Arista Networks (ANET) 5 May 212021 Q1 Earnings call transcript

Welcome to the First Quarter 2021 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 Investor McKee, AVP, and Corporate Curtis Development. begin. you Sir, may

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

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

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

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

XXXX you, in I Arista, this for you vaccinated heightened all you, quarter are concerned we joining call. India. earnings At Curtis. first pandemic and especially our crisis are Thank hope the us by times. these safe COVID Thank everyone, in afternoon for being

steps Back taking can contributed non-GAAP of earnings QX we as delivered XXXX assist teams a of share of best EOS the for with subscription are revenue. we our software A-Care and We the local $X.XX. XX.X% renewals, and to to revenues services, XXX.X million know. quarter, per approximately specifics,

mix, well margins quarter. Our Cloud as non-GAAP was Titan and XX.X% gross contributions enterprise, as by for higher at services and the software influenced

We at continue Titans was and to the quarter. the providers experience close good growth Enterprise customers was customer third our second, the providers and In in largest fourth tied at Cloud and with XX%, specialty new million followed dollar place, logos was Americas vertical; enterprises. cloud traction a the and at customer place. increasing were service International and contribution financials by XX% in quarter,

deck. They also, to to the the to To the Cloud and sector are the the consistent have already Relations in our ranges Enterprises the and XX% we in product XX% providers range report provided we of reiterate, are annually. in terms specifics XX% the In XX% in range, with are XX% Investor will trends, XX% our range. Titans

and shed like software light for Arista. pertains chain to to and XX% to routing, for for XX% forecast XX% to shortages, XX% to services. Our In of as light industry-wide adjacent chip expected campus core center, this be annually topic, more especially product on I'd data XX% and it line to the is supply XX%

our a is resonating customers they growth our and are many preferred and with are Arista more healthy them. the We intimately and and with prospects of we experiencing share projections. work driving pleased First and customers XXX foremost, we with top multi-year status as well with are demand

we been to supply put in never chain Arista so with substrate reduced history. perspective, capacity. in shortages this the To has time. and assembly has and plan in have wafer XX-week for resulted lead now constrained COVID However, many components

have COVID volatility with significant to due more the Our suppliers and contract improve and to experienced orders. few manufacturers we're Naturally, has specific improved Customer demand in planning past country delivery. strategic our though months. working closely visibility

customers to working are do deployment customers We timing needs. that time pre-ordering. believe this with the not are at our their of We understand our

pain they’re balance manufacturing Arista of data center invest campus, and capacity. especially often and a Arista’s averse I recent to result even momentum a is vertical However, XXXX. half shortages. of includes planning for of year steps chain these XXXX spans enterprises, customers, for believe will my prudent taking But into markets, supply exercising and think many suite this is the chose backdrop; all of Therefore, second we we and inventory this ask products. a enterprise Arista. and point remain increase do a software as risk decisive routing,

switches, Our data seamless and their a network can state, disparate build customers Arista with are now centric CIOs architecture, by our cloud data A pain-points characteristics. first, cloud a part to and network driven integrated to operations, their driven a AI building Historically key cloud our architecture their cloud enterprise aligned driven into approach programmability, experience. of network routers, is client traction functions management and spanning sets to with security, be data and the and software into networking. cloud functions addressing

a try few me examples this. enterprise Let to highlight illustrate to

Using NetOps spine alternative and quality, another customer factors. differentiated only Arista. again, low U.S. campus chassis. manual low innovation. is factor. automation, streaming enhanced platform software embraced issues example differentiators and for as because The automation as Cloud both wired Arista’s The POE for and leveraged CX center. and customer customer the high embraced automation multiple and customer center They once was some EOS upgrades, was WiFi fatigued very They Vision in cognitive key chose A capabilities win and and advantages. They switches also for also improved continued form The these Vision confidence The application. and brought A dollar with and support, our our have spine the with on also to legacy in their image across data examples, once availability. retail leaf recent customer, upon density and sector. distribution routing driven analytics, platforms. build our a vs this and center implemented EVPN Our feasible Cloud us second of was hospitality single multi-gig operations, automation, touch telemetry control. our our their for zero footprint, Arista’s compliance XRU programmable chassis to and the and easy enterprise was and in Switching data and based architectures. DevOps [deep Vision capability in international popular of state and there again million across to foundation spine AI Spline strategy all Cloud and Cloud power, provisioning, this an integration were because themes. differentiated was XXXX deliver with software telemetry Cloud win of agility, leaf unified EOS API for modern key role. buffet] a answerable XXXXPs spine software Titans. key change campus as our driven and to third deliverable was VXLAN campus Europe. availability, design, workspaces cognitive and five-A's in A with three much Migrating a is from programmability, key for common Vision played In and a was

XX-gig, visibility that also are now pleased to our across from demand XXX-gig increased customers. we state sorry, Titan see XXX-gig and We XXX-gig, Cloud

have volatile, like them and to recently. preferred to status, cases Officer overall more Operating invite be deploying in can many with While CapEx this this. deployment partnership enjoyed Anshul, diverse our I'd business on elaborate we the a Anshul? with us used reported consistent Chief of

Thank you, Jayshree.

data half [optical in XXX, availability timeframe. this to cycle the cloud and We is gig seeing of compute, architectures software continue cycles, of interconnect, WAN. well-aligned improve are gig networking for XXX been these as The lens] features encryption, operational optics, The designs about this customers. and XXX These year. AI, much ZR scale, or efficiencies we gen next monitor talked to driving next is upgrade expected resiliency, start MACsec have and upgrade also and center for generation to our storage, second XXX,

wanted Demand for environments, share. While our we our we the our their expected Back have remain always customers preferred to Titan products fair get multi-vendor segment a ago. in to Cloud than partner Jayshree. continue what and you, quarter healthier is

said. you, Anshul. Thank Well

on just Anshul time. increased although And due we so the constructive Cloud in the mentioned, of XXXX, reasons second Titan more lead to our half trail shipments demand the may all are for

unifies in data our to networking consistently. summary, So, strategy siloed client cloud sets

product and pass to the lines Ita more transformation, network will a of Brennan both cusp the I at specifics. market CFO, and resulting diversification it growth across are Ita? sectors future. financial now in our over for We in

million related increased came from Services afternoon. customers. our supply GAAP XX% of release. million. new other with million. and product to revenues were million and marketing expense R&D COVID-related remain stock-based period and in quarter upper chain deployments results last of impacts, continue of Sales is our Thanks, and mix reconciliation to our the the in QX XXX was constrained quarter the at year-over-year, to of guidance up Overall X.X% we other for margin lower period. a as end the to all selected above from This and guidance of non-recurring or expenses revenue, industry-wide reflecting headcount well Total XXX up navigate in last XXX.X and shift in employee-related our somewhat million XX.X non-GAAP in disruptions. the increased were million million Shipments customer offset carefully reflected XX.X%, International quarter. revenue, Jayshree, million, certain costs Cloud XX.X XXX.X analysis This Operating geographical specialty non-cash charges. for for approximately to cloud fourth slightly or subscription of quarter of good XX% of XXX.X non-GAAP revenue above results revenue quarter. full based spending XXX QX related with our million. is spending was the mid-point at XXX.X excludes compensation in by XX% came due XX.X% of by quarter of location items. QX acquisition our for A at larger in first of quarter. the from gross variable QX and consistent in or the XXXX earnings total the largely compensation provided Titan in guidance XX.X% approximately or million, mix and software XX.X% the of XX.X% in last introduction and revenue, up on at This quarter charges, balanced down and XX%, contributed revenue constraints XXX.X our was

expenses. marketing and As a travel reminder, we lower to benefit from continue COVID-related

came X.X% G&A or at fourth from approximately XX related quarter activities. last Our in XX.X [affecting] revenue, costs to compliance million million down normal of quarter

and of for operating quarter approximately million offset This tax resulted income quarter XX.X%. amount. million or Other favorable of of million was Our some in a income revenue. income XX.X% of expense was X.X million, was the and for XX.X% our the the net and included rate FX quarter or XXX.X interest by XXX.X expense effective revenue. X for unfavorable income, income Other

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

average per the year of our an ended We the during to $XXX common investments stock the approximately sheet. million equivalents, quarter $XXX $X Cash, repurchased price first Now balance and at share. cash billion. of turning at

As to QX a repurchase three board million against $X shares repurchased X.X our reminder, or over worth shares authorization years, in of billion XXXX. now million we’ve commencing $XXX

against continue be We to will remaining opportunities the execute mandate. to

quarter, continued products. solid in generated X.X at Turning days the up billings period, in to to the down We linearity had operational performance cash prior and period, from performance buffer period. from the affecting turns investments quarter. reflecting with increased quarter, million come components first continue QX last in from the times and million we certain of XX income supply in as days operations in XXX million those the Inventory and we the inventory XXX.X in are cash for chain. XX consistent in of Inventory net XXX.X

of differed Our related from new million, clauses] products [acceptance balance was deferred product across in revenue various total million XXX XXX up increase customers XX for revenue Approximately million to this vary QX. the of deferred in directly activity, of revenue timing quarter-by-quarter the to basis. term renewal renewals, on and is remainder The service to sectors. and can linked which a service related and increase with

with volatility Accounts existing payments. revenue reduced we expect for specific from customers. down product may expanded our acquisition trends XXXX conjunction These days increased deferred combined increased product X.X person Looking timing days with reflecting of with testing XX a to in levels significant be XX forward, healthy million. a of were new amount. introductions, quarter year acceptance QX, in Capital cases days the payable rate in in used inventory new of and customer upfront were expenditures and customer and and receipts clauses result the

for the trends, line growth favorable turning of in the recovery the year. rate half second we demand second for as to move first experienced That quarterly Now, We top demand and in in expect across rates outlook the improving through saw to the still continue with our beyond. year, all an deceleration segments support year-over-year we of the growth top said, given some XXXX. combined year-over-year our market These healthy comparisons quarter. quarter line

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

remain investments and support in an to innovation our business spending sales to to growing support Turning to expansion. investments, the and our marketing go-to-market committed R&D across we

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

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

Thank you, Ita.

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

[Operator from Badri Sami Instructions] Your question first Suisse. comes Credit with

open. is line Your

the for you on and thank solid guidepost. congratulations question Hi, quarter, and such a

all to I Anshul Jayshree, than from better hyperscale [indiscernible] to maybe what three or broad months of something it as far it that helps wanted build like standout walk said, Anshul reach and as just three was and major expectations plans to conclusion, just planning, they you customers, your or So, for us could today how just and maybe or out go regarding customers, what you to was as based want ago. two through, back across kind much guys offline? bring saw and you

on Sure, Sami, years upgrade time. so the some XXX almost always now runs the and time, we've second for and talk it knew and would saying we it gig about can some that ready two coming, while this there's half. for been for take will And doing been customers be we quite see cycle getting pilot

more that. much confidence. not really It's than what the us So that's gives

on Jayshree to as issues [indiscernible] work and through our supply have side well. customers chain As mentioned, of there's the plenty

in we stages So, the But certainly planning feeling better more before. it's than now. right are really

team, just and to know, I that vendor. And Cloud a not status sure add you want is Anshul make with that, Sami, the just our Titans his regular

allowed the strength, us the you preferred the has different the if combinations their on from, will. So, needs, know, the to the priority, products, partnership permutations strength a and emphasis deployments, and intimacy used go to cases, on their you

Right. Sami. Thanks,

Your Ader William from with next comes question Jason Blair.

open. is line Your

thank Yeah, you.

a I raise. First tell Jayshree, supply deserves chain the all, to you team of want

I when down. I’ll you. times Thank take that under the get lead advisement,

know, few And what better efforts years, up over do with? where or a vertical as enterprise that My question, in learnings you And are like of geography? away your ramped you've come you've do or last maybe customer the side I the the guess, you some segment you feel enterprise is business. on particular can

think the items. three two learnings are or I

with we've Cloud The first early say takes often makers. just even thing would decision had I gratification, It's like instant not it is, providers enterprise or longer.

made are we ago what labors years the to two investments we're seeing fruit So, now. the

point. one that's So

The line product more second is thing is, diverse. our

and only security, to you really is most epicenter client-to-cloud, because of Cloud manual our our Until advantage the Before, think I selling the really, switch our in huge the operating been was their were know, different all routing products, expansion software silos, our a the then importantly, because we has impossible, from network. campus, automation, migration, measured, including which modernized they migration all was it systems. big awake we our center, DMS, data were Vision,

So, product formed another of third COVID itself. COVID the an last point combined sort And in be an way, has big we for of competitors. couple years, I with relationship been line over equalizer is, odd would with has diversity, enterprise learning think key. Arista, dominant the been my the have

has to it I they're think that. with do and about to So, come plan think we've Arista. is, physically physical and And move more willing alternatives. and had is, disadvantage see and part virtually. had with advantage they chance a our given can't The some customers more work we've us advantage that disadvantage The to

Thank Right. Jason. you

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

open. line Your is

Thanks. Jayshree, to I your grandchild. you want congratulate new on personally

so to He about is [indiscernible]. you Thank much.

improvement is folks? the improvement of is and respect more how with With much you that happiness. Wishing to looking to to still other different any of other at? of some your you how back much Facebook And much seeing? was can what your the give strength I two? customer how also to within times can share the are in business, that most, also And you're specific of on those Or you you segments, cloud customer cloud much insight dominant, comments, but some Going markets? on the are insight assume terms respect still Microsoft

Right.

Cloud very Titan here. help X is Well, Okay. me our to sample size X small base all, customer a Anshul customers, right. first of out of

So the make well two can't continue the relevant, them, mentioned, quite very important. Facebook do very you others If Microsoft up the don't be and to with we difference.

Titans, intimacy definitely joint you will or them. want Having XXXX, design QX anything specifically So, And they team that healthier. is them, QX. And of to feel working with in contributions their important. said know with of the been the other that, are we and partnership our very to say Cloud one Anshul strategic more? in need contributed you the wins, have throughout two and and nature They Anshul getting

Absolutely.

we multiple network. Inside winning as the previous center, as areas outside data as the the mentioned well especially at layers well for center, call ones, customers and these of data As we're related this as as WAN well.

And So that's said having uncertainties giving I should upgrade we cycles, some you an with including that beyond at us numbers, always we the specific in and grow there what happened that, multiple where cycle. but the were of to are factors optics. instead opportunity were, everyone think XXX-gig remember all availability like don't all, of related of expand note control when

So, are better that the all start nicely to up are really the feeling and adding of upgrade comments the half. second that we cycle elements are

Great. Thank Anshul. you,

with from Suva Next comes Citi. Jim question

line is Your open.

a also congratulations big you and to you, Thank Arista. there and everyone at

very, citing shortages. You a sales of lot beat you I component know, materially, mean are, companies materially and on your very other

perspective is end outlook? biggest? were the as or Thank great. So, got even It sales, From your above components, stronger verticals, as that expectations, the a well drove service-wide really market your enterprise which you. the the cloud you was which the

course Schmidt, to drive thank materially, Jim, materially. Ashwin and then only entire sales can we ship. sales have materially Chris the beat for Anshul, want and beating really we give team kudos to you. if of to We I And

heard verticals statements you One five well our might very from QX. all performed things very, of Ita’s the have in is,

were dollar were the more, both five Enterprise stood the to logo those their were all with they two acquisitions up made up. If go say think mark. definitely had combined all very made would and ones I I ratings. And customers, and I Cloud Titans but out, contribution increase and highlight would good. I which in by So million the especially, new

Thanks, Jim.

Okay.

Your with next MKM Partners. comes Fahad from question Najam

Your line is open.

question. for my Jayshree, you Thank taking

XXX% quarter question and a the you component mark In or any impact on follow-up. terms were of a your to shortages That's ship from demand? have I of able

think Yeah, the facing we're doubt I there's lead no that right. extended times,

like time. it we and So, to clearly, stuff like to lead facing extended sooner, would give would have them are we to sooner. But customers

do. under So, hard know, think I I longer environment constrained, it's with definitely mean, which lead that, everybody kind operating I we But time. of quantify like to would are a to supply us

Alright.

mistaking, my future on Titan countries So XX entering Cloud visibility Cloud in for customer, to your each this building is to Microsoft that’s new not question improved the your XXX year XX Titans, centers largest data I'm about foreseeable talking year alone. if

why build-out talking you is Cloud the you infrastructure why slight, not know, know, so, those [positive those So, of visibility improved improved this overall, you’re significant look know, from it? tone], How a your you're about? customer is with like you, given that of the shared [indiscernible] much segment seeing? I long substantial, kind would be, Titan you slightly or are orders times trends lead expecting an quantify given being to visibility

Fahad, even one so get visibility. two that Normally, absolutely visibility We perhaps Anshul. you're extend right, take the of This some right. I'll we quarter into XXXX, have now will Yeah, throughout XXXX, time, to question.

we that us on they their reasons longer-term it's future say have shared the you visibility So, and with exactly have now that a for plans.

know, centers, bank, still and Now, they to parts the awful acquire got an their They've results. cooling, the data to compute, that, it, our actual going execute. we lot on build the to the also you take name part got we're not having got said that execution the the you to turn there's into storage, of that as to and visibility power, to

never know typical a one you have quarters. like but may more you're we two definitely upbeat a an tone to things So, the we better eye optimistic definitely, and more into while feel detecting change, view, than

Thanks Fahad.

from Your Vogt David comes UBS. next with question

is open. Your line

inventory. just And little Thank And the I supply if had dive you, bit taking maybe a can chain everyone question. a question deeper. for and in about we the

second basically look do you a inventory obviously, spending that inventory, be sequentially. commentary of should we that terms know, when the increase How know, rent you're might getting give capital, position at interpret half Thanks. some fairly into you at in And your be point? does of year it's for we where the a your improve of Cloud sort XQ sense your in if the from you the this to of you Titans? guidance, flat meaningful inventory manufacturing position, So, expecting think [indiscernible] us

look Yeah, so has at at QX I it if you last kind think year, if right. year of all beginning pretty this the look has look know, more mean, that each at balance, of been the they And inventory much as it the as the then components finished quarter. and can, materials the year, through and raw side. in you you as the we've the using of started mix of been at I kind the been goods, fast expect, of beginning the And that, of you'd growing we growth way

what's at end significantly we in. when file commitments Q, sure you'll what place historically supply various supply QX, higher up to been putting, that chain commitments you XXX the as as on which the see high that's putting purchase see it's across it's suppliers to million are table make you'll other than of with the know, the comes like and that The been is

fronts new all and kind are of on pushing products. aggressive. These are So, being we

profile. risk lower aggressive We of, know, never funding, supply and So they chain. risk inventory in have lower But risk, are say being a we profile. you have but terms a no they

was rate have [indiscernible] year-over-year tell Ita on Do plan? commitment us you you can data it you, What of last Q handy? the a be, can sort at would filed? year the And growth that before basis what purchase was

Significantly lower. Yeah.

going a later higher. you'll it's take to mean you it. if look today, think so it at, we’re – I So, see significantly we're find But I

We haven't been historically. in that realm

[indiscernible]. Thanks. find We'll Understood. Thanks. it in

question from Leopold Simon Your Raymond next James. with comes

Your open. line is

certainly half I'm with Thank comment guide year. update like quarter, in the bar, pretty June low the could kind XX%. back the know, you a view the comfortable terms to But that we've were an you consensus the That March like of ignoring the taking sound XXXX and you of you. that enough indicate to in offered growth. of for at you this roughly, the get grow about high-XX question. Thanks I Great. would Last seems not you had, more were deceleration thinking full-year for quarters point? two and What are because you

than the So question, higher it'll but be Ita thinking definitely Simon, XX%. answer we're I’ll let

you to I mean, guide practice. I I not trying right. guide. our there's obviously, which think normal given without year, kind you in upside every know, Right, some Simon, QX, quarter, know, the the in we've of, upside you is mean,

to think revenue need know, I we a between don't growth on XXXX XXXX. You and there the quarterly step sequentially think look in it from, know, we more QX can, you continue because to you see about out, to some on year-over-year was a and I if the QX there. comparatives But forget than significant of think basis, you quarters in trying up do it, kind year-over-year from here

just improvements. mind. shown you some we've that keep in But I obviously, So think

incremental think I quarterly feeling way think we're think growth better, an I but it. it's about it’s to the right rate still as

about chain, are considering should think there supply the when we be patterns, we than patterns? other clarify, obstacles seasonal to other Just sequential

is supply I chain constraint, think probably mean, I the the biggest right?

that was I Yeah, think indicated we've demand healthy.

if So, more of we it, be would lot better. could fulfill a feeling we

thank you. right, All

Your Rod from with Sachs. Hall Goldman next question comes

open. is line Your

to I your that go the detected, improved, trajectory quarter, orders of wanted to just we Yeah, significantly there in project the the are thanks going to Cloud what had kind kind back to revenues tend question. like of March. in for in look the Titans

bit. February, and January were quite So sort of up okay, March then picked but a

gives of in you the as was know, that, year? one more confidence your look what curious of terms of I'm for So, Cloud orders And linearity back-end the so is into you things much Titans? you the that

this know We and our we verticals But we Titans you nor did January, experienced all or base, entire linearity QX, didn't so, have customer March. were seasonality we normally right? consistent that of have issues. this QX, linear Cloud matter, have the Rod, February, for would pretty seasonality were in

this is New Maybe a normal post-COVID Year January So, the the have, and weather normal there or But no we of Chinese storms pretty were have good, impact because February. right? any we felt in of things issues we seasonal didn't or situation.

verticals? the all for [Indiscernible]

Yes.

Okay. sorry. Yeah, please Anshul,

you know, by as Rod, the are Cloud Titans nature. lumpy

it's So, It products, a they won't more to timing down ship really this trying Jayshree as to comes to measure basis point, deploy At just supply way want month-by-month of tied on we them when and to them. mentioned, so of the and on. work. much

certainly what not don't you that's how saw measuring, but are know So, I we it.

great. Okay, you. Thank

Rod. you, Thank

with from Your Samik Chatterjee JPMorgan. next comes question

is line open. Your

Jayshree, Hi. just back know you've Cloud particularly customers, with about, I of etcetera, generally portfolio you. campus, and you’ve portfolio I the go that like you’ve, that enterprise expanded launched added the wanted market. breadth into Vision to talked Thank to you’ve the

the like that other are broader positioning for companies next still like networking. companies remains the generation themselves about talking impression private enterprise multi-cloud the SD there's think network some of I WAN, some

to of continue organic, just to potential bread So, there? a is expand the terms that terms need though thinking wanted see much or expansion kind about and much today where M&A? portfolio how your to of in on you of How do are get thoughts Arista’s in of you

enterprise market center Arista’s complete from mean that Obviously, every breed of in every question we to we've doesn't gone That's more portfolio, a or data but from good best play perspective, Samik. space. segment a

right. to been end has medium-to-high focus WAN SD more largely Our LAN, would for I of campus and more our, than enterprise, data on say, the center SD

say we're an So, focused first all, SMB, not on. for haven't we building today area more that's of products where would I the is

continue But a, routing, focus, terms in we best DCI, even and WAN, you know, regional of So, if I branch which be of have it's it. you Alto, Palo you and SD continue we'll of market our multi-cloud. have for And would have to form breed, the say to [sassy] think we WAN we of SD or with will and partner build SMB that. whether or VMware on WAN could name

SMB good have other of portfolio the enterprise, that good feel complement rich we portfolios we’ll and that high-end So, the the of for a companies. we very with

Thank it. you. Got

Your comes with Amit from next question Evercore. Daryani

is open. line Your

on and question my taking a for good Thanks quarter. congratulations really

looks Titan versus it your really the better you're top was like when know, just Cloud at line I diversity as You but doing I you're switching guess the is, or in I being driven, sustaining performance, look it question have good recent growth, past.

to And success than Thank is this And what my diversity? is product really need challenge go space? service two to keep to is inherently the you overcome you and security selling more on alter market you secondly, to think internally dynamics, guess or operation selling, I anything a sustaining and software start providers, complicated to more do biggest you. selling enterprises and in A, to get in as question routing, then you have that switching? So, do something

Thank All right, you, got your two in. you Amit. questions

So, would new yes, I first we software entered good searching with a enhance But we approach that hard is when – our market share, vendor. because now say were we platforms. was once got started, switching routing you to selling to too have our and switching

harder, does systems it's a technical but engineering take inherently not different So, it and expertise.

we and with have expertise augmenting organization switch is specialists detection doing what more response, And Ashwin for find Fabric, the routing. network specialists Monitoring in big we have for our and for we So, specialists switching the DANZ we’ve Anshul’s and Awake software routing. ourselves

So, naturally, you cake switching and we add layers will. need to of icing, if that upon foundation or build these

provider we new enterprise know, still no of In the kid And XX service the and terms XX to been there. easily on breed incumbency many, the with years you block. we're dealing who've XX vendors to longer. of we're doubt, there to have as challenges, And best

And old say the any So, technical being be our prowess. have incumbency challenge opportunity challenge. continues and we get there don't breaking to to think overcoming the But important an I habits. challenge biggest I would offered our showing is

Amit. Thanks,

Research. next Your Wolfe comes Jeff with Kvaal from question

Your open. line is

are are Ita perhaps qualitative may you. It in nature, on a little mix seems little prosaic bit going for mix, couple and OpEx a of crosscurrents the a though you there On and tight travel. enterprise changing know, back more be structure the the may Yes. come with a bit margin that, components

course are us, for how if and expect could, over year? the those parse you might wondering I'm extent balancing So, of of you what out share could you sort the the to we

P&L we think still There I obviously. right. supply kind or no XX, pieces, constraints we're well carrying lots it's the pretty I whether in about doubt burden There's are COVID Yeah, better, the those of as no, bit XX a mean, and little sell executing the then moving midpoint numbers, in inventories, we're some to to from of right? inventory

is somewhat there that benefit we the sure. marketing of payments, lower, have fact side OpEx It's expenses, for there So the some travel, burden by offset on the you etcetera. know, lower

hopefully right? it you how I they’re we'll the those know, play both that's think somewhat time. of offsetting, think kind to in short-term. of they're, So out think about I see So, And, over

growth you the and, think range somewhere operate middle is the XX hopefully, we in that go margins, of for forward. a I XX still as we’ll know, good to

And operating margins Ita?

XX%. We've about or this minus plus talked

again, And We're but that's I range. So, there’s used think we good, pieces, think so moving good about think, that. staying right? feel in I to that I still

Jeff. Thanks, Thank you.

Kidron Your with comes next Oppenheimer. from question Ittai

Your line is open.

very quarter Congrats. Thanks nice and ladies.

Thank you.

a of couple thanks. Yeah, Good. have questions. I

shorter-term, visibility the whether improved I that all, would Is First you of can planning forward at do sure the but I, resolved, well. that a play really no you side, there on talk which Why require wizard you improved security do would of do best in of visibility side are a, why shorten you the partnership the security that? understand your expect new how the So, relevant like, a leaving as you've chain maybe the the issues, meaning And bit to play design to AI seems once deeper to WAN edges about then you about seem the you and this the and bit should can, haven't be lot you more longer-term, like way kind monitoring that, that have to back and you're it again? think the on of side. I know, down blending company a or of back market? attack security visibility things flexion that? reflection before, and and Jayshree, plans is networking going you supply I don't you the talked much to to of clear of make that all, cloud SD of talked SD little on it, a mean and going is vendors, can security which on your if what landscape. WAN, are those How future to little wanted sort there? give automation slowly for us this that And on bit is, be not is projects, the that networking a question by market? is the perhaps a the clarify about, on of you thoughts you little And And

question do which Ittai, you answer? to want me

All of them.

are But to and and one. long-term those the We'll hour on that to constraints, hand-in-hand, planning question tend Anshul callbacks. more We'll be Cloud supply answer our for supply on they're team go involved decisions, CapEx And Titans, they yes, and projects. to some the making some with one your specific do need But the have an definitely, we of their because chain two quarters. both constraints. very

quarter a at two least beyond year's visibility. to are We that visibility getting

know, the long-term one-year continue short of partner there's supply On you're project we number security, absolutely their right a I’ll it's will – breed you two to because in of give longer of quarters security vendors, think best one and So, decision. answer the and going to I because you we constraints, saying with beyond to discussion, one.

three centric. zero provide holistic and the do in for we differentiator encryption of segmentation? huge the provide is, how segmentation, right We we data introduce macro the been right has And to DCI be networking, to This our Our the layer? really really center parts a capabilities it. network us One will products. network do approach how trust there's

security. of how the intrusion all So, do those protection, wireless do we are network related

security visibility awake the seamless largely a are acquired driven. the and just switch and this real it to combination us detection Monitoring third as And well working it didn't on as proactive capability or time itself. to and Anshul product. and from a proactive the network and We big of products, to really acquire make is AI of telemetry a would Rahul perspective. be response I point Awake, Fabric that's more allows both really The analysis. and situational secondary, Awake call We security attack The streaming acquisition the DANZ visibility network

tuned, of different stay more zero hear firewall basically cloud partnerships trust, our vendors. security from that. you'll or us networking with But all vendors, is this So our on strategy from

Very good.

Thank you.

Stanley. with Your Marshall next Morgan question comes from Meta

open. is line Your

or products to the how Got kind Big Switch be interest customer that, And Awake a just Thanks. it. ask, are it is whether back we and And maybe of guess, the the Awake integration of going I Thanks. the in your portfolio? year? the seeing, circling on integration wanted think where security, had or next over just I of just, they should you about some kind that within how of acquisitions,

like very strategic think acquisitions, I Switch are time. strategic us. And Meta, both Big all acquisitions and Awake take for they

let and me Switch goal with Our first. start Big

capabilities, this seeing end that platforms, integrate correlation, more we Analyzer with on and it able monitoring into be Big X,XXX, X,XXX now are the already visualization, the etcetera towards to you'll variants switching we of DANZ our recently. acquisition, building including just You or fabric. on fabric were know, And year. of our switches. the different call introduced Data that Switch And as we We

the integration the of Switch not because is because Big switch only the strategic So, of but integration. very capabilities, monitoring

the team CSO, have on in I'm going the on talk more fantastic On done CIO. Away focusing job has just of to really the all, side, a about not Anshul first the it, but but of

have decision makers. more really want to about to Anshul You target both say that? you

give do, fairly There's on and the integration. have Awake. take to sell to as quick the and side, visibility, how the to and market all integration there on security product a is collaboration with sometimes With teams, acquisitions, figure the Absolutely. market, Jayshree [indiscernible] the to have since to it the the you mentioned, then more them product. customer take to this go them able least more to And team, on, and with but networking so we at to based phase out done I'm to integrate in

we what coming than in growth it's would more along coming more Obviously, a typically have we Awake it's small other investments, so situations. faster well and along, way acquired as to there's But come. So well. done company,

Great. Thanks.

Okay.

comes Your Pierre question from with New Street. next Ferragu

Your line is open.

time bit maybe hear you I beat thank talk my constraints, question. you your expectations. a you guide, you above a same your of and nitty-gritty I but question, for guys, and the Hi, taking supply about at have guide

So, to beat to I'd constrained as you long that for, really you every have if quarter, expectations supply you get constraints been possible. have love as

You mean, done. we problem nice have if to it's a have

call wouldn't that [demon] I like Exactly. call supply that would problem. constraint. I a like a

visibility the how have maybe. operating way is But planning actually, much anyway, this probably question that, my too kind quarter? you you're do of You much you're operating, And to [demon] keep have just next do into not figure you really more online? I is because upgrade If when get out. capacity what it trouble? that's And quarter apply I'm coming to to fine? trying

deep trouble, industry-wide because have Yeah, shortage, give have I supply who do we you over if thoughtful more vendor Pierre. a only our I more be It's to were quickly would this guess time. a we're are question. planning. we And because I an with think trouble good they'd is all would trying customers the But constraint answer issues, in to in the alternatives. including

on all footing. we're on of bad constraints an every but side, in good equal And in one we're shape us demand supply shape not the So, the I on is would tell you, side.

good feel that. about we So,

Thank you.

Fargo. Rakers Your next Wells question with comes from Aaron

open. is line Your

for thanks Yeah, the quarter well. congratulations on the as questions taking and

Aaron. you, Thank

the revenue deferred discussion. I to want go to back

prepared You that million kind know, seen think of you time deferred deferred you've got mentioned I product any revenue it's that's we've into some that XX build of built, now remarks, deferred quite in your kind product of been buckets. since

next the did you. obligations that And revenue what then kind differed, performance you the do into quarters? quarter come Are that next is over about Thank concept to how any in couple comments of expecting that, that on guidance? So, this you expand? outside that how the of number, are of think

Yeah.

hard to of the out. quarters out to multiple to kind it's So on to But but for not a as multiple down second right. quarters that to do an start always say know, necessarily down. deferred, I assumption you quarter, that's know, I we I'm of position guide, trying it QX that expect I that in forecast come in not will to expect yet, kind guide But don't we the think the not come that think you

have You of – level but forward. across that that think, at least various know, of a I at you know, we'll mix least likely deferred customers sectors, it's it's going

On Q, the bit which see you kind work disclosure some RPOs, little I we in of, consolidated see later around you'll a pieces. know, the can that did RPO and mean, the the so you

between revenue a the of is product deferred know, the lot the You in movement and services.

that other can of much, consolidated some again, single that The that kind you we've see together. items didn't of see you'll move and kind so but quarter-over-quarter, a footnote it those of all disclosures into

easier hopefully, amounts, that's the to non on balance services kind to all but So kind the process, if of, billed of around sheet like, services, you right. are amounts RPO

revenue. you kind that, like in deferred or opposed product anything the know to of, which is build As

Great. Thank you.

Thanks Aaron.

comes question Tal next with Your from of America. Liani Bank

line open. Your is

you I'm your unique. be unique, going not you Hi, but I'm going wanted to to to grandchild, congratulate quarter, the to congratulate about I and not about be wanted guys. I

one important. way the with So, let’s keep more second

Thank you. Thank you.

their their to they now drive just drivers spend, same etcetera, data centers? wondering I'm or XXXX. renewed just And assets assets, had sweat center want of And last companies one add about if the other momentum snap and to now they where have there I capacity, in of the data said enterprise ask data enterprise centers. that enterprises see they during you centers, to under that in corporates spending data kind the back because is and kind spent etcetera modernize of experience year, have

know, more a you data long-term centers as much decision. are enterprise of Tal,

tied was it but to invest and looking tied generally assets go you strategy needing a not to, cloud know, anything, and so they [slept] last a if And years, or XXX-gig]. were three I'm they [XXX-gig say So, upgrades which they're workloads they cloud, looking one-year, their to which I ones their consolidation. and then tied premise. to first they're in to out sure for figuring COVID, was year And for the or would five less of to more for

it's tied say more specific And I anything year. would than that to last so to

into cloud one bringing probably is motivator. data centers their So, principles number the

you. Got Thank it.

you. Thank

question next with comes Research. from Bollin Cleveland Your Ben

line Your open. is

Thank the you question. for Good afternoon. taking

I and prior your how resulting COVID think talked customers? how return I campus about a on Thanks. bit. wins? work, And executing wanted from thoughts to any influencing planning you new talk more of Jayshree, you Could planning to maybe share initiative? overall you you're little know, that piggyback you about interested the in or then customer feel question the in trajectory the

[Kansas] that's question so know you hadn't a Ben. I up Yeah, was far. surprised come good

froze right. even think was period of to I with COVID is last and what year in there time, making a deal just how happened So, decisions, everybody knew nobody

full making. half of especially return the to don't year, campus XXX% so either. as are And is the seeing of of hybrid Towards from doing at looking many do make when it second a much a the decision to but same. to safe it's them see a more workspaces. Arista so, perspective, them we this We all it year, return engage until we started work don't our is safe see employees do in

Anshul’s in working Some week. into team may John and the very day software geographical the happy but of here, not different is McCool’s come hardware work that’s especially example, may team of intensive, work for Ken very locations and Duda’s every will remotely them or

very distinct to to more moving workspaces for and provide reasons. branches a from And So, we access equal our of headquarters at where to changing still campus campus decisions. is you you and fluid It's set have have influencing see work wired, and a multiple you're whether the elastic do or of transit, regions or to in Whether whether that you're home WiFi at geographies. you're work. variety

clearly but constructive campus remote on on are back they're coming Our offering constructive well. to ubiquitous connectivity very employees to their as enterprises also very headquarters,

in centers, these regional As which on spaces. not lot activity more retail an seeing even distribution an space, the a and we’re are though retail we're example, SD of to WAN, connected

doing small well is of obviously is operating the most Arista enterprises. high-end our the So, and in We're in well campus. numbers, our

we think said, maybe a not to are is success. work well, focus, a more not targets. SMB, the we're a been Where lot our I to I even of of frankly. or So we're is, hasn't do more distributed And there. And which focused, that's driven enterprise, channel doing area you that where as our marching enterprise, having got

in our say. doing non-targets not So, what target much is in our and doing well at I'd campus, all

Okay.

Thanks, Ben.

comes question with next Your from Tim Barclays. Long

open. Your is line

side? you're with Thank you you. on a any seeing switching then white where a SaaS update cut are networks? little Maybe certain of move Tier new customers for second, And you type maybe a little boxing two-parter, portions box going opposite the bit the the a community? their Thank trends seeing from seeing white little companies white any bit just bit Cloud do Jayshree more customers, can traditional box of branded more you. what are versus Maybe or you trying the on are of to X

white to take strong you views I has that box, know want Anshul question? some pretty do on

SaaS companies X Tier really of in Tim, haven't there terms that Cloud part in or scenarios the of we in the Sure. two change One seen and white are parts. market. any box

that] to Asia. hasn't in So, white the it's some And Titans changed the [fitting limited in beyond large are Cloud largely or box very it United really that. States the

many we carry to in not inventory back go as FYI, applies struggling so had. chain equally much cloud going of to are to to want that the [ODM white as are large through may fact, of and Sun] all companies every You and have the supply boxes the And And an well. it just because commitments. discussions

shifting of projects But things of years going those on larger mentioned before, discussion at well companies I'm is, we're some these leaving materialize. But couple that to fact in doing opportunities. cloud a aside, there. take the So, branded, on the engineering in our as previous our I've looking

good the share deployed, be in well. about to news patient. have when you to please and give opportunity. We the you let as ready, labs, So, time, But it getting bake go with and we success very happily will execution our let pilots. feel it's about the And it and it

part]. [my in change no So,

quo. Status change. No

you. Thank Okay.

KeyBanc. Your comes next George [indiscernible] from with question

Your open. line is

What dialing your you second taking in about Hey. [indiscernible] expectations that to just Steve. timing [Technical differ Thanks my Thank verticals? your for timing between you on half I do touched the expect this I opportunity. XXX-g in talked differences? know XXXX, for Difficulty] major I’m you. of question. are

enterprises, some in will see the say it's Titans place early XXX-gig – definitely our Cloud and you'd think be our providers, specialty no, first and I but them Titans. our Yeah, the is high-end of adoption I of would Cloud Cloud the

Thanks, George.

a lag think quick it'll And on on for of expectations [indiscernible] you XXXX do beyond? like follow here's be the a adoption up maybe enterprise, and into the

the longer. enterprises still adopting enterprises Many think are the take I Yeah, XXX-gig. will of

So, and into well of as I think start XXX-gig XXXX, go XXXX, you'll see XXXX, it a XXXX combination XXX-gig but could in and well.

Thanks, right. George. All

Your comes Securities. next with JMP question Suppiger Erik from

Your line is open.

Yeah, thanks for taking question. the

said, us million secondly, in First you’re campus. off, mean on on you to track remind for for Then that hit XXXX? XXX that targets target Can that you're you track – for is Jayshree okay. were on on does your you

yes. The answer is,

of the then talk you can the anticipating that are XXX-gig little to changed front? you. in dynamics, the share remind has on Very if about or as still bit some up leader anything good. you that And can you'll a us, competitive Thank ramp starts you that be XXX-gig, market on

good. this customers result not good share is very products Sure, a our for very the is our not happy. forecast. feedback education much is Erik, The very, customers market standpoint, are From changed, is buying And the and has of still competitive our Anshul. products, our

themselves. results So for position. good let our feel about speak We the

Thanks. Eric, Alright,

Your Jon next Vertical from question with comes Group. Lopez

Your is open. line

these I Hey, of thanks so have two of, interesting much. follow-up topics. not of particularly some Excuse sort me.

quarter-to-quarter, rarely that The quarter, very, there this is very first has like you to very why just marginally revenue that extrapolate anything in one activity? is Ita, so declined from know it did service and

draw fundamental try I typically read from be the some any lighter. catch know, conclusions and all whether right. really at QX It than can not, right, not that, just bill little quarter, would. doesn't I close strong, is when a that contracts that. And you to wouldn't change into a you then it’s to I so, no, and the QX renewal in there's fundamental. of, anything up or try Yeah, It's wouldn't you timing more

That’s Nope. you. got I Okay. perfect.

real And sorry, one. quick just the second

of seasonality. back coming to concept explore the I this to thing the, Just I want guess is

a single up they not the QX you're series, like second forgetting So, it it's between Is and but sequentially. call year? perhaps that in more just for generally kind year-on-year focused low admitting been a what QX, into comps? wild are the of double of year-on-year suggesting digit some given Ita pushed earlier data that the you you're activity Or high on saying digits, has you're the and trend, that

the I said demand I rest we and good no, their on think all be about seasonality. but said, of that than the given QX the did pandemic, based Yeah, think you experience the I I know, feeling not other that, will year, demand. the That's

was Jon million grew year XX QX, Yeah, quarter-over-quarter. a around, know, growing and revenue you're I think you last know, like XXX in then my only added comment, off you you QX, in QX to you

and in reference. QX, That's QX. much get comps the only obviously, So, the harder

of come down naturally rate because is growth that. year-over-year the going to just So

I model rate, think thing at that's if easier growth if quarter kind you over right, look from perspective. out, map you're quarter at it to the a of looking an

That’s the so help. it. much Thanks for

Thanks, Jon.

Notter last comes Jefferies. question with Your from George

is line open. Your

[Kyle] George, thanks is question questions XXX-gig. this me Hi, main for on here. My were and fitting for the and on in campus

again? – plans when have you turn And expectations? we is that [indiscernible] and to Do up would expenses wait you death, again? the the a currently back on currently those have Or it you model, contemplate you still? of how do travel but to back may any a see beating are OpEx know, on pick that in should avoid kind of said know out ask expectation they're when So any I’ll I you they simple one.

know, right kind you I a are pieces huge think mean, our of start to mean, expenses lot I with. around sales and now. to come around the to moving it wasn't we that back as in year. just I There's that margin update huge. it doesn't marketing We'll of, later not But go. begin

Okay, thanks very much.

Okay.

QX XXXX Arista earnings the concludes this So, call.

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

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

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