Arista Networks (ANET) 30 Jul 242024 Q2 Earnings call transcript

Welcome to the Second Quarter 2024 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 Breithaupt, on and Ullal, call today's Officer. Officer; With Chairperson Jayshree Chief Chief Financial Arista's Chantelle Executive release afternoon, announcing second This ending XXXX. XX, June 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

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

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

for everyone, second call. for and joining our us earnings this thank quarter Thank you, XXXX you, Liz, afternoon

ahead for of superior quarter. Software a the As with a of revenue. $X.XX. billion pure-play of and are contributed our Support innovator We share XX.X% networking we this of strongly renewals us, $XX billion at per delivered $X.XX Services revenues quarter, with pleased TAM earnings non-GAAP with greater approximately than execution

Our margin quarter non-GAAP the registered XX.X% by of realizing reductions. XX%. influenced the at manufacturing International with Americas gross XX%, discipline for was strong at cost contribution outstanding

portfolio As cumulative XX,XXX York worldwide. we investors we and celebrated Arista's of tenth with a XXXX, dear migration NIC customers, Stock our Etherlink complete ultra-Ethernet we the consortium million InfiniBand customers is that a the validating product, New rich with This XXX ports are and over XXX-gig but launched supporting of our now point anniversary near and in June deployed at AI is from fact, products, GPU agnostic. not Ethernet. Exchange compatible, are a In a just platforms to both portfolio that

clusters. very consistent a first unique massively a AI the XXX corresponding ports represents a XXX RX AI architecture. XXXX, The Arista's ] XXX-gig XXXX The output gigabit product our The up throughput to with offering portfolio spraying the deliver traffic ultra-scalable intelligent parallel of generation nonblocking XXXXX capacity terabits consists Spine xX supports port [ XXX congestion-free X,XXX throughput or series supports XXXX XXXX offering terabits can to is RX with gig virtual AI or gigabit in of of large proven per second. is of XX distributed a switch AI Etherlink XXX% Ethernet with distributed flagship XXXX fabric. AI that Ethernet The scheduling and distributed a queuing Switch systems in new ports the a RX The chassis, fourth single density. for XXXXXX highest that XXXX

once just making Arista great. Let's is Ethernet say again,

First, generation we in then WAN fifth Campus the low AI in was era, cloud era. XXXX routing and in in our latency now and followed in And XXXX XXXX journey this frame. began there and by the with time XXXX era,

the a of portfolio Etherlink extensible to up OS. in can trials built and differentiated is design our XTUs XXX,XXX X-tier and support midst Our proven on in

our our We of Officer, Ashwin would Chief Cloud, are diverse set to describe progress Enterprise quite like pleased Customer customer AI, in with Campus XXXX. invite to and across customers. our I appointed Kohli, wins newly

over to Ashwin, you.

you for call. earnings Thank Many first thanks, my to inviting Jayshree. me

everybody Let me X wins. through customer walk global the

investing revenue which work is example reliable leadership provider new, GPUs less first penetrate new ]. enterprise Tier to core fabrics. their been wanted to with Arista of [ markets. Ethernet HXXXs AI heavily in increase traditional and and scalable an senior be new Their with reliant has and environment win X services on NVIDIA cloud The on a consisted large Their

AI legacy connected it vendor, their applications. which issues them However, scale and performance to being their networking was having in with significant resulted

front-end The to to alleviate the engagement was network goal issues. customer our refresh of these

an technical deploying Our a migrating current Ethernet path XXXXs, alleviate issues migration them resulted to AI eventually link the XXX-gig to XXX-gig the in X-step using in partnership future.

thousands team our and for that deployed to which considerable of routing. a global headquarters. help had able The a hundreds which design customer This them is their customer, and in data spans large second to corporate our both globally. for to next a to leverage decade. a customer has almost campus create us with them win was center success square request for led last-minute the dissatisfaction The demonstrate adjacencies a The current feet campus value new across network, which vendor, highlights

and twin to existing design topology this in window, CloudVision Arista with adapted visibility digital months' management. data of cycle time. center Given minimal used life was only for a campus the the design and the leveraged X

spine in stability instilling with their multiple the of parallel core router. network leverages The same again, removing bandwidth factor technical was by increasing Once moving legacy simplified extreme Arista backbones environment, to The complexities. products. their platform rescue. customer once struggling well the the U.S. CloudVision certification again as and their a with and streamlining routing in simple same the and to confidence came software, routers, fixed numerous complexity procedures routing form

center example and use is third extend scale, by manufacturer delivered via of end-to-end which vendors achieve binary center, This complexity beyond customer and top can international provisioning arena led priority CloudVision large be that infrastructure, data created had the automation, The and the in consistent to very priority size X of visibility, to high win which EOS Arista from the single both consistency the image solution now in due clear to delivering of perspective. the from from Arista. the higher the next technical a X across solution Their automotive our and being and a platform. same more Arista which Arista has an was component adopt The different CloudVision data also was example XXXX our multiple One cases. included This which level of CloudVision the routing U.S. operational very next previously simplification infrastructure, a RX customer's solution their to of spine than use into a again its shows level key once delivered and a platforms. is a the

in strength And service Jayshree, demonstrates our last win space. provider this routing

provider for solutions of for We years. innovative service have many at been providing customers the forefront

integration. all and know, the are midst As we of in we an packet optical

our and customer coherent CloudVision route including professional a optics. pluggable and industry-leading showcased to at routers we Zero Plus full to build reflector along our scale SR In which economics. along these result, services. Jayshree, XXXX We AWE BGP provider provided support ] XXX-gig our back allowed EVP of turnkey newly XXXX optics, in WAN solutions, popular statewide and with and routers [ cloud Thanks, dense a supporting example, out and router XXX-gig service RX mine a this provider middle our our this with wide strength variety As a service a solution, over announced you. pluggable as coherent backbone customer

of sector. you, that. off your enterprise thank congratulations. the Hats to momentum the Score our translates Ashwin, to Well, Promoter to Net achieving our XX%. and press for off new team see is and exciting XX, so which It's highest of Hot

of vertical. As a the the fact, of of to our we commitment powering speak, are Olympics, symbolic the entertainment and as matter we broadcasters media

computer. AI training peak AI the Well, collective come a so accelerator years is another lossless mandating network seamlessly network same because to better in reminded our we fair in be of marketplace than when expected of X to for highly models the to And the in that every XXXXs to true of of position the our job proving declaring I far available ] the and we're times. with San seeing cluster am platform mission-critical best-of-breed famous it's so XXXX, for again the cycle completion connect nature it's because XX networking. the [ say for was later,

front-end Our enabling systems more models other sum users data as center, than AI become the of storage, such to and end trained the also networks We multi-tenant AI the connect to parts. of data wide the system believe the network. AI acceleration the to management centers are holistic epicenter centers, storage AI and evolving is applications, where of area network compute, its for in

need network or data on in technology that deal with state, showcased up updates, By alternatively, inside to receive data that such continuously connecting have with more AI host. multimodal foundational we connect or systems. the the NIC we run add a centers architecture network Arista NVIDIA to agent send into keep and working EOS holistically AI the to BlueField expect can ], the with future. demonstration telemetry adjacent [ differentiated AI Arista our the EOS-based network of switches cards our interface as current itself on the data sets demonstrated configuration the NICs directly

the traction. is customer think clearly Arista purpose I our vision Well, driving and

AI Our tell turn center, epicenter like plan data you, the more. transactions, over financial to Chief and campus networking specifics Chantelle. all to to centers. it of Chantelle, I'd center, they platforms And the to our be with Financial centers Over becoming digital Officer, or review are us that,

to IPO really New It at the great Thanks, Exchange celebration see Stock everyone Jayshree. event. York was

Now and our guidance provided turning excludes items. all selected A noncash and is to in nonrecurring our numbers. of is acquisition-related results GAAP to analysis non-GAAP compensation release. the non-GAAP QX QX on our reconciliation and our certain other charges results based impacts, of full stock-based for earnings This

Cloud, down Total XX.X% of Enterprise were from in guidance X quarter $X.XX the approximately sectors contributed of of our total above end up at revenue, Software or XX.X% up for revenues prior all of the million revenues across XX.X% of in XX.X% delivered in Services in billion $X.XX significantly billion. was $XXX the and Growth International upper and revenue in billion, Providers. Subscription QX. XX.X% QX the quarter. year-over-year, from to came $X.XX quarter,

performance a This APJ in driven our decrease by quarter-over-quarter relatively was weaker region.

came introduction higher new of double-digit revenue last last and quarter from year-over-year primarily prior compared The guidance in period. in our was from in at from of quarter. up $XXX.X up last The to was XX.X% the of by inventory-related and X% million in increase revenue, gross above or reduction million up XX.X% million primarily at quarter, improvement the $XXX.X of from in in $XXX expense reflected QX quarter. was million This XX.X%, were Operating margin $XXX.X million prior marketing overall a up or quarter gross percentage quarter in the headcount revenue, driven headcount with of the million. increased the expenses a spending and quarter XX%, last Sales margin XX.X% reserves. product versus or R&D XX.X% year. costs the $XX.X year for $XX.X

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

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

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

cash remaining conditions, equivalents Of $X.X stock the XXXX. under the May the $XX Turning was business share. million $XX The the and million, repurchases and of billion approved which prior of at in at was factors. will depended quarter new the repurchased be amount of purchased future now $XXX an In under repurchased and timing $X.X our billion Cash, ended price other of is to $XXX.XX quarter, and the million per investments $X our and price million stock authorization, actual balance upon complete, program market $XXX billion. common sheet. we average

quarter. in QX, turning days the the for in from second of capital. strong $XXX earnings favorable quarter. from the operations in prior contribution ] Inventory cash the days, materials impacted the generated We renewals Now in from were large end decreased [ turns operating to reflecting performance to down by billion X.Xx, a quarter. the working DSO with reduction XX a X period, at from $X.X cash quarter, $X million XX period, came up billion performance at from reflecting last in service turn raw in of up inventory. our Inventory

commitments Our the end the quarter $X at inventory billion and at purchase of $X.X totaled billion, end of from up QX.

stabilize a our introductions. expect variability supplier for reflection We but to times as have to as we'll this product number improve, some quarters new in future demand continue of lead

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

product approximately Our deferred increased quarter. revenue million versus last $XXX

increased revenue expanded in variability to use days, receipts Capital customer days timing clauses and $X.X a from and the in we and These payable expect new XXXX up product increase contracts XX acceptance customers may payments. the customer-specific Accounts the was reminder, with be and for XX magnitude QX, trials of of deferred trends quarter days balances. introductions, were year million. reflecting expenditures our of result As cases. and product a new inventory

As XXXX, momentum the fiscal of by we we encouraged enter that in the we are second half see year the market.

portfolio, along innovative existing our Cloud, Providers AI product and introductions, Our well are for product customers. our with Enterprise new suited

is in XX% of our our and XX%. this remains raised and growth least at With margin both operating fiscal to is 'XX, approximately outlook invest to people for year XX%, at a all XX%. now backdrop continue and revenue will go-to-market as Gross We margin through R&D to processes. now guidance

approximately revenues for guidance XX% nonrecurring to $X.XX billion operating the any approximately other excluding third on of results margin to XX% quarter and Our based approximately follows: $X.XX impacts at and gross billion, compensation is stock-based non-GAAP and margin noncash as items XX%. of

approximately shares With Our back Liz. be of diluted to expected approximately now rate effective million XXX to is I tax Liz? XX.X%, call shares. that, with the turn

Chantelle. you, Thank

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

comes with the [Operator Sachs. Michael line Our Instructions] question first of Goldman Ng from

into for the your of was next-generation vendor discussion head all? as Arista's [ systems we next it clarity As and networking. share been with the be in I particularly modularity couple ], some MVLXXXX its GPUs some components, networking? of ] could modular [ to of whether about views you the there's some particularly if how back-end at may Blackwell, if Blackwell wondering and just might And relates provide on that the affect positioning years, less over

the these I faster dependency especially Michael, the timely is as network the throughput clearly think be for related. will faster, products get therefore, of And introduction and Sure. GPUs on XXX-gig obviously, Blackwell. for our higher more required,

more the where ], a GPUs connection XX always server of its of you're eventually, has and cell the call port that, what PCIe up, past a that's I terms now new I connecting win. scale there's [ there's been density by NVLink a even and and to In will those and NVLink, internally for there, UAL going GPUs [ the Ethernet and been ] called now specify market the for and with in in consortium connecting way, modularity believe,

and to depends more And density that the accelerator connect. they choose how on AI so

technology. bus a more it's said, often I've As

on Arista on where the the end eventually, the end So up. on scale plays and scale strongly not front back both is out,

switches and of or the ports will to out wrap-based connect RU, a ports those into multiple Ethernet whether come Arista. independent a modularity, So design, scale-out from the it's have Ethernet chassis

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

about deferred most And it total is like the in product stands I guess of Looks like year-on-year. looks that on out balance up. XX% to disclosed, me -- metric at based what you million it you're looks the like revenue the you deferred. $XXX now

AI the was related it opportunities? the from help to we revenue product -- line, should above appreciate again Is the think that recognition XX% looks these of being that previously cadence peak like you expect how deferred deferred. that what On can of almost product how us the level number? do Just we about

Yes. question, Aaron. No, good

hand extraordinary Let deferred new But Product course, new it particularly a not product see us product we year higher lot and high It I'll me down. goes of and dipping And it's quarter to cases. flows. then in, or running use CFO, ebbs a in in X X deferred and it's comes generically my and to have start of when of Chantelle. out. sort

So the want the consistent, a can long Do words few on that? flow. short to is ebb term term say and you

deferred thing mix that cases. a Yes, thank the to and that is would is The use add you, Jayshree. balance always customers only of I

So a those mix rotate on wouldn't It particular of of combined. any intersection those. I X really is

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

had quarter, the you you mentioned AI of Ashwin guys kind wins trials last of quarter. off you that a major that Jayshree, of the list you part Great. X Obviously, listed were X guys during kind the had -- or of.

trying maybe that Or is Tier of part a X update on was a get of current Just where count trials? to trials what or any the AI currently? stand just those sense if of trials X AI those win AI

to speak he's since No, it here to Yes. with to going turn over us. and want Ashwin to it, I I'm

X. and all, those how of on well, X pilots into speak started customers of largely moving A Ashwin, this X And next AI very any AI and And to of have are But them. of X lot that, They all specialty Titans. we in But year, bit? are little First now going those, could as well. classified we starting with as do are to of in my to could They're end to won't out pilots. smack depending trials maybe smaller who year, be largely middle you've out as you X say them been providers of I they most anyway. Cloud in that couple what call the a addition tens up. of a maybe to hope, we That's trials. be saying X luck want

if Jayshree's different having which my general-purpose or Absolutely, with providers, provider. that around Yes. shared a customers X of a I just Tier with step Jayshree. around the types I example to to team the ones Tier take Meta, more enterprise customers is wanted are cloud And you to. cloud was is it's so around clarify back, conversations the X either right, I referring

And adopters. they tend be early to

Absolutely.

They're cluster. classified in about reasonably to small start you've But got somewhere. or build an a size, to thousands. AI not XX It's thousands

So they say? started hundred about GPUs, you a few would

yes. Absolutely,

with Our next Malik comes Atif of from question Citi. the line

Jayshree, TAM that $XXX your how you to TAM? next AI what that for you $XX number does in is understand mentioned the you million year? remarks. in revenue us relate provided networking Can a billion prepared help And have number

lot. a get I that question Yes, asked

First can TAM. the that's the TAM remember, up of $XXX years. But And signed far is all, consist than for. our million of data center early greater we've that

very, there's parcel And of is the in which area which It's of north more Ethernet front on to then a a Our and the don't routing. which TAM, in fashion will is end. InfiniBand AI how move AI And We we obviously, there's narrow back as center. billion. already of count TAM very that's then TAM, the much $XX part campus count in wide end, data big. the our

[ center. And call the very I building ran then software. upon that AI that center ] are X laid these So is center, center, some campus and the nice blocks data

largely saw, around we would centered a this Software security. and If nice and renewals quarter, observability which Service CloudVision be you in bump had

Not X TAMs say the part the of these support would and not I well. -- services components to are of software blocks, the are on top building forget of that as course, So X and it. then these

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

can easing. ask trending? to about other from What investments vendors actually are about now we us Cloud of you infrastructure in Because your non-AI like component digestion I'd the heard AI and tell traditional that is inventory how segment.

that seeing you are So too?

the gig. to saw are in time, classic XXX of that through the spend that, spend. And there said was or to XXX like saw customers. our the AI AI these moving a a in that preferences many we same to many going favorable going simultaneously, of at of to Having cloud, customers We on as year. of continue where call refresh cycle to from I to terms we are large it, from We XXX see pivot last cloud XXX lot

cloud our continuing So while think of faster important than cloud, to grow AI we're be an we classic will contributions. betting aspect on

Evercore. line Our from will the with next question of Daryanani come Amit

I a year the much get and your the realize growth guide, in of question related I updated it's at least first half. guess what the in XX% half to you've the actually for just year. back easier 'XX But compares had the versus

And an HX HX can basis, doesn't, in the not growth just you back for think think half the the you why to half? from it reasonable it actually back in of does is accelerate if So accelerate versus that year? it do

Yes.

but do I least second because of see go we able as see the XX%, where through to think the guide to we to back guide see that growth, scenarios perspective say of in and do come continue QX of we year. rest with XX% comfortable forward the We of at acceleration I scenarios, half this in expect we the were year. Jayshree some multiple and to and for came least at would the we'll from that are the I

XX Look my went to XX, And at XX. We're traditionally We least XX us. at from known to says to XX. be CFO conservative. now

we're think half point, the I and let's confident see half, about second this confident increasingly we So XXXX. about you second are think should at getting how goes. But

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

way? the By

there? you Tal,

me? hear you Can Yes.

Yes, yes.

is implied quarter if getting growth -- the I'm a we've quarter. lower question. the wondering Or than question the fourth said that it's goes is this I And is is growth of implied And fourth what the growth with much fourth it anything only Okay. with conservatism? I'm there calculated more It previous quarter in line gross the just the across the question quarter is seen growth you revenue kind year-over-year? next is My the And is, in or margin special lower. in it And implied -- in quarter. the everything. the goes last X% growth, conservatism answer. lower,

recognition conservatism, So seasonality anything some of but a it is implied or with drives or lower of guidance? that is anything special there timing XQ

So Tal, if blowing you would Analyst guide. gross to back off go Day, November I because lower, disagree think just to margin out it I we're our call

XX yet, reductions. was costs et I have guide on at cetera, cost for plan now being you not X disciplined shown our should team quarters McCool, on [ gross would And But in we my to to amazing They're as of Alex projected. and look we if say Our lower. the XX. Mike you the margins gross and really mix, general, margin. off John and Hats ] Capas working entire

I we exceptionally relatively lower. well just X did think the the first thing. quarters, That's last so it's

QX we're year. just always QX, give But to as good you into of aim of terms of in better, double-digit growth. but want outstanding QX, say XX% operating we'll be. to And be have is it We'll we came We and numbers. QX for to visibility again, aim in course, we with the off I use go as to don't for an more do would benchmark a we'll will XX%. how growth, Second, large I sense a able quarter.

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

guess about be then curious I deferred deferred quarter was for on thought QX? do the revenue. how guess I'm deferred that product category product revenue into curious I for were product coming what QX. you would expectations have just much to your view also, a added And in I you

product in our deferred don't Yes. Yes, philosophy that nothing's guide changed revenue. we

to there's there the So product say coming nothing revenue. sense deferred the report. new we this of I would -- to guide don't -- we that's in quarter,

the But process. of to have forecast We we're would I go we quarter. planning through our in as what it we land expectations sense were where that from say going the met having in idea an

to new XXXX these products sense assume for Got a it. think XXXX you've do customers, And How customer that might are acceptances shipped you it? those flow Is to acceptance. I that about waiting for Is a customer through? start you're event? when Any event?

Yes. AI, cetera. they're They case, the all have et cloud, the unique classic different customer, use timings to because

way. and they're that So all unique bespoke

So there's on trending no set that.

And so the from come as as -- then quarters, through forecasting and they land we'll they'll perspective. off a and that's we deployed roll get where

to it's say it's I think longer, And it's classic AI, it cloud, shorter. it's takes if if fair

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

results strong I ask prepared if But can had a remarks. Ashwin that the And just commentary here. the in on question

for mentioned across front the think next million we sort you're target that on do customers interpreted back Tier to you're refreshing sort your that think have opportunity help us should about year? opportunity seeing end X I where that you how Ashwin, concerns of customer, from Particularly, about $XXX for the some the How that with of as Just the back-end revenues think about your sort you of it as side. customer bandwidth the being that you to alleviate the of attached end. base?

in the would any non-cloud X million to got The I the to million, around goal But hard in it I right? comments hard $XXX the say, that all? it's to want don't and was happening be back mean space. you've this go demonstrate $XXX outside enterprise customer, this that, to if X what's that around right? Jayshree, know, customer very to wins our Samik, at I Yes, attach don't right? within to translate

X there add things and going provider team the just are are Ashwin the enterprise was that I -- Yes. seeing sector. and in to

technology. still I XX and adopter early think the definitely migration on anybody to XX, they're XXX gig of data If center going is a pretty on. not a is solidly

XXX of some And them would I even are to gig, say. moving

Absolutely, Jayshree.

the a campus heard for still you and win, I And a Campus, on really deployments. center. market. but a But Ashwin slow general, desire. struggling Arista, about are that's data frustrated in we is talk know, campus they're of lot seeing So existing they're with

in we're and So Tier there's activity enterprise, we and feel for ran, routed target of $XXX again, about even million The in next service X both on good lot going year. our really there. a providers

finally, smaller, et of They you other talked the but GPUs, But trials [ to tend cetera. when AI be be us. they using comes customer the to familiarity servers, may center availability, representation it's about, of And and has. networks, recognized on a the performance, confidence ] it AI side data the naturally no mission critical the loss trials leading is with the reliability, best-of-breed importance to with pilots the and the they've

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

services chain recover. on several that are there indicate networking their beginning might units supply the I you to are couple over provider commitment quarters. out their number so verticals to across discuss And the of new next could was you hearing data enterprise address today? the added being networking over service of and that hoping you what are upgrade in quarters So discuss points your customers that, the from of have server you of and traditional couple you last or perhaps these enterprise gear customers the and as XX,XXX

Yes.

take Let question. the me second

We are we celebrated XX,XXX. think adding I the systematically.

to the -- customers. of of in past, we because add numbers large so used And

well. are we're adding and customers every quarter, very, systematic with customers going very Now who of pleased add the many small of that's hundreds

On former what the was -- question? other -- your

there. and adoption server of networking for the How the to on about environments seeing think you're campus and or what gear growth

Okay.

aren't data it center Devices with dealing and perhaps to right? servers tend campus, a as users Service campus. but to more related to So upgrades. surprise are may more much to come you, be related always

connecting that method now. prove at little Or see 'XX, in -- buildings oasis zero-touch things capabilities, a are So create the a in things 'XX cetera. tending they're like topology, for and planning the analytics, to smack the they're et enabling right to to better it they're those that RFPs. middle of Greenfield post-pandemic much trying in we're campus, and wired/wireless and leaf Leaf/Spine our segmentation, campus then with is desert automation, X

the really overall turning campus So to in sluggish market. is a out somewhat

familiarity campus. data are again, the very more are us lot We the do that to the modernizing success their to a in it finding has with customers in center, and our And translating campus. with interested that's in

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

gradually true architectures think capture think years? bigger over capturing quickly you resources? several the realistic to more that more the of How picture a the could about I What looks network Jayshree, like traditional become overall mean of as front-end. back-end of fabric more do that just that next opportunity compute you

market is lot of that largely today point still there to I are think Well, InfiniBand. a studies

ago. Ben, You were looking we a year me, remember in just outside saying

So step making Ethernet world, are X the is we're feeling again. very whole InfiniBand great acknowledged players gratified we have that that even

all $XXX And though more difficult million, do to expect, $XXX I should so end thing very I the to more Ethernet. to back going when -- signed the end that at be say, even year, they to it's to expect up number end from million move of become is least I the front we're next back Ethernet. One and distinguish

center, of back. the AI this be a For conglomeration both call front as we to is and going the it,

if a So now, the forward end. X, X is the end center of I were years from AI both think to supercenter fast I the back front and

strictly I inference and edge will many and GPUs distinction make. more long were it fast as use track So more to forward, there's training able we'll there as cases. many if think cases be use cases difficult But small-scale may cases, which to that many use use be more make I training to

the line will question Alex from Needham. come next with Henderson of Our

of Cloud side the But the hoping front enormous spending well that in at that data there amount ultimately was catch-up the in a bit the end we is about in a the there's as consistent they're some there in is if juncture little there's that moderate end, AI driving and or application a into been a going of there's has could with rebounding bias ongoing the rate, -- whether for the reasonable a potential Clearly, investment that business acceleration wondering application under-investing networking of spending a going I at as is back center. because growth of that growth? called spending talk biases area Titans. elements the And an CPU over I'm traditional GPUs. rate to the historically whether in the

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from question with will Piper Sandler. Fish James next the line come of Our

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from question line will next Leopold with the come James. of Our Simon Raymond

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

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

keep that bring clusters the to that impact And we talked being about and as to wondering, larger connect ] they XX% Is that conversation, bigger you've as just go these but to get little a connecting I'm about is and hearing to built. these as bigger bit up and bigger this does maybe you you're I larger scale, Sorry your high is AI are ability guess, working X [ more level. Does having of revenue? clusters CapEx. or clusters more back or that Arista guys API -- capture change go down bigger? on

memory, host, processes are a and role, the look the there the GPUs important. in Yes, and so per and the it's tenants cluster how how and wide area scale optimization XTUs But And a has strictly divvied the whether look AI the up X Distribution between through plays if of you storage multiple up look you look we make at case number the of or visibility. when lenses, AI of an redundancy it's for link just workload. it for these on load types many much through through you GPUs location and applications you design, look libraries at base, the which collective to can of the resilience, levels network want specific an how communication workloads, are. in, you it compute, active, balancing, put network to at at design, at

clusters. say, design. more of getting of commutations parameters. you all of we're network more are GPU additional have taken very a add end time. starts approach siloed, to metrics many for what centered Otherwise, to around then Because job be to working and are completion we number with being it on. that has to are multiple circles in really combination. But definitely that's concentric things billions models up All But design-centric and there's this network these performance There training and GPUs, So just more. the the

scale beyond goes other metrics it So mentioned. I these of and performance to some

have Operator, for last we please. Sebastien. Thanks, time question, X

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

it introduction. and for through think trying Maybe and to Chantelle. back your to what I guess both is is maybe this bring Jayshree product I'm just together

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perspective? what there So like to from just perspective look QX AI relative path of any from color might in an your expectations a terms glide

Yes.

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GPUs, of and the you've seen some heading public and this tens our have to of Some in are already GPUs. towards XX,XXX by published thousands customers blogs gone XX,XXX from of

think tens into Next thousands there be for GPUs. of of heading aiming XXX,XXX many year, I will them

see I year So next as promising. more

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Yes. Yes.

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readiness So and very have scopes at customers different we we have very, those and customers. cloud enterprise of

QX, they're year, So next all types, timing eligible QX for for cetera. QX, QX, et

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Yes.

things and cooling think like and power ability in simple to are scale. I deploy affecting the massive

and of there's So QX. entirety about magic year. the about nothing year magic There's in plenty next its

Quarter the Call. Earnings Arista XXXX Second concludes Networks This

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

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

now may You disconnect.