Arista Networks, Inc. Reports Third Quarter 2023 Financial Results

Arista Networks, Inc. Reports Third Quarter 2023 Financial Results

SANTA CLARA, Calif.--(BUSINESS WIRE)--October 30, 2023--

Arista Networks, Inc. (NYSE: ANET), an industry leader in data-driven, client to cloud networking for large data center, campus and routing environments, today announced financial results for its third quarter ended September 30, 2023.

Third Quarter Financial Highlights

“Arista once again delivered strong financial results in the third quarter,” says Jayshree Ullal, President and CEO of Arista Networks. “Customer momentum remained strong in both enterprise and cloud/AI sectors.”

  --  Revenue of $1.509 billion, an increase of 3.5% compared to the second
     quarter of 2023, and an increase of 28.3% from the third quarter of
     2022.
  --  GAAP gross margin of 62.4%, compared to GAAP gross margin of 60.6% in
     the second quarter of 2023 and 60.3% in the third quarter of 2022.
  --  Non-GAAP gross margin of 63.1%, compared to non-GAAP gross margin of
     61.3% in the second quarter of 2023 and 61.2% in the third quarter of
     2022.
  --  GAAP net income of $545.3 million, or $1.72 per diluted share, compared
     to GAAP net income of $354.0 million, or $1.13 per diluted share in the
     third quarter of 2022.
  --  Non-GAAP net income of $581.4 million, or $1.83 per diluted share,
     compared to non-GAAP net income of $391.9 million, or $1.25 per diluted
     share in the third quarter of 2022.

Commenting on the company’s financial results, Ita Brennan, Arista’s CFO said, “The team continues to demonstrate strong discipline, working to normalize supply chain metrics while delivering incremental improvements to our 2023 outlook, which now calls for year-over-year revenue growth in excess of 33%.”

Company Highlights

  --  Arista Appointed by Spark as Private Telecommunications Cloud
     Networking Provider -- Arista announced that it has been appointed by
     Spark as a private cloud networking provider to support Spark's data
     centre networking services for a new private telecommunications cloud
     platform.
  --  The Arrival of Open AI Networking -- Arista and the founding members of
     the Ultra Ethernet Consortium, UEC, have set out on the mission to
     enhance the capabilities of Ethernet for AI and HPC.
  --  Arista is Recognized by Newsweek as one of America's Greenest Companies
     -- Arista is pleased to be included in Newsweek's first ranking of
     America's Greenest Companies which captures a snapshot in time of where
     the leading companies are--and sets a benchmark for future rankings.

Financial Outlook

For the fourth quarter of 2023, we expect:

  --  Revenue between $1.500 billion to $1.550 billion
  --  Non-GAAP gross margin of approximately 63%; and
  --  Non-GAAP operating margin of approximately 42%.

Guidance for non-GAAP financial measures excludes stock-based compensation expense, amortization of acquisition-related intangible assets, and potential non-recurring charges or benefits. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis because these exclusions can be uncertain or difficult to predict, including stock-based compensation expense which is impacted by the company’s future hiring and retention needs and the future fair market value of the company’s common stock. The actual amount of these exclusions will have a significant impact on the company’s GAAP gross margin and GAAP operating margin.