Summary
Arista Networks reported strong revenue growth in the third quarter of 2018, with total revenue increasing by 28.7% year-over-year to $563.3 million. This growth was driven by a 27.6% increase in product revenue and a significant 35.9% rise in service revenue, indicating expanding customer adoption and increased post-contract support. The company also reported a substantial increase in operating expenses, largely due to significant investments in research and development and the impact of two recent acquisitions (Mojo Networks and Metamako). Despite increased R&D and sales and marketing expenses, general and administrative expenses decreased due to reduced litigation activity following the settlement with Cisco. Net income for the quarter was $168.5 million, a 25.9% increase over the prior year, demonstrating robust profitability despite increased operational spending.
Financial Highlights
53 data points| Revenue | $563.31M |
| Cost of Revenue | $201.73M |
| Gross Profit | $361.58M |
| R&D Expenses | $117.59M |
| Operating Expenses | $180.81M |
| Operating Income | $180.77M |
| Interest Expense | $673K |
| Net Income | $168.52M |
| EPS (Basic) | $0.14 |
| EPS (Diluted) | $0.13 |
| Shares Outstanding (Basic) | 1.20B |
| Shares Outstanding (Diluted) | 1.30B |
Key Highlights
- 1Total revenue for the third quarter of 2018 was $563.3 million, an increase of 28.7% compared to the prior year's quarter, driven by strong performance in both product and service segments.
- 2Product revenue grew by 27.6% year-over-year, reaching $485.5 million, indicating continued demand for Arista's core networking solutions.
- 3Service revenue saw a significant increase of 35.9% to $77.8 million, reflecting the expansion of Arista's customer base and increased adoption of its post-contract support services.
- 4Net income for the quarter was $168.5 million, a 25.9% increase from $133.7 million in the same period last year, showcasing improved profitability.
- 5Research and development expenses increased significantly by 47.7% to $117.6 million, reflecting continued investment in innovation and new product development, including costs associated with recent acquisitions.
- 6The company completed two acquisitions in the third quarter: Mojo Networks for WiFi solutions and Metamako for low-latency applications, strengthening its cloud networking architecture and next-generation platforms.
- 7A significant legal settlement with Cisco was finalized in August 2018, resulting in a $405 million charge in the second quarter, which positively impacted general and administrative expenses in the third quarter due to reduced litigation activity.