Arista Networks (ANET) 1 May 232023 Q1 Earnings call transcript

Welcome to the First Quarter 2023 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 first This ending XXXX. XX, March issued Networks a quarter the for its Arista results fiscal press

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

fiscal financial and lead capital recent During our demand year, materially uncertainties and total documents in of including those and results statements, our which constraints, will these innovation, make from acquisitions, the course filed product could SEC, of forward-looking for quarter component benefits cause with outlook actual of financial those costs, statements. addressable on AI, chain addressing detail optimization, in and the we second this to are pressures longer-term and conference subject market outlook differ our XXXX call, most the to working the which our customer the opportunities, including the our by supply XXXX Form XX-K Arista strategy Networks management beyond, these management discussed anticipated for XX-Q in inflationary relating output, business, manufacturing trends, Form and to for market and that risks times, specifically inventory

been update are certain our have basis apply certain on this after of statements that representing future. a we statements expressed adjusted in use views charges. not please to obligation these on non-GAAP as today Also, as them the to forward-looking undertake rely measures These and you call exclude this and on should financial note We call. no

in press non-GAAP reconciliations to financial provided GAAP release. financial of our measures measures We these earnings have

the turn over will I Jayshree. that, to With call

share the delivered Liz, and per billion of XX.X% a of X.XX contributed software revenues the We month and you, May. revenue. non-GAAP quarter happy $X.XX. earnings support happy renewals of Services approximately with for Thank of and a everyone, Monday,

of XX.X% concentration. margins chain gross and non-GAAP cloud by supply overheads was Our influenced titan

year. We to expect our margins gross quarter throughout this improve every

at the Americas registered with for contribution the at strong XX.X% XX.X% International quarter.

our moderate lead annual like shift While will improving. We trends cloud be are It reporting triple is expect digit more to titans overall our to state. that times while XXXX to we do our we’re enterprise to is segments I will compared basis, seeing. on share would growth, vertical some evident likely steady an

months, visibility forecast Our to are I say, or now customer they shrinking. and six six now beyond therefore months are below should

billion of Despite macro endorsed X.X in XXXX. growth approximately we uncertainty, consensus to revenue XX% annual

we we both for This of gig promise announcements. many side, On XXX for and for and OFC Arista optical intra-datacenter performance intra the at at demanding the AI and and QX large, the exciting At vision delivering connectivity industry XXXX, was power improved a Linear beyond. made Optics product price introduced low Drive our for highlight workloads.

the of is clusters combination and idle predictable that data delivery to for memory avoid characteristics AI, AI ROCE, network. RDMA converged and mix, access; expensive to specialized wire lossless states in of synchronized mandate Speaking of Key network. at XXX requires large that include and large of AI bursts rate RDMA and transport the remote to Today, which Ethernet become RDMA with XXX along gig speeds. allows switches, Ethernet stands the over direct processor

intensive AI, AI with switching generative customers This industry-wide and economics, our and data interoperability, workloads Ethernet with on based inference, is of and language large resonating training applications. install standards compute great merchant for are course platforms. and brings strategy supporting familiarity, base, Arista's options. many model massive cloud silicon

XXXX. Presently, we the deployments are production this to in in leading trials midst of year

our QX decade new entry with area WAN our the and Arista wide into through throughout formalized networking AI In ahead. to the the expect XXXX, We years routing network meaningful system. also become

on based and is class with carrier neutral enterprise Pathfinder routing transit cloud platform Service. CloudVision Our

we area model operational and a for surprisingly, as network EOS service. operating a wide support service that Not as delivering stack, system Arista's

partnered mission deploy modern be WAN WAN targeting to critical has a are develop category. as Equinix traffic included network [high-volume] enterprises We and with the of where matter routing [ph] system and and our adjacency routing Arista WAN. encrypted will part in

In enterprise registered the year. result non-cloud have campus dollar customers, million and solid past category, in momentum a we number is the of a direct of which our throughout the

a Let wins. customer few with me illustrate

was The first behavior as analyzing used criminal win. and and an laundering, money terrorism, by such to detect case activities objective government The collecting data. illegal other in is international customer's scams, time real

assurance and Ethernet. fan network automation, buffer are ML and their visibility, ultra centers open features provides data-driven congestion deep management, and workloads. AI optimizes based analyzer on memory Using and Arista's latency advanced clusters telemetry, with for in AI controls standards for mission dynamic real critical data all microburst ML AI time like packet

and continues proposal for on win as education over framework validated strength power [ph], unmatched automation from platforms the points, with international flow across was our wireless factor. where We vertical, designs Arista's an edge, Arista a distributed access leveraged multiple automation second Q] coupled Ethernet Campus visibility. Our unified Edge highlights [CloudVision ever decision the in bringing switches, cognitive theme ranging locations and growing

securely is This to and The data through infrastructure, entire inorganically U.S. organic to had This design requiring hybrid center in acquisitions interconnect closer connectivity their Equinix, architecture. next to Internet each grown XXX at customer fine, win included site. Ethernet sector. cloud and is looking active-active a the multiple their modernize enable centers, the moving Financial greenfield and encrypted data in data gigabit cloud hosted

their feature SSU a environment For role. without Arista's prominent systems played to a users, end upgrade in upgrade or smart campus smooth their disruption

superior for a was approach. tools view for twin critical a next a environment facilities. automation. and digital The center data all healthcare highlights of security as help them modeling their Mirroring customer build for monitoring traffic also at analysis Port their remote data their network This remote of We win holistic sessions their from designs analysis centers

Ethernet location. each DMS, in-house Arista’s Video capabilities. and customer editing real-time than for would they streaming XX be could by DANZ Ethernet. A stored then storage better PCs and XXX looking disparate and gigabit win at was was with be Fabric centralized and video tools gigabit Monitoring accessed final expensive remote at arrays, connected Max rendered or clients, on their which the be

comes elegant media its scalability, the strength media in queuing virtual aligns RX deep buffer entertainment simplicity, this core architecture the flexibility from strength vertical vertical. this and The our output Arista’s with highlights – our shows in design and and platforms.

network see, this platform. each a architecture, innovative and our So, Arista the of power theme in allowing customer all a wins, their as to customer deploying recurring can consistent you based every on is where our is solutions with modernize

that, Ita, metrics. CFO to with hand like for I'd to And financial our

all in Thanks, stock-based GAAP Jayshree, and QX based provided compensation charges, our guidance our results non-recurring certain acquisition-related non-GAAP results and A QX impacts, good afternoon. This selected to analysis is is release. non-GAAP, items. full of of excludes XXXX our on other our reconciliation earnings non-cash and

QX to Total XX% of billion. X.XXX end year-over-year X.XXX X.XXX our the of up revenues in were above billion billion, guidance and well upper

contributed continue QX. of first experience Services levels of component software in the supporting quarter, time. XX.X% for in improvements We subscription and and XX.X% down improvements supply the manufacturing some quarter, in to lead output from approximately in revenues more consistent

at a continue largely to down on total accelerated software XXX revenues, or It's from revenues reflected XX.X% International services in revenue, growth of for consistent million and basis. more quarter. came last grow product the XX.X% while in quarter

reduction, on from fourth a high and quarter quarter. contribution This reflected customers region report largely in EMEA unusually our the

in gross growth Overall, type margin continue in due and we largely guidance see Overall XX%. cloud outsized of our ongoing customer. in-line U.S. our XX.X% to QX to the with domestic approximately strength of was

up the last in costs the chain million. or with from XXX.X supply cost XX.X% revenue, healthy XXX.X headcount expenses product million incremental at of last quarter introduction for the in new XXX.X of R&D million recognize This XXX.X to up million came the period, mix. primarily continue period. or and quarter Operating cloud We combined reflected spending were at XX.X% quarter. from in increased revenue,

XX.X increased higher last Sales quarter compensation and revenue, expense costs marketing of or headcount million XX.X to million compared with expenses. and variable was X.X%

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

for income was Our quarter million revenue. XXX.X of or operating the XX.X%

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

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

repurchases average turning Now, X.X billion. and X.XX sheet. Cash, balance per price cash future million other will the business at $XXX.X In board of $XX.X an available authorization. dependent an investments of actual market million equivalents, or our to factors. timing on to repurchased future at quarter common amount the million $XXX.X share. dollars price, now repurchased of at ended $XXX under stock current and average This approximately leaves conditions, million XXX.X share we and of shares our stock in per quarter, quarters. We've the The price repurchase and be billion

Now performance, working earnings down in by DSOs [ph] linearity collections operating days first partially We days investments for offset billings. reflecting operations reflecting [XXX QX, strong strong cash flow turning quarter with XX capital. a to million] quarter. of cash good approximately the generated in the from period, ongoing in from committed of XX

components last finished in a Inventory from increase to the from period, and goods. reflecting Inventory the in turns switch billion slight increased related commitments quarter. purchase down prior were billion from of X.X receipt up quarter, X.Xx in X.Xx X.X our the

commitment purchase of at X.X the billion, billion from QX. down end at Our were quarter the the of end X.X

our in to improve this to optimize and component continue lead supply we decline number future expect positions. work to times as We quarters

on in up services linked Our revenue term of the vary billion related quarter-by-quarter contracts, billion, from can service total a QX. revenue basis. the balance directly deferred and X.XXX timing of and which was The balance to XXX and deferred majority

Our were days, of product receipts Accounts timing and days the quarter. the from million. days deferred XX XX up last expenditures for was flat X.X payable in were payments. QX to inventory quarter Capital protecting revenue balance

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

allowing consistent through reduced customers. we so times final chain, to As these in move deployment. times make lead manufacturing however of more needing resolve for our improving purchase the lead we advance to the longer result [indiscernible] in to The and expect far reduced do customers visibility. output supply decisions expect also XXXX, no We to

customer addition, expect titan we in following in cloud especially with spending, moderation year accelerated XXXX. of demand some customers In our

engagements deployments current the and believe being said, revenue of XXXX current All customer across that for XX%. consensus support business growth approximately we rate of

comps. year-over-year as the In progresses more expect quarterly trends, terms should of year growth with difficult you moderating prior year

broker On from QX, our the healthy have gross cloud while output, fewer margin improvement steady a expect contribution the maintaining manufacturing we beginning we and consume optimize parts opportunity some to as front, in customers. to see

include a carefully to spending acquire sees continue the market talent. as year. maximum Now, overall and as investments to on we the opportunity monitor team would hires focus investments, we our and turning through the to to prioritize environment go targeted This move R&D and will the

and focus the On cash we commitments. chain We will continued some I inventory on our to expect on front, as a optimization. from should basis working capital growth quarter-by-quarter components continue purchase in receive supply

all of approximately guidance quarter results of our operating margin the and gross at any of on in items non-cash the X.XX of margin approximately XX%. as based stock-based other non-GAAP to approximately impacts recurring backdrop, XX%, second non- excludes revenues With X.XX and billion billion; this is is follows: compensation

tax effective million diluted with shares. is approximately shares be XX.X% XXX rate approximately to of Our expected

to turn now will I call Liz? back Liz. the

Ita. you, Thank

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

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

open. now is line Your

commentary changed you for the in ago? around taking lead or component the as that cloud say And how let's relative quarter the how you. to the specifically thoughts the just characterize evolved a curious, that's know the I'm question. visibility would Yes, at Thank kind all, you or times maybe thanks shrink, vertical? commentary if hyperscale of

Yeah. Hey, and maybe Aaron. I'll kick me. Anshul help can it off,

largely quarters if for period visibility supply two four chain And last before, of – you a take typically you related, year were cloud we last issue, subtract was which know, visibility. quarters, year get right? with out were the two years, time the and if of the historically starting titans you As to

decisions because As our especially times to our segment is shrinking, closer can visibility that are lead improving, our make also times. with they lead

reduced visibility is this to I our two six last say months. year quarters has So, by year and would from roughly

go can We the next Aaron. take question. you, Thank ahead and

Your line Antoine Street next Chkaiban New with question of Research. comes from the

Your is line open.

for Hi. you my Thank much very taking question.

during billion and the CMZ, an Ethernet at well years. deployed grow billion, this think in did forecast over So, last that that stand next XXXX. their million switch network XXX And AI over X was few X I in XXX in well provided XXXX [Broadcom] could chips earnings, of in million said AI you to the intensive [ph]

that I CMD? missing the billion therefore TAM This already would I billion anticipating revenues. you well So, more [ph] that is or that [TAM] imagine estimated. Am the correspond above X X the anything considerably to expand or at did than you in are

is this Hi, Anshul. Sure.

you very it's topic ways. talk a AI As about and many know, a there's of in lot exciting

so that First, quarter you the numbers year, right, a by when will There's deploy on in [indiscernible] out versus can you the where on when giving going given long have a to right? market. versus they and chips often Broadcom's customers lead ship and ship separate that are as of they an as systems systems, offset sometimes times our

infancy. I It's a Jayshree there Second, clearly how to of we're it will about know talked us primary with we growing. don't trajectory really for our still as as I its script very AI opportunity great on customers keep And for the some well. very well in think is in be. a think and top doing big sure on good is

to add arena. billion of numbers Anshul XXXX arena. are that, to our forecast just more the X than X in larger XXXX analysts to showing And already said, what Yes. to XXXX Market billion is

gets deployed the certainly market deployments. X into double system chip, and at cloud years. can that. alluded, a gets It think looking already system I is by time our the are customers. projecting again, the Broadcom a chip by chip then it's built enthusiastically as X Anshul analysts has us, And by But be their Broadcom to

Thank you.

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

open. is line Your

Thanks question. my for Hi. Yes. taking

getting down bit lead in you in I conclude If lead do times that. step-up inventory can mentioned in your think step dig questions on into times Obviously, a your with particularly take function for your come material the we the don't months, help rather point? start from you. starting than demand your demand? into maybe bit, of come you of dive mind, this sort six now few just at inventory And sort fleet, the a – this deeper down have you much about will the is Thank in me continues if quarter, in sort visibility if a to a a of products as inventory we that here number, into to a move why, to, inventory sort why higher of up in-line visibility

supply. in of place some the rest well go have Samik. you some Hi, work about commitments that we as right? there that to that we When This We ago, components is the of those have going to through kind we continue lead last and year, through think key We're were to this to had Ita. on long times made those commitment for, purchase this particularly year time to year secure earlier order

into components build etcetera. well they'll and out products, will go as inventory as those So, we obviously continue of inventory, to come

deployment So, but on pipeline on of on we still the we those commitments side, us those purchase commitments. front components healthy have of to the purchase in made going when were a based are timing gather system

you million of if at in purchase excess inventory commitments, quarter. So, it look came XXX this total of plus down the

you but shift then will and purchase inventory. kind sell continue over into we'll from inventory commitments parts will see to, work down time, of that that We the obviously

just business to we're just managing time as to, Samik know, add And not in you inventory. the

components still on XX-week have said, of we improvements. the Ita chain our with even lead supply many As time

a months, do want especially fulfill and in X demand to is will to to if So, next year. we we where and on components have customers assume year the on ahead, get that and to this products and XX common feel inventory, we position we demand that to so our plan confident continue there

you. my Thank taking Thanks for question.

Thanks, Samik.

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

open. is line Your

I half. taking sort inventories just for question second expectations guys on and to you growth basically question. for of revenue AI follow-up, on Thank Great. my the want the

and if on come spending given to mentioned, from second XX% growth Group it So, of to like it’s down. half the revenue just come correctly, going down, sounds as a you yet, year-over-year basis. about down the comps I'm patterns still you tough bring And sort inventory think need you hearing Titan in to

to Thanks. of kind the square sort just for we square marketplace do the that with, the data XX that deck. that you're I'm in also, XX took up how in So, to you're from talking deceleration campus expanded deck? in trying the highlighting about of about you the optimism looks the billion sort like versus, center TAM and your of that TAM about billion

Hey, David.

of was long-term first enterprise optimistic be took And QX, and feel for think demand continue XXXX, we to our up all, XXXX, very about the in TAM I AI. think to just QX, we I not clear. cloud

So, comparing we the know, with is deploying and valid and lot and it. demand cloud year But a our QX of a TAM. as then you difficulty are titans spend long-term little and the volatile statements. digesting a shouldn't confuse the as with QX the it XXXX they're spend less Both comps XXXX and one year other will market

to across the look [ph]. years, you [do demand have if we're and well] strong So, going multiple

this of that growing going to very comps we deceleration I right? see talked as we're of last and you kind years, and quarter, about what revenue but consistent because how the is just last quarter consecutively, comps, – mean grow with the the And each because David, pattern well. quarter-by-quarter trended of we're will

say here. new anything it So, doesn't

took bit to overall up the XX%. a get to we little probably fact, number In the

saying now said We November, Right. XX in we're XX.

guys. Thanks, Thank Right. you.

you. Thank

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

open. is Your line

Great. in, cloud the of Thanks. just on kind vertical. zeroing titans Maybe

any orders but you near-term getting or visibility, within – were thought outs, maybe kind changes seen to guidance take reduced of of the orders in pushed are your to that quarter any going of place or had within, know, just wanted kind of orders push mentioned you out? and kind Thanks. clarify, You you of that

Yes, would take. and a question, sort say, Anshul Meta, give I let but answer it's the a of I'll

deployments things you clearly of silver add are is pushed but that? regions to Some and are out. getting getting lining the are pushed out, cloud out not Anshul, some the to AI. some That's pushed want getting getting pulled, of

to backbone, know Meta, first progressing if the color areas well. that I [BPI tracking. Those in started can is what as which market] I been is This XXX-gig going add cycle are [ph] more key some about to only AI. we're we've deployments place. talk as the expected

So is knew And that AI before. part to obviously, state. growing what steady is compared we

Thank Great. you.

Sebastien next of question line with Your William from comes Blair. Naji the

Your now open. line is

for question. thanks Hi, taking the

InfiniBand? discussion you and Just maybe the metrics given Ethernet for out highlight can you this any us for have network around advantages something these building frame like generative these AI versus fabrics AI, of advantages might that

Sure.

said space, everything is I fact known. think I the but to the is building clusters very a advantage this that well I the Number familiarity multi-vendor, connecting Ethernet from troubleshooting when before, interoperable think highly to network, GPU where you're you're of X standard

from [ph] best-of-breed approach, horizontal and a technologies] So every Ethernet [Ethernet can win struggle. generally time

to InfiniBand can that, that approach be Having applied computing clusters adopted well. as vertical GPU said the high-performance for

and larger and it they how all customers' become, depends So, I Ethernet. think clusters it the favors the they the more large on are

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

open. Your now line is

non-cloud orders, XX.X% about much. Last your want it about I shaping don't chain quarter? neutralize kind supply to demand faster qualitatively, provide comes grow quarter this thanks other grow And very happens and What with the of exact titan, happened this issue? ask you grew supposed the again, when numbers to much was – year, what trying guys, by I'm this up it it Thanks. to to titans, guidance, year? to non-cloud is supposed Hi part. how even

demand question. strong and Yes. No, Enterprise is good steady. pretty

customer In as activity year. fact, as would as the strong I go just as saying last been far has

component less big we a fish perhaps it concentration because in has that of hear we high of titan right? revenue And experiencing said, some obviously, about, a a cloud So we things to are are ocean, our QX. macro in these small

translate into than see doesn't revenue the number in year. contribution specific But a quarter. demand will the the think direct you So, far greater a XX% I through

of question next Ng comes Goldman Sachs. Michael with from line Your the

open. is line Your

would you endorsement good I for was consensus what wondering of could deployments you're branded because you relates to the afternoon. would question. Hey about about about It Thank as updates was to trial of talk be perhaps talk growth. there at to scale helpful. Any cloud hear did you. Thank underway. any AI other And the areas call encouraging assuming was within you year-over-year XX% that you that web it out switches that the titans? production optionality just DIY if

Michael. Sure,

those year Anshul, the said, As expect AI stuff, believe year, cards, year the tremendous GPU And seeing production. before, a amount part Arista's clusters and will we we me, the doing could interface performance, you of X,XXX flagship trials different platform. critical we latency, the diversity a even network on simulation into of be transaction. work And we better types correct dealing is the in the of and with that last the come maybe traffic, how the list, [indiscernible] this

product to believe be for be we flagship opposed expect will And AI that. material couple the year as do meaningful the not years. of So, X,XXX last we the this to

indirect And other your if can answer just question. I

Your doing question boxes? white was how these are at we

ship [the [ph] boxes] We

We said this before.

We're to maintaining don't we are well status we very sitting quo. [indiscernible]. and market think with white They're believe afraid, customers. box I the not back our doing is

are think core than speaking, now. efforts status development the that's think more even the In achieved where I stays But we market intense before. I fact, largely quo, for

Thanks, Jayshree. Anshul. Thanks,

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

Your line is open. now

Great, I split two pieces. a thanks. I've that got want to into question

share at that looking piece, share in you're very gain arena, budgets? AI in AI The does significant market advantage had second, networking you've I wallet high-speed. the a first within one share know then the the is, as And

then given your And an I share can within from significant so dominant your wallet in the guess far and gained You've AI will So, in I related the share share is, competitors for remember. the delivering acceleration your experience market? it? drive that Two AI questions. share CapEx every within question year

go about high-speed your AI for back we're now. to market in right what of kind me is the grappling because market first, let then we’ll still and Alex, with talk acceleration AI the share question

cases] high I for In speed, with we've XXX-gig got terms XXX think [ph] use AI. now [killer and – of some

see So, and driving our to from XXX you now being application strength going AI will with cases strength strength XXX, some high-speed XXX XXX our acceleration. with and in killer

feel you of We could what argue is confident it now. XXX-gig. use the Otherwise, more case for and XXX

that quite that with So XX%, us the to very AI Specific of that the makes the go positive. is component honestly, wallet obviously, greatest maybe the AI applications, shift, spend of today that. is processers, XX% and

not they're we’ll breed if integrated, share we of but our choose if it, absolutely of as the wallet of get may horizontal So, vertically customers see there. much best

much. Great. Thank so you

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

Your line is now open.

risk do have you sense that Good with you you're to given already. my quarters four titan. a afternoon. is cloud quarters, with companies ends just reduced pause big think it the last in X these spending visibility at there's back that normal Thanks I two for or questions. just which to I had a to an go up some seeing visibility point really and this guess, it actually back you X your outright did at quarters the or cycle that now taking going want guess, I is extra-long

the is in one Thanks. we or risk with up return been normalcy way like think this do pause a wondering, end we've just that or you both to XXXX? in there's a of I'm So, them

Hi, Amit Anshul. This is

X.X Our customers been for years this for have waiting moment.

extent. follow they is that. where back can to nothing closely we different well levels, more lead to very used pre-COVID return to great We're chain nothing So, as recovering. back customers normalcy. coming These times be to Supply a component – than

question from line Analyst. Independent the Your Fahad next Najam, of an comes

is line open. Your

you question the first my that wanted chip, on of the XC introduced of technology when the taking to Anshul, recent the that they your and kind earliest I question. architecture. time reminds gains you of me you to Broadcom's leaf-spine and thank Hey, JerichoX-AI in a and for significant and introduction it were the JerichoX adopters of led ask

about So, Anything is should same the think this advantages enjoying are in terms in JerichoX a in can as you cycle we cycle? the the And of previous tell you us the similar cycle? forthcoming guys you did upgrade comparison?

GX, not changes. get way GX to XXX is some look AI, going gig you customers good market quickly and of replaced to a suddenly will XXX-gig take go end JerichoX. time, this know make at on to with introduction and So for the time will

And more bandwidth just so, they especially don't when need yet.

to same get technology XXX-gig complementary And as that absolutely you'll scale also adoption the at of AI, performs as cluster can and see the very GPUs at a announcement, may XXX-gig, white quick throughput the At AI chip a teams the have and time, JerichoX can we large to quickly that with better these market the there’s read will is them was out JerichoX and scaled quickly with clusters, announced [indiscernible] which consume there. showed you InfiniBand. along AI than some papers that published were XX% also X,XXX

and thanks just everyone ship to production. get us the then the trials, it remember, But there's So just there, takes out this [indiscernible] have is chips why to go it. the get chips, been for to that It volume technology the and needs time build to such customers, systems, announced. with

value Broadcom, and XXX cases. enterprises, for cloud is we XXX gig you're exciting very XXX really journey, the here AI mainstream for for but use with gig multiyear and and beyond partnership gig a our seeing what It's

Matt Bank. from line question of with comes Your Deutsche next the Niknam

Your is line open.

taking thanks the for question. Hey,

in where Just saw some particularly cycles, the to go or back you customer to greater-than-usual slowness the macro later discussion. regions, I'm there just maybe wondering, any lengthening sales quarter? verticals Thanks. were

I that And say did I'd seasonality the but this activity see but usually, know trend in Matt, internationally. is in regions, strong one quarter, in definitely certain month especially see QX, of base, don't Yes, March, – some a a how very we this. we we're watching

Okay. all April? that at changed And early in has

No. early to Too say.

it question? Is in improved You has that changed sense the your it's April. mean in

That's right.

good so April Yes, far. is

Okay. Thank you.

Michael of Genovese with Your next the from Rosenblatt. line question comes

Your line is now open.

the Thanks for taking question.

question one for Just me.

about I right spending? are talked we on inflect? about went So think actual – guess I we've we AI. what's that will question switching I cloud basically, it's lot on mean XXXX when now? Thank you. but XXXX, do when maybe And thinking outlook your the a And months, six timing about next how the is, about

you don't before the we spending months don't XXXX We Can because we six know. visibility. tell have

A little that yet, for early Mike.

the you training, through But or for will on timing the now, GPUs positively? switches? you inflect timing switching think all go mean, these of what as units about of when of processing do things, I all deployments these

You're asking cloud titan specific AI to spending? or

XX% Well, clearly specific now, you you switching the mean, there do. XX% cluster deployments but that AI AI that data to spending stuff a When don't uptick that of do centers? in I in is in significant be of will is happening percentage – think

last Okay. our This think some will where year, spend cloud we'll production and et spend, built but specific as see XXXX the out, XXXX in small and we'd year was on are cloud I getting Well, cetera. that's to relative said, certainly more how a like to it I see year accelerate to the of larger AI, trials. visibility again, regions

you. Thank clarifying. for Thanks fair. That’s

you. Thank

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

open. is line Your

it's of Hey I well, well, course. you But are were circle as anticipated. larger you ladies, pre-pandemic. much guys as obviously, moving commitment, a Purchase as back to nice there than wanted Anshul down business you quarter and guys

about to about of normalcy of about talked Is reverse of that And are the we, year we, you should free level convert this So, Ita, should we, commitment cash flow of how this. impacts early think in And to kind on still flow for of sequential we'll purchase how guys work conversions obviously, see purchase inventory as commitments then you that XXXX? as I that cash inventory. kind that through thinking kind then? the something guess,

I XX Yes. Look, think the because right, the these component to we commitment don't over start have if need of in. purchase ways, some significantly it times come will we don't I next, lead come to once down months I XX number see my know,

manage obviously So, we – to to need that.

of look net to keen reposition, But see of lead now. inventory, want number that year, times if we managing in of obviously, long have the generate a can. some consume we it on flip will to, you the we cash inventory grow actually down. cash, bring kind it start inventory Some then think you in and that and that receive, to we'll more will But where is, start will through number XXXX, as to focus some, that I grow do kind it there's we'll

what ever go and certainly through more where we probably carry think will the couple we I gone it it through we but mean probably more from bit having went Do before? buffers, were not. get years, a I today. where inventory kind to should of last we come is little back down just of –

flow on the conversion free year? cash for any And thoughts the

Yes.

inventory for this think year, consumer I is a cash. of

the with think to cash highly looks year, what increment through So, the put it's out. hard the exactly I positive inventory that that we like, that know balance concern it's every – some P&L but that probably is we'll cash. will I guidance quarter, we've mean go as But

So, a cash, be amount we I inventory but still generating build think will balance. healthy we'll of

with line Ittai next Kidron question from comes Oppenheimer. Your of the

open. is line Your

the improvement you [Two better get improvement on the is Ita, side? it chain of cloud still Hi, point margin that's perhaps how chain moderating you does [ph] is the – your the reflection where the that the mix, the just in by them expensive or wanted gross the that supply side? quarter. driven to chain dig on gross improve supply mitigated? And I expect anticipate, supply thanks. of into margin better. again there. pricing And that meaning second, what comments things] a ladies, most What supply one, – Number to nice hurting to that's through is Hi year? chain getting now on the you is

year, have the I I still that the pipeline. in we mean, like, should better so Because we rest we those Yes. obviously, I as consuming go get we'll mean parts even legacy, broker through had parts in other prior, purchased have where you stop think in prepare QX right? for and that QX, and to the more consuming were parts that broker quarter, of you then if you the

will that definitely help. So,

start there, focus efficiencies the we is manufacturing, we now can manufacturing, other [indiscernible] driving the focus and driving that's have et that don't important The can thing on stuff, of we cetera. on soft

year. should some go the of we see as we So, improvements that come through out

the for of need because deployment. that the a they bit maybe have discussion is we're more, lot, cloud the assuming little to orders when next not just pipeline but right? more lot of whole a we change do having cloud, the in I'm is mix place a about for a not business, a the deployment That

think they are So, that's flat there of right? now, Now right? we and can that right that orders in [indiscernible] deployments of out when think important kind year. with is, how shorter orders The what cloud becomes of an through distinction, – I So, we happy will look business the the isn't pretty times do when new place those us front see question the I new lead like? rest

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

Your line is open.

respect Ita, you. for guess, Thanks thoughts out seeing questions. Good around and marketing? have OpEx the given what those you you. afternoon you're visibility how and taking there? share evolved year, with And sales I supply Could and everyone. for the to the more through and Thank R&D any specific

Yes.

R&D given places grow see win see. headcount we and we'll just and the But for today, business when around doesn't continuing as will we to us we talked we those It But make the we'll envelope invest, script, the good a investments, continue to to we we as that. right? year are grow are go-to-market looking we to do we top opportunity, front in again, of investments. hire, an But fast certainly continue about where probably think of and talent think really that, do some little I quarter-over-quarter, and us. that line, quite will bit it's that as the to we to continuing continue about and the in increment for continue business to continuing you'll and have are the envelope but within

from line question next the Your comes of Tim Long with Barclays.

open. line Your is

I Can a the adjacencies. on you. ask Thank two-parter

do there. curious for I'm level to to be able sector when give revenue Obviously, guys kind now of macro campus headwinds that path to you same feedback tends could think side. view you. side, How becomes that have just think how kind being Thank routing out growing you then more view the in you natural platform. the the if and there on First, And starting grow So, do been see? what you sensitive? that full like more on we're has curious would what Jayshree, with just look Anshul, routing of a business? if us the you're the been you of you increased like – or little nicely

side, between the the somewhere campus and XX is on XX think billion. TAM I billion Tim,

So, decision see the have I macro manifest excuse because few interest actual because good we longer macro obviously, demand in cycles fantastic is very solid, want the waiting as an X just we're we're demand we continues. fantastic years. our said, to That products. may – the first next don't in we for the very still the products still as our make our some campus think of see I way here will But because billion operating

think I looking it's good. So,

very to been you exciting comments. too On lot right? demand, still launch, the It's some add [ph], want a early, it’s of a Anshul, [wind routing]

happening the go When building, disruption talk you edge about talk in outside, of when but and even you that there's an campuses, lot connects what's market, the right? the about a to There's edge, the too. at inside

customers this interest announced We is too area. We a from It early. have plenty offering. this just our in of bit

too say plus important up and the after the broader of and early But how it membership. jump grows. go to enterprise having We'll market. So, it's it is integrated solution down watch to

Our tax. natural CloudVision – EOS and existing customers to the they see our affinity

would that So be the natural spot.

you. Okay. Thank

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

open. is line Your

about you long basis? you're for at quarterly backlog to on using question. do you point? orders speak working backlog And much Can least continue expect qualitatively how this Thanks the at how up down a taking

Yes. talk those right? do back times. to orders don't had is think of times] backlog, to I'd we're times to had it right? Look, think The lead comes love [extensive We all [ph], lead the to going driver I place about customers I lead that. to else, times, all Erik. lead

lead our way to improved shorter As time started back customers right. time, visibility lead to that normal and lead will kind window times of more window navigate a slowly

But there. of lead going right? take will something think to that's first very the that to in taking naturally of that's the will get normal. times some I back to as But But that's steps what take we're beginning bring time going now, time. visibility to happen that. more We're

Is process? a that multiyear

take time to I get will don't when know we're normal. there. back It to

the said much back take us pretty We've XXXX. Yes. of will it half

think So, early normal is I next year.

Okay, thank you.

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

is open. now line Your

Thanks taking the for question.

terms quick a anything around there's if you've readiness you a critical metric, look we missing? I'm the mass. of Just question, maturity as wondering portfolio, a still it If software does And of some how that sort strategy campus and get Thank its in of built feels of campus my the in RPO terms seem like had you. at its terms one. the your up a And it announcements products. if could software behind value. and around enterprise-focused number in of you've capabilities

Simon. Yes. Thanks,

in pieces, as look where to at we framework In we stand-alone as CloudVision. announced would they software. or few say of solution is the There's bring want think software course, capabilities. They to DANZ some tend and Specific I it MDR automation Monitoring either wired, an CloudVision they bundled I not our the most the wireless, Fabric. very It's security of want stand-alone more some filled. they missing the EOS. of with campus, a in gaps RSA,

quarter. campus, about introduced gaps software are tends of always platforms one. with first Control talk partnered Arista next in alone. I I'll the be more vendors its combination of other we've it now for fill and starting Network the Historically, stand-alone some But But we never think a Access it ourselves. and to software to

It of of was my mind, understand RSA where final coming was to announcement from. what maybe one actually, that The was my I'm sort felt question like in really that's the gaps, trying and here. Yes.

Agni, language, identity, for the network fire but is the Guardian this means in Arista version Yes. quarter, for I'll I just was going Sanskrit. to give condensed save next you Indian

some with our ice we'll So, of spread the fire.

good. do that handy? just you Sounds the And RPO value, have

Yes.

in million I services that range. and up yes. a pick to a It think did bit the long Still not it's software to XX up small XX million little but on about way numbers, between side, quarter-over-quarter. go,

Thank you.

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

line open. Your is

Hi, kind is, the titans, cloud on Two what grow, for digits? going grow and to give trend cloud idea XXXX? an Any XQ campus balance titan going is that that of then of in you for expected is us in to just do One that's And make XXXX, reference could number questions. for double could XXXX? revenues you to

going we're split. think the don't prevent to try vertical to I Yes.

at think I two XX% on think least customers customers year, not front. we said our that but we said will be the we've biggest is, what really for it's all

and by good we'll And year They're you I'll about on volatility, despite the give have a XXXX. with them. you a million we we stick the number of that think something. achieve that feel really with gave the good for and campus, that, when XXX all here. And year towards I to partners, end good I we'll

one last time Operator, question, for please. we have

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

open. is line now Your

or lot. guess in Hi, about a that's Thanks. stand-alone the following about some visibility the inventory is, customers. not questions what of customers I'm installed are on Thanks evidence guys. and just, on, building really the inventory whether of being out rather it's whether thoughts network, of normal excess just I than products that of guess Any inventory just inventory I your fully any there? asking kind utilized. but maybe buffers that's

you inventory asked in the excess abnormal. nothing It's Nothing you almost There's think and normal well it. question seeing. just buffers. answered we're I

George. guiding to you just … I mean, there’s supply] constrained. [And [ph], are so

to we'd they know if they have like Gosh, it. how got some,

so much. Thanks

XXXX quarter first Networks Arista the concludes earnings call. This

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

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

You now disconnect. may