Sunday, 3 March 2024


Arista Networks surpasses revenue expectations in Q4 By

China plans three-tier data strategy to avoid U.S delistings - FT

© Reuters.

Arista Networks (NYSE:) has reported a robust financial performance for the fourth quarter of 2023, with revenues reaching $1.54B, surpassing the company’s initial guidance. This growth was bolstered by a record non-GAAP earnings per share of $2.08, primarily attributed to a favorable tax rate. The company’s strong results were also supported by a significant contribution from services and software support renewals, which accounted for approximately 17% of the total revenue. Arista’s non-GAAP gross margin stood at 65.4%, benefiting from an improved supply chain and a larger mix of enterprise customers. The company’s international market performance was notably strong, contributing 22.3% to the total revenue. Looking ahead, Arista Networks has set ambitious targets for its AI networking revenue and expects to achieve at least $750M by 2025. The company also anticipates double-digit growth in 2024, aiming for approximately $6.5B in revenue.

Key Takeaways

  • Arista Networks’ Q4 revenue hit $1.54B, a 20.8% increase year-over-year (YoY).
  • Non-GAAP earnings per share reached a record $2.08.
  • Services and software support renewals represented 17% of total revenue.
  • Non-GAAP gross margin was strong at 65.4%.
  • International markets contributed significantly, accounting for 22.3% of total revenue.
  • The company targets at least $750M in AI networking revenue by 2025.
  • Arista expects to maintain double-digit growth with a revenue target of about $6.5B for 2024.
  • Q1 2024 revenue is projected to be between $1.52B and $1.56B, with a gross margin of around 62% and an operating margin of about 42%.

Company Outlook

  • Arista Networks is focusing on pilots this year, with full production expected to commence in 2025.
  • The company is confident in its AI networking targets for 2025.
  • Revenue guidance for 2024 is conservative, with a focus on quarterly performance.
  • Arista Networks believes it is well-positioned in the AI networking market, with solutions gaining customer recognition.

Bearish Highlights

  • Cloud mix has seen a slight decline.
  • The company acknowledges the complexity and uncertainty in the timing of market developments.
  • Arista’s guidance remains conservative, reflecting the current market understanding.

Bullish Highlights

  • Arista has won all four Ethernet customers and one InfiniBand customer, securing high-profile clients.
  • The company coexists with white box networks but focuses on its own software stack for critical data centers and AI.
  • Partnerships with leading GPU vendors…

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