Arista Networks (ANET) 7 May 242024 Q1 Earnings call transcript

Welcome to the First Quarter 2024 Arista Networks Financial Results Earnings Conference Call. [Operator Instructions] And 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 Breithaupt, on and Ullal, call today's Officer. Officer; With Chairperson Jayshree Chief Chief Financial Arista's Chantelle 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 During year, of including those statements, will make the course forward-looking for quarter outlooks of financial second this to longer-term conference outlook our XXXX call, the the XXXX Arista Networks management beyond. for relating and

that this a call these certain update please certain have could capital and Our total exclude on chain for addressable output, forward-looking pressures statements to which future. no statements. These charges. product opportunities, market including costs, working business, component customer should of market inventory supply basis strategy obligation in to and trends, our addressing financial and been inflationary use times, on these of are call. the with today, as and our demand management XX-Q are recent Also, manufacturing AI, risks we the discuss statements and lead constraints, which and non-GAAP we after that by Form measures as not and on views most differ to uncertainties specifically note detail those subject in documents optimization you anticipated this undertake representing in cause XX-K expressed the materially on Form in apply these them from our adjusted and We results rely actual benefits our the SEC, filed to acquisitions, innovation,

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

as for billion a Call. all ourselves Thank Thank First TAM looking pure-play XXXX client-to-cloud data-driven the AI you, at next network Quarter for everyone, least networking $XX networking. Earnings addressing era, our to for the consolidation, establish Amidst is the innovator, joining us Arista you, afternoon this in Liz.

the approximately quarter of and XX.X% delivered In QX at we of share non-GAAP terms Software a specifics, contributed Services with $X.XX for Support strongly Renewals of revenue. earnings billion per revenue of $X.XX.

margins gross and XX.X% at contribution as and registered strong by of at well management, mix favorable for chain improved inventory with enterprise. International as the supply the the non-GAAP Our influenced XX%. of quarter was XX% Americas

As Arista team and our we proud the execution. kick consistent off I'm XXXX, of so work

to We been XX build a management the have seasoned to XX team fortunate for years. past

and remain always like a diverse roles. you Anshul, supporter our service a of Andy platform hardware the the our John programming I have Our networking in past for of will of well-wisher initiatives. code, Sadana's writing best very while silicon Officer, instrumental core say in is he side. This McCool full-time I the years chief working Chief with. our a I'd with major words. and years. Hugh architect next-generation tech for in But would gratitude company. ever company to and engaged to Holbrook, sincere in wonderful is the company the is XX-plus and the still is Development XX though, recently are few our had actively founders of for Ken Anshul optics set of behalf the engineering initiatives invite driving and Alex know express to like team promoted of that Arista pleasure to I On tandem, one on AI,

thanks over more. of been Duda isn't Ashwin, very It's in special these guidance especially multitude all all, an Chantelle, and And mind. I've base me. mentor etched been grown to and all family, a We've and the very all leadership, Taxay, people that to want there years. Arista Above what a wishes you, of Hugh ever workplace. life break have well-wisher. Back over over in looking than and thank my future. time are passion, continue I coach when the from to had to course, journey I I'm at want you, you hasn't just call our me. downs Jayshree. be thank. $XX fun. our and but imagined. Chris, the exploring you Foss, make Mark Ita you young. have of take people of vision, McCool, Holbrook, the John our the and to She startup Ken well areas many a Thank believing a today. It's to one. more family Thank manager, around Arista decided come X ups for I Marc always learned different by I Special Arista spend are The in Every years my partners milestone, long will could kids and an to XX event, on company listening I just billion Arista to way with Andy every me. for a today, and Jayshree. roles and investors, also the customers, has more Jayshree. special years. for are Bechtolsheim to also our

memories. Anshul, genuine It and to that expression contributions hard-sell very for of Arista. huge gives me you hearing your goosebumps thank your nostalgic

the miss Arista back the organization. hope will time, not flattening return home. At role you replacing will and instead COO this someday and We be will you

sales. We strength operations Arista Ken our McCool, standard and executives have Vice bench Group new Platform taken Chief leveraging our President, initiatives. particular, to X.X stepped our who John Kiser, cloud, tech our our of up Officer; responsibility will for our deep initiatives, In and be drive AI,

executives will enterprise Officer, the opportunity. provider and Customer Chief side, Schmidt, and address together Ashwin Chris Chief On promoted seasoned Sales X Officer; have Kohli, the global noncloud been

in Arista a a for of Our with time or grown have up tenures leaders long long more. decade

focus all Customer quality to Titans, quite undeniable AI as Providers. is our on and X are innovation. and momentum customers prospects with with We impress our high Cloud Arista sectors: pleased across Enterprise the activity and and continues our

I Leaf/Spine CTO Ken programmable and also are and like are Board campus our as in would Ken. As automation, constructing based observability. network we I recently zero-touch our topology, build overlays such network, of as the our invite suite we security, enterprise you, $XXX on said, Founder, Universal on delays describe NaaS telemetry Duda, to the XXXX. Over goal strategy, enterprise to our to of to to Arista million we drive elected our as

every the a also history network data, and themselves, changes used. performance of difficult and port is state enabling the gathered simply that device NetDL. Alongside But application network, taking the not data collected we their of piece collect machine in for experience. NetDL was switches. the Then advanced experiencing. Recent the gather is by into data you user, Data can is outside through and paths Duda, part operating, time, strategy. From NetDL, every you full networking network doing just And these is us the Jayshree, telemetry talk as is has be problem being are the performing, counter, and discarded of of layer the network stack, how or and involved what users inception this data. network snapshots, Arista take about ago, archiving the our you, and in which labeled Thank rather of learning. for a also suitably behavior and advantage to network functionality most networking value solving use provide store flow network by NetDL, insight Networks. event, how being real in supports our interpret historically, across and Excited monitor need network of sources of every inbound with the which of thanks, this the continually changing large which Link our have Network but the influencing EOS today but users data to part understand AI sets, a to everyone, using data we here. Ken purposes. I'm not to every further are because for Arista it with from best cases. Network-as-a-Service how this external our how network little all Data developments data we of enabling CTO each decades data. was streaming how is proved to Network this breakthroughs, simply device, it lacks numbers service to addresses enrich data rapidly But network Arista about context. what foundational data to

want selects the in partners identify AI fabrics, for building NIC the customers with and visibility, NetDL and NaaS example, enables or provisioning, network misconfigurations on beyond and pinpoint Network-as-a-Service. Network-as-a-Service hardware I or and is focus NetDL selection, Arista's integrating performance For rest, strategy software how services. to and relationship our model, to network The data deployment, for operating NaaS with operators and our call, Arista's customer us service up-leveling handles fabric-wide to customers, service this taking or configure hosts enable providing bottlenecks. But equipment enables misbehaving for troubleshooting. CV tools provider instances by also service providing building, monitoring simply data

service database can addition, prioritization and and their end performance. endpoints, One provision rules traffic manage into think the policies, provision of In NaaS couldn't self-service, use their topologies, without physical customers as access with to as systems, provides enabling top virtual cloud to CV service end NetDL, set starting its new of NaaS get of the get new and NaaS user user set visibility scale a monitoring. reusable cost-effective NetDL design bottom operations, the autonomous automated principles foundation line network, deployment from we to service. And applying multi-tenant provides computing patterns, self service to

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early our NaaS or Designs an Configuration Validated Arista example, is For of a system. Service version provisioning It's Instance AVD, tool.

independent provide AGNI to NaaS. needed Our customers identify management services identity location within global

finally, week. Thus, product service of us, or NaaS strategic also Networking guiding a through serving a for has we that our monitoring or business opportunity development as UNO our Zero for Trust efforts. our ultimately vision will solution immediate our simultaneously showcased element at the while RSA CloudVision Universal ZTN represents NaaS Observability, NaaS. Network this product integrated become principle security And Our

about our uncompromised the these While first. is to future all investors core we always and will promise here, our we are put really customers unchanging and excited

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Okay. Switching AI. to

Of complete call course, without is that. no

As job to flagship This a complex performance of wait they away iterations. ethernet networking sizes up benchmark Arista large across individual performance, for building offer of success and continues is model to coherence generative slowdown all of our is of by customers, GPU thousands scale-out training and packet to these across node precious reach creating versus AI for to proving was a involve least blog and critically and processor evolve, of and XX,XXX of impact completion at our and thousands of processors or that building to AI from utilization taken highlighted improvement by penalization network innovative an based made Spine. time AI job training platforms. In are have Any Arista X,XXX known, inefficient the data the cluster AI customer performance more. The XX% proper many due achieved AI as completion application tackles improve idling one a InfiniBand. GPUs. XX% on tasks tasks across important cluster our Titan time stage networking AI recent Cloud expensive mix

and centers. isolation as in consisting the AI storage year an both the decade. GPUs back-end of witnessing back-end infrastructure of this a and as and nodes, networking AI across is demand Ethernet work accelerators IP/WAN the throughout applications continue communication emerging compute simply as AI We well end and alongside AI well. cannot are and systems front-end critical like front nodes and to inflection data the seamless as and among expect CPUs,

the versus InfiniBand that you well X becoming Ethernet that strategy, all to this data XXX,XXX differentiated If you to in now GPUs X range migrating EOS highly scale major with facto we choice shared de for workloads. A at GPUs XX,XXX in clusters, year, are data good Ethernet network and AI production a pilots, from February, in won In AI good trials recall, of connecting delivered by are we we AI thousands in progressing XXXX. needs and scale-out network the is we lake of architecture. our premier I expect recently. at cases, training network

constructive We our projects as provider summary, are, the XXXX. In AI progress in our our and achieving cloud enterprise X.X to new therefore, is becoming target to set million and direction to of about increasingly well. improving Arista activity and we $XXX of networking, AI continues continue visibility

We to projecting above more. Warm us Arista's to in with growth financial range to the Day to Chantelle to annual welcome and CFO, are And now turn time over as Analyst XX% you, it of very our tell like for that, specifics first XXXX. I'd review Chantelle. XX%

other well is our of selected were billion, guidance QX of of This contributed from in The GAAP afternoon. strength by earnings all charges $X.XX doing or XX.X% the stock-based quarter results noncash International and is XX.X% came for to led our year-over-year our good our compensation from XXXX in Thank revenues was end XX.X% impacts, QX. as guidance slightly the excludes $XXX in quarter. vertical provided revenue QX down for XX.X% total non-GAAP in up and $X.XXX the and non-GAAP of you, revenue, with A the items. first in software last above growth results upper in and $X.XX QX quarter, XX% certain our of the full down at and million revenues subscription in billion acquisition-related enterprise release. Total to approximately expected. Services Jayshree, on billion. reconciliation based analysis and nonrecurring year-over-year of cloud

an and contribution includes This the volatility from quarter-over-quarter impact unusually the prior quarterly of reduction reflects EMEA the quarter. our in in-region high customers

at by quarter This revenue, from XX.X% increased at quarter of the R&D spending count of million revenue, were down new $XXX in U.S. period million other factors: or revenue, from approximately $XXX.X XX%. customers. favorable and quarter, gains year. up last $XXX.X In due see growth in X.X% team, count margin that services products. Sales the expense our XX.X% Enterprise FY or reflected This was of Cloud in continue or mix business $XXX million. from revenue accretion in is Titan prototypes was from came of introduction down in key X to of costs led our Supply Gross product offset 'XX. The strong Mike our last by from lower year-over-year costs slightly last chain million million addition, margin is XX.X%, quarter. solid offset above and QX to last his and costs delayed and McCool, QX to contributions quarter Capes up compared of spending increased next-generation with timing by $XX.X product, the John million $XX.X software. Operating mix operational and and efforts revenue a a with Enterprise we XX.X% this and was with driven guidance by associated stronger later XX.X% discretionary head of expenses the for productivity until between marketing head

quarter XX.X%. X.X% This costs effective G&A at the quarter. Our quarter $XXX X.X% $XX.X Income quarter our or in prior the from was tax revenue. income million resulted million, the revenue, from for $XX.X operations of or of rate XX.X% or income net for million revenue XX.X% and of revenue. Other came was for of in the of million up in was $XXX.X

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

the balance $X.XX quarter investments the Cash, billion. approximately at and ended to cash turning Now sheet. equivalents

in common total million stock. And repurchased During an XX repurchased a we $XXX.X price April, for additional we share. $XX.X the an of average of at per million million of our quarter, $XXX.XX

$X.X a Board have Board Directors price our authorization, new other The repurchased authorized $XXX.XX price May share repurchases of upon billion in at we under XXXX, conditions, and X.X commences of completed XXXX XXXX. business an share. In We be program, average in billion our actual million which now and factors. amount existing timing shares future stock whereby will and per of stock market expires repurchases $X May May and repurchase dependent

billion quarter. investments $XXX.X operating earnings the and in flat last approximately of offset XX Now components slightly working reflecting increased quarter, from performance by significant reflecting XX cash capital. DSLs QX generated partially to the increase to end up from period, an from $X first the million to by in renewals. We commitments in operations of goods. X, were of prior $X.X in switch-related from in at turning Inventory in strong Inventory for performance, quarter up cash our the ongoing billion receipt days purchase in Came turns the days, service period, finished quarter. driven

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

as this but will we product new ramp volatile improve expect introductions. off up We number lead to remain to level as somewhat times continue

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

quarter. approximately deferred decreased revenue versus $XX product Our million last by balance

and We revenue balances. may expanded use increase increased volatility to of cases. new trends customers our expect the introductions, significant result new be of a customer-specific These and product XXXX product in acceptance year clauses deferred

million. deferred significantly QX, an and XX reflecting Capital in balance business for were As mentioned XX move drivers. expenditures $X.X payments. on prior quarter from payable days timing down in underlying the days, receipts Accounts basis days of quarterly were a the the inventory can quarters, of independent high unusually

I I had our and working model and current leadership opportunities that broader markets innovation, the outlook with and foundational. agile team the we The the and long-term our the employee our to our excited now commitment second about a have for beyond. customers' operating quarter serve. Arista ecosystem, and both Jayshree, for am to are turning Now in passion business quarter success

pleased of with year are momentum demonstrated we raising the to XX% XX% are this, guidance for an our across outlook Cloud segments, Enterprise, Providers. With We being XXXX. growth fiscal and the revenue to

remain gross of XX%. On fiscal improvements, XXXX operational combined to given with the continued expected customer the the we outlook year end XX% front, margin mix with

Now turning and to spending investments.

as macro investment hires monitor acquire as to and we year. the continue a see R&D will inform focus through targeted market include environment opportunities. the on both overall go-to-market prioritization to move and leadership roles, and We the which overall This will opportunities we our strong talent. team

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

follows: of operating and guidance is and quarter, for is nonrecurring With other which billion, as billion conditions of on noncash based and results gross of margin excludes approximately XX% items these sets margin any XX%. compensation second revenues approximately expectations, the at impacts approximately $X.XX to $X.XX stock-based non-GAAP our and

rate diluted for Liz call is turn shares. I with be back XX.X% of to Liz? to XXX.X expected the Our Q&A. shares approximately approximately effective million now will tax

Thank you, Chantelle.

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

[Operator with comes Instructions] Citi. first from of your And line Atif the question Malik

seeing margin from you your gross on regards seeing but the comment with dynamics I it could customer expectations a with you you're It's higher full sounds comment for Titans. like guidance, from Cloud the I hoping raised your could Adrienne year to was hoping Atif. you're your contribution on for was Enterprise, mix

Yes.

when didn't will our and in in this alone, And X I that. the been Titans, we with so believe beyond across X much half, is QX November, it go AI and true visibility Enterprise. we and activity what we in has all Cloud I continue to and to beyond first have Providers expected. we So sectors, much had months, The and as gave Chantelle described, X guidance

guidance feeling we're raised our we about in So than earlier therefore, good done have would and X have probably all May.

think X quarters, we liked would ideally do think, look good we Chantelle, think you to I enough. at what but felt have I

I of the saw gave diversified we of Yes. because and that think momentum No, the the momentum us mix confidence.

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

when there's Chantelle, of and a Jayshree the sort guess, full in But what here. implying. the appreciate If years, correct, I the on X of of which out you guidance I'm it's half? been when a or and half-over-half the momentum I for I X% a look year terms probably look activity implying previous uptick below it X of raise about QX that basis at doing of of in I you've across you're in half-over-half sort at better X%, that range the growth, that. go a just you're not math only back or seeing you're of than we I'm the that. Every been the X in you've board, year that why sort other mentioned wondering last are year in seen more bit half-over-half the sort than back --

anything else. It's like

Our numbers are and getting larger larger.

So to larger to activity translate has numbers.

even course, more, the moment, just it improve see at from very So to XX% if of we'll XX% our good feeling XX% increasing we're appropriately XX%. to for to guide the quarter. But guide we

do year. know, that traditionally you Arista As so early in doesn't the

but nevertheless So confident, that confidence as optimistically confident. or confident please but read cautiously

line Ben of And Research. next the from question with Melius Reitzes comes your

the Jefferies. on question move will to We Notter next from with George

said key the to you on monologue. in earlier guys something think want in I I

you mentioned Ethernet about InfiniBand? You were to you're And just than just incomplete about I me are exactly remind making to -- talking that. you the I'd what learn love my InfiniBand. anything, was is there? that more better notes Could XX% What here. And comparison

Traditionally, technology. you to Certainly, considered lossless know, has as lot properties. you is Ethernet when and a advantages George. are there Ethernet of have some at of look considered InfiniBand been loss InfiniBand in Historically, and each isolation,

of has with about and in this optics a every completion comparing GPU However, of at job in from the was together the gotten you everything, technologies, just full environment the the and that approximately data Ethernet faster. independent parties, real-world sizes, coherents completion that cluster job data packet when shown including packet look you Broadcom, XX% actually the that have time is across put time those along size and of we third a all

So you in these at can look things silos.

look can improvements are already seeing practical Ethernet. a cluster a in it practical on You at in cluster and we

the just Now Ethernet and know don't forget, Ethernet the numbers this see as dynamic control, you're consortium today. spring of get ultra improvements load have going some is I even and will those congestion it better. we we on Once and balancing packet believe to

Got about correct? it. RoCE as here opposed assume talking just to I you're straight up that Ethernet, is

all to or NIC Imagine In have right exactly. we're we now, which UEC, too, XX% RoCE, go cases, most improvement, pre the version Ethernet, about seeing RoCE in But talking we're RDMA with scenarios. is when UEC. you deployed most [indiscernible]

I like? know the into over time. look sense relative you have think what might the working blends Ethernet, also there Do presumably, version UEC of what own But a differential standard on your you might on be guys that are InfiniBand? it do to you

more some improvements. The we what to we of working we us we're but software XXX We architecture call that looking we right? on think, version on XXX like load server yet, Ethernet. especially control, the performance the largely, NIC, on at an have and there's of UEC are NICs, where to of switch So not built I aspects compliant consideration onto Ethernet, what the do see make are X do others on the -- the the do it's buffering, improvements our be the into from switch, it. the metrics because What it, Etherlink we'll architecture and the we switch. the is will already takes on additional working balancing have that give version own will congestion And and we've compatible and

both to together. need work half Thanks, we So George.

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

to do how I if approach And How you go seeing potentially in right the you moves you systems-based head are you with was see seeing And competitiveness yourselves with wondering more Blackwell. see think NVIDIA you market more also, if evolving? impacting you're to mind I now. can don't that NVIDIA How your a that characterize head? NVIDIA?

for loaded Ben, a Thanks, Yes. question.

First want I and of Jensen. to bank NVIDIA all,

a I fantastic NVIDIA build that we didn't think networking if it's wouldn't understand important opportunity have to some massive AI GPUs.

yes, very, market the opportunity NVIDIA networks GPUs very them are So leader in created reduced we us by. our and market the see all mostly that market think is they've using their I time, to the for an and there, we incremental

Now I them GPUs. the Of course, them market? see in on do we we do. see

We see also side. RoCE they're choice. facto on we when InfiniBand, the of network the RDMA for been, or them see part, them, sometimes And most ethernet has NIC which obviously, then de pushing

Ethernet the a competitor to side. the say, me heard yet on very this have might We pleased I we looking as before, last feel and GPUs You NVIDIA's, direct that outside or for scale-out the today, year able NICs NVIDIA we based year networking. But was into AI network are be Ethernet. on see don't

X% of business. business. It's XXX% our think their of I it's

that at we've front And So switching back end. better all. we and years now experience about of both got the to at think don't better worry our make XX to Ethernet we on founding end and overlap

work Arista NVIDIA you, with confident and GPUs. Thank Ben. network scale scale-up we're can So the build up very that

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

what the transitions if reasons CEO, perhaps the said a be use you job improvement, your talked about, expected I just with you that InfiniBand really guess, customer are seen what go back to of versus commitment data Jayshree, can you've the just the anything desire, remain can, I to the the your Ethernet? and given still some completion Switch then would talk the helpful. And you've more aggressively given Board with does at [indiscernible] would Arista, you had executive discussion about that you just [indiscernible] around

see lot U-turn you all, of hope them Well, things. we make first do heard call other time, I'm a and I he executives Anshul, of comes had We've Anshul back. to decide sorry to over boomerangs. a

Silicon Anshul. true in have industry very with Valley. XX the But we we've which hope constant a bench the have I a and strong bench. for we've So years, And certainly -- our last very that's in had very is blessed rare to been

a the we we're sorry to make personal And up remain bench we decision know greater while do take Anshul a a So step see well-wisher. he'll to strength, below know to Anshul things. break, now will

my for years. committed I commitment, for the multiple have to As Board,

I a think it's staying retired, the I'm wrong but had order. I here committed long stayed wish Anshul and had for to time. I

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

performing merchant whether you as some announce is introduced time see but capabilities NVIDIA I'm the in-network silicon point? at ecosystem curious computing broader this could the can Ethernet introduce and NVSwitch, best inside with about now switch is to itself. products, calculations So Perhaps new the not something some

Antoine, is the for Is are question? what products you AI? new asking our that

in-network No, computing is I'm that do silicon wondering about itself. ethernet the asking could NVSwitch can And and capabilities, something was as inside ecosystem this matrix introduce if add the broader multiply merchant well? switch I some specifically

Yes.

just for the to compute where the else's everyone lot of benefit, GPU. compute the So closest layer as generally you're possible, in-network as processing a is done

place. certainly little and for functions. It very why and et would not network those processing some more don't a those So compute the doable. in of that's I the functions very power, state reason require natural in network it's cetera, do but see a any we offload could built

half a going I to be think other. the and dozen it's XXX of

network it prefer for to Some would the network network-wide scale and compute closest like some it layer at the would layer.

much is the feasibility Antoine. cases, both very So there in

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

including in see but soon. you hope about you sentiments keep you And Jayshree, XXX the kind kind how availability guys the should the systems? just around having if product use Software, thinking adjacent timing optics road you AI gig are kind we expect this my of next-gen core, or in multiple -- one, you to echo cases, us use of take be announcements of versus I not of product alluding miss for map we'll quarters, to to around. direction, this but more can? I Anshul, there,

around you gig you James, like cables, system, NICs, discussions build And good on deja the whether remember the as a the it's to had the vu, Yes. you know, similar ecosystem optics, might need well we've switching accessories. it, too. XXX an

build actually gig, will a products switching XXX and especially the I some So do introduction to year. NICs, more start I take the you'll ecosystem than believe take entire advantage, in optical seeing think of early for and but

I into think going lot I discussion this think see earlier. to I 'XX said, So or 'XX. That even systems being more a probably of had you're

ratings, you're XXX You're going other, large to where see East can a clusters the you of high you even performance. XXX in then gig, then source build a are need and that just lot And of to demonstrate rating scale higher go but of you the with need the higher wider tens don't, dozen have and you'll much which XXX that half GPUs once -- systems West recent see of some and GPUs once not going gig thousands.

That's So important see limiting XXX I of to thing don't remember. of gig the networks. the the an AI deployment ecosystem

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

towards biased the -- help for this, or Leopold. in AI Victor front AI Arista This edge end maybe workloads sorry, as knock-on is the able might more eventually I'm case? how expect Chiu that's Do a Simon if understand deploy you And be to from effect at we networking to inferencing. the size us based see customers then in

in Simon, your just question. [indiscernible]

to end that's [indiscernible] and compute to your end you IP Phase have would storage consideration, end say connect X than of has production. to But to haven't rather something, back connect front and which than typically you're We networks. WAN right and the routing, absolutely the adaptive reinventing you more back as

resulting AI in while of do back-end phase. clusters more overall and uniform take compute, deployment XXXX, consideration for memory, back-end So million in we that the front-end, see into coming the our naturally we next network in not $XXX a projection more holistic storage,

AI by it data lot They favorably the build deployed of then want look the get center. us. lot connection. we'll a to of -- our so do to terms and are expecting We the of And clusters. want fully uniform silos clusters but want I sense. So and they way, to that a in these we a customers of islands the of that's makes AI it really don't one full They -- reasons -- at one first think disparate bring holistic

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

XXX Maybe to from It as pilots deployments? to some gig. question going the of do see of and I'll bottlenecks flip kind kind necessarily sounds what -- not ultimate just from it's like ask you of James'

that ecosystem is Are so fall of to take just that into time? -- it some place? place And deployments can pieces need of are a matter there other of before the those

you a I in even emerged. sort I say were play may but . Meta, and -- of it's it's if the in some Cloud everybody definitely knows many Cloud, would bottlenecks. wouldn't call situation. The there them, time-based recall, And cases that use and familiarity-based plug that, to how ways. deploy

a a training The cooling the they're for GPUs Power just of first use it. of fastest emerging and let's the AI case looking consideration, is is is, workloads performance. at networking huge part that's clusters. And build huge the

amount chime that Do Layer need they the X, times, seeing but hear quiet You -- across Layer as of to Do operating WAN cluster. job goes balancing? we're to him view and love XXX whole they point to and because it's need here. facilities I'd do and would need to do of has the they they and infrastructure load in. tolerate We're love waiting best -- But you less lot OS Do and up, hear features? to do on your to operate to of there's how for can Do time GPUs, Do downtime. Ken, completion tremendous visibility, do the XXX. the it on the just visibility discovery this and for out, interconnect? So set need of they waiting Nobody surprised familiarity of right? Then a to X? the need there's be manageability side, it foundational be a that into course, connect the cluster and been I'd to Ken need pointed the to or they to of do a this. some what on with set in of is lot the availability rightly understanding hashing?

is availability the all pieces. Look, what's of deployment that Jayshree. lacking I people's the think Thanks, Yes.

huge a pent-up there's they these so the people as the build And GPUs as demand fast see facilities, clusters networking for built, we can get need. this and getting stuff the get and

because the of AI back-end same world's largest the not experience some network positioned to with years clusters of I bursts. low-balanced, in players managing to clusters massive of identical they some think clusters issues we're cloud to building got needs scaled are here we've scale a that extraordinarily and properly that well storage but a needs be have lot of buffer storage manage

and has particular, of is AI congestion XX stuff bunch And years years, out [ InfiniBand a over FDDI, so these topic is useful the there thing in with head-to-head is And SONET, done Interconnect, why also one HIPPI, Ethernet nodes in we've come that in keeps Token those And battles networks. the of the then because ring, won. all common. the And this up. the like reason law, ATM, ]. some technologies is interconnect. Coherent network have Mirrornet coming a about just management of of in XX of like And number of Scalable value -- quadratic And Metcalfe's point Ethernet to I'd Ethernet of old.

the off be advantage to advantage overwhelmed have something And who detail have is because very temporary with quickly going the which tech the -- tries Ethernet, so cycle is any quadratic Ethernet. large build some they disadvantage. of starting you connectivity a And is of anybody with to by not

think exactly years channel, fiber where it's [ it sure, ] I'm how waver that's not InfiniBand takes to So many for I all to headed. but go

question next line of Company. your Cleveland with Ben the from comes Bollin And Research

you made about they how compare and X customers we us competes you a type when X And months of guidance and in visibility different comment Jayshree, Could back to what today? the visibility. through of subsets November, had you maybe had have that you take of differ?

question. Thank you, Ben. That's a good

category, Titans it really X would searching after the think been were seeing the we regions balanced November, like for of Cloud approach X much. We're in Titans Cloud even tough take the for me amazing. exciting, I and Today, also and In the were is Cloud said. where rapidly doing visibility, pivoting where AI, thinking you us let on Cloud. expanding which not but now about by year they're a So AI months AI as have rather they're more their still to a situations

maybe our say visibility by. would goes it gets improved I as now to at So longer time X has months least and

team the the of right? And X starting to QX, get right the activities which of up strongest they to On the initiatives I'm to in strong an Enterprise, only Chris the is entire know. that not citing else we then as is seeing storms East believe back guide conservative some QX winter and otherwise they rest it they increase the the not only bellwether everybody are Ashwin we from well. but macro, of activity and I macro. of us to can now, Tier moment in cloud QX, us to we're with, don't myself, better for but AI come speak not amount a a Schmidt for profound for with providers, Coast because What is deal macro, want than some better I a are had them But but team in the pick slow. There's seeing and normally for still Chantelle holidays. leads one from is strong. usually and QX. see year, have January hence, I'm

as of as some close as momentum. the Providers the Titans, Service X Providers combination the but So Tier large seeing is Specialty they're not the and Cloud also

has would from I say even case can the longer. months. improved months And cycles Enterprise, our overall, our the over in X X sales obviously, visibility So of now to be

So it wins. time the But has been to takes convert into never activity higher.

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

historically. where million up percentage $XX high second, to GPU, that compute target in per only you of spending. of in I support end of, about And range, some GPUs very migration about then the X% XXXX. encouraging of high think be about we pilots assuming a how as the to XX% end First, compute XX% with would networking -- I about could imply wondering the of talk trials $XXX,XXX was XX,XXX said hear we of range you've XXX,XXX end. you to roll talked billion I would And that about the GPUs was determinants think of production ANET's end? And $XXX low versus ANET's for about if to to It out key just

was missing those call to anything may if I wondering what if be I could just So about talk assumptions. you there, out in there's

Michael. you, Thank Yes.

next to point come XX,XXX, of in could GPUs is year. we to XX,XXX, XXX,XXX, have think together. from that do I lot XX,XXX to of But go better your things well a taken order

and First of time lead center all, itself. There's the into center data the amount the goes let's about facility the or facilities. a cooling, work AI power, of talk that tremendous

this kind you're when now of And production factor. a key proving lab, so to that's something talking the as in opposed

of is location second up GPUs, the build with with go inside GPU, they scale the should GPUs, The of GPUs, the the the locality Blackwell of to should the they these GPUs, out of the number network. server one the scale the or scale a

off were how they when talking will railways in. of often go and is gig we put our into whole or center want constructive CMP to we're the X-way here. go which the and on GPU or network. again, would that. And watch scale, the build which the then X-way performance, scale the XXXX a out much means give GPUs, customers or of our XX-way is more is switch thing why more the or and I is get or which of you But means nice say more CMP a metric. similar can will I'll connect have analogy And of numbers X-way lot Cloud improved, quick called the X-way is We ratings these XXX scale in and turn to So they into lead be the more third ran on to something what's that going third gravity, about NICs that work significantly designs to the number to performance the times

of XXXX. and rate locality considerations GPU power positive X major in think I to performance get the of us on network allow the production the are So that more

comes line question the next from Deutsche with your of Matthew And Bank. Niknam

I on got one AI. ask to more

point year's driving may I beat a X million But contribution baked the start for to guess to any that next a towards $XXX as horse. specific this in Sorry to guide year? the material there the from pilot contribution any trials is that relative more AI, and be And stronger importantly, is 'XX. is increase migration outlook? year prior ramp the think the about to to to Or dead relation there into we getting percentage there

want to Chantelle, take been that? you talking of lot. I've a AI

you should. think I

Yes, question. AI I take this can

more So a I constructive think target has think prepared when that about you that remarks, become that's million Jayshree's to the path. $XXX glide

it's 'XX. a glide So to 'XX, not X in path It's

of sense path, say the is million would in the $XXX assumed not a glide the at it there it's I end in path, So in some glide a will but hockey XXXX stick. Yes.

year X for this not sure. It's Matt.

Yes.

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

non-AI I've got question a here.

or little So grab the about are incremental channel land might bit lot doing maybe one competitors. look going from particularly as share a to go-to-market you well? mid-market more some can this partners A disruption, those of then with of talk some you acquisitions, the type of you to et other what be within the your that cetera. through year, some making customers investments them as of And you're

progress channel be to years, enough last of our But Yes. done more little investment we lead than partners, getting Sebastian, honest. on on doing probably couple we're times. about we have a were apologize very

Our lead times have improved.

the from and go-to-market, significantly stepped have activities to that. grow in definitely where to investments and going the on judging we're we to Schmidt to had 'XX up pedal investment expecting our 'XX, Chris they've metal I'm on So continue Ashwin's team and making been the and they've

Titans our multiple going over remain systems customers, there really don't the we're going approach technical we this got would our while where play campus X,XXX We the this is to is target. this about change and focus think see the because on significant significant our is Cloud side, going go-to-market channel really a Enterprise to that product on larger side. will year and on and the engineering comes probably on campus. Today, And happen years, really I on X,XXX same out AI say, partners, after in play I the to customers. investments it's not a the

is mid-market verticals the sector. to health our appropriately I be targeted specific fine in like work and partners with then strategy. region, in public more the this get country, And think care, the we deal education, a with the billion, to channel first that. To will so at

beyond billion, we As to on still $XXX the This second progress. go in aim to to work do to is need $X billion, and work we million more we need absolutely, channels.

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

from numbers going or server your side seeing not in whether past you optimization them look of server as would gears not of you the I'm characterize Cloud you look at unit quite curious, Jayshree, down some actually. seen the considerably. moving incremental shift quarters, handful larger over we've I'm AI to we customers, market if of at how away kind cycle of to past refresh think the a of or front a catalyst phase could signs whether you're server be you traditional and and the this company?

years. if was and service cycle. service dreadful to one think refresh this where back on to I one continue X the No, to front-end we going network of But there generally be cycles do service we speaking, Yes. you customers see a -- we're our the remember, And now, in X cloud. the year skipped

they upgrades, may higher. X, of occasionally, a little performance like some For but them go

upgrade. That from and happen. of data server the much there's because of appropriately the server, cases the And storage and side and ripple center the do compute continuing another you spine CPU use So use associated absolutely, changing. because be on server then once we the It's that believe not there cloud the and to that refresh. interconnect cycle some will case regional is effect

In addition more we're also and regional more seeing which to expansion.

cloud New designed regions Titans. for major are outfitted and being the created and our by

the of line Karl question your Ackerman And comes BNP next Paribas. from with

customers can half for of a of be of driver you by slowness deployment your mix the in you that will AI Enterprise. growing driven spoke second the Jayshree, Enterprise 'XX do how is the not your Or that software be a more seeing in curious I'm about think whether event? any fiscal meaningful Networks on-prem And and financial more of 'XX? are you being fiscal revenue?

with I say some Ken this and activity some innovation. different is analyze that buy driven And thousands high by of fact have OSs network more. images and our to people. the question. good this where very we topology, don't have really you and a to has very a that's I X Well, amazing have Enterprise quality universal XX different quality, software operate produced would

are seeing the AI pilot back Titans, the very some in trial I we starting think Relative our AI small, customers trials, for a phase -- the to earlier, clusters. are as trial small. But very as they're a activity bring describing of of was large lot It wide there of production, in branch. can so to still the are while up GPU cases to to well. them data enterprise It's applies campus. Leaf/Spine. that go that outlined, phase for to good use the to case to elegant a same applies The Universal just center point And you to It the use security. It you applies Spine that observability. area. architecture the applies apply applies It the enterprise

nice in biggest purpose that's and So a ones center still Enterprise. data the are campus the case use well. as general the But

Operator, question. one we have time last for

UBS. final from question Vogt line David comes your of with And the

schedule the Jayshree, AI, I go have map question I back to the -- So to want Blackwell. a about road deployment and for

bit thinking seems So on about about of transition how are towards little in 'XX bit in cloud fall the Blackwell delivery on be thinking product? maybe maybe road spend of late technology expected more sounds terms maybe this that to little in pause your what the bit that specifically does with a away Legacy detail. And that initial this map delivery than of slower going a of you plays it initially year. late there How into a customer from as you're put like a and a the year some somewhat of it's

for to pause wait across not necessarily think the how clusters. We're is collective for they're you're to their GPUs visibility, because GPU of choice the network future consideration. All divided still And Blackwell today's that say, to architectures, communication, up to I be storage is host, seeing cluster specific tenants, a in resilience, all memory, good workloads, matter bringing XXXX this to anybody a built, Yes. on taken of multiple scale-out GPU yet. don't going a Balckwells. connecting no be whether or has has into libraries, optimizations

a going to the a Blackwell. pause they're connects for so current whether to HXXX. Blackwell network, And network going because to the for they're not ready get they're waiting or it

it, as investments what network urgency completion time to important the the matter network not going ready can so the side is. and be side So any they're GPU we getting of that best see training the and spare on job workloads is the no the

Thanks, concludes First the XXXX Quarter Arista David. This Earnings Networks Call.

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

may Ladies now. This today's concludes joining. disconnect call, and for and gentlemen, thank you you