and natural acquisition and base across customer James, love

is customer And some our of the WiFi separate interest base. from in

really effort. are and sideshow on sales as Manny go-to-market, a And Anshul on mainstream a that's There's So, from both campus focusing here. a no and motion. also second going

expertise. And sales expertise SE building and an we're so entire especially

are understands management. sales and our where of special team putting is So, we all not emphasis WiFi radio

of across sales sales specialized the have the the is do nothing there. and we there's But to So focus, SE unique rest campus. entire expertise marketing

certainly sourcing But there's I base other probably come in were still your being mean, work still of to than maybe think still more to our stuff. There in components do. cetera. and are question, And Yeah. I certain through our some sourced we that we've the if hadn't et China. diversified outsourcing would we ITC have China, Jim, supply are we

of do get obviously possible. So we some to of his to to McCool as and done work mitigate John that top And for team mind quickly costs. those do that's have as

Thank you the so clarification. much for details appreciated. greatly It's and

Jim. you, Thank

from Needham Your Alex next Henderson with & comes Company. question

Your line is open.

of that versus about APAC? quarters. Thanks. of and in parse I give comps, business, a Europe little have and economic comps you for conditions the bit little of could a talk international bit could a just But the between between next slowdown bit comps color between little your us business. you tough the very you hoping and Obviously, here was couple portion the tough

absolutely Alex. Yeah. No, right, you're

issue. tough is well the geography. overall in our did comps very organically I think We

of by However, was volatility the global resided. spend where the and their defined customers some

the a board. So, was Asia-Pac weak, strong, was across strong little EMEA U.S. was but

XX the it depending and doing intact still where on well. the organic and spend. Titans So, turned providers is top out Cloud just business that the way But

when is Yeah. And APAC we base again do volatility back I relatively quarters, between filed EMEA over right, seen and couple you've of we last but and think the Q, the the some forth small. still because have

couple you to So, or a or going one other the sizable is then deal of sizable (XX:XX). a when deals, win

in you could percentage guys ask low-single-digit one If It terms clarification. say did wasn't to? from you acquisitions? which or low-single-digit the add Jayshree, just of clear contribution were millions referring I one

Million.

Alex. Millions,

small. relatively still It's

million. Single-digit

you. Thank

Yes.

Alex. Thank you,

with question next Gabelli. Susanto Hendi from comes Your

open. is line Your

QX and great you Thank performance.

Thank you, Hendi.

to campus whether you is So, core Jayshree, about different similar, have frontier. with some more and it will Arista go-to-market go-to-market I partners? cognitive closest would like your how defined the as strategy, how next understand your

the going healthy we leverage is question, that's easiest now No, very nice go-to-market a low-hanging over good Yeah. Hendi. got that. to X,XXX already a of base We're one the Obviously, customers. we've And have.

but condition will that However, necessary not a in participate campus. the be to sufficient

expanding. strategy an is, but will going channel to Manny's fact, We're pepper some our with be focus. We adding already theaters, complement elite and customer our not focus initiatives we've had the capability international but of we in all to one channel are And to direct in channels, experience more that.

will So the and campus be XXXX. in in investment own marketing important our the and combination a channels the of sales step one very to

Thank you, Jayshree, job. great and

Thank you, Andy.

Intelligence. Ho Woo question last Jin from comes with Bloomberg Your

Your is open. line

hey. Oh, if I for Thanks may. Great. me squeezing in. A couple

XXX-gig the next with that any of that there about think Jayshree, And related uptick, of revenue switch, how you you terms couple architectures the the cloud. of out P&L guys needs innovated IT the to Ita, over drawdown Are considerations came quarters? of be with the we hitting then, revenue should And switching? when was So, deferred in Q-ed? the to network on the the deferred similar that much XXX-gig how

the related is the I Yeah. growth mean, think I again really product to requalification.

new move As old stuff with will when to stuff, And difficult that tell. et cetera. to back, again, comes exactly that balance versus it's

to it's So, forecast and in other that, like, I'm to too than say think downward that if move will beyond in it of guide, you'd part that, not trying as that. contemplating this. But try we're our not a QX forecast I I significant early right?

just Jin, last of the the wrap QX. to And question Woo up

way design into availability, of mix bringing XXX-gig and approached automation, agility form on fixed chassis analytics perspective, modular match at look If approached from both factor. platforms, our XXX-gig, high it you and heavy differentiation, a we we the software network

You year. similar XXX-gig over can a expect strategy for the next us to adopt

Great. Thank you.

you. Thank

Investor information the to which mention presentation a earnings you our which on concludes results, call. that section on This posted QX the website. also have we I additional Arista XXXX fiscal want access can provides our

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

disconnect. now may You