Arista Networks (ANET) 15 Feb 222021 Q4 Earnings call transcript

Welcome to the Fourth 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 call is being recorded and will be available for replay from the Investor Relations section of the Arista website following this call. Mr. of Finance Head you Investor Arista’s begin. may Nathamuni, Corporate and and Relations, Venk

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

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

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

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

call your to Thank you, earnings And welcome first Arista. at Ven.

XXXX. We’re excited one earnings you, us everyone, have Head Executive If our that of XXXX quarter and board their it I QX for joining of on that has comes customers it the there’s employees our of during certainly approximately XX% variant revenues and you with this quarter, latest and families variant. We software we us, you share $X.XX. of With to of are us taught our during these times. to for that ever-changing Corporate partners vaccines afternoon Omicron fourth safe for delivered choices, pandemic and thing Finance. the call. all trust placing booster is and our per am a support proud and in $XXX.X IR renewals surprises. thank Services million Development, spread non-GAAP adapting for with Back revenue. Thank earnings for contributed of as the the hope your of

result of increasing margin registered direct influenced number of campus year. our non-GAAP as customers momentum section the We that Our million-dollar in supply experienced record and a we throughout by chain XX.X% enterprise gross of have was the a costs.

of now customers. have cumulative in X,XXX surpassed We excess

at followed Cloud double-digit at XXXX fourth grew percentages XXXX. Titans by our In verticals followed largest the well place. place place, was the by at specialty verticals, and fifth QX financials at vertical, terms of enterprise, third providers providers All cloud the in service

Facebook, enterprise approximately of for approximately providers the annual in formerly a revenue invite QX financials Anshul at only expect geographical strong to Shifting on Operating I in Meta, execution. approximately the Microsoft at second like revenue the more XXXX, terms the and for now than as our to light the Sadana, XX% XX% XX%, customer registered at Chief Cloud Titans came time. year XX%, sector improve our was would to we In quarter. greater at XX% Cloud Titan was at contribution. the lead Americas contributions of to XX%. in our XX% international XX% become do mix, customer revenue, Officer, with and We XXXX. shed

you, Thank Jayshree.

XXX and Our regional spine, be XXX The we Arista continues and deployed We now gig running fewer scale XXXX, on WAN AI to spines also business for and successfully XXXX, OCP, issues Meta latest spine now transitioned strong. products we consistent. centers. November competition. to have continue from from but new cases, products and Cloud to year, than production largest are XXXX at our with also to Arista is trials and in existing The the like data in data Feedback only is Edge. use gig. PCI Arista center customers far cloud and In prototype production successfully last our to with XXX not clusters. areas easier work co-developed are which at for gig, announced is winning well do

While Cloud healthy. Arista from our to largest remains there our customers you, Back continues maintain its to To is and share leadership shifts lead high-volume spine deployments. these Titans demand products speculation one these in quote often of for directly, Jayshree. position cases, in some even about our grow use of

decade. has continued something engineering over team to We you our with the for Anshul. Titans, look nurturing you, and Cloud been the a Thank entire partnership forward

ports In continue share center annual and XXX, the across We both XXX-gig believe industry XX, approximately XX% will XXX-gig highly in for XXXX and strong analysts. cloud deployed EOS our according is with XX, stack, This core products, Arista of our data market speeds. lines, spending XXX-gig differentiated to and drove revenue built be terms XXX number XX, X successfully our of enterprise product upon cloud and to cycles. we

comprised XXXX. in routing, to cognitive Our million campus XXXX our second in at and revenue market campus approximately double is the $XXX We and network adjacencies replacing workspaces. of to doubled routers $XXX again aiming million

edge wireless cases use X significant service provider winning routing. and X generated in successfully spines switching customer and wins campus many peering We incumbents. Tier X, cognitive the Tier and in investments for versus Our Tier projects routing deployed

edge and yielding of the in routing investments the is Our the stack traction. simplification

alone, across XX XX% XXXX routing The revenue approximately EOS years. X,XXX two Just features to We platforms. we in total past adjacencies delivered over and campus over together a compelling introduced software contributed the as in of networks. X routing releases legacy alternative

Response, category total the and product models services services based and DMS subscription-based Our network Network A-Care, third AVA revenue. NDR, Arista’s contributed or and Arista XX% is Detection as network with software on CloudVision, approximately Monitoring software sensors observability, such or of Fabric, DANZ security. advanced and subscription

networking. a CloudVision cloud-first our customers’ Day, aspect for our is well cumulative in agility integral as November proud We industry element is Analyst client data XXXX principles are and that highly data-driven X,XXX a to to every differentiated transformation digital has exceeded is networking now this network. this To network recap to operations. positioned networking. over at to right the A cloud bring strategy customers leader the Arista as of of these key for part the discussion

as functions into Arista embedded such routing, inherently observability security are and Software the EOS.

launched architecture functions. both, resonating a our with Our Lake is EOS to with has Data NetDL Network software state NetDL, we customers. well November XXXX, in and store-driven evolved that third-generation stack

prescriptive to network cloud a multiple heritage building upon sets from and data are unify predictive our to sources. proactive experience We operations platform, bring

and EVA multiple or harnessing hunting. Virtual a Autonomous are data. modalities network store processing and consistently generated analysis to process supervised data network We and Assist powerful threat and to NetDL algorithm with root network-related AI/ML of the EVA, cause combination natural gather, uses help language of operators and

XXXX. quality. fatigue I’m summary, I into Hat, Microsoft, Palo Splunk, collaborate products unwavering. networking Alto with name diversified by billion, Zscaler our XXXX, a indeed Networks, this as leaders together growth observing ServiceNow, achieved contrast, Zoom customers, In of and billion, build us of affinity Looking the a engage is $X.XX for execution and Arista. Red XX% support pursuit year exciting at our worldwide and was It be few, ecosystem. peers’ for sectors. first flow and a alone. world-class lines across in table. Arista’s forces heightened time earn the an to industry customer of Cloud It momentum discontinuity low Equinix, cannot coupled collaborative Arista’s ahead our a has with VMware, dimensions time at Titans our with year growth, a proud customers record-setting profile frustration so in seat I’m data-driven With We $X across joined and exceeding annual and team’s with and that with cash strategic memorable to marked to with product multiple In the Slack, and

of growth mentioned for we in the despite to We into continue growth so, obstacles reiterate billion annual XX% Day XXXX, as have at emerged multiple now we expect supply XXXX and November’s years Analyst $X.XX And aim we our that stronger. outlook now ahead. chain

turn our financial I’ll specifics. for to over Now, Ita, it CFO,

XXXX QX afternoon. and This and full acquisition-related based results our and year for stock-based nonrecurring our Jayshree, XXXX Thanks, QX noncash items. other on and charges excludes is certain all compensation impacts, good and non-GAAP of analysis guidance

revenues X-for-X $XXX well In to basis guidance in end addition, were our above QX November our $XXX results Total to selected the a split million, XX.X% our in are non-GAAP the of of $XXX.X share-related all stock million reconciliation on in reflect A numbers is and post to completed release. provided XXXX. of split earnings year-over-year full upper up provided GAAP million.

approximately with our from our all across Shipments performance revenue, for of above the products. our customers Cloud see This continued growing remained midpoint new with in quarter particular performance healthy to XX% we gross disruptions. software our solid at revenues Cloud This a contributed our year-over-year QX guidance demand basis. Titan our of the or up customers, with strong from the as as fourth in strong continue with international $XXX.X line XX.X%, carefully larger in ramp quarter. of XX%. of customers. completes to We we navigate on sectors for a came revenue of strength constrained and QX. total Titan with third year market quarter, quarter and in in was reflects from Services just COVID-related industry-wide the roughly margin year contributions International international XX% in-region XX% the revenues shortages in XX% to range subscription XX.X% supply the approximately combined Overall million

XX% the from primarily recognize of to X.X% revenue, Sales reflected employee-related spending increased million and $XXX.X R&D This last million or last $XXX quarter, was in Titan quarter came or period. or Cloud in marketing headcount higher million revenue continue incremental at increase from $XX.X of for variable revenue quarter the were up compensation of chain headcount expense compared see to costs Operating $XXX.X expenses began in costs at in and with the at mix increased last an quarter. the We million $XX.X and million. million. XX.X% revenue, up expenses. and $XXX.X period to supply quarter in

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

Our G&A revenue. $XX.X costs came or million at X.X% of in

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

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

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

April XXXX this shares repurchase a share. XX.X having As approximately authorization, per $XX billion the million repurchased completes recap, at of total a $X

business authorization, the October price, dependent quarter purchasing timing in acquisition on share. repurchases will against be In $X average factors. $XXX XXXX other future of repurchases Board price market $XX.X per million of requirements, an addition, and shares the and or actual billion The amount initiated at stock conditions, XXX,XXX and opportunities business we

from We and in increasing million generation to of with chain. This of the in some operating supply linearity consistent at with XX days at XX reflecting in growth our Now, turning $X inventory excess DSOs strong year inventory turns quarter. costs. from buffers increased the were the fourth for a $XXX.X generated X.X QX, in operations period, prior cash million last potential period, the our in up the billion. revenue completing came of flow component cash business up period and million to cash Inventory in in reflects of the first investments, deferred performance in of added $XXX and billings earnings quarter the even times. cash period. Inventory quarter, model from increased and $XXX.X days, reflecting

demand. $X.X up for in lead purchase and Our $X.X billion in from now response This strength extending commitments in the QX. quarter billion, continued to is into were XXXX times increased

for products the mitigate in order reminder, early life prioritize of inclusion excess a obsolescence. help continue we newer or As to cycle these to strategies in risk

term majority balance services from revenue vary acceptance related the $XXX clauses Our $XXX was $XXX linked service revenue balance, the larger from and on and recently a basis. to QX. last customers. to The contracts, up million, largely deferred of directly Approximately million products, our in of can quarter, up related the Cloud of total most Titan million balance deferred with deferred is product represents $XXX timing for quarter-by-quarter million revenue, new which

the and inventory product days, were XX trends, clauses As a deferred with remain were have up of and in significant Capital healthy combined quarter acquisition reminder, levels reflecting expanded with from expenditures and conjunction in-person timing existing acceptance receipts use period we for QX, of customer-specific amounts. reduced upfront in XX increased a million. higher new introductions, days in new customers. days in revenue customer resulted payable cases payments. $X.X These product with of rate Accounts the testing,

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

our at market difficult XXXX supply approximately year-over-year Day, growth XX%. tempered we environment. of by all of impact sectors, to across expect outlined the healthy revenue Analyst achieve our demand reflects As a continued for This

margin gross with some continued industry-wide costs, and supply front, constraints the offset increases. price from On logistics elevated customer see we

first While in impact are typical likely Titan potential range. in below we for quarters. it gross quarter we XX%, enabling our margins be supply, in negative to expect the of guidance we successful future mix XX% the If would Cloud gross to contribution customer the highlight result would in range the accelerate, improving of margins to

to Now spending support expansion. go-to-market and committed for support a and backdrop, growing to and in remain as We all to this our our innovation R&D first to of sales across to the turning guidance investments. business operating investments marketing the items, our margin With of excludes quarter, noncash nonrecurring revenues which approximately at million; stock-based XX% as approximately to other follows: XX%. of is non-GAAP million gross compensation results based impacts and $XXX margin on and any and is $XXX XX%;

million Our rate post-split effective XX%, with call XXX to shares a I now Venk. basis is will shares. to Venk? expected on be tax approximately the diluted turn back of

Ita. Thank you,

it I’d please to Arista participation, question. We’re allow your you to Q&A for for understanding. to call. greater of now like the To a everyone please earnings away. themselves request Thank going portion the limit single to move that take Operator,

with from of the Rod Instructions] first Your comes [Operator question line Hall Goldman Sachs.

regarding the the bit it’s where dig ‘XX be on into there in split, is little wonder $X of you’re would over about talk succeeding the -- momentum, enterprise point well one And given way, over the my I growth the and you billion. of So, verticals enterprise momentum? bit XX%. momentum, sustainability disclosure over billion there $X strong that if could a extremely by congratulations a and revenue And little

give that more just going So can you enterprise, if color how wondering in Thanks. what’s for on on ‘XX? looks

Rod. Thank you,

has a financials. the enterprise the watch. includes definitely traction contribution to So yes, the been by And also the pleasure

customer the which financials, with traction good very financials. very we in has for some and been much but landed had expanded we’ve us, So, a long-time

be going cylinders enterprise. pride on us. would that are the across for moment of many we So, But a

and seeing the We’re care, of international the lot the included is And across enterprise. activity health a traction in entertainment, of the in course, also geographies. campus media in

of of and year as expect it’s enterprise So, proud have and to a well. momentum, diversity one lot in continuing this our we’re

been anything us campus know you on lot don’t just moment. is you’re generally know demand campus, And that maybe WiFi, give the Jayshree, a feeling how going? I at but could for there there’s how I like of

Yes.

are we a familiar who customer And customers we our EOS have just very is extremely think in with campus. of with the Arista in base doing with embracing us. seeing I as Arista lot million-dollar therefore, you, own are shared So, we U.S. well general,

point So, that would a success. be of real

The not second campus. we’re interesting unification wireless seeing that’s thing the a and I’d but across just wired the we’re say in edge, the seeing WiFi, as momentum we’re seeing and well of is really been very

ahead of work lot a So, more us.

you’ll make looking we’re these still to As numbers point them out, larger. often but are small, all

the JP question Chatterjee next from Morgan. line of Your comes with Samik

think, Jayshree, particular, today times maybe lead terms how’s can prepared in about into you times proving that more just dig as your a in if visibility remarks I but mentioned with, bit lead we it Meta, improving in you quarter or do year? supply And see through any sort chain today? maybe worse go the Where ago? where more standing the Is you you. than details on the a better seeing of shortages? Thank you’re of

visibility literally quarters. lot to chain, with helps That do you, things, whole we and only giving Well, and has started in say forecast. a which vendors. say want our for declined phenomenal customers of we’re of thank job got That No, Cloud at we us Thank all, two year but in your helps us seeing us done first helps all our helped usually, us met there. getting November plan. Anshul project. improved you the helps. It January, we some I It lot. more some a want component being the one a Titans, team said, or Samik. to And have I Analyst we on with a when you, do when from Day, supply decommits that felt of It

shortages, supply shortages the like forward but between step our one We step the over experiencing I virus, component two another QX shortages, wave one backward. uncertainty in would certainly backward, So, the as Omicron the don’t we’re logistics and the steps labor of and describe chain here.

elevated times. lead do we have So,

QX our no therefore, I improving. chain to back-end they indicator the isn’t commitment some our are We’ll will the with year anywhere It’s But of as but XX improving components, for be loaded. think you, from every So, shared fun. XX supply of I’ve quarter, keep great weeks.

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

of question my the you think rates campus revenue? guess, for I and for XXXX of growth software, campus thanks growth and product those said the the routing which I two? segments, for was the the software. is, which two in was Thanks. Yes. the What disclosure and And what was was breakdown year-over-year XX%. particular those on XX% routing, in

help Maybe know routing Gosh. I for was me. software the I right? excellent. Oh Ita, have me you numbers Maybe can off-hand. is don’t and on the It campus would... double,

at right, piece I line is of hand. the software growing routing revenue business, the piece The have pretty percentage probably with itself, in pretty was The that much because constant. don’t

All Okay. right.

locate the for you yes, follow and I offline, that can So, of point, be helpful. can would up at if some kind XXXX routing campus but...

Yes.

doubled. That has

So, we know that XXX%.

Right. was I But about combine XX%? right, you routing, -- curious those two, as

Yes.

As contributor, Yes. to We’ll did. we back you. get a

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

goods you, you. coming you’ve or little about six now from I to wanted last the see whether a specifically in prices in raised unpack component thinking if see discuss we’re could think those semiconductors, Thank about input your ordered have particularly if maybe as prices? goods parts retroactively at moving what higher You could help cost year And to costs of suppliers, to higher I’m bit maybe going on months you us of drivers. sold? your start is how

we’ve mean, increases were I orders definitely repriced. that about seen some We Yes. we’ve that, in had prices, right? and talked

to So there backlog, increases there. reality open seeing just that’s repricing extended Given to times, make the those people backlog has the suppliers, we’re to that try of right? lead been some against they need that fulfill is

some seen definitely we’ve that. So, of

both. a combination of So it’s I think,

our we’re side. that. increases carefully increases. that some with ongoing these that go also transparent with on we do the of increases if what increases customers go take and of further we’ll seeing suppliers, monitor what continue actions our this take I to to are made. forward. the go been seeing to right? forward, very cost we you as is we’ve think on We’ll backlogs suppliers there to of You’re And to about We’ve and passed as need with those we customers to continue We’ve and price Do next? some know see repricing to kind disruptions of watching where we’re going kind obviously but

half? your But just the second to year gross would or you similar to calendar more in be margin half expect specific, of weaker do first the be

Yes. mean, gross kind to I back I’ll of -- go around think I normal commentary what margin. our

not see times. a see the we that we’ll what had think happen of quite at going long pressure between large I said there. fulfill some that’s different increases start business. time we backlog place, some we’ve lead older as but pricing, we is we put to will that some backlog customer same and of was price pieces from to Then, into time, benefit for some we’ll the At mix because shifts the kind

have potentially, negative various we’re able business, why bigger Cloud the like-for-like can to a of as improve I we the will think the business. customer as margins we quarters impact. maintain piece in similar gross outer I a of in across gross some supply shifts, caution pieces and it’s But it that the would Titan That’s grow think So, then that So, margin a have right? sector-to-sector. kind impacting of again, will mix

the a as an can managing think mix good have But that’s pieces, we different we job kind that. between impact. to I do going of of again, then,

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

could was hoping about XXXXRX offering. I just the recent talk you

I’d spine Facebook AI love is that’s just I but product if workloads AI this super these what same offerings? applications the in to have workloads, the cluster, and was the time so think just TAM? of what you -- TAM for about? already Are are expanding launched solution would expand place, the how that new understand by is or It is, that’s was sort is next-gen with what a the offering. potentially around new it called, And your much this you your all

detail. more it then Always will go I’ll a Thank and Amit. good question, you. kick Anshul off into

very largely The and traffic. which we network, all, largely which leaf-spine network, the there. in small cloud call first lot same a focus elephant and dealing packets leaders lot flows, a we’ve you on purpose-built been thought also based network, we compute-intensive of the tremendous you’re on front-end back-end a So the building and and is a metaverse applications pioneers have strong when AI-intensive with amount of of and very been now and architecture, of have network, workloads, especially require large a

historically, a indicated, the as as the this fabric workloads been these XXXXRX Ethernet to a has place Facebook unique area mark the that’s So, InfiniBand. AI with for implemented in opportunity congestion right turn spring, is its But new the QRS. to it Anshul, control with packet the efficient with I’ll over dynamic the the with want balancing, master to more? of you say load XXXX.

just Jayshree, attribute. great a more, So, little job describing the did bit

Thank you.

us, Amit, you and these Ethernet has being around is sliced these spine types XXXX cases. provide the and GPUs, try opportunity when and chop fairly flows hotspots with use XXXX classically the had well what of to the can CPUs, saturate it which of sets the networking But and in doing especially product with all creates traffic. nodes, new lost-less it around, is the across for all AI heavyweight data

traditionally new And historically, TAM your brand-new new InfiniBand. I is the and historically, would Arista say, in question, of to to a new because cycle this. it’s a answer beginning been are we And

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

starting gains their Hopefully, the having, between much, that’s from share and about the to -- results. hear The driver? you’re higher is finally, the it market meaning okay. at course, is, more market what’s in growth so and with why spoke seeing, orders solution substantially Cisco I the than of market the and it have itself? if suddenly level, lose and of acceleration is is for or they’re case, campus, share answer seeing growing is about Meaning, centers this I why growth you Cisco, you are do where of are the question answer much? is growth to how look we can data Juniper me great underlying you great the And in here before, more growing this and so

But data were to in I you’re it about and relevance means execution making center back look really weaker. the that, think us answer. of our customers higher. than Tal, is getting the competition three tend the just ago, Arista’s company. past, to years Maybe higher if as has gotten think we our and more that you a Wow,

relevant routing, entire enterprise analytics you CloudVision many, and campus, and data today, center for If I the we have operation look interconnect, components observability, hunting, monitoring, whether many agility. the think itself, data it’s the center more threat customer,

some we have table of for Arista on and the on of them not And out how the modern is some this set do this seat So, as a better the are of the they to being premise. them happen. where thought the but are in cloud only sought advisor workloads, leader, make

has an alternative. that of product because think needing portfolio customer because of changed our I So, the and really

to existing and opening remarks, and think I fatigued As said planning more in my had due alternative. COVID, horizon. an I they frustrated they’ve the also increasingly They’re better a want with players

I the So, both our timing years. the think and has relevance now improved in last couple of

than the share the growth you before more shifts explaining the are or it’s same. to or about but about deliver the do the shift? market right underlying share and think it. customers, in to no, Jayshree, market ability And more products now right Got that your It’s less

gig XXX share and data are gaining XXX I Well, market the in in center switching. think definitely our we gig in

are share a market other because still player. still small we’re The small shifts

Now, we have to bigger. work to get

small say, shifts, So, let’s our call but increased I wouldn’t relevance them numbers. on side, still

I mean rates, I think, business. cetera, Tal, we’re et of logo, closure I seeing, part would in that good new certainly the say,

share, there’s it obviously. see comment there. -- that’s on hard you numbers, our definitely think it’s to I in think but And traction I

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

just want were comfortable data course that architectures is quarter? kind with just be whether basically center with what they comfortable enterprise to if with really their they level Just supply likely changes of really environment of question within a that from giving your to I kind chain with guess, where curious more on just them in they this building higher forced kind architecture Tal. to able as be Maybe organizations product or into a normal discussions a wondering more take get being from maybe customers, to visibility doing weren’t customers? look higher-level at triggering made has of

exactly you’re right. think I Meta, Yes.

have the alternatives. to lead you what think they about lot In that think when office. chance times about and firefighting the to I put in a the they premise. extremely and on so pressured horizon put cloud And planning got the think past, today, the CIO what better. that are on have a Also the is is workloads a cloud they they’ve extended,

well the Arista So, of benefactor I and underway overall enterprise architecture redesign that. a is think is and

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

investors that XXX-gig and have And could respective out, as in binary the concern and the assuming as at not we I if is But the XXX-gig Facebook, one Jayshree, a of hit on both over? us number for peak some Microsoft many roll flatten builds. the community think. those for quite could look investment nearly that probably and recognize further and is world on levels runway next, insight out what’s share the point you they eventually runway bills any of and

Well, look, XXXX ‘XX. customers. volatility from XXXX the we’re We and lows of the Titan our experienced Cloud used to of highs then and

that? a a you Titans investing to want CapEx. from increasingly, CapEx. shed their network we are clearly to period are more we’re light So, more And the on correlated in Cloud directly do where Anshul,

Absolutely, Jayshree.

is very I business the Cloud are strong which the they investments think have making. Titans model, resulting a in

customers real move are these on. strength of two, all there fairly well. there’s So, Number planning to

them absolutely live clear, So, very network. into we these stock appreciate the visibility. products it’s in the And need go to their not warehouse. to trying They they’re

Paul, visibility or be we delighted, real. of happy for years, we had but year. if would three buildouts are we for the be should visibility very So, two one

for But near strong. that. beyond demand we go not believe the the is let’s term, So

All right.

-- is Titan They’re consistently the What cloud upgrades specialty investing. all are customers and, across thinking, their their right? what Cloud all customers, swing, full some Paul, we’re seeing in all is we’re fact, in our of

Additionally, annually we capacity putting megawatt center data are year. more every

we is obviously But so, as And multiyear we can’t think but let you beyond a know this now, upgrade. we’ll right we do. see XXXX much

And it you But said she course after increase Ita as a of build-outs bandwidth. back XX-plus back in about public cloud won’t from But and gross understandably past the percent why change likely assume, all last infrastructure what’s percentage of of When far customer made Jayshree, would when, with doing impact next were XX% things while focus what you’ve the earlier revenue understand know year over different your consuming be something in back I it greater on not I that earlier. saw a from and involving mix revenue cautioning far time. I cloud about I gets only the all you us, we such point AI the you’re could than impact the ‘XX, margin greater went the get over it’s if then. gross Meta, be the dominated clarification buildout. to to changed? margin, it But on

Yes.

what there’s across So, I reasonable said Day, range, XX% was, growth XX% I grow And there, of to in still Analyst think you be the I that rates the couple think at right? and we could case. think right? to go we kind with XX% back in a if things look, of business that’s which

below to that really range able we’re cost accelerate more threaten the and maybe dealing guidance with, the script go is we’re that if on and it of that’s we’ll and et cetera. cloud I think see in of different a the saying, that structure we of end of terms that and accelerate when business, kind -- It’s some that. piece of the beyond inputs environment bottom the cost the

way And -- -- good there I in the a we’re increases, was done have your with So back saying, think think job has pressure of to as about to now, freedom the think costs, logistics I it’s cost that we’ve isn’t tighter different less, could a range. see on it’s margin are we’re of have you to team of Right? structure right? same okay, you that gross job degrees flexibility over and cloud a a think the deal you really then. cost and the that dealing scenario, done again, bottom But with cetera, et presence. optimizing mean, good just really just And it the time. I I in it’s some then growing now. end

Badri Your with of Credit the line comes next question Sami from Suisse.

in customers in there to XX% up who. three become need of that just years maybe any are and just quick Microsoft that have seeing? fourth ramping are the how many a plus and that the third in a supply it’s revenue for two their next function disruptions they know frame as to follow-up network cards. potential been disconnects? see way And you guys is after just or a could to the XXXX is of the know kind are We customers, And question First buildup but chain Meta don’t could XX%-plus over some if us created of you that uncaptured we need we opportunities as

Yes.

the Your find is Maybe little Meta Cloud Titan be. answer. with M will second a Cloud to of find to no substantially there’s but bid activity Titans, a like today question can another Microsoft that. we the customer and all is one lot moment, At easier

your customers we engaging to opportunities? and theoretical many away. all go happen how right it’s into a almost this, Sami, some question on because mean, As with our I question,

that five just I fact, years with we In today heard customer of won. we a engaged ago that

happened five some years. some in five So, happen in weeks and

don’t really because just of it and an TAM So plenty answer increasing serve we hope that precise we have got But on keeps we’ve it. ratio. time to exact

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

now, lot months you. markets. the surprised now. more end bookings? you of the if only and visibility really Ita, say, months about the not step wondering a ago? impressed back, Thank us And your getting our you. kind maybe you’re three when three to mentioned What’s versus compared end you and but really compressed take know results, just or ago you You markets I’m upside most Jayshree to you the had a last call can in what we let both, Thank verticals

the entire I QX with Jim. surprised I’m year, and say not Thanks, QX. necessarily would pleasantly

the boast I activity and strength, backlog executing order into just that surprise some from the just orders all has execution anything, very team tend capabilities, and level Titans to while to specialty Arista At if proud preferred the -- and very, with QX of of. And happy we pleasant those about is is think well. I despite translating doesn’t revenue same the QX. a and am most of that of providers proud the enterprise both something very cloud executing of we’re is been on time, partnership status our Cloud

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

assume Jayshree, I’m guys kind either deferred on of over going contemplated you’ve XX% up against laid guidance do out, -- you XX% calendar to as the you and full that that growth backlog. you backlog the similar the a somewhat you’ve last that be revenue deferred as some couple for product, expect you’ve driven that well also to quarters. growth That coming build off of seen? amount you’ve the last that the fulfilling year, you as And XX% revenue you’ve revenue do guidance backlog build carry that build by got out got comment, of seen of backlog year or and that you’ve both got

lead that et don’t mean, backlog we’re I what’s it’s for cetera. into hard and lead be bookings happening times I conversation. the Yes. to with know get to the now whole right so times, given just going it meaningful been

quarter, would as right I that off XX%. go would deferred deferred to say, goes think the not on we’re right our that revenue, I assuming balance that the now not coming balance we now that’s feed see that We’ll how the but the intention it’s look, sheet.

Yes.

it’s think I fair.

broader take to Execution think, be away strong. could demand if resolution. stronger is I we had thing the is supply chain

Needham. line next Henderson Alex of comes the Your with from question

I’m growth who in industry Juniper of us that even It’s this in. at the a probably at substantially look I Cisco, rate the that that in you if time has broad XX% since tech growth think clearly you bubble. this pleasure and the orders growth the your a higher of talk forecasted. XX%-plus analysts is one ‘XX It’s category, ‘XX all which than at follow any hoping Extreme, and problem produced about to to get confronts could

that to XX% do which you we to How And I so, XX% to share rise into which titans, help resolve a over and problem. quarter resolution which the X% gave what no you And X% of now gains. titans, resolve Obviously, growth, there’s X% XX% at XX% have exclude roll could XX% type this in the X%? down don’t got to we’re vicinity environment, But it Does backlog XX% environment it’s to you to us is a this to point? the towards than you orders a it’s to guidance if understand -- at if more X% is backlogs number some with that to vicinity. include some with in companies? normalized return of be XX% growth all you think, and to industry probably probably how

to Yes. I’ll answer. try

thoughtful is continues has question, will answer Every forever. forever? And of an very a party no. a that this it’s period the continue think and I Alex, end. Nothing growth beginning extreme

I a non-Cloud to However, for time Cloud space. we of growth I some the in the double-digit just clarify enjoy Arista, there’s tremendous independent Titan spend, that can Titan want opportunity. CapEx to believe come quite for

keep to come. I enthusiasm a of this multiple has Arista foundation understand to and in, you to excitement we’re growing sure make era years So, extreme independent double that want just digits for

We’ll of into XXXX. greater are is in this in will not and probably, to XXXX and and into continue we’re and to much my the visibility and speculation pure and a XXXX, normal for I settle part, continue think do that wish in growth single more frenzy growth don’t I people this will be a is on us, be looking We’ll but that just But for and digits. lead hard because for -- Now, thereafter. even faster. working times a we planning only think be so,

If I it. on could up just follow

this occurs, roll normal. start reconcile? that companies that the think backlogs you over that orders some to of as I to do mean, this other above these is have way run the So, large

of it’s else, to to have same the bookings it’s get to because deployments not point. I and much focused got period stuff to going as will good on why much, longer, deployed booking. That’s sure, is number a than Alex, have right? think time of when for right? a focus deployed actually really on think at It’s more Instead of all get That’s It’s stay is get about. to visibility to visibility having you do planning this you’ve deployed. keep a of Yes. deployments compression But all why with you the and it a and customers That’s well, factor rate So right? the a trying horizon anything as time to going right? how quarter, we

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

titans, think Two business, how or questions. business carried a you it you Microsoft to is, that downshift that feel incremental Is is much the campus came more business across comment that? titan said that the seeing? for overall then down in you that’s do you’re you’re in question progressing? secondly, Is up want, enterprise XX%. And being can spread new XX% other I business is there being by One, out business you or up? about The think what And how holding the the doing logo I the little bit ‘XX. was that making

Erik, look while I over Anshul data. is going answer to second the question campus the

Okay.

these November new start the year, especially launched to new many at the So, was we XXXX be XXXX, as of in the last of half we mentioned technologies the deployed of the second right and expected products, year of year.

strong. that, has healthy and than demand been Other loaded. back-end somewhat were they So,

a bit So, and little will there supply technology. new be there’s products worry related a else there’s But more about within forward. strong to contributor We of they business. the timing nothing gap going of cloud believe

is we’re to don’t good rule you thumb came I campus half obviously, answer prospects. existing new starting of to have and for think from of but question, customers many, many that a came to numbers, answer questions -- the getting logos, Campus with. we’re about And new exact our just from And half

bigger they’ll of even and some them get start year. small So this

next Sandler. the Piper with comes from of Fish Your line James question

Valentine’s entire the team to Thanks. here? And Day happy

you. Same you, to Thank Jim.

today? And orders much for And Day just us the possibly. demand actually, Jayshree, the visibility year you guys of is Anyway, bit. of XXXX you Valentine’s in to comments really you business going about it and like avoid how back of help pull-in are net a to thinking guys XXXX the kind question, that given in of seeing pointed on spouses visibility or have what spending titans? convinced I’m around earnings how the us today? potential into increased ‘XX of Alex’s your into you kind you actually effect out to with quantify half Can QX we’re second your

The the And had Well, have you’re saying let least year. or huge X me we at we James. volume just projects, historically we That’s planning. make, quarters. now separate cetera. et It’s titans, a purchase also X the of asking, a our question factor we’re have in to the

to X enjoyed we’ve always enterprise, It’s months. been XX longer-term the On always visibility.

that So, much I visibility of would year say, in right really enjoying general, Not longer and not the too is what’s It’s that. changed. projects. than just on too titans visibility benefit our one is on much now the greater less than

And pull-in on the here XXXX? potential for net of into demand XXXX from

a deploy plans they’re not kind that us all deployment to laying right? their of working deployed, are project where right? it’s telling we’re can tomorrow, when orders of them when supply deployed, out it’s figure right? time, and be the more be to over deployments, they’re pull-ins. It James, to they’re out with And comes so and kind -- can that’s to also back and solution stuff much So, It’s of going be needs the not plans stuff it orders but going these

second be early Let’s or is project half example. building take they’re but a it’s putting The or most project in campus new to they’re new a a Invariably, they XXXX, now. planning have. likely XXXX

time. the happens that So, new. That’s not all

a from perspective, not right? per visibility. and se, revenue That’s just a They’re business giving pull-ins,

a planning planning. horizon on Okay. this to to think time and planning they have and of and worry larger the I would about the issue. is I to year do it. the lead doing would never the time has They gotten They time planning thing used want now because just-in-time reiterate lot were -- one one

Your Research. next question with comes Bollin from the Cleveland Ben line of

you hoping about How January? How what how talk share the decommits? think little in the billion spiked more about a the bit you Ita, the all in could risk a purchase you decommits a that? you at time timing on comment perspective? was that you comes I see Could of component of you. from $X.X influence any in non-cancelable your And question details had think for you over it might commitments. I could

Yes. $X.X the of billion, I -- that always mean some of that’s the time for. we’ve of of big and we’ve components kind of period that buffered we’re that kind a there the is key extended piece buffering

difficult risk there the and So, of things relatively and are and the are kind excess to that making that. secure, products, we do -- low new investments chips of some chips new for other to just obsolete

is, to get we XXX% components involved set not, smaller right? would And have other that, just need components at considered supply see use it’s you that them them more broader and need in just come there’s we’ll kind about of the in right? XX% or anymore, to They’re key across class So, BAM it’s key of not able we’ll The of of -- those components, the ourselves is the [ph] hold and you BAM. other tied because what the ship, The are least to when the right? we’ve chain components decommits. have seen in order use components And them. rest be in We because embedded in will we components up decommits to -- before.

happen So, this view a we’re taking why step again that, that and broader that’s up seen of quarter. you’ve

them. will come will they it and I the when mean, received, hold chips come gets in of I mean, in. stuff and terms will In

the of going that just you’ll of in amount components that XXXX So, because we’re to fair a that, see turn it’s hold. because

on I Ben, the XX has Anshul, or had they’ve is McCool, that historically to team strategic Susan vendors. Hayes, just add, entire X want done what John to focus

number that to think XXx XX I has XX. gone to up

appropriately we and to gone relationships products for duration have longer XXx. design our maintain, and therefore, more them and commitments by a their plans the we time. and And make purchase for X So, up of now to timing has wait understand for keep to have

line Your next George the comes of from question Jefferies. Notter with

are of looking the your your XX-month is from I those QX question on, of how next QX estimate commits. how seem terms numbers granted, other the tried is to you in cost for the of estimated. and to question -- next XXX% -- but to so all in guess, real higher much hardware we Like magnitude Like, of are commitments. sold. your compare anticipating And is perspective hardware far purchase in far looked terms of adverse want so grossly keep some changes going like XX-month ending are up We space goods inventory just we little our guys this and sold in guys relative are at this the the XX in out what’s much you the months, be in to supply getting you’re just your next -- or you that? and on on to underestimating companies your business this the ahead purchase chain? the of ran of we at And where combo a I we purchase inventory came commitments. exercise goods and cost with at And on

Yes. back value around thinking -- think make comes it George, of key I kind those of to and again components. components commitments is BAM some the to the of willing the where where about the and the we’re

we of are in bet life not necessarily believe And year, going be silicon, we’re again, that it’s those that cost they’re to willing safe commitments. those So, tying consumed kind but up. this the take a that’s we relatively capital coming products, it’s by components to and of and control really early of early life making

you’re commitments and in that’s everything not now revenue purchase So, I that out what will shipped It’s XXXX. think that seeing. for we’ve got be consumed,

today from of Your comes UBS. David with final question Vogt the line

delays issues that into ‘XX, just some revenue get and into are terms when plays sort just and sort there Notwithstanding operational revenue how wanted from get at of of year Microsoft some ‘XX double-digit Thanks. to in visibility year this investment? and recent Facebook be a aggressive thoughts the that But this center pace about data expansion, and for in their in think both given in we in to then of at of sense trying how should kind your XXXX of last how balance Obviously, on qualification your would of books Meta, year. plays the XXXX.

our today XX% parts of Sure. Jayshree Analyst the both these is and and took greater plans. of lot XX% Ita David, time growth to go And Day over already customers customer. a are significant mentioned, One of a at than business. we very

there The soon. other one get will likely

So, we models is healthy. believe strength have our our their We already. the guidance taken into and demand into

and and As data very you’ve to mentioned, and centers world they the the they networking. clearly have preferred across we investing new had are build-outs partner new entire well -- in technology continue and are with they’ve

So, we’ll that with as benefit well.

So to some this with growth makes the or in really for extent, up lack XXXX XXXX, with now enjoy this of cycle, new them. growth the and

terms into quick percentage year? building delayed a as follow-up. think Just back-end gig say, or in of weighted of of terms this -- What let’s in their is data spills centers if XXX out XXXX, Microsoft in do that you

volatility have the all with supply. model to hard we Probably

think, is I right now, demand strong.

them products. these if can they it’s give And other to how heads of to enough figure supply deploy enough tied have technology really ways So they customers up.

concern that’s So, a lesser of right now.

Arista David. and This Anshul, XXXX Earnings thanks, Call. Quarter Networks Fourth concludes Thanks,

you information on in on your for interest thank supplemental our access of presentation, section you today, that Arista. additional joining thank We have provides And can you posted Again, all website. our for results. which and a us Investors the

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

disconnect. may You now