Arista Networks (ANET) 7 Nov 242024 Q3 Earnings call transcript

Welcome to the third 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.

operator. you, Thank and everyone, for us. joining Good thank afternoon, you issued are Arista and results Networks With Arista Breithaupt, me XX, and for Ullal, call today's Networks afternoon, quarter Officer. This Officer; on its Chairperson fiscal announcing ending Jayshree Chief Chief Financial press third a release Arista's September the Chantelle XXXX. Executive

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

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

financial of I measures to reconciliations release. non-GAAP in our financial [indiscernible] these press GAAP With that, measures earnings will have We provided

this Liz, call. revenues afternoon contributed and quarter, you, us earnings and third of for [indiscernible] of approximately our strongly per joining with for a delivered XX.X% at earnings for Thank $X.XX of Services billion software $X.XX. the quarter thank XXXX you, non-GAAP record share revenue. everyone, We

non-GAAP and Americas influenced from Our XXXX encouraged for XX.X% margin and have otherwise lot a of on June quarter titan the of spots momentum vision margin event, the tenth supply had said we by what approximately Analyst company. both ground of chain pricing, was very recent strength hygiene. of pressure favorable Day. XX%. Clearly, celebration the the at bright and gross offset in covered At by an the cloud an strong QX by we with a quarter and the in are contribution XX% International registered XXXX customer and in enterprise lot would anniversary

like believe well epicenter So briefly resonating I'd for strategy X.X Arista mission-critical are on expand of our plans transactions our to is customers. at the that Arista with today, and networks emerging X.X XXXX. We

next decade. the we only for pure-play network are, the We innovator believe,

state-oriented of center. At for simply AI can platforms stack transformation the software for This lake this data access without center modern multimodal centers all a EOS is be learn networking public having One our Our silos or heart are data campus to a this data. foundational of to from an center data cannot a subscribed WAN center, network data. sets.

built cloud XXXX down for all and and the delivering center, with upgrade duration XXXX, to available AI networking visibility AI that architecture bringing made the AIOps up AI back-end and Arista and learning without we pilots proactive the Number more we and for in and root granular We one-click AI and vernacular, networking. the flow both terms in cause AI at that which cloud production availability zero-touch from telemetry and with number flow. time centers us for security, state all for algorithms and diversity, So lot trials data-driven in flow with slow entire slow is workloads relies data two, a this and highly as of could networking. Three front-end on AI The of move Arista size of cloud thousands provide and of GPUs, for to and client just of right in XXXX. collecting it is XXXX foundation clusters analysis. Networking fidelity In guide best-in-class, gaining one, a AI predictive operations be differentiate with completion about buzzwords. data levels; matters to campus, for traction more are the would ML traffic positioned factor network machine expect in customers in multiple job slowest less client with networking. is the us hitless for three, principles well crucial products from and deeper is in greatly automation insights of resilience prescriptive data. flows differs AR networks. one traffic to

and from Our front for end large-scale cloud scale-out and to Ethernet the AI AI seamlessly [indiscernible] and the end Investor as networks. storage, WAN workloads. emerging back a training accelerated centers of connect compute, pioneer networking

tier million wirespeed over throughput for with networks scales from Our with X potentially GPUs, accelerators and single AI tiers. performance, XXX,XXX multiple session tier even new to [indiscernible] XXX-gig non-blocking portfolio X

that platform XX [indiscernible] XX,XXX unique products with up be fabric, to At consists networking why And X and with The families may for highly officially to look for developed with scale and AI AI a Our physically for a X-tier recent with tier with distributed mid-October differentiated fabric forwarding [indiscernible] curing eliminating failover build a architecture large XXXX switch. spine like Death Arista fast accelerator-based encouraging the point networks clusters. AI ultimate our X OCP the GPU and [indiscernible] job not fare in EthalinkXXXX [indiscernible]. to cell we complements it was switching I like tuning time. spraying fully innovations of portfolio just in to XXXX, saving X now John for efficient XX AI RX close cable need our improving over a our clusters. output provides to single-stage like over valuable very collaboration challenging and McCool would platform of launched ], completion Platform It and the years. after [ chain John, supply describe a spine you. virtual resources processor scheduled and flagship XXXX couple Officer, platform Chief invite network,

in range into second requirements the customers production products switching density with I'm XXXX we per the Ethernet second our per set to broad are the along of to Spine, providing have to solutions. Thank report customers to This the XXXX of XXX XXXX and Together XXX over pleased XX parallel Jayshree. June broadest second customers Ethernet optimize RX GPUs entered gigabit tiers increasing their platforms RX connect gigabit XXX our port AI our networks. their work. Ecolink leaf allows AI current able best with that to switch, announced to distributed you, match deployment optics, the of Arista per for gigabit each minimize density AI

they're As front-end continue preparing also deployments, our with their customers AI networks.

on backbone for cluster. XXXX This into by increased connections the bandwidth capture require existing and is XXX-gigabit demand training data, increased deliver results access backbone. trend providing clusters to the AI RX clusters new snapshots New the These solution. also new high-speed generated

to chain post-pandemic key assure has predictability, silicon, remain the availability our increased supply for times from of these purchase extended switching While lead commitments pre-pandemic components. semiconductors returned advanced high-performance levels. To we've for

move the respond will deployment addition, as to we on-hand rapid our increase overall to AI new we inventory In next reduce into year. networks and lead times of

team planning align Our expected to to chain supply these closely work with continues with purchases receipt delivery. customer best of

consumption looking integrating to increases double in with power AI Next-generation while network data contend centers significant will performance.

electrical our trade-offs flow domains make mechanical Our us allows and coupled system-level to solutions. tightly optimize across to design design

of cloud co-design for companies Our configurations required insight provides data coupled switch variety center experience in into environments. the leading tightly these with the

we segment. development to our focus supports diagnostics our device continue first-time rapidly fast with in integration, design map on software Jayshree. networking Back us evolving to and confidence that time a attributes to will Finally, with operating These production data you, execute and results. this AI a give on SDK road analysis

on you here entire executives, your And and new [indiscernible] the you, performance Thank team. to congrats high very you John. for and a

load space to expected for imminently has AI specification really view, have for phenomenal adoption rapid a superiority a the our to contributions is of In UEC building Arista Ethernet with cluster powered the our consortium guys networking. AI work You Critical system of ecosystem down founding only the job. evolved the CloudVision. AI midst viable the Arista's as by The over the types, bring AI is AI holistic done centers the visibility Ethernet long-term of with flow standard all host. key AI networking and Ultra open visibility unparalleled and and we're way automation accelerators EOS is to and continues EUS U.S. member. XX direction methods the members. to control agnostic software to to depth for for delivers Arista upgrade. Shifting advanced nice goals. upgrades by to of an using Arista XXXX dynamic continues provided in smart congestion where traffic to of balancing all

with of heading June, at know to least XXXX pilots. growth we XX%, pretty growth discussed in This XX% a our Exchange in is As to we've York our our appears in predictions XX%. some $XX jump New by has experienced and TAM years XXXX, be event to 'XX quite in you prior XXXX. in Stock And to expanded AI faster influenced billion amazing exceeding XX.X%

year, $X approximately expectation $X of margin. an revenue way annual Within next in XXXX back-end campus operating now each $XXX are ago. X we and set a we projecting of or We back X to in networking targets are with XX% XX% that billion our confident quite translating of years to and in billion by growth million healthy revenue achieving XXXX that target,

XXX% recognize requirements. AI the end ratios. high training its as anywhere It's to from we've it network influence seen will ratio though on and XXX% the as sometimes, front-end be to back network This can of depending that of XX% AI back-end the and the important

Our is for be to networking number our now aiming comprehensive approximately double back-end billion likely of $XXX therefore of million, AI XXXX. in target $X.X center

than our growth forecast teams of from of none in We for X-year Chief so Financial annual forthcoming aim Chantelle. CAGR over details other a More foreseeable the to double-digit XXXX. XXXX Officer, to will you, and continue future to

you, Jayshree. Thank

more earnings results nonrecurring on our release. to results is noncash 'XX our stock-based now fiscal A of items. full asset our and the non-GAAP. amortization all Excludes QX on guidance other non-GAAP to year based intangible detail for and analysis of GAAP financials. selected QX reconciliation and impacts, This Turning compensation

of XX% strong XX% billion. third total This approximately reached last Services revenue of exceeded revenues revenues came revenues our of to the subscription quarter. the down billion year-over-year quarter Total guidance $XXX.X in $X.XX from performance $X.XX for International XX.X% marking million range increase. XX.X% software quarter. and billion, a in $X.XX contributed or

additional up cloud were approximately an $XXX.X enterprise from double-digit last million XX.X% to of margin of was quarter versus million were revenue, An guidance R&D-related down in marketing is materialize from the the reflects expected XX%, million. R&D item revenue, This the down and the supply million quarter. shipments $XXX.X quarter was XX.X% at decrease year. Sales XX.X%, $XXX.X in and originally increased enterprise slightly QX in margins low prior came domestic from in increased quarter-over-quarter $XX.X stronger This to quarter. percentage in of QX from from in current upper driven contribution now or R&D by expected spending or discipline customers. Overall, had last XX.X% from QX quarter. of in and prior range QX down our improvement X.X% last QX expenses of quarter note our in quarter. Operating and expenses X.X% at above down that is last revenue, year. chain million expense that $XXX.X gross are year-over-year of the there or

at $XX.X costs Our last X.X% or G&A million quarter. came in similar to

of in anticipated year. Other This million shift million, was tax effective our revenue. was expenses impacted XX.X%. of and Our revenue. QX income a expense R&D-related quarter in resulted operating the favorable was quarter $XXX.X income for for the XX.X% by of [indiscernible] $XX.X This or of income net the quarter QX and from or $XXX.X favorably of the this now was rate for million

impacted resulting of diluted too, XX.X% was by quarter the number year. XXX.X earnings favorably share in QX R&D-related QX. share shares from number from per shift a prior to in for $X.XX, expenses the This, up diluted the was Our

an $XX.X Now turning the million program the $X.X of common and balance May to per average repurchased approved Cash, quarter of equivalents at XXXX, the Of billion the in investments stock our sheet. price at cash billion. we ended share. quarter, In $X.X repurchase $XXX.XX approximately

billion quarters. market actual repurchases of price factors. timing and stock available will dependent The business $X amount other for repurchase and of conditions, future upon future and remains be

the a with collections from linearity QX, DSOs billion period, favorable reduction in with materials Turning of down in came last to Inventory raw decreased were strong We cash reflecting $X.X XX a to up the operating down [indiscernible] XX from reflecting strong our third billion the turns generated period, performance quarter billing. $X.X billion reflecting in combined performance X.X% combined contributions from prior for $X.X of quarter, quarter. X.Xx, from approximately in working in the at Inventory quarter. inventory. in earnings days capital days, results. operations from

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

have We new for product in future some expect to to a of continue our variability introductions. quarters this as demand number reflection

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

expenditures revenue from XXXX and variability this deferred and resulted continue construction quarter revenue use million the for product inner customers QX of QX, to approximately facilities and new even product year acceptance the of product balances. new build clauses increased be XX Capital were Accounts has In with continues magnitude payments. XX a receipt versus payable contracts to to $XX to have introductions, last customer-specific in we expanded expanded our days the trends initial expect protest. days, $X work Our of our for increase in were timing approximately October, million. million days and down of quarter. Fiscal began will deferred during reflecting incur These cases. $XXX [indiscernible]

Now turning to the fourth quarter.

other results of fourth approximately margin as is approximately the of is amortization approximately based intangible quarter, Revenues to follows: for on billion, which nonrecurring excludes impacts, margin guidance $X.X asset noncash Our of and to compensation non-GAAP any gross and operating XX% stock-based billion XX%. XX%; $X.XX items

a diluted rate approximately on shares tax is XX.X% be to expected on pre-split XXX of million effective approximately shares Our basis. with

primarily experienced in On good the mentioned capital and couple cash driven an the increased QX. This have of cash front, while to lead operating reduce order times move increases John's to by deployment last over anticipate overall increase networks in in quarters, inventory of requirements we we rapid the working prepared to as in is AI remarks. we in XXXX, respond into

investment the spending our R&D, go-to-market continue and will activities We in company. scaling

split pleased of not the part Additionally, The announce a of of dynamics. Transitioning fiscal of increases Board impact stock that accessible company our reflects or shareholders the trading intrinsic nor a for stock designed the the particularly we our support split of which does make our It's to creating split. commitment to we while enhancing improve shares XXXX. prospects change and in strategy. wider performance and are financial [ This ] more important number to will X-for-X QX accessibility long-term and investors, outstanding, investors, value ownership our it as retail believe year of in has value of our broader confidence to it to ultimately Arista's now attractive Directors stock, note and the the to is the stock approved range company. that our growth continued ongoing decision does

Jayshree placing growth to operating XX% weighting have mentioned, revenue XX% to XX% the mix are margin expected at an increased outlook is to gross forecasted of XX%. we approximately XX%. revenue at and XX% [indiscernible], to The As margin of putting

R&D, approximately to scaling we mid-teens to continue year company in future, the foreseeable as X-year invest the in Our billion commitment through in remains 'XX reach growth in go-to-market revenue double-digit and goal forecast 'XX. of CAGR of revenue $X our and for a XXXX. forecast reiterate the to We fiscal

serve the our returns deliver and current company turn I opportunities future strong Liz? Liz. networking to as by call shareholders. pure-play excited back will to to our the and the are to We innovation customers now

Chantal. you, Thank

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

from first of [Operator question Chatterjee Your Samik with comes Instructions] line the JPMorgan.

of issued A also you're can previously TI if meet sort don't results, on of guiding ask $XXX I that here strong target. but to guidance, guiding one set you to if had Jayshree, the you're you of target campus revenue the your and mind. million

So year. those growing where the XXXX it ex year AI into in only next of the through sort business coming in take account, campus ex is digestion sort that I single XXXX. is and if a backlog does on of imply yields of two you This comped double-digit digits

why have outlook? in that business sort that And parse [indiscernible] your non-AI So of maybe a expectations, in maybe implied as just -- driving what's significant there's through to what the in the that sort is driving of numbers? noncampus

you, Samik. Thank

As surprised months, you of we only XX don't pilots. our roughly how much about we visibility want the we know, better pleasantly started ahead X and AI of kind with of on faster how acceleration get were that's ourselves to So to extends and can either, we right? do

goes, the markets visibility faster I pivoting represents that the and me see our if better definitely on now. this all as large to combination we as worse. to data couldn't nice do that center right customer sectors. customers so It and product segments very in of the classic our cloud think our best aggressively continuing are we mean called our wouldn't all or markets slower different different So but doesn't our we new a it in in can see faster And cloud. we AI and center refresh is -- far are and in But this cloud, grow surprise campus

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

provide the versus do update about? gave in X the production you XX expectations expect on past? are And How And AI are days as of what happen? of Can maybe we an move when scale major your progressing you talking kind things that you trials to to ago. the

Arista question. X. out of a That's we're out not actually X of good X now X, believes

largely X pleased this in We to are XXX,XXX X we clusters. the was they're and X mode starting. moving got -- well. One progressing from in customer is of going inspecting to awaiting year, is new fifth expected. In feet. well those X is power we and in on The so are out GPUs, X XXXX, GPU a very production. This the with XXXX customer, pilots very, customers moving fifth challenges customer. in become are of get that very with There are XX,XXX in slower X We're et trials to cetera. Ethernet cooling, to And and go new our trial clusters driven. XXXX. customer back hope moving the are may fifth InfiniBand pilots on XXXX, we trial than in They their particular also customer they've historically now to some we who

and as an we're say, I great would three, we one, I'd them really -- to won, give expect getting we're started not glad we one, state, A. the quite steady would expected be. have and as So fourth fifth The

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

for switching of with the share it that Does X, launch spot? in went mean from increased from in the it competing boxes? or it boxes. X% the than to in going white Spectrum What the data it that white with NVIDIA? more their higher you center lower Gen question Or NVIDIA Is seeing like is competition in to on data market XX%. about is AI? competing box centers? same the front-end quarter be is participation is white it And outlook And you're last the shows second

answer? Okay. Thanks, do question want [ me you Tal ] which to

gift Let's of... Give the go with NVIDIA. me

may ask question anyway. the else Somebody

But your answer. answer to just your get you'll NVIDIA. question So on

all good First we their we to ability as demand. wouldn't networking this have AI of the If didn't partner. connect a we NVIDIA all, GPUs, have view to

Jensen, thank the for So -- you, you, partnership. NVIDIA thank

into as with [indiscernible] into very know, and acquisition, not Ethernet personally and X stack full Now capability. most much. NVIDIA capability the it's We you the sells do We Ethernet some time, or with run the maybe customers. it, have run InfiniBand, they of X do the

as And expert the so has there. generally speaking, Arista looked upon

We have full portfolio. a

there. of have ethernet of working large We the not the looked even GP welcome and to we're software. is we're and the seeing on a going But the plus We Ethernet customers lot or as And partner XXX%. say as on a with upon the Titans it's Arista expert look a win whether fierce enterprise, NVIDIA full we smaller competitor, like switching. to compete the them to scale-out that's enterprises, smaller GPU

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

team with I'll Tal. tag

I that So we'll AI. to or it to of trying with do look competitive here. this may again want I'm competition what at in the advent of partner changing landscape how sort once be broadly is understand

and So like and Nokia. you not Juniper but just Cisco white hearing from also box, about competitors

So landscape really update the would an on helpful. be competitive

Simon. a broad you, question. That's Thank nice

So I never NVIDIA. you the GPU expect $XXX saying [indiscernible], And ago, bundling including incremental. to to about the brand cloud, just were the natively may million be since end because And don't any specifically is we in connecting in on the us. outside end, somebody parse let we're and back X asked times, end, see back can the halves, just GPUs. muddles there At we're to would remember I back me in Arista this happening there the it We opposed was within It's right? front because a get, as end, is looking many me it AI particular, before. share of into problem new year most you that

standard smaller looking end. and We're, there take gain fact, with credibility can are claiming get, for leader gold and are to that experience in all claiming incumbents to there. but Arista many the and market back is a that become we'll the not we InfiniBand we more So be of versions there Ethernet

more as network. end, we front viewed to a standard many complex in the gold much It's ways, competitively. are the On

And You of have scale LX, encryption visibility, to a telemetry, routing this, John to tremendous leaf-spine automation I a switches families at accelerated with all would networking XX you the call build there's NVIDIA's portfolio amount and what X of portfolio. compute competitive VXLAN, best EVPN, peers and to alluded differentiation at portfolio compared is this, none. and we architecture. accelerated scale. the And complements mentioned, capability LX, scale, have the the absolute bar

where aren't industry a In swap fact, aware theirs I specifically you running applications for peers am even couple the AI of to of talked situations they on the want some of and ours. about,

bullish with newly gig feeling XXX flagship we mostly So product this running the worked Meta, introduced X,XXX closely the extremely product, at today because line the XXX that a XXXX, with lot supply [indiscernible] why ecosystem for chain are John this to it. team there isn't is the forward the get ready But and moving XXX. into XXX, for the building of the

back and I So on incremental the front say, competitively, -- extremely would in the end. we're it's end. well doing

XX ago our and AI overall, classify performance where I today we years coming would [indiscernible] now being in -- to So from a are

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

Or in it more the has it's X I the in going more slower the improved sounds limiting and that actually wanted fifth a over visibility it to like around there? few year. on reconcile on last... the not fifth last upside customer your that $XXX little if wondering is but now expected. wanted conservative slower ask million or limiting I your X, Has you're than improved over to gotten your for next about And going visibility months. customer bit comment AI

being bring to a end, has but I think realistic. Somebody we're conservative

So I said you think right. it

do least think X have XX, months, even the X I what you the on maybe good we at out think? visibility, next X, of John, for

Yes.

early one, in fourth improving we do. trials, are we got the On to

let's know. they'll right, looking fourth one, on case, not don't, why be we're but 'XX, do. stalled, fifth you the good [indiscernible] to Is up feeling They still in which in a It's little for probably how for XXXX And the we're let bit of on we're XXXX. So about second nicely which in may they may one. careful half the But the about 'XX. if guide see, that our bang we'll predicting being be we're year step

I a them, the would agree. X of agree. It's categorized I totally Jayshree would But completely think way I question, the good out Ben.

[indiscernible] question from Paribas. comes the BNP Ackerman Karl with

been switches ports. Jayshree, have discuss Will engaged XXX production if to think EtonLink XXX-gig what's your 'XX? guess the the gig right and pilots AI In on sales way of hyperscalers? spine programs the whether trials gig. XXX or and XXX products gig you could other of on words, be these beyond are mix on it so, hardware deploying I new in And with about

and their trials Yes. for UEC on XXX, good et hard That's always take say and somebody John a to today, still ecosystem because a capabilities, including break NIC just I because was the into XXX again, XXX pilots are majority would spring of people I, to XXX the XXX question. it cetera. the I so are and if packet can back going the that mean, and waiting you the it tell of and at ask breakouts and XXX --

some between of in is XXXX as XXX. we will go Majority trials expect I majority gig. into on XXX XXX we're a see early XX, XXX, of while and So better we XXX. split

Your of Company. next & from Koontz with question Needham Ryan comes the line

maybe Can campus the verticals us update you're Or campus are you was moving seeing the are most base the core? in applications? a big touch on core traction seeing your Is bit. kind on you of your Where seeing from terms campus strength the your hoping WiFi? bits you primarily this applications I most could opportunities and of we just around traction in in?

you tell and Yes. -- Yes. back Ryan, never stronger. has and opportunity step say let me try our that enterprise been

there's it. a is, that I looking competitive I pure-play awful getting awful the silos in consolidation whether for other think into don't there's going what And things, are get And operating different being have often systems we and Arista enterprise and mean an code. sometimes sales we add and network innovator, that on coverage other though and and As sought industry deals for the peers more being lot by not or even doesn't is invited an of our more fact a at of the have that X the a together. observability lot are products fatigue of just lot it's to design

now, don't and data center, opportunity little there, center center. of too. data enterprise our AI there's a There's we WAN in course, as campus of just there's characterize center, bit there's So

me okay, is of let everybody from the specifically. more can cool. [indiscernible] as data now have my same one I the Clearly, place your first campus. so So on address and question center universal go, went is This oh, They [indiscernible] the spine spine.

big Then laughing. has here, a and activity WiFi. put the started, $XXX platform get ready you [indiscernible] that the the million a a more our that comes way And from they've confidence measure already So wired is for part foundation need to [indiscernible] projection say, spine. of which and the Kumar edge already to but and ports, this Jayshree, he'd is power if or the important, super Ethernet, in

Yes.

to he would get And that you right. so say, got

wired. we're number we're in two, spine; the progress the making stronger so one, And on

this that coverage extra to still Our will because is center sell data in. are we learning WiFi weakest fix partly the the folks, radio to plan we're that, come we and how is and where

into wired So say more is strength of coming spine. would I our and

We Chantelle, very you of well are want better. we something? . do to but to add WiFi, doing in pockets need

your of part, some verticals about wanted question. verticals. I asking take the were the second of I think just add you the to in to Just some

care, center where campus, media, some retail, seeing say would health and I data we're strength [indiscernible] think I financials,

federal paid is Fed that's we're own serious one. not and very a [indiscernible], an area subsidiary. its we setting including attention the historically getting up about, good This market to have

been you've Chantelle, pushing a part So there. us huge of

So thank you.

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

spend sizable that guess both product deferred time makes years, some could when I what total historically, manner, pretty help you're has. you just we're deferred in really good goes [indiscernible] different we is going up on revenue historically revenue 'XX. but decelerate up you dramatically. delta, hoping in product I'm such you seeing acceleration Jayshree, why guiding Maybe connect with actually product the that dramatic up end number me what's a the on your like out the in and default acceleration also the the for number,

going case happen XX I don't say let one examples those were to you, line. to X multiple in the and longer XXXX. can take you're Chantelle. can all answer months not a the I'm question, the Chantelle will be this know, in the trials may It Remember, expert years I to Over manifest. of to typically, but lot quoting,

yes. think, I

you, thank Jayshree. So

move frames, type there referred part goes type to, other product quarter, in that So use case, out. we those of and it this every now bespoke in all mix time too, of you're customers, to have is you the see starting what thing, the know And through that the as they lengthen. there. Jayshree of of is are is the deferred

know we this we is then told a So 'XX, as we'll variables this through to it's what time. the at update. And mix we that move you And of continue before.

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

of -- keep trials you and clearly, other of, added opportunities sovereigns see AI main of sense a just have those for some kind adding are thinking developing or of or a these get Arista? investing do that about customers kind just to opportunities X X heavily wanted kind But clearly have just other how these you in you how those of are fifth. I Jayshree, Tier either and

good This question. is a

look these go That's we X the are But the XXX,XXX to can not these saying we're this. are predict [indiscernible]. at more. the way and GPUs So to

in if So way, cloud, would the X will. group, Tier the very they AI by well, Titan could be there be rarely hyperscaler are in can titans, they you they the be largest And as the in about classic too, much don't counts, a on but so least going smaller GPU they're to the classic By we way, XX enterprise at trials enterprise. talk it. XX do have we in

and in folding on. we're the and on beachhead, there's our they're definitely the our our So numbers very going really our to important point to market establish share big skew our that X but they AI, innovation more

spread be there specifically be we on In will as Titan and the will but these X X and there X. see more Cloud Tier well X the more, across in the are your category that of Tier terms as both they're question Tier

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

Yes.

families portfolio, XXXX X going switch on you or maybe see could or each you into a comment we're on specifically order Just rank of lease what opportunity Ethernet spine the and the the beyond. across the as as then tolling Etalin single-tier and

because it, are this a I'll because with [indiscernible], It's probably on with. X here switch. I fixed guestimate. take we'll but single out we it's based John a a X crack our It's at units On color. me switches terms customers very but clearly an It's helped Broadcom. no of comment, would familiar in is partnership intense should give say try XXXX you the say popular are to

the we done Tomahawk X, we've X, So and would that's X, So here say, volume-wise, X, I on one. big right? X, are

both that's then flagship, the stealer, of but This the real if Broadcom the GPUs. the may extremely Jericho X,XXX best mini would up this where is other feel just we new. the X,XXX the in And with XX,XXX volume -- competitively of and is gives John, is extreme, is in into configuration of with dollars, capabilities again, [indiscernible] you smaller, what right? It's in the in brand a dollars, In working and partners worlds to strategic, be you Going XXXX a the you all family. say, our that kind will.

John, very So collaboration, did -- competitively, going this. Nobody think have X would but does XX guys say. else So a close in peer with and you working I months, stage. I together, but with -- no a We in for been this right? single there's us it's Meta, fabric scheduled for this, John, a years, to

qualify years. and accelerator could know how that, couple of very we could So it it next be promising about be to less in a but fast I the think

[indiscernible]

we Yes, have the the XXXX people XXXX, products are deployment Between fit is number their GPUs that of those same large for the but the XXX. scale mix minimum in that do amount the they maximum of a and in the can tiers so X,XXX attractive very both optimizing get of of the interested see are people use case.

So now how the deployments deploy the around on we their do many center. see want a based GPUs lot of to tailoring data they size of

go chain. really to to to supply X,XXX to then in from rates they'll point. suddenly, X a that's then you go, have add your an want And a X-way line And okay, running I cards more more you and for Yes, suddenly, come way. good

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

to when making looks wanted some underlying -- about what's kind XXXX? I ask and you you it of at help well the expectations? of declines? XXXX Do expectations gross curious provided, that segue of your assumptions model off look of of Is that it mix plus XX% I'm like I as margin factored landscape declines. margin you you're those those margin Just expect outlook the midterm as some into competitive in any multiple customers? just what's customers on

say, absolutely, expecting the that referred with that you team. and John to great chain supply doing he's is mix. outlook continue to, would it the discipline I We're customer been his

bigger, And the is it it a I to a for customers, say bit cheeky that bit denominator So comment gets tougher. it's as gets maybe one BIC as a the XX% only. would say dynamic, the

'XX the see just the we that in go sort goes out we'll we as 'XX. now, to see we'll and that keep right of how ones talk the currently about, from and So we'll But years.

XX harder going and to have harder to It's get customers.

that still moment. any others be anticipate the in at I M&M but will XXXX, So there's believe I don't

last Operator, question. for we have time X

Citigroup. Our line final from will of come question the Atif Malik with

at front on are talked signs the you some cloud the lift to end Xx AI classic dollar see front the pressure from looking back least on every What about bandwidth. recent the or you've Jayshree, from end. is spent conferences, for on the on the end

highest every Atif narrow Listen, training and it's training just approach a more intense just to they AI. And use be that case. they you and will want well. more very more, XXX% is spend build AI, next Yes. which will it to and carry depends It's another for But dollar could seen to a a include AI. on scenario, million year, $XXX I traffic see completion things other more starting XX% why out, it we spent include think I will we're [indiscernible] to prove in something cluster the even all job their If like we've $XXX unique more, models. believe, the said, what to, as back on is XXX% back-end over front-end look end, million but for and

average and I so number wouldn't XX% surprised anywhere X-X%., the is is over. be back is that which between and So XXX%, if Xx

the why by qualify good track. front end, inference, exactly training, pretty I having -- becomes know AI start it the cloud come feeling pure number Don't AI increasingly, as about to if [indiscernible] classic that that. to So how saying is together, which storage, all difficult count [indiscernible], you

the Call. concludes Earnings XXXX This Quarter Arista Networks Third

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

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

may disconnect. now You