Arista Networks (ANET) 12 Feb 242023 Q4 Earnings call transcript

Welcome to the Fourth 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 Arista's are Arista Ita Networks' me Chantelle Arista's on and Ullal, call today's Breithaupt, and Officer; Officer; With Chairperson Officer. Jayshree Chief Chief Financial Chief incoming Financial outgoing Brennan, Executive

issued December This ending announcing the fourth XXXX. press results afternoon, a release its for Arista fiscal Networks XX, quarter

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

These risks market that call. relating financial forward-looking to this of and you apply call, the them Networks to Form statements, conference the including make supply this inflationary forward-looking these of times, SEC, today, from quarter undertake as lead no innovation, on market these chain our fiscal and which those our XXXX financial the working most materially XX-Q We specifically Form to pressures During demand product and the the the course the future. beyond, first capital those our subject cause actual recent constraints, and management could Arista and addressable in for component output, outlook acquisitions, by outlook XXXX with in representing our for will and are trends, anticipated and total benefits we of customer these costs, year, addressing management of update for should opportunities, after business, detail XX-K statements including our statements. strategy on longer-term optimization manufacturing rely AI, inventory in not statements filed as uncertainties differ views which our obligation documents in results to discuss and

expressed this non-GAAP financial use on on and exclude been certain note measures have that call certain Also, to adjusted a please charges. basis we are

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

that fourth of year-over-year quarter for XXXX joining memorable to you, Arista. of driving the earnings revenue guidance has and Thank achieved annually. been another $X.XX, us billion, excess in for earnings everyone, per beyond with well growth year record XX% instead Thank this coupled XXXX revenue at non-GAAP up for share initial you, call. XX% our afternoon for year Liz. gave a We XX.X%, of $X.XX

QX billion Back earnings to delivered record with approximately the per non-GAAP due software some contributed renewals of revenue. share to and $X.XX of we favorable specifics, onetime revenues $X.XX XX% a a rate. of for Services support tax quarter

gross at mix. supply non-GAAP the influenced our International the one enterprise international quarter recent history. of performing Our XX.X%. Americas This for margins chain improving XX.X% of was and by strongest contributions in greater registered was XX.X%, quarters with at

than and at XX% Despite our M&M. normal with multiple CapEx volatility pivots, XX% Cloud AI for Cloud while at was to Both providers at Titans XX% Shifting XX%. including annual status were XXXX, revenue XX%, privileged the and approximately at both contributed we Enterprises, are cherish strong year last Titan financials, XX%. and Meta of Microsoft customer and approximately sector respectively. concentration reductions significantly the greater

golden terabyte the Speaking thousands how of intensive fall a on Ethernet in widely processes the of orders attended from I [ the Ethernet data era. demands civilian at greater [ fine and across XXXX, workloads are and deployed History is increasing reminder It the [ and for megabits X.XX AI collision ] XXth as ] they anniversary AI, is of AI truly share in Ethernet shared ML of switching Museum. today. magnitude compute printed have ] a to of by Ethernet a both with Andy Computer of speed placing

the all Ethernet entire workload. to workloads the can network GPU delivered be in because it the completed clusters. and tolerate needs scale after to All scale. is link cannot AI only case X at corporate worst job or are delays AI AI throttle Basically, at the takes successfully flows

pioneered by founding [ network spring the customers. to completion AI are the ] balancing access topology dynamically the Spring meets improvements to parts ]. Packet X multiple is of every job [ Arista Number members developing Consortium and forms being flow time. of one, with of to Ultra improve destination. Arista packet load all Ethernet our allow simultaneously

balance to Two completion rigid unlike of the flexible is reliable achieve job using this. links is with rapid to vendors flexible its AI transfer closely ordering. working bulk ordering Arista and an to InfiniBand. optimally is the AI-intensive Ethernet Key with leading ordering operations,

common receiver simultaneously. there's to losses In uncoordinated purpose-built multi-packs traffic across network multiple and virtual are load the platforms fabric. senders Finally, a a VOQ of networks, avoid hotspots, can across congestion. kind evenly output send these Arista's in-cost whereby problem congestion spreading the queuing AI to designed

system In XX, stack. XX, across data terms and and It products XXX deployed our AI of successfully lines, gig core, consists our software center operating is annual XXX, highly extensible speeds. built XXXX which cloud, of differentiated Arista product XXX are upon

Our cloud availability as and XX% power-efficient, without capacity our end back-end and compute drove storage centers insatiable of speeds the The cost demand the data deliver of and redundancy core zones clusters. front networking bandwidth network approximately products high revenue. doubling for both

XXX analysts. highest to attain our approximately XX-plus of industry We to switching #X gain performance XXX, at ports the and continue gig to share position according percent in XXX

in have to of XXX We XXX XXXX customer XXXX. XXX-gig customers our base customers increased approximately in

XXX pilots back-end We as important expect Ethernet for emerge GPU and both will clusters. gigabit AI XXX

at achieving optimistic networking of cautiously about XXXX. least goal in million are AI $XXX AI in revenue We our

our Cognitive Our second workspaces. comprised of network market adjacencies routers is replacing routing, and Campus

Days. that for shared XXXX in progress at by Analyst make the $XXX to continue many have we million revenue aiming campus, We

Identities our in of zero-touch introduction well AGNI, resonating Guardian cognitive Network wired and well wireless, for as the Arista [indiscernible] is and campus Our mitigation as provisioning investments customers. with

network-as-a-service and domains. with and in OS across observability Zero availability, overlays The post-pandemic is our network and Trust campus seeking high consistency embedded management

use also We routing edge are successfully cases. in many deployed peering and

encryption of our WAN WAN a and introduced It portfolio. we software with approximately and platforms. System EOS and giving releases X seamless well, of XXXX, and across campus enterprise In routing has features introduced capabilities. contribute alone, LAN new focus routing WAN on adjacencies XXXX positioned in we XXX XX% Routing together scale, Just fall The revenue. our transit a us customers XX

are Our for services third as network on subscription [ models A-Care observability total revenue. software adjacent software based surpassed that model licenses or Dan's software services approximately and a inside network and markets. core the ], such cumulative is customers category Arista's fabric perpetual pivotal with Please to and XX% included contributed not sensors [ operating response. X,XXX the note Arista DMF of the or monitoring are enterprise. modern building and advanced ] CloudVision, threat subscription-based network We and for detection counted here CloudVision,

we use with verticals. are customers the headline has momentum cases with as and Arista to continues globally provider XXXX's about enterprise been of and While business AI, multiple diversify well. pleased mostly its

revenue Foundation. have years and our enterprise in last doubled client-to-cloud-to-AI we gold than with the the X and X We are EOS becoming more for CloudVision X networking standard

customer enterprise $X XX% a approximately of million logos momentum. our campus at in increased XXXX and steadily Our as result direct

instead touch predictive [indiscernible] as the for share available Three be products we client resilience Autonomous highly algorithms zero upgrades security, based finally, poised root and Virtual on multiple and one, relies staff software-driven; increased one-click prescriptive at principles in two, and enterprise: cause differentiate operations observability for AI/ML to are that cloud automation less proactive levels; human continue best-in-class, Assist, AVA on analysis. gainer a or to insights with market is to us and manual operations

for of to modalities store network data Our the only foundational and operators. process network the and network multiple incongruent reconcile ability data silos [ gather, lake way to ] the architecture is all

While programmable validation aiming only networking Voice [ switching Arista to and customer in that XX in Customer campus for Gartner's legacy innovator, XX ] Wave's years old top pure-play are earning spots of for Forrester vendors in remains are XXXX. consolidation, the

Vegas. our XXXX, called we customer December largest in of conducted In events one Innovate

customers While it not vision, prospects location, found most their They for ] initiatives. [ my Arista best-of-breed resonate our our with and building networking X.X compelling data-driven exciting network platforms. favorite deeply transformation very and

team's of working double-digit lead time our intimately on-time reiterate future with up They Simply we of $X.X Brennan. across support to proud innovation. we I as our billion improve growth in gross that, set review We summary, turn have with our to customers. Ita execution and the time, in one this the at our In last from as for outpaced it times, operational to networking, worked industry dimensions. visibility quality, shipments. year Analyst multiple strategic With financial in all XX% wrap I'd Despite direction such put, and for we am to XX% approximately Ita? limited like metrics XXXX. so of aiming tirelessly the fantastic Day, XXXX, margin metrics the another

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

up the came contributed up in of fourth million from billion. QX XX.X% in Services our guidance $X.XX revenue up at XX.X% and International end total for year-over-year towards Total billion or revenue, quarter. quarter, QX. upper revenues in XX.X% software $X.X $X.XX the were to from quarter subscription of billion, of of in XX.X% approximately the revenues and $XXX.X XX% last

well customers. above Overall our gross reflected guidance our of quarter. a and largely from approximately This XX.X%, margin in-region in up quarter-over-quarter increase XX.X% from was healthy last XX% QX EMEA contribution

gross year, incremental product as As their to see customers offset and we higher shipments need inventory in for with somewhat additional chain margin reserves costs a for improvements enterprise the recap continue mix. better by the supply quarter-over-quarter refine forecast

million from and the in Operating experienced of with spending of quarter product introduction million last XXXX first XX.X% -- XXXX. quarter other reflecting the lower XX.X% levels half at half up X.X% sales R&D increases million. costs travel or of we of compensation of what at versus reflects expect next-generation were were million million in what quarter, $XX.X This $XXX.X timing and we quarter, and or expenses with last the $XXX.X revenue, of expenses for costs consistent prototype new $XXX came for Sales revenue, with first of revenue, or and increased up last associated development costs. products. the $XX of marketing from the

million quarter came $XX.X revenue, at X.X% quarter, costs seasonal million some last reflecting fourth spending. from or G&A of $XX.X in Our up

earnings the of $XXX tax to Other was revenue. reflected the or lower-than-normal revenue. resulted of quarter of quarter jurisdictional release and limitations The XX.X% rate rate million expiration XX.X% $XX.X quarter in million, $XXX.X the and for and the of our was was reserves income a operating income true-up the favorable million This quarterly of expense for tax Our for XX.X%. mix. net statute or income some tax due of the effective

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

$XXX Now $X our dependent million the repurchase leaves sheet. under or share repurchase at price stock in our turning did stock repurchase and quarter to quarters. Cash, be available equivalents of amount shares To billion. shares million an business at program and $XXX.X other X future per average actual current repurchased and for our and quarter. to have balance authorization. factors. common $XXX.X the timing in Board will date, This on The of market recap conditions, price billion of repurchases the not approximately cash future $X we We million ended investments

an with effecting Now strong $XXX.X by payable. up DSOs million at in for from switch-related cash were the fourth X.Xx increase strength ongoing from the ] consumption of down quarter. and seasonal taxes our in QX, finished earnings We from generated cash and increased reflecting goods. period, days revenue, service Inventories combined $X.XX in shipments last approximately turning operations slightly in of in components X.XXx, operating commitments slightly reflecting purchase XX and in the come deferred billings. days, to of from performance, XX renewal quarter. timing offset billion, reductions performance Inventory the receipt some [ to increase

$X of QX. were from billion the billion, the purchase quarter $X.XX at Our end down the commitments of at end

We overall expect commitment our reduce to purchase to continue number.

especially healthy position on a as key maintain related However, new products. to we will we components, focus

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

balance product increased Our ahead quarter. expectations approximately million significantly the that on last was This revenue this again basis. quarterly our and for of $XXX over quarter balance yet move deferred shows can a

and days turn receipts QX 'XX were Jayshree. of spend inventory million. days, call of from I back timing the still to Jayshree? XX up quarter somewhat to payable were Capital reflecting payments. the we As expect now, up QX, expenditures this in the balance days decline XX significantly 'XX in to Accounts now and levels. from be the $X QX would for like

an our all earnings Thank for and best innings. a years And if incredible first We're you, you invite you come, next Ita, miss Officer. as an all, X.X to for the of Chief wish one. going in lot, Financial we'll you ever please call, you miss your

guidance, Financial very Chantelle QX first our Officer, it's at to my Welcome, Chantelle. for to incoming Now our introduce her Chief XXXX earnings describe Breithaupt call Arista. pleasure

you, Jayshree. on your during Thank you all Ita, that as congratulations achieved Arista. tenure

our greatly during is Your appreciated. transition partnership

I've serve are set by team leadership both the joining of impressed Since innovative marquee team been that redefining and to customers both outstanding Arista, engineering highly the future the networking. a of

grown annual of In XX the million cumulative bandwidth annual years, in ports has Arista the shipping the years, just shipping frame. with X time a past began Arista XX centers And in has XXX-fold. in that products the data XXXX. bandwidth doubled

market joining such of Arista data our at share evidenced and center time. Our exciting dollars. I gains percent XX-plus an both the recent ports to acceleration market by the is be switching quarters of range thrilled am in in

a our combined growth outlook business. and XXXX first XXXX years the Analyst in Now of for confident remainder XX%. after for of the revenue year of to multiple for growth, remain enterprise moderated quarter view, outlook XX% We accelerated the trajectory called fiscal turning growth spending our fiscal to This Day the with cloud reflects of with which continued year. our

expected due margin, the reiterate For end to the revenue. range be QX for the of deferred lower expected fiscal of including mix, heavier 'XX XX% release XX% year with a to we at gross to cloud some

spending, XXXX. and include of invest may in in expect margin operating investment go-to-market with with This gross XX% resourcing of Day revenue, view, terms our we line In faster This spending in second half Analyst to than increased an new approximately product XXXX. incremental trend rebound as low latter already expected our is support costs is introduction to the evident road 'XX to product unusually the in R&D map. from QX of in levels

as investments continue the work will in year. On we reduce cash working through our inventory we drive further reduction to and some to front, move capital the

QX revenues rate non-GAAP our first billion, 'XX. operating quarter, tax $X.XX at XX.X% remain and XX%. rate, results expected at back usual impacts historical to our approximately unusually the which structural rate is nonrecurring stock-based of from all $X.XX this items as any of experienced based Our for compensation With excludes approximately gross other noncash up onetime on last and approximately and the to XX.X%, the to of quarter is low is backdrop, as margin XX% guidance billion follows: margin FY of a

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

excited to as journey I Arista am summary, In lead X.X CFO.

Liz? $XX to for TAM Q&A. best-of-breed With enabling of Liz the will call our billion. impressive back We I migrate products best-of-breed data-driven that, now turn our to platforms,

Chantelle. you, Thank

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

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

the and months, as as really Arista we and particularly just move XXX, through table the you it's XXX us this 'XX. been into guess question Ita, your that I'm in networks kind gig progress and of -- the of AI views like product AI Jayshree, And opportunity back-end you through cycles I cadence we the with based just working 'XX wish the how retirement. on you. just curious focus great on of of for is, evolved? these build-out remind I obviously, last best Ethernet. as X my has set

And will Thank yes, all you, Aaron. miss we Ita.

when networking clear. AI there of performance AI of the if goal a I we at give I small So bids large, months are a customers we X look last are our to To AI and be have last And participated them track a on the have Arista in continues we stays $XXX X AI number I large say of large you would X, versus all Day. for has I indication, Ethernet, say the out November but participated more months. the million But X anything better of last difficult to at of revenue InfiniBand, color which maybe some clusters number year, in X is bids, them still Ethernet InfiniBand. project last that should in XX to months, on well won they Analyst actually X for last say on set

So high-profile these are very customers.

before, progress. truly last year pilots is But year with I was and trials. as XXXX. of this of in are year sets This production said only the pleased true We the in

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

-- don't of ] trying find core see the the backlog traditional because center I'm the compute. we kind I'm year. last of business with contribution have to what's tick to and trying data correlation numbers and [

cycle sales service at orders? does Just short declines does see is work the the contribution, So server -- if and decline in sales and demand servers, we low, is excluding it service macro switching there the run, the mean least how demand? in also that in a between it some

Yes.

network. where know, just orders. have AI, stack future never of last in is Chantelle matters CPUs need ultimately, the ] matter, network, CPUs know, the cable, of But rack the So leaf or answer in of sort architecture, CPUs we for or X,XXX everything for be GPUs. and they hand [ and come the been we've hand-in-hand, I would or useless we But or the We as whether lead the the your the servers waiting say, GPUs all the and of to GPUs typically, And Ita rack time. in ratio to on kind look create generally, they've Tal, of for [ of generally, have GPUs. what the couple a And on hand can go is waiting go but to you are as and to we that which been question To first revenue. a outfit of because in years, before I together. CPUs in all, long they they bookings, ] with you I find really what in can to metrics and kind you would network these to ship, comment

our which if our spine, independently all even be is which decision -- the of On not that processors can connects available. leads, made are the

on the correlated, So it's on more leaf, not. spine, the it's

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

to start to to you commentary white talking since about and do the been been People not has the white vice pleasure. has white it and ability around, you Arista's box. want wish grow. impacted echo world why been believe maybe the from threat for My box? you just market I AI more and networks, hasn't move of Can more have market move versa, really of maybe white why in to question would Ita. box It's away everyone's or best, a Arista with of box the articulate the would

last stand-alone I'm just spend ] good Look, thing for and coexist or going the to box times, They're think that data in, [ I'm to cases center? long of for X ] millions can even your and is EOS can commodity throw cost dollars cluster, right? white want depend is analytics, a many box. of but and for a something a there's FBOS AI. going away sort the mission-critical perspective, Arista's is for either multimillion here the Sonic cost, with of box If network downtime box in stay this put the very they how to do you use stack if will -- a network put product, white It's will There more mission-critical, ] a is on many So people still software automation, millions or to [ run availability, really, GPU continue [ but really throw dollars. on somebody in they're but I where and white to question, blue be Sebastian. a away commodity throwaway wants time we get

in we centers always have it, for a but box, relatively embraced case use So continues white coexist enterprise with be we data larger companies. the small to and mission-critical it cloud

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

question. your up strategy X scale higher-level networking of last a seen key through over the Maybe peers months. sizable several We've M&A

how So well of as can as order and you you maybe -- enterprise value serve and target such the scale talk about a both AI verticals? the to in cloud Titan better bit little view

Matt, a Yes. that's good question. No,

size I been capabilities, customers as we feel innovation think on continue deal AI because the up They to this look cycle the cloud with we'll networking those for don't for look and XX for with to Arista's bulked and for, years AI, and they heritage XX years. be bulk. you pretty and know, foreseeable has the next

On are size health. and multiple the enterprise, there markets

X think early in targeting the good data of we've in example both years the done that how you're the traditionally last center if a well adopters, there. and I very done is the And very, has campus. service well

do of necessarily will well large If Arista to not at next follower, the there the I continue -- enterprise. the adopters, you the the sort in maybe but early look screening of think fast category

go. We and underserved that, long a We've which to about ways of whole I'm both Global the underserved And is mid-market go. in. probably are so talking XX% We've the that of not Fortune and a them are have XXXX markets underpenetrated we left got XXXX. We and customers. to those lot even the XX% got long, the of in SMB,

doing, consolidation are this doubled sometimes of last X exactly X X to absolutely, integration, X, be XX. our because is and we're logo of X So is enterprise can't down than too. need post-pandemic, can This more to be more doubling at I vendors, investment grow, years, have in revenue what careful down. the sometimes our But but where we we on look make plus don't comment where and plus doubled presence this in the we is increased exactly When there. [indiscernible] investments about X enterprise. vendors I in

So responsibility, not that's mine. somebody else's

a lot organic I growth. of think can we get

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

maybe Jayshree, just question. a

on visibility during production, But of these say noted visibility kind -- front-end but then second if limited to that you there's of it towards the early noted spending? supply timing margin, margin would a guys pilots bias projects? any the of it on back-end it's quarter. that the the what more Just and question, gross just commentary You into kind is of comment? where you chain And just down. portion and scale some But of level the mix this coming year. it's you're like led upside one understand enterprise costs when in of finding gross Is

any one that of fourth towards that and just in for particular happened customer QX, to weighted first. dropped mix, the mean quarter take right? the way kind I'll I really a higher. not be reason. heavily was in It margins maybe Yes, mean of lot just enterprise we last upside that I were the

And Meta, and on continues verticals. progress and question of the mission-critical your mainstream enterprises there, to high making concept to this multi-domain of routing, Arista be go-to-market. We're answer going the is think for innovation multiple I to good drive AI activity, availability, enterprise campus, our part EOS,

we side, track continue AI On the well. to

production of from I GPUs then this is to year, connecting we which I connecting think we're hundreds thousands pilots, expect call of larger is clusters. moving and trials, what which GPUs

will and the evolve? all customers of thereof. had large and it production to considerable going coming be I we're next ourselves we activity. that we confidence of Is and on also XXX how a from year one pretty the give Ultra role year's to asking these part. similar XXX, our is But a discussions will moving us gig ecosystem the very Consortium how number. clusters together, The Ethernet feeling or pilots be standards combination to questions And this XXX think I about will play good in these think trials

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

past. disclosed to chain like starting you, it's should jump on as is deferred could in some the 'XX? for retirement. product level enacted is now given I'll we the based having we we as actually guess you much Ita what normal of way, other the and being jump that QX delay in about to point by causing the or way, to guys ship Maybe the see congrats miss back doesn't think be on It did available, and revenue saw supplied I But a 'XX here, past able that you've this the what's we this this as to in what's more or seem in go at with supply hang-up price you readily jump. see the have have normal increases on

timing. causing So this I you is to going sure past. shipped the talk -- think back works, it's I it's about of talked deferred, in And over to the the trialing a obviously, new just Jim, shipments Yes, I'm the it to think where that's this driver in to how the timing Chantelle think right? and of deferred, it's get just that type it mean future, is purely I really we've it deferred. not underlying But that's if we're caught customer, capabilities been for projects, right, it the about actually new some that business. again, in with is have fundamental be we

terms anything there happening don't that that's very we've continue compete there's different in particularly and order, I business. pricing out adjustments, I seen. of to think that's environment of on we little for normal where think pricing the of pricing just the kind

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

guess Ita, of ones I'll miss you a role. and for me. Chantelle, good luck, new of in course, couple to your I you

well. bit feels it little it then of revenue. year-over-year your broadly your a declined come should more all, would like cloud your comfortable can working It 'XX us you million kind AI targets, And targets, you're you can what as like seem Maybe 'XX already be on are talking of feels in First very on $XXX half 'XX 'XX? it for Chantelle, increase the of 'XX assumptions mix, about guide, about the comfortable the from and I given on think the year. your underlying networking, tell

million only if conservatism why the million of $XXX business this networking -- guidance? generate why I such $XXX assume So aggressive year, $XXX here million, AI an to Why the should that your the come on targets? annual to rest from get

Okay, then first for and it I'll question, you Chantelle the Ittai, over Ita take what let and conservatism. me to call pass

all, came that not mix well. very others since then the really take did well, when of mix is think so. less look I is total And XXX% ] our down, time enterprise strong, really, you very does should from something good. [ the first really So cloud our But away but what cloud this is our

So we're It we're all the part in come. many is it very XXXX, come I've many, but to doing it sectors proud very X of yet our of to as -- enterprise said number, on certainly to AI is you well was gradually will increase. momentum. going small times, and a

fantastic of one conservatism wants which Okay, CFOs the are my to take question?

I'll well [indiscernible]. you wishes. start for the Thank the

out get year to are to the that we that a coming into those we'll multiple so want balanced and how work in what options to guidance. to think get XXXX, and have that our sense we've mixes laid I for view our it's performance to through

expect eloquently put very pilots we to Jayshree that what to from going 'XX, from of the 'XX 'XX, in on sense AI think I production. trials

change how year a quarter And see so in time, me means QX with XXXX. progresses. that I to going at we're go think coming just a the we'll in and in at especially work this time, anything what But to through we'll

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

you're I'm I you. leaving us. can't going to Ita, believe miss

you in last there's shipped noise the have year companies. There's Where enterprise 'XX? been amounts lot And you a the they their where IT versus of hearing about of spending market. are the lot the you've to think have I concern volume alternative segment. really for into And are is talked gear enterprise are I relative networking saying in intentions of particularly spending a spending question CFOs. oversupply of What terms the priorities? telling there's that the going to they So to from field, large been indigestion various some of are that what the is some clearly, over

rewind financial and That's of lot to Alex. a was [indiscernible] a good were think question, to year, later, fast to last going the actually lot whole now year Silicon January momentum price And And then. I is CEOs. I a We clock CIs a now certainly I stronger that, the than through our other. if if I talked the year a in Bank, crisis, Valley enterprise forward ago. was this this, it

this that [ all for bringing of CICD model, [indiscernible] looking innovation, principles, customers all network DevOps, So ], [ SecOps together. this modern ] are NetOps,

CIOs cloud, the large so the in the today, of company. to the to innovator that And my say than And would out $XX we down have with that to the Arista as enterprise operational $XX of least TAM client million deliver really view, us break the in recognize billion at of more I continues, vision opportunity any find pure-play other silos.

comes line from from Atif Citi. of Your next Malik question the

InfiniBand. Thanks for providing wins comments that X on the against

last what solutions enterprise on this with for NVIDIA Now your AI means your competitor announced business, collaboration Ethernet about you back-end week. talk if Can anything? Ethernet networking a

understand Yes. does. well announcement probably I my as don't competitor as the

And has or Cisco it with the vendors. of be market. and with GPU be you leading I Specific XX% designs. do validated UCS to we'll partnership, NVIDIA has know, to XX% working that more our as can you think the assured

is Jensen a are get AI complete ] closely. vital to network going I partner So design It [ and going. to

we supply best be and the look also of to working whatever the Intel partners our so Switzerland will the in AMD we will network We be, GPU and ever. be XPUs, with might

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

miss to good as Yes, going luck. Ita, you well,

wanted more on a bit Jayshree. up AI, little follow that I to So

little be You kind think it's now. this But are those or the just customers talk going little are you deployments really there. -- these than will see what normal Could a you whether a vertical? you about it's landscape breadth more other bit about of different into large you And bit color can about Do be talk to more moving competitive how Did lot you a multiple thinking wins. little talked face providers vendors? these? said about you a a or right of in sure I'm sole-sourced there as bit of service business? you enterprise this the

Tim. Thanks, Yes.

Okay.

our back on the real me expertise build first is just provide let say a how step approach to from So consultative Arista AI and back-end network. to robust

into product Arista -- in because is becomes kind ago, whole popular ] our looking and single you year. year was chassis may that cluster back-end in, XXX of ports, changed AI Ethernet a InfiniBand the capacity spine, -- or discussion become Ethernet terabits with I can everybody versus has XXX bundled the were really are right we recall, lot HPC [ important for of But so And you AI now everybody XXXX an a in of number as outside AI. you of of XXX. And cluster an we the seeing substantial a told north a getting had InfiniBand the a which give had

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then Ethernet will And we ] for think lossless working is make congestion architecture mix for in have of the Ultra [ going AI the This Ethernet networking with ] of that I spring overlay will forward. standard UC [ what packet Consortium on suite a Ethernet. terms and default controls, with the

sole I source will didn't remiss if would tell that Now it our sourced. networking [indiscernible], cloud be sole you isn't be I

I'm move requires well is multiple be cloud initially. performance networking, relying moving rapidly, to time, we sourced think sole you a sources, positioned focus first Arista very won't I of latency, And high today's AI So predictable for but decade. our networking on very models on [indiscernible]. were AI it'll innings over But sure are the the application bandwidth, be just the like to probably for

is, front-end to I the these these too. revisiting a of AI other one although cloud thing say lot want will And network, customers pivots, result are in pivots AI doing

it, being deep something of very to at is anatomy which really a to and where is they take this AI center the we the connect reliable GPUs, well all this really And piece you understood. have if look come So in. is

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Your of from Research. next the line Ben from comes Reitzes question Melius

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X Who to that? conservatism, So CFOs color, Ben, to how I'm and add going to the wants more about speak then go? I'll let my

to that before. January, time guidance question change frame, to on the think from the similar of year. I would November don't February change think I our Kind

right mentioning, have you're it within think what time guidance at There's timing I a quarter to The the will of time. of frame, in we our guarantee changes we're and now materialize and see. take where see, guide we of X no XX-month wait think wait resembles in that the sense watch and Jayshree? reflections at and 'XX, we'll that's that, the our we'll but

Yes.

we'll says are time drivers, drivers see that complex, the all mean, I take a think that things how and So out. always it of the it everything timing quarter that's great at right? all. play you I mentioned

half posted. optimism more conservatism our to changes in likely if look, in or the second we'll more keep And you XXXX,

time last have for we X Operator, question.

comes the Karl final from line Paribas. BNP ] Your question of from Ackerman [

Good evening Paris. from

front-end gig ] ] will year So for networks. there [ indicate companies begin the early been of XXX actually ports several later X.XX supply and chain with deployments the have to market that optimal inflect this [ for

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Arista Networks concludes Call. This XXXX Fourth Earnings the Quarter

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