Arista Networks (ANET) 5 Aug 202020 Q2 Earnings call transcript

Welcome to the Second Quarter 2020 Arista Networks’ Financial Results Earnings Conference Call.

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

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

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

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

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

a second our At commitment afternoon address times. recognize start XXX-year these global our cloud call. we communications for to in and reiterate quarter you, like global coronavirus responsibility To joining Thank response. supporting infrastructure in for Curtis. and us with, everyone you, and I once customer Arista, XXXX pandemic Thank to this and safety would during earnings role employee the our mission-critical

adjusting new are norm the and this or home emerge. XXXX We continue expect until to throughout from work therapeutics will vaccines

business closely working of revenue. manufacturers our are we QX to support chain $X.XX. and specifics, to completed the quarter Back $XXX.X with and contract a for revenue per times delivered support We non-GAAP their earnings services share improve approximately million and continuity supply our with customers renewals of XX% lead initiatives. in of software A-Care

space and a X is our registered Our the non-GAAP million by gross followed new march in was tied vertical continue of providers record margins number for to mix. a QX day service $X enterprise cloud XXXX, services direct again enterprise place. a as performer, result providers vertical. service customers and once influenced third largest cloud software of our and and by largest in second the In traction second our towards were X goal Tier XX.X% The financials quarter. to We customers of fourth X tightness

that financial XX% approximately XX% of we mix services approximately mix; prior second vertical mix; consistent providers, the and titans, of you cloud including mix. the the the was in of Our approximately in with shared XX% quarter trends May: have the with enterprises,

the was normal of XX%. of geography, with smaller spend quarter. In EMEA titan Americas the international cloud decisions push-out traction to XX% Regional big terms customer due was than and contribution in international at reduced

XXX portfolio June its first Campus As million we ending year predicted, objective XX, met Cognitive Arista’s XXXX.

hopeful remain especially traction, pleased the in will million, new time, double $XXX and to enterprise course, take to that While to our market prospects depending the next era. on we of believe are conditions. with this optimistic quarters six five We we in COVID

week, terms selection last major new In across of for cloud the the supporting services edge, Arista innovations, all introduced cloud providers. router dynamic part EOS

key seamless, based of automated for Cox include and enterprise the declarative features and cloud elastic across through visibility transit CloudVision AWS multi-cloud gateway three resources. AWS, EOS Arista’s for a of Azure cloud of cloud providers, Some of integration consumption provisioning and the GCP, main centralized terraform; provisioning, dashboard Hashi on

our looming are clearly sharply review and in cycles and by extended increased we The cases midyear cloud As sector. in this, strength economic confirmed recession escalating. at July. are Arista wars the outside is a trade control. of QX experienced Despite number macro XXXX there recovery has enterprise the sales campus in point, issues COVID-XX The titan offset

pleased details. multi-cloud category and cloud with emerge migration Gartner’s our recent legacy network top Wave recognition advantages expect we our customers We data Forrester’s modern. from capabilities, leaders in with being the for routing, are will the statements networking and and hope for center, many to for year. well CFO, strategy in also all even for status networking. now In networking. to center programmable We of These compelling Brennan, the switches believe these designated times, data premier to a with Arista’s our business-wide open turn for sneak validate campus monitoring in score sixth both Magic I we and SDN stronger than us Quadrant are cloud the and call you new are safe in truly positioned Quadrant unprecedented in enabling Ita? financial Ita I industry well. Magic consecutive peers. leader Gartner

afternoon. Thanks, results non-GAAP This Approximately, non-recurring to deferred compensation of is charges other on revenue all GAAP excludes to million Jayshree the of impacts, certain acquisition-related $XXX earnings guidance full based A to of release. recognition year-over-year, selected of XX% good X% our and of million. of revenues XXXX. end decline and $XXX guidance million, second product the $XXX related is our QX but reconciliation in XXXX non-cash in provided non-GAAP are Total $XX upper down analysis at for and QX stock-based quarter results were items. our this QX of in our million the our and

In overall was supply to the XX% in approximately slightly XX% somewhat while demand of resulting last extended quarter quarter. International Service for total related represented challenges, first revenues, up time healthy, million addition, in constrained QX in the $XXX.X down shipments revenues quarter. reasonably total from experience and quarter. we for revenues, COVID-XX XX.X% revenue at some of XX% lead from continue came the or in

down $XXX.X with or marketing at down XX.X%. in or million largely of year-over-year cloud gross quarter $XXX.X While in of the quarter. came above consistent shift in we see QX was with approximately basis Sales due were the location compared was million revenue, $XX.X of R&D some the from Operating push-out revenue marketing travel-related last opportunities million lower of at customers, geographical last in-region a margin in to million XX.X% businesses expense quarter-over-quarter guidance in did of by and $XX last last also. the quarter, and from our expenses quarter to spending our our larger XX% to at on revenues, $XX.X XX% million. spending. XX.X% for midpoint and X.X% quarter titan or mix deployments was Overall, XX% of

approximately Our quarter million revenue, $XX come at in $XX.X G&A or of million. X% down costs of from last

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

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

the our We not quarter. common Now, turning at stock balance shares of cash sheet. ended equivalents quarter and during to the the $X.X approximately repurchase Cash, billion. did investments second

reminder, to of shares our a or previously in $XXX repurchased shares over As commencing million years worth X.X QX have repurchase ‘XX. X authorization $X we Board against million billion

We expect income quarter, of reflecting in investments. net remaining execute against the from capital $XXX working offset operations by the cash to solid somewhat We performance to second authorization. million continue generated incremental opportunistically

linearity levels COVID-related end chain at days, through the DSOs the help to We improve any and expect reflecting year the up supply down from times up to came were from million $XXX quarter. billings of the of Inventory as from in to increase lead XX XX buffer against the in in look X.Xx, we X.Xx increased period. future days in Inventory period. turns last the prior continue strategically $XXX quarter, to disruptions. inventory QX, million in

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

The now almost can timing is for expenditures service QX, balance reflecting services basis. Accounts is related. of the from payable million. XX revenue revenue exclusively to the up $X.X deferred and days quarter-by-quarter were of were directly payments. services a our XX vary inventory renewals, which linked timing of Capital receipts and the deferred level term in on quarter reminder, days, a days As

beyond. quarter Now, turning to and third our outlook for the

to of We impact closely continue will it in monitor when world. these the restrictions and be unclear Local operating COVID-XX how finally is flux resolved. remain and the restrictions around

some to chain slowly the on return do made supply to good and progress during still we we manufacturing work While quarter, have times. normal to lead

outlook margin XX% customer reiterate driver. to gross overall the front, gross with margin XX%, the mix our of we being On would key

closer range. COVID other some QX. expect equal, of to midpoint we’d chain freight things and all in incremental costs being recognize our related and margins With gross We QX to supply bound the

investments we carefully, while spending travel, key the and will On to expenses. prioritizing related a projects benefiting and marketing and COVID-related manage from engagements, spending natural side, reduction in customer continue

add expect however, back revenue should, investments solidifies. You model to see the into as us incremental

revenues XX%. of impact non-cash mitigate impacts to business other backdrop, approximately uncertain million is as and we all gross QX for to this will third to of its This million, a for quarter, as and reflects to situation new compensation $XXX margin our and non-GAAP our monitor continue an the which excludes Finally, to items, is any margin current guidance our based $XXX stock-based however understanding COVID-XX non-recurring need as results supply challenges guidance in of attempt situation XX%, the of and chain. XX% of approximately our follows: With inherently unfolds. and is operating on and

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

Ita. you, Thank

themselves like the Arista to that a the away. everyone Thank please going call. of time you portion now it limit move to are please Operator, to take Q&A to for question. would request earnings We constraints, understanding. your single I to Due

the Q&A the first call. earnings will from Arista Hall question comes Your [Operator from now We Instructions] the begin of line Sachs. of Rod portion Goldman

line open. is Your

other impacts, start hi, question. the we with wondered we for revenue I the Yes, Are and said wanted you didn’t and you on have revenues normal you just have that seeing what I what movement impact are – to are on whether of cloud as was solved that you year, there to seasonality those verticals could any in $XX whether last about here from the observed terms ask their the QX issues last secondly, calculated million on if last supply seen And of thanks I quarter’s quarter. on mostly guys then in since supply come will you is off impact you to chain those ongoing is verticals there to the or here back QX? know or or now? the trends year from the further see and guidance comment similar

Jayshree. is This Rod. Hi,

strong And continued manufacturing, And we cloud are think strong linear in come had in pretty fashion the other traction in general. a throughout the still QX in well. verticals year So seasonality, in they all terms from got experiencing We fairly very COVID quarter. terms I as we four than better also the on issues. of this but experienced obviously back titans, inventory much from things a of

to where We don’t we to them, to we we normal long back improve look have improved are till it them, lead very be times, we have but probably improving QX. – expect

Okay.

the much still because getting on a supply quarter? are sounds as as like but Jayshree not You bit of it chain, revenues, drag last little maybe of maybe

till get won’t improving to QX, to we from to QX are normal improve we QX. QX, from but Yes, will back we QX again

Great.

Okay, thank you.

Thanks, Rod.

Erik Securities. JMP from Your the comes next line of Suppiger question from

Your line is open.

upside anticipated chain taking – in Yes, for shipments did from – chain, for thanks you being last were think to able had your question. indicated quarter shipping the because Back you it prevent to sufficient – or further that you on from had supply able the I supply June from the the you upside make inventory did you inventory quarter, prevents you the make? that to quarter

made we if we asking could more more made have our could if guide inventory. the were given gave, Well, more? to We we Erik, we able have quarter, make you are but had

Thank Okay, very you. good.

Erik. Thanks,

Erik. Thanks,

William of Your from next question comes from the Ader Blair. line Jason

is line open. Your

environment center? am another Can like the not It Good Yes, center. about about you talking data you about talk campus, afternoon, seems enterprise quarter guys. for data specifically thank the but you. demand had there. good I

you little market over had are you a selling of with some a are know, the because learnings several the bit of Just years a have into that winning why competitive market, What that Jayshree incumbent. pretty I there? major last it’s

about why are just environment success and your there, talk So, you winning?

we winning, to I that three our way are are which and in us as being No, every department. of think support. reasons, because really Customers peers superior quality in seeing

decisions and from customers, ones. can real and as now customers greater Our land-and-expand recognition innovation so us cycles market in is and customers were long. existing new of with to of stronger. enterprises us stronger starting industry analysts both many these on make Sales And ones getting then other tell as enterprises opportunities both well our the are our be and aware

so really are may several And enterprise’s that but another customers expansion on success sound familiar us for their many that’s quarters obvious, progress deepening cases. is also with been more in this going we work is of QX. in our This seeing for materialize use aspect the are that

not prospects, So only land-and-expand opportunities. more but we are we getting are winning new also

pointed we our the enterprise being are and shining board all So, always star the in that now I across we and regions. the to brightest seeing think have our opportunity

thanks. Okay,

Okay. Thanks, Jason.

Meta from Morgan Marshall the next Stanley. Your question of comes line from

is open. line Your

kind versus or update to work of wanted were Tier on the get given build public was Xs just acceleration them you due how COVID have might from thought an kind to about how Thanks. I home? cloud of changing, of leveraging thanks. some just thinking COVID Great, seen

Yes. cloud look ways to No, I meter. X at think, there Tier is really two

public much cost a hybrid they But cost a also justify as make cloud going manage Sometimes, can of combination run public from in very their going cost the the cloud. investments and they effective other their than times, much more they perspective, investments long to the to structures. have to

you see are It’s nature. really So cyclical X about. which a depends very of talking cloud And in on Tier bit both. you it

that some to cloud continue hope grow on the So, little as and of that of did throughout too Tier slow own we start second year delay of decisions we can X some in workloads some their in and pick the the have others down experienced we a the and and we we up half experienced some that year.

for piece a think is X Tier I of cloud that’s especially well us doing CDN.

you all rightly but work video is the up and starting the as aggregate bandwidth all of of Not that the an investment. video that With all itself flows home, of create mentioned, the that Xk from Xk bandwidth. is aggregates to large, to

you. Thank Great, thank you.

you, Thank Meta.

line of Your Evercore. from the next question Amit comes from Daryanani

Your line is open

of Jayshree last Thanks for couple guess a the you my taking question. in I for quarters. question

hyperscale of decline Arista Expectations context and just someone Capital into this in I is as a and But the or have go starts we higher, that? more has We than shrink CapEx to as while do CapEx diminish Arista comfortable should realized that think revenue decline, get we totally and spend. we things hyperscale down slow year, seen that lot to the exit back to your be year revenue how year-over-year, we about XX%, continued will XX% hyperscale

affect CapEx, to But spend I is said from to our flat right network one we was Titans QX. is very strongest did are absolutely But strong down the are and I to flattish originally cloud CapEx at overall, some now so thought last call, are titan strong down. experience would feel you we some high no all, of down of look and and flattish, because which the want as reiterate, in CapEx. that reported first some massive one if that did an to titan CapEx think cloud correlation are Amit the were you about between good Well, say the a there we and we some be the improvement

be So cloud overall for in this year the the we flat will for half. titans. of But that the course monitor second we’ll believe

Thank it. Got you.

you. Thank

comes question next Paul from Cowen. of the Your from line Silverstein

open. line Your is

evening or referring standing or third-party are or to you specifically and you Cisco solutions with among Good one your to like developed/white better from concern share regarding us worse? investors to relative another, cloud extent box position long obviously Jayshree guys. changes off from whether but competitors for Arista kicked internally titans. insight Any getting can any competitive

the quarter Arista switch better changed or introduced the Thanks, in worse abstraction for Paul, interface. as, not

support, containerized SONiC support, embrace customers So too. on white a long Arista’s O&L blue and commitment so support, boxes virtual. EOS, history we embrace ag EOS, continue of boxes SDK, FBOS to this EOS, Linux, we have

to impacted made that Jayshree that be next could decisions to clear, decisions the have the latter I’m referring this might matter? impact just or half quarter revenue, not just of for that been that but year year

Anshul, Yes. change don’t color, know, We half don’t are get some but you second give don’t we there, to any Anshul? – in you ahead, can go see I we if maybe

there So, parties including multiple on to topic, for look, lot this created is noise engaged lot our customers. of don’t by around have and a much the a judgments obviously roadmap that lose. projects, we of our are But

So very that to their architectures. have to and build network heavily choose their they not XXXX we they scales just a a it’s are have involved business, for XXXX box in and

give we the is level fine. high worry, will message So be would don’t I

you saying others because worry, ground, be you will there’s notwithstanding fine incremental and share you apologise, many some I will so loss, not projects or Anshul you projects there notwithstanding will lose that that gaining but does be don’t share? will grow

you continue a in the fundamental thesis is detail, but are can message we unchanged. getting think Well I is think I

architectural seeing competitive not shifts or are losses. We

spots data XXX-gig. third recent number consecutive the on validates year fact, one are that In for we

increasing is quarter. share every our and So

Paul. Thanks,

Okay.

the Your Suva next question of comes Citigroup. from from line Jim

Your line is open.

have with longer are a we be discussions, yet you pandemic is much. think should you we longer about have just XXX-gig such. are that? that Thank they with harder have up so how labs, and it and look working Maybe coronavirus and Any coffees we and to fruitful if coming term people it even, on coming, we to XXX-gig whether meet through visibility teas taking more testing

said Well, I due last you XXX-gig year, to XXXX began into go be COVID-related the will Right. trials end told we of you we as Thanks, have some to Jim. last always all quarter, may the them at of from delayed we XXXX slowdown. think mentioned but things

deploy over You just collaboration XXX-gig can’t a virtual conference.

have new do product You qualification. to

have winning You are progress in. optics the XXX-gig That to get very our tens we in said, pleased of customers. are we and with

In customers XXX-gig. won we to-date, fact, in over XX

So, we early many are in cycles. pleased progress, are with them of deployment but the trials and

so you much. Thank

Thank you, Jim.

question Aaron Rakers from next Wells Fargo. line the of Your from comes

line Your is open.

little bit, mix the understand Yes, I taking memory go numbers the to you really sequentially. the or lowest level XX.X% just change margin, looks it's thanks if it can for have is think, want variables appreciate we my correct, between a seen. didn't help gross margin? your to gross I the question. into At And like us product the verticals

going can are seeing that you the think give product gross you. margin margin So, we gross and forward? how some about impact Thank you on

mix, the the QX. there's, it right, is think wasn't I that you are customer dislocated mean, QX right I and between but biggest Yes, still driver

we the to lot pickups or has some able side. look about, talked sell we gross some we previous quarter, the a that we couldn't margin you us at that being have on sell given sell thought wouldn't if and think, I last inventory

not not through of obviously will type services. that of the flow All for product margins stuff

have over, are supply about kind as just costs we freight COVID and you right. cost this also logistics, covering quarter, chain of that into think supply now around of prioritizing structure, we QX, over costs and some honestly implemented So, QX

are we activities that show some, going will around the So, of the in right. product cost that carry year up to end through some burden those line, of all

outside have around we mix just the the, that that will bit seeing move think a normal of shortly. of I kind been even So, customer

in competitively just in say. there be clear, market pricing dynamics no guess been as change the I you to has

on face right. nothing I pricing, new nothing but how that’s of mean, is the market right, always out the was, ordinary or different, put anything some

And greater Yes. just are we clarify no COVID related or structures, competitive said, cost to what changing pricing just dynamics. experiencing he

Perfect. Thank you.

you. Thank

Okay.

from comes Raymond question of next Leopold line James. from Your the Simon

Your open. line is

the Thank you had comment make the Thank you comparing Jayshree, a on when you $XXX year, sure last giving are clarify question. using was that I to guess cloud what about you taking you appreciate very what I we hoping mean it you. titans. guidance talk flat baseline but XXXX, had revenue the significant much about in what thinking I number I want for million understand recognition base I could given was are you meant you the to? of the by flat you been you

into question, Yes, given, I just of deferred. we that’s relative computing I to Simon. simply with actually the color want that? to year-over-year but a revenue have the get me great you was help didn’t Ita,

is you as know, very commentary, that demand, much Yes, Simon, around right.

not it’s is the how adjusting deferred. So

year-over-year you and was flat, adjust cloud business think demand million need the deferred on if about you of the to still of out you okay, right. that, it top $XXX was the say, So,

decline cloud flat. as will demand being on a you still So, with a Jayshree year-over-year even revenue described basis see for the

you using life are simple? tell our you value dollar us to keep just what Could

know top percentages much mix difference for business the the of you a the we if of how building and was the of my there, will the that Off right. take spirit I on the then head, gave is mean, roughly million, no, this you what demand $XXX you deferred you adjust get the basis. but the

We can if up pick get want, So straight afterwards forward. you it's you but it can pretty there.

Okay. Thank you very much.

from Bloomberg. Ho comes line Woo question the next of Your from Jin

open. is Your line

for Alright, question. my great. Thank taking you

and telco so seems competitor guys and for new Nokia finally the question, demand into time am because switching XG competition question. a switching now is if I a business solution been just have it’s for thing switching, sore in spot quite know curious their one it for purchasing may for coming on of market, their you you? or the a you I market So that’s more have that thoughts providers some not changed a

exactly – their think few is be entry and into and I And what difficult, I Nokia, service provider good very data player product center but on the the is, Well, but, believe details certainly while I a will the there fifth think company. to don’t tough them they really respect and be companies, any compete, the I with products might have will see XXX-gig especially do cases we a there. marketing. and as some despite it find service for We used available combined optical think provider,

So I don’t some rightly out, with think don’t cases see optical. competition direct but we may you combining will see, I a them, like they will use we pointed think find with

or Well guys? is when to an telco there is there finally center starts out for that emerge XG rolling opportunity data you

We, That’s we certainly with opportunity a independent the see center segment. a service very that but seeing we in as XG a real independent use telco that of provider data out, today case rolling Nokia. participates on are already strongly Arista

Thank you.

Thank you.

of line Jeff from Wolfe question the Research. from next Kvaal comes Your

open. is Your line

trajectory Thank you cloud in titan in less. all the couple the I very been of been smooth titans growth years. with have very in was cloud It’s everyone. traditionally you a little vertical much, ask in to hoping about obviously, last the course, of

the differs late that been that at come smooth XXX-gig year, just than of XXXX be many no year? back in the half, of in hoping the top or would or bit middle push think I rather trajectory. out might should I the of And be a at we given Thank So little wondering am XXX-gig to a the careful little we us if first have you. in about the that how even look XXXX the

that’s it you, I buy you few as look over XXX-gig, Anshul cup you a coffee. Thank can said, not to Jeff. at words a pass am one, and when of say going I to

them is still is on. will XXX all there our for and XXXX this off are level take cloud XXXX that varying longer. to in time while and and, take files, labs of of some migration think And I and stages from make of a some different and right will that of good certainly concept better in much to different in testing cloud are I intense XXXX forms get to XXX-gig to migration. late start So of you There say but of think understood are demand them titans visibility will proof go it,

our think I for of be that want of to customers. Anshul is to I on can the and deployment XXX-gig XXX-gig what to the you confidently add the combination tell mainstream you XXX-gig? is going most

cloud XXX-gig the to with will there XXX-gig, available no to Absolutely. the into these XXX-gig stall well factors. and and have of the is not cloud, very cloud whatever in in XXX they we And But X/XXX-gig I participate waiting. again, today. to They deploy think mentioned the next X X qualifies form Jayshree, years. all is just is build whatever going they going effect you is today, real market because for buy in capacity, market needs in the the would from bifurcate

very you much. thank Okay,

Thanks Jeff.

JPMorgan. Chatterjee question next Samik Your from comes from

is Your line open.

Analyst seem for up how taking from and rate XXXX, terms Thank that and teens at I to embedding had just mentioned And the getting of to mid customers where question. set growth us Day wondering XXXX Hi, you how to double-digit with communicated cloud this I you more back thanks in growth you you. a spending in cloud? the ready a Jayshree strong of a my am the cloud comeback for from be rate think earlier. does feeling seeing are consensus largely you visibility

double-digit Samik. or grow cloud. to the to on we ready don’t are going think I Thanks mid-teens say I am

large. so are numbers Our

are in large being our numbers right? to be and clearly contributed cloud traction from grow will We enterprise, faster from the but period, I growth think the happy is the cloud. the clearly coming

many too tell, for correlation XXXX. is variables there that but direct will make in time So to a

right. a a to all the with everything trying XXXX just It’s early little as to view that is uncertainty Yes. there yet, start call

you. Thank

Thanks.

Thanks, Samik.

the of America. from from comes Tal question of Bank line next Your Liani

open. is line Your

Hi, Hopefully can okay. you hear guys. me

we Hi, Tal. can. Yes,

nice am year-over-year growth Hello. XX% you going yes, QX, I I of and Last look pretty the the back double-digit numbers, and at to lot decline. and you around QX is danced growth year year-over-year but XX%, questions of XX%, it. kind QX, if grew quarter, beat this that

the do to the cloud up it second, recovery and color customer the you to if the existing a past mentioned is growth because us demand deploy see new in is growth, around cloud So, vertical. demand, see in help an there or what’s cloud? you I with this on trying where and the the is color first so you that is for decline where kind profile back is the demand verticals? of it? to beneath see color the numbers just trying the of just to the vertical last you two ex-cloud meaning understand the strength, I thing am quarter growth I was some numbers So things, provided of this weakness and to you trying the in started And meaning just is we snap with get of without other same after and is us the the the understand us can growth surface, any in cloud, that architectures, trend big etcetera. am am what behind going see able I give with the was can to Thanks.

of we kind go down think level Yes. Tal, going are that don’t detail. I mean, of to I to

growth, I you of think recognized that X% being year. last about of deferred relates you the year-over-year revenue take the if that kind have to

shared level, active on year. running think in in right. step and were down Facebook, which They And first QX the about at through that saw year talked very this You actually we then half the before, right. have they a quarter, we are I a know we last that have have we through lower previously fourth down step

on unusual QX, – strength without us to going the not cases that the Jayshree we the the quarter, was in other in on versus that the of last there this some gave verticals again we that. in key mix kind different but you because the and big use have quarter of alright. we around gave kind and just gone to are drivers the nothing then So, and those call in the the verticals products drivers stuff, mix breakdown cloud get those And of into But are are the do your seen cloud. of trying

expected, now flattish on was well, continues over better thought demand year, when a we of it’s continues a we grow kind coming into down than basis versus the cloud it’s solidly So, not – do being when not the at to look breakout, you enterprise to a it’s and, still but had it year.

And second – my maybe any in any color vertical? the the growth cloud color question, about

you there think on right. get can the math, I

If look you take you the right. – on out and at on the there, growth revenue you get the can the certainly deferred basis

be will year, We right. for saying we are the for saying are the demand year, flattish the

at So I much that this there not give sure else can point. am we you is

deployed, demand looking was to are any I new What I deploy and and the is and am is of up? they of why you some that just types part it referring were between understand trying reversion any architectures in etcetera past, new is beneath to there a that's mean, trend result were is it correlation a was the because the to cloud, that big reduced between spending. and or there to customers going declines in the growth noted as whether servers

their have they spine a adding a multiple we they it’s And an number flavors super building are look, where these regional be data use layer, in to spine. of case additional density usually it IO. spine in either two they be XXXX. It So Tal out could building expansion, network come – could or especially expanding or are centers. And new but on racks increase server the

see. cases popular use three expect year. definitely So, quarter more saw that these this we of most see we and this the And that to are we

much. so Thanks Great.

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questions. both are very good Ben,

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Sami. Hi,

for Hey, sorry about that. wanted about to Thank just little question. international a I opportunity ask bit you the the there.

quarters you a and year-on-year seen have couple some push-outs. We of about decline of talked

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Thanks, Sami.

from Your next Vinod Srinivasaraghavan the of line Oppenheimer. from comes question

Your is line open.

are headwinds, XX%, would seeing Hi, taking or you you slowdown like I mostly to thanks expecting are talk supply some my question. about are related any extent vertical? say just the that want the demand demand in and chain weakness XX% headwinds you supply for or say outlook your to embedding you are that

more. question it’s answer And bit least QX, a as in not able I but I shipped as would well into of may demand loaded have I QX cycle. run be summer That’s to it say little we will satisfaction, was a albeit at to we a Vinod. think your wish pertains that and to strong slow Thanks, that I could

but So, pressured we and to demand. don’t we yet QX know supply second create and to about –QX, about don’t respond next the more were supply hope QX or half QX, we enough chain that year certainly chain know by

how been you And you. of sense backlog, a you kind of much just your – thank Okay, like of give is held has – would can up? say that what us there

about but Yes, safe it’s backlog, no, we don’t talk have we some. say to

you. Thank

Vinod. Thanks,

So this earnings QX concludes the Arista XXXX call.

results, section information for additional our can us access you which the everyone on provides fiscal which website. you on be presentation, joining a and posted have safe. Thank We of our today Investors

you. Thank

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

You may disconnect. now