Arista Networks (ANET) 2 Aug 222022 Q2 Earnings call transcript

Welcome to the Second Quarter 2022 Arista Networks Financial Results Earnings Conference Call. [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. Ms. Liz Stine, Arista’s Director of Investor Relations, you may begin.

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

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

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

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

for earnings a afternoon support approximately billion XXXX call. us $X.XX. Thank with for and of earnings XX.X% of Liz. share everyone you our Thank We the non-GAAP second delivered per joining contributed this of quarter revenue. you, $X.XX the renewals Service revenues quarter for

Our as chain cloud We XX.X%, continue these higher of trends by titan to well do as margins non-GAAP throughout escalating was XXXX. supply a expect due mix. costs gross both influenced to

former In terms of networking customers. Pluribus cloud at cloud for Srikantan. telco by the to cloud enterprise, pioneered class and was our with financials followed investments XG and specialty tied we Inc. fourth the acquired CEO, led In XX% completed branch strong contribution International Devens. XXXX, performance our we a late titans XX%, switching former two QX NVIDIA Untangle, the for in QX, providers a Kumar new of unified closed and our CEO, edge XXXX with DPU-based the first In management for by Ericsson endorsed small led position, half largest large our security verticals, threat for offerings, in third was service by by commercial Americas and providers and asset place. the of networking. partners, cloud, fabrics. particularly acquisitions We security cloud for acquisition of Scott with our fabric bolster Networks, vertical, Pluribus

relevance Our specialty in and reinforce enterprises. XXXX mainstream providers results customer QX Arista’s cloud titan, cloud

millions titan, least in our significantly logos and our I greater and million million-dollar Chief Operating greater annually. Sadana, than Expert, hundreds at than that partnerships shed As light Anshul? all like Officer invite the Chief to million, X some million, of Cloud strategic greater to of doubled on cloud than the Anshul our XX would X have nature with years contribute previously, mentioned I in than million categories, last greater X customers. XX

Jayshree. you, Thank

have us provided platforms, giving an solutions scale other grow U.S. business. designs and pioneer a cloud a efficient also connecting to of be our The cloud have to providers many proud network are data us at our market and millions model helped same verticals, all We to center software networking in in lower and servers. leader win

in spine special Microsoft over and calls, switches revenue cloud and of the the each of track As our center edge we we for and full Meta previous customers network, disclosed data expected and leaf in very globe. all At to Microsoft, top the layers layers at to the their LAN are year. spine of XX% regional deployed across from to be are

pluggable next-gen together with a network our partnered SONiC to have has the ever. become EOS, the is partnership optics, the in codevelop the industry. standard We create now to Microsoft than and with stronger and long-reach gold which and deploys both encryption layer DCI engineering products,

Our products continue are production, and to for the receive positive and feedback deployed very preferred our newer XXX-gig we about and be supplier continue in execution to quality Azure.

network have with early design since been the involved their also strong days. We have a had with Meta partnership and

with of multiple latest XXXX platform time-to-market We efficiency unmatched have products including generations them, codeveloped with the and power XX.X-terabit advantages.

also where We plains. constant use fabrics is with deployed there have We’ve colorful cluster cases, a several need higher-speed for including in deployed Meta’s in parallel networks. their backbone layers,

well, titans a In well specialty at to to cases providers, partnerships addition and scale. similar titans, two big smaller continuing use we the but to titans our do as well top the as very with as other are cloud

partnership to continue or customers a it to platforms comes architectures, great engineering have with We when features. next-gen

had customers. commitments chain. looking servers the appreciated very forward-looking own despite supply partnership our Over Customers by to the risk, we firsthand. investments analyzing purchase our and in build are who so components through a years, on have at The their team relentless the strong by deeply work these lockdowns, also challenges market, manufacturing broker second-order find many supply know last X additional Arista

not We for are to a compared our now for also supply best-in-class other alternatives. recognized but products, superior chain only

Jayshree. predict our you, the to we cloud on patterns behalf business these healthy. While spend be of to and Back cannot continues future guidance,

Anshul. you, Thank

that are best to cloud see having our years customers. of with one can our we You date

as fully trading has quarter. Series a this applications. new demanding and functionality exchange combination and of of XX%. is Arista choosing Two with cause LX XXXX independent latency portfolio, root reason primary a its translating an featured strong short. also extension LX/LX in edge were this team The third-party to first several and Cognitive CUE enterprise XXXX offer available Edge-as-a-Service integrate with commercial CUE low high-performance EOS launched XX NPS, report. is Unified customers our designed analysis Having switching for terms for earned vulnerabilities, powerful an world-class ultra-low fewer to score, Arista expertise, connectivity. the high-frequency of Edge, customer enterprises. programmable of a cited the introduced latency CloudVision and Arista distributed products, models for for for its net rating always of and In distributed Arista or promoter highest in XXXX support, commercial

Let give me to illustrate you few of a XXXX idea. wins enterprise customer the first an in half

an the including sets factor Firstly, WiFi dashboards a change and and CUE, in was the with part WiFi the RFP changing cloud spine journey, campus client universities largest cognitive well-entrenched was decision U.S. across win an won for overall their center we security to a and key decision, student experience, Cognitive CloudVision with wired control domains one visibility. is way a X dormitories integral decision, for in rich the with their players. our to influenced the Unified of or in enabling quality superior of wireless customer delivered bank, and beating architecture, large international data automation data EVPN. manage In Layer all Edge,

manufacturing. public management enterprise for Our and made providing win, the and possible next Their visibility heavy the NPS telemetry. on was Azure routing cloud an leading professional supply with customer premise services rich score and chain the Arista’s interest in drove and

multimillion Arista, edge combination of packet across Our including over high density, the to BGP major well messaging million Key integrate and included for users dollar and for win peering this XXX and a platform their buffers for the EOS with homegrown as port was deep leaf routing a as spine. programmability supporting automation. win reasons internationally strategic routing

with IT automation telemetry possible was use It X advantages and win well international data Arista’s center again architectural for banking in outsourcing capabilities. interconnect as assurance sector case. day with was a as once Another the

Area, Our no Last the a key cloud viewed a a specialty in global we with with spine reseller Bay positively team Arista, center flow X by such with features here customer. filtering and traffic where played platforms quality California. least by headquartered were EOS rich Arista’s and role mitigation. means provider our flagship but as analysis as class data and and single delivered the for tight spec, performance partnering

perimeter, also detection visibility the a and combining the DMF, Arista won response, collapse NDR, the network Fabric, Monitoring security platform. holistic and into of DANZ forensics and With layer,

multimodal work. Aristans as and to have has credit lot to we being to all million as in in data lake cloud of best have XXXX team $X at practice deployment and data Arista a compelling gratitude the startup all IPO and Arista a quarter way a on network so networking. theme across all client data in these who And in believed to my QX in first proud XXXX. cloud as the see, unwavering push CloudVision from is evolved first billion the from a year much well centering us, In and XXXX, few and to the architecture. billion back centers the better our revenue today, and to EOS can lab, been Arista out huge build common I kudos hard our is XXXX hundred you AVA continue cloud breed feat, dollars in proof-of-concept really summary, our goes network our This to now customers as a $X Arista’s not and of design zero based best am the but only As of a differentiators. strength at way us wins

Our quest to And on. it specifics. that, for like turn to marches Ita proactive, for data-driven prescriptive with I’d networking financial predictive over and

services compensation was reconciliation A GAAP our remains constraining afternoon. strength and and in with of ongoing purchases QX reflected good basis. $X.XXX earnings consistent subscription International titan and XX.X% business. all QX. and Jayshree well of on and and our up Services a impacts, This announcement approximately the at This billion, cost U.S. of based quarter. areas or down first revenues selected in more guidance upper accelerated the provided of non-GAAP the our our across with revenues in all end our in revenues environment particularly excludes the shipments at ‘XX quarter, software contributed Total stock-based XX.X% software product non-GAAP of range in our strength expedite XX% larger to items. in continue to gross period. in for customers. in acquisition-related cloud the quarter decommits XX% were somewhat charges revenues, were to million Thanks, while fees. This above in higher guidance range release. end other from requiring $XXX is supplier to margins year-over-year revenue $XXX.X came quarter million of down XX% results for full revenue, growth XX% with healthy from and results our non-cash Overall broker and supply nonrecurring certain the expedite QX total is the second reflected billion. of on largely XX.X% in with grow XX.X% lower-than-expected fees the demand challenging of and period, QX QX The $X in in guidance upper Overall, the of

lower expedite the the of ranges to and at and XX.X% spending Sales the came from for of in need fees. for levels of $XXX million. revenue, million quarter $XXX.X a at to healthy This R&D $XXX.X costs discussed, current previously or quarter As marketing of or and last reflected up expenses. the primarily component quarter, cloud or offset mostly revenue increased headcount margin Operating by headcount expense flat compared last at $XX.X expenses $XX.X XX.X% million million were were period. broker mix with increased period last revenue. million higher X% reflect variable gross sourcing in lower

with revenue, Our quarter. G&A costs came consistent X.X% of or $XX last million in at

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

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

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

amount dollar requirements, against XXXX As market future price, board of conditions, acquisition authorization. billion timing dependent repurchased X.X and a on and opportunities approximately million stock October The reminder, actual other business we’ve factors. business $XXX and or million be repurchases now shares our will

a of not the expected cash. the these $XXX.X outlook acquisitions million half two near material are $X and are our in million, total our with in term. impact completed including remainder associated and common with first also included revenue in to in We expenses provided a and have financials stock acquisitions on the in consideration below The

receipt components should prior in in quarter. assets million peripherals increase shipments, component components from to the overall linearity for Inventory cash reverse period, once including the million reflecting operations deferred inventory operating strong $XXX.X This from in QX, Increases the XX billings a quarter, from the somewhat Now working second by up increased the We other small X.Xx, these in million due and the were performance conditions $XXX.X a in driven supplier future investments. Inventory switch-related cash reflecting inventory turns increased and are DSOs down came generated goods. shipments of for days quarter, and by of of decline trend XX finished in turning in a mainly days, $XXX.X the from X.Xx earnings period. improve. for decommitted to in in and in supply prior performance, decommits. offset reflecting up capital at higher revenue quarter. delayed

current $X.X billion, reflect Our multiyear environment. purchase and supply for commitment These quarter number in long up commitments lead strength was QX. in the demand $X.X time from the overall purchase billion

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

on with million Accounts revenue in $XXX clauses revenue payments. balance the and from the acceptance service expenditures for balance, directly product the million. represents reflecting of total deferred customers. products timing of $X.X QX, last to days, down inventory customer-specific deferred vary $X.X which revenue $XXX XX QX. contracts, down balance services related Our days Approximately XX were new days and Capital basis. was to from billion, the were $X payable quarter-by-quarter deferred of the billion and may quarter quarter, majority The is term largely from linked up receipts of related a million larger for our in timing

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

half of market year, growth on Reflecting difficult revenue XX%. mix, with and Our growth, Analyst heavily model somewhat supply of approximately component combined environment. Day We had, again, outlook in by of XX% for increased balanced saw and business of per the but the for the we heavier cloud share expansion revenue of the operating margin earnings across lowering margin XX% our year-over-year constrained XXXX year-over-year call resilience supply. sectors a with achieved for growth approximately the scale, a costs, gross higher first face very allowing

Looking to the third quarter.

have metrics by to somewhat shipments demand the across attempts hindered While remained been have business, ad strong supplier predictably decommits. hoc scale

the of a volume view balanced supply Our ship QX reflects improvement in assumes remaining uncertainties. some outlook but chain

and contribution gross fees, a continue need titan healthy with cloud from with margin to purchases combined expect for broker customers. some revenue expedite pressure our We

investments, As to and to sales R&D we with and baseline our line marketing, investment investments continue to plan. in spending and grow expect our in

we the spending broader risks, However, we to of are and will cognizant macro monitor continue carefully.

Revenues compensation is billion non-recurring impacts of backdrop, stock-based approximately a XX%, for non-cash of results this approximately and to operating all and gross the to of approximately follows: our $X.XXX third which excludes any of as as non-GAAP items, on margin XX% billion, quarter, based $X.XXX XX%. margin is So guidance other

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

Ita. you, Thank

move it Thank [Operator Q&A now earnings will portion understanding. Operator, Instructions] for call. the to of Arista you We your the take away.

[Operator from Your line Rakers Instructions] the first with Aaron question of comes Wells Fargo.

open. now line is Your

year? Thanks gave Yes. maybe you a or Appreciating you it, just congratulations calendar look on of in updated that the quarter. fourth I’d we the as – the the quarter. for imply – like go just you guide. deceleration some the provided. question. in fiscal form pretty guess was the what the to little confused for that taking kind it. of expectation I I full through sharp XQ growth bit Because missed Are XX% I I – would obviously, Ita, commentary at is outlook or the And

So Thank just you. obviously, curious if you XQ implied could how the guide. thinking laid update you you’re that out XX% us the at about Day, that for Analyst

very the for quarters. well that happy Yes. that much original we’re pretty the XX% three I at for done I we’ve mean first year. we’re mean against pretty metric obviously,

the specifically, growth just good uncertainty I fourth But pretty rate. where versus around now some feel We’re given about quarter we etcetera. we that the of sit not think guiding supply, original

well, is a myself, when But Ita and good supply so and and but a quarter ahead that Jayshree. our execution that Aaron, commitment year, at time this team, chain. a of at last of has taken guided as our we well, have on is is November get gone north a one we in the There quarter ourselves. – no getting demand philosophy. XX% XX% is Anshul, point one is lot we surprises the we time There many in well certainly still feel

very thank Okay, you much.

Thank you.

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

now open. line is Your

Great. my guys question. Thanks, taking for

of was chain expedited think, last like quarter, maybe So they it and some just securing a your quarter. like they and sounds really Obviously, competitors components. I to supply this were want revenue have that growth more vendor one higher but know sounds decommits. bigger fees and it strong, there you struggled, follow-up on I headwinds hit. But paid took

that in freight broker fees. seeing in you’re components market, or what for sense a get for the of whether expedited market kind to the the wanted it’s Just

that the plays color. some see we as we little move could talked But balance year, And gross Just bit as we expectation into relief, bit think about move Thanks. I ‘XX? that know into having year? the visibility. margins there you could out of that a a some limited how little you more healthier get an is do next maybe and

Yes.

know think, from you keep no as and supply David, our So have commitments. going I just purchase we strategy, in higher higher. They left unturned stone

reported we billion. $X.X quarter, This

no is we So there in Arista’s desire the to have. part demand lack fulfill of

going clearly with etcetera. demand, are strong backlog, We in strong

better bad – has no in all problem the not However, we QX. and foreseeing continues. much need we’re to together, it component come in It’s QX, with much improvement the been QX. and components It in

in perhaps get some get to will come. we’re one component, But have we can’t a So we system. have If XXXX, relief. components build to again, all relief, missing the we

we our how is reflects guide that and behavior that. reflecting in acquire So our components

not still XX-week of We’re years we the quarters components. lead therefore, getting and that. the for plan have Many and to times, multiple components have

Just Jayshree. a follow-up, quick

can $X.X how you of the help frame know – revenue you falls how So If us purchase perspective? sort product years, order the balance through into think us that. help billion but multiple ‘XX a of you of from maybe beyond I this of and commitments, it’s could do kind about that year

that, probably when and Yes. us. wouldn’t a could so If it it’s we our buy we deliver We comes do it don’t commitment, much. suppliers know multiyear to We know.

small we enough cases, just supply, very So ask. in what getting not most we’re we’re getting percentages of and

you. Thank Great.

you. Thank

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

Your line open. is now

the and I at for It north recently titans that I environment. demand I increase. the changing great sounds to one we some updating my you’re backlog much. makes the of getting. of depreciation demand the very some schedules about such question like backlog and for the well visibility to But assume That mentioned components. question more a and But have only the is news it XX%. gone side. continued Thank not supply team saw you congratulations you’re both and challenging a entire Ita switch taking quarter your the has time. their of sense. kind cloud Jayshree of in year full that But wanted And work chain to on very focus network

given wondering how getting X even think more chain are about say, you So I’m months issues? And ago Thank the that. than, you. supply you visibility

the for major the Sure, Jim. team you with beyond. good I’m Thank milestone And I couldn’t of agree and very more. proud wishes. this this for Arista you quarter

talked to the Titans remember be it the It’s five entire I Cloud consistently team a LNG. moment a the Would Cloud proud about or say Anshul Titans verticals time we especially So digits? significantly. single and very but have growing when flat been

customers, seeing So growth Titans. healthiness you’re all direct especially Cloud to the cloud of north upside XX% contribution and a the is of the our

So say first, I that. want to

don’t we orders. don’t report Secondly, backlog. We report

are disciplined We’re that. can numbers we of very unless about kind meaningless They execute.

feeling the over a it months, Anshul, improved Titans. Cloud gone going you you. X has visibility I’m to about to to are Our They that? with How year. have turn from about

Right. to through being, Well, supply else these cloud highlighted, the the component they planning. with partner for understand they so the which the on. issues. not so can that as anxious constraints get us And as back But what come they I go customers normal deeper constraints are everyone only time are, as actually they understanding is in short on product, and to

asking is behalf. a current But lead XX the A visibility – healthy. us of is near-term, predict weeks roughly that. time what the to are is them. are trying really that lot on happens demand can’t guess We in their our beyond people with So year.

best the They business we in are good feel to a cycle. it’s and these directly. think ask I But about companies healthy big build-outs. their

know, the the well. data or several center As and inside layers doing refreshes investment upgrade DCI you are XXX-gig other all they the in as

So, well. all along is that coming

mean then Jim. mean And accounting I I usually how you happening works, what’s about in been already think follows kind and depreciation the when that of the just to back think question, business. that I

elongated see similar operations they from different saw we there couple field. operations the kind catching something happening the where a don’t the anything ago, in the up I of just years perspective. we of is accounting an didn’t think of But new business. what’s there to of kind in It’s also So anything depreciation the And cycle.

teams. your you and to congratulations and you Thank

Thank you.

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

open. now is line Your

season my how current seen Great. earnings last feedback guess, enterprise Jayshree, the through question. the mixed to or we’ve I Thank gone for week this on responding as is taking macro. the some so, you we’ve vertical

wondering customers intent can are in how spending not of progressing? from going you – them sort or to see enterprise you earnings orders And backlog know price increases. about Just Do if your you with – terms conversations into the the for the vertical, from same next I but on the of asking I’m the year? talked response last call, enterprise

has the increases how to in price those response So been the enterprise vertical? you. Thank

Samik. we have Thank all as been growing a a Well, of the look faster has price connection for now a at And I we the have is business enterprise right? larger than our despite many for many strong of Arista legacy bellwether would when much mean increases, less years, than in while our you, with likes X you, are not tell competitors than feel talk momentum year to I nobody But our relationship execution. for and this been So enterprise and classify has customers. cloud and of quarter macro oasis micro and recession, this, stand-alone and that sure. peers. credibility higher little enterprise enterprise them. step customer recession, both a you never certainly we customers, both good back I and in have cloud and I with

Thank you.

Thank you, Samik.

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

Your open. now line is

coming reversal continue question. to It of us we Ita, to this any at feed Because $XX deferred expedited came the little about revenue, down. it how And the drawdown. by backlog there it come I on more does expecting ship million and product about roughly somewhat want product deferred million bridge chain down seem to seemed still a quarter, drawdown can help quarter. deferred last bit taking talked talking is we about for based understanding was like fees does $XXX into supply it go your Jayshree? were think rate? I on million. to because to way you execution, down this you able the a guys. Are And product were $XX back Hi, Thanks

don’t assumes time just I do a and is metric. kind Coming of etcetera. going down QX helpful of bookings. Jim, $XXX the clear, So possible the deferred to QX. to no of drawdown, not in Yes. think kind be the times there the back just where are of backlog worst This to of lead that we we’re discuss you It’s with they million deferred just And that we assumption gave to drawdown. is revenue, guide revenue draw right? no did the kind for

So side in QX. we on are the improving shipment

So I news. think good that’s

We’re see to that. pleased

way I think to about think best the probably that’s it.

Thanks, Ita.

you. Thank

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

Your line is now open.

Great. Thanks.

you’ve when revenues First XXXX, annual you’re you that that the less time I think generated our And last looked found up were back frame. million growth. $XXX only company, in quarter there were the at XX% of I three to now. I revenue off, model XX%, back one producing ‘XX a times quarters which is are in pretty was of you since amazing much vicinity

and about grow And these be any XX% and be but taking that should as generating got at to my Day around rate a tailoring out that we think those we guess is, it. frame? against? tough time, in too daunting rate worth look at question that we lead forced you’re don’t know to supply-constrained you to comp I our expectations commentary say environment for So you’ve listened of to year against comps Or ‘XX would growth I is that this reason there year, we go and think a that that out, as like imply should extremely Analyst time of look you’re a your you about kind given the to year’s down believe at your at

You well, know us Alex.

at to – now end the us lane. down will the be and whatever you base when You know $X.X of growing well. of how Well, it almost $XXX It’s all, for million billion grew we’re always or discussion know good we by year. a the thank first how history off that’s

committed to half We double a terms think see And next in will we’re our double-digit will half ‘XX. But grow good improve think and be visibility will no demand. the feel the it still of base some think year. of and too. We The the about there Day. tell this challenges reason if our our feeling of XX%, following: some is feeling challenges, way will XXXX. losing times as then lead you do right? digits growth, we of improve, that And we there couldn’t and Analyst the times I come the of and lead done, more back we good we probably as to large well we’re of that in first maybe all is next as at really the said still will about recession, And

all could so for. you I much. ask That Thank

Alex. Thanks,

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

Your is now line open.

next go Jason? to should Operator, we the question.

Hello. Can you hear me?

We can now. hear you

Okay.

penetrated about seven you’ve cases, in supplier, be your think they we may new for of primary extent. to accounts, just how center helpful Because some to about When some Sorry. there something. maybe is about part you another to data headroom are curious already eight-figure that. have and and just accounts? large are know know their how using But in in you have or of think those you or any enterprises you some tell how where network But it they enterprise much way those penetrated I would

But starting, started we’re But center campus. to opportunity. you. a we We here. penetration I of other our financials. the right? answer go in the long excellent got Less than the verticals that’s good trading. say if only then look I’d there, for high-frequency in the verticals, I question. years we is at X the think an we’ve have one Jason, out even a And the have because you data have precise got way journey We’ve don’t

So – and enterprises tail as time. take you a have long know, and

a upside. So financials to close in TAM we’re center nothing the I penetrated and data in probably is still the of enterprise. don’t more huge very feel little There the XX%. And penetrated but huge

kind to of initial you those the a orders us grow year grow follow-on mean I nice year get that are of after at opportunity seeing And those you pace? accounts Just – a sense land? give every every

depends happen land we over exactly quarters. and year. year. Or and it It next every always a the Yes. sometimes, skips see spend, year several certainly expand. it goes but No, definitely to doesn’t their on It happens

you. Thank Great.

Jason. Thanks,

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

now Your line is open.

you Thanks evolving? shortages in afternoon, thoughts large question. I taking playing catch-up Good these are for is the network how that to question for seeing? the my some they a Titans. And How redundancy how address on had of Anshul, everyone. equipment availability influencing are about is they Cloud your

customers are these the spine a good That’s architectures resilient question. very leaf Okay. with designs. Generally,

But network to. you with they So site want initially, as time. because then at do they the lighter a go think site. a add completely They But and floating exception. trade-offs short-term they customers scale just open. very you’d if that’s out to but if try I had are retrofit go over a to could you absolutely more broadly. it’s are I hard and comments to that’s out, the back avoid saw well, these deploying happening don’t some Most rare then

Thank you.

Thanks, Ben.

of the with Rod Sachs. Hall comes question next Goldman from line Your

open. now line Your

Yes. the question. the I’ll Thanks I Jayshree. analogy for guess again, oasis use

So in know little I seems oasis? done you’ve a you, you particularly I’m enterprise. curious And are have maybe use this And others. for do from you environment. that’s – feel I’m like it like you tough taking wondering, share you to you’ve whether in have than of just you. able nice something quick able bit to somebody competitors, some supply to gain follow-up Even been better this though a using other else’s it’s water from oasis. Are for I

I Thanks camel. analogy, multiple your it’s efforts. like Rod. think a now I continue To feel

and The they the alluded has manufacturing themselves I to the in to but better speak that this, outstanding an an my done the are team team and Anshul just McCool, you can’t pushes to of unturned. chain Hayes, job. supply peers A can I no left just John they my leadership have industry, As Anshul, keep stone doing already. Susan tell team

enterprises for enterprise. are and coming Chris look relationship and It’s what far we with have table. to bigger When a So, Schmidt, like and our at back we our Ashwin investment that. X our few thank seat the also CloudVision with to much for years have ago, product, X And as speak feel years to only you we at us an started the them. the are quality, we are a now our our And going we ago. themselves. years software-defined inviting differentiation, But doing, I the as relevance capabilities team EOS

titans, also the it’s built, relationships execution our years long have ways than combination So, enterprise, but we a have and we for the standard then got only albeit manufacturing X less even of the gold go. where young, becoming it’s a old, to cloud not

for just think might create like Jayshree. volatility lot on been or have about, does something that. what to am Sapphire it builds Rapids there also And what builds, wanted the give ask, project some all? at I that in in on us maybe and things that curious those it delay of Thanks Okay. any color then you I affect that, major could effect you speculation would whether has about a if

us. time last many us. turned with into Anshul, remember, it, pneumonia only see, more look alternative. – Yes. competitive especially around, you may supply entire think or this. an And for seeing are little of for will I are and is experienced certainly you to it more the assets No, options. server this Arista felt an a for that skipped they They time we of the inspect sneeze due was chain, we there customer Facebook, the this not delays, scenario nightmarish cycle, because of many some what either But

light. some You can shed

have technology, [Technical can either odd Difficulty] seeing on They alternate or immediately. we of wait cloud they hands are technology their deploy them get whatever or Sure. will one companies any Most current not these effect.

because So, there [Technical of no really countries. Difficulty] is slowdown

very Thank That’s helpful. Yes. Great. you for that.

Rod. Thanks

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

is now open. line Your

couple deferred revenue of for But – about you just drawdown. maybe major me. And throughout of A expecting Ita, supply question, a imagine just QX, second kind thinking then for kind you on the not chain. One, year? Thanks. any I are understand of of Great. it just would questions are how you

last of maybe couple of the or conditions quarter, be space peers the improved the of think have I may even within weeks some kind said month slightly. maybe the last within

kind Your there guidance some is of would that improvement imply happening.

volatility or kind see slightly? there kind quarter Thanks. improving we that any that So, should any conditions of I just of just to be mindful of the exited quarter, during you are the wanted is signs as

Yes.

into the kind I specific of especially think quarter. being we deferred, when are out to it kind on on tough forecast of overall not very the it’s QX,

think QX. time, it’s in at a we quarter seen I have a some improvements

You kind can see of that the in numbers. underlying ship

this QX continues. that But I hopefully, there think is deferred at So, around don’t anything point. particular for

a of about. the then to need supply nothing are seeing terms And itself, improvements, marginal excited getting. we lot are get than components more we chain We but terribly in whole

So, not yet, Meta.

Okay. Great. Thank you.

Thank you.

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

Your line is now open.

they I taking on titans if comments their well an immediate that you for I Arista? are given some Thanks are the thinking of the given have up slowed effect question. talked how what, wondering the for facing, anything, you, comments the just thoughts the to but you potential if given Arista slowing they to hiring. as about as wouldn’t speculation imagine wanted to that see expenses, mean does had number fewer those public engineers, stresses are implications a it hiring as cloud the have about

impact however, for CapEx We Arista CapEx. the good at this times is management. CapEx. of the And the customers, have to had small in one about Well, spend titans amount cloud Simon, on I no has some But discipline on probably And of time slow a the in percentage the small, feel of exercise expense feel the to. think general, every we company and it’s their that hiring the needs cloud Arista. near-term first

you. Thank

Thank you.

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

Your now line open. is

for question. Yes. the Thanks. taking Thanks

Just one clarification. point of

think I think and certainly demand highest providers the and had your secondly, specialty cloud is? Can though And that’s sounds confirm if was ever. said you quarter, case. as titans It there the clearly the visibility you robust then are last that that trends talk that you still are the or demand any just it – focus trends that posting maybe driving Is broad you broad this? Can there the video, across very to demand. are are group? driving particular some any is

to cloud, as question, So, Erik, take symptoms, in And in your as QX. expressed visibility of I just terms and The think it quickly strong away, experience. same we demand answer same is the Anshul.

having compute also Those very storage [Technical are doing very [Technical comes when Difficulty] are strong from are Difficulty]. applications. They customers their the still or still use well very cloud is And some too. going normal at the cases are standard Erik, a edge cloud of well, it doing apart to strong.

Okay. Very good. Thank you.

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

line is Your now open.

is on Lauren Thanks taking for the for This Hi. Amit. questions.

much March of to So, sequential the in just purchase going commitments quarter. thinking slower the uptick much back pace being and terms than them about – a the at

should over improvement last this lead of steady? of Would how in So, you or be guys lead we think kind holding XX saw the terms days? times times about it an that are

quarter some up for setting last Lauren, was just what purchase we saw think, of kind orders I of and year the the beginning XXXX.

normally. a step expect you just function was than of would it more So, see to

else read So, that. into anything I wouldn’t

you. Got it. Thank

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

now Your open. line is

if news Anshul questions, is good mic. asking my but sit I the is be one kind the would closer enough to to have first multiple he

Okay. That’s easy.

that. Appreciate

One question at a time.

to question, say, one actually at recall, I $XXX I exited are from XXXX the you $XXX assume $XXX million annualized run of remember of don’t the that XXXX, I If first you but half of are tracking assume first you ahead tracking million, that I the care Anshul. the are with if I numbers. you million through to what I for know ahead year. rate have The question. you the for and targeting you That’s guide, enterprise – year want

into? else. macro any Any everybody customers, have Is everyone is environment of it but out with that like areas wherever, any there of the be And you product or translating doesn’t edging you – there seen, any weakness are enterprise would for macro from thoughts most where you and weakness? other appreciated. communications that the Is to question impending Are opportunity cloud concerned here? same? greatest is signs the Thank from related you. it, sides are it that, obviously is, it The to new sound for more

are Anshul, near Okay. you the mic.

to answer? want You

you Paul, – multiple in had terms questions. of

Not right are now. On being are expenses. prudent macro, we we at bellwether, look, but about signs a that there the moment, no are

change them. customer projects. a We macro and prioritizing so recessions now, so come, our recession I to specifically no But of That a that have fiercely They But us we of issue been when few suddenly. through they far, cancel as got has or may a happen said want come and projects. good. are to and issue

ahead. Paul, – go on the

on ahead the Go enterprise.

customers that But slowdown all all telling steady. cautious The asking doing. what are any are us and are we or others worried are customers seeing things They are enterprise from yet. Yes. not

are And relative How number? to $XXX that you tracking? million

Yes.

this campus, that’s were is the you right? That’s – where So, on not – mean we a… little a

I Campus apologize. enterprise, Yes. exactly.

Yes.

Okay.

shipments. need still We feel are we feel So, the at $XXX track We million. to about on better to close the demand. about year good the

shipments, able so – deliver having demand capacity. trust than you be only the would The the I to have is Jayshree, you if issue $XXX million. greater

as shipments. need right feel I about the – yes. good we Yes. now the Like I feel good demand. said, components about more I don’t

it. Thank you. Got

Thank you.

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

Your line now is open.

Thank for question. Hi. question you visibility. the My is on

same and Jayshree And So, customers. amount But all spectrum. in the were were if saying of I been this etcetera. hyperscalers to are in had end sector what of get on extended was Anshul, it visibility the on improved most just the your turbulence to ask regarding all has where the has you created saying, it you that, from kind we idea times, reporting the chains at think we or eliminate of supply Just key with have that your are the day, visibility getting remained essentially of accelerations, these and couple what worsened? slowdowns, customers, just your cancellations, or this an of has quarter a conversation and the tech the guys Taiwanese/Chinese last about I what

but expect same. don’t I while. see decline as think well, times a choice decline, day see It And multiple the lead like we questions. we I we visibility for remained the to that

Got it. you. Thank

from Your New the comes next line of Pierre Street. with question Ferragu

open. Your line is now

my how in in am I or taking get move being to ask about few to buy much will to your actually are next how much components for quarters. questions. you different. I XXXX the Thanks Maybe are to dying going Hi. something plans you

or acquisitions, going behind people you these your this to are these kind your the importantly, into you EOS us like address most you want strategy? the And of idea add two like And announced have core is an developed. your teams like are markets product like was these going of the could platform? if or or you operations, of that products of wondering how your vision that thousands software acquisition what developers Untangle tell are have what’s significant maybe quarter – You and about of additional lines I hundreds integration could deep to what number features to any of with rather the other the segments line? terms to small And are of acquisitions – of integrate Pluribus. in adding? you tell technologies. it of which you And us software technology Is Probably, which about what’s these

it. you two appreciate We Yes. Pierre, of the question. make I thank new Well, first all, did refreshing for acquisitions. small

in increase not it’s then will Awake. and our addition with and make And you we employees Switch for Mojo about Networks another know, I total – aggregate XXX. uncommon Arista XXXX the think, starting Ita, Metamako in probably Big and XXX back to of by our to as in small acquisitions, investments organic normal headcount

tended We four and that results talent. culture But successful. technology for most integration proud business we and to-date, that to done to and make make of we so the are our cultural fact have of acquisitions product them that. of we see we fit they can And can the got very have all, the all

channel of bringing commercial very unified we and Untangle and of can and the great the our with market. security this in cloud management a to for and us tackling the that wireless Pluribus a technology edge concept bring enterprise wired market, and no low-end threat mid-market will Untangle talent be acquisition is and distributed So, unsecure bring fabric. are different. Pluribus our

Arista building would it know, lots two see and has forms instances, you As cloud been is to telco fabric But integrating really lots in the exciting a XG of One networking. cloud in of be them. and case.

with there processing case, lot really am we new market to to DPU bringing Pluribus the into really unit, DPU excited with are fabric. overlays through rich working and team companies. a the of the leader, DPU and forward and a and capability, I in And the is Ericsson So, NVIDIA Jensen relationship capabilities acquisition. on are also forge that our more the looking data

both further a acquisitions on So, and to they technology system-wide are talent goal our larger products.

Jayshree. Thanks

Thank you, Pierre.

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

lot. Hi a ago, guys. I raising know Any a quarter pricing. talk about Thanks there was – some

wondering you show sense decided magnitude, in for lot. what Just a area. terms Any that sense do guys for up to any in when that the model? Thanks timing might in of

in us in second adjustment you, adjustments, earliest pricing QX the XXXX. pricing of that late last probably affect we Thank have that again two one Yes, only made late June probably will is in in November George. we a did see QX. we effect And make will

high in had we costs of to some XXXX. So, most our gross of margins this expect the we pricing help and neutralize have

price Any of magnitude it. adjustment? the sense June Got on

to I? – do depending did different on They not zero We product. should XX%, to were magnitude XX%, different from the shouldn’t say, in I X% products. range

only the portfolio. second was George, across not selective raise the on Yes. products,

Thank you.

some high took had cost. We the price decision. We

question. George. have more for we time Operator, one Thanks

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

is open. line now Your

time. business is What do say Hey is? it verticals? the potential the changed. for revenues guys. that Anshul, about to it talk significance the deployed? case, significant deployed? forward? long How of XXX-gig, it where it How And you we You to didn’t going at used kind a a it of being message about market talk to your you significance then beginning it’s small XXX-gig see of Can

in is as along very and us, some with strategic XXX-gig well. cases, to XXX Absolutely, XXX-gig gig

would we we XXX-gig, from grew a XXX-gig XXX in concludes to Tal. and And in expect - the you the enterprise in in XXXX adopters XXX-gig grow customers are as us Liz lot XXX-gig, can – a attest. XX as to The you Anshul XXXX. combinations of in give XXXX. customers starting XXX-gig XXX-gig well. But quick A backward, review obviously more fastest about Stine go to cloud This to to are see ahead and of Just

Revenue-wise, price? is how smaller it significant numbers higher given but it’s

It’s early stages the stronger It’s year. third still of for that. Yes. this This is year XXX-gig.

way. production were they think in trials XXXX. I in mostly a started We in in seeing significant XXXX

you give out of end year-end later – more at share will the ‘XX. numbers as the – market We come

Thank you.

the concludes XXXX Networks quarter Arista This call. second earnings

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

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

disconnect. now You may