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Arista Networks Generates Earnings and Revenues That Exceed Wall Street Forecasts, Boosting Its Stock

Networking company Arista Networks Inc. showed why it has built a reputation for delivering strong growth rates over the past few years, today reporting second quarter financial results that easily beat Wall’s expectations. Street.

Arista reported net income of $299 million for the period, up from $196.8 million a year earlier. Earnings before certain costs such as stock-based compensation were $1.08 per share, with revenue of $1.052 billion, up 49% from the same period last year.

The results easily exceeded Wall Street targets of 91 cents per share in earnings and $976 billion in revenue. Sales also exceeded Arista’s own targets of $950 million to $1 billion. Arista stock jumped 7% in the extended trading session after the report, adding to a slight gain earlier in the day.

Arista sells enterprise networking hardware, including high-speed switches that speed communications between computer server racks in data centers. The majority of these switches are sold to hyperscale data center operators such as Meta Platforms Inc., Microsoft Corp. and Google LLC. The company also sells enterprise campus switches to businesses that operate on-premises data centers, competing with much larger rival Cisco Systems Inc.

The other side of Arista’s business is network management and security software and services, which are used by enterprises to keep their networks operational and identify the cause of outages, monitor user experiences, and identify security threats.

The hardware business provides the majority of Arista’s revenue. The company said it generated sales of $885.8 million in the quarter, with software and services adding $166 million.

Arista chief executive Jayshree Ullal (pictured) said the company had hit a key milestone, achieving more than $1 billion in revenue in a single quarter for the first time. This was all the more impressive given the uncertain supply chain environment, she added. “This record milestone further validates the customer value of Arista’s differentiated cloud networking platforms, now adopted by many of the world’s largest cloud and enterprise customers,” continued Ullal.

In a conference call, Arista COO Anshul Sadana said Meta Platforms and Microsoft are expected to account for 10% of the company’s fiscal 2023 revenue.

“You can see we’re having one of our best years yet in terms of cloud customers,” Ullal said.

Arista, which also posted strong growth in the previous quarter, said it forecast third-quarter sales of between $1.025 billion and $1.075 billion, ahead of Wall Street’s forecast of $1 billion. The outlook is in line with optimistic forecasts from major cloud computing giants including Microsoft, Google and Amazon Web Services Inc., all of which forecast strong demand despite the macroeconomic pressures facing most tech companies today.

The networking industry is being watched closely by investors for any signs of a slowdown. In May, Cisco Systems offered a revenue forecast more than $1 billion below the Wall Street consensus.

Photo: SiliconANGLE

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