Summary
Arista Networks, Inc. (ANET) reported strong revenue growth of 26.0% for the first quarter of 2019, reaching $595.4 million, driven by robust demand for its cloud networking solutions, particularly from existing customers expanding their networks. Product revenue saw a significant 24.0% increase, while service revenue jumped 38.7%. The company's gross margin remained strong at 63.9%, slightly down from the prior year's 64.1% due to product transition costs, but offset by improved service margins and a favorable customer mix. Operating expenses increased by 13.4%, primarily in R&D and Sales & Marketing, reflecting continued investment in product development and market expansion. Net income surged by 39.1% to $201.0 million. The company's liquidity position remains strong with $2.2 billion in cash, cash equivalents, and marketable securities. Key financial highlights include a substantial increase in cash from operations, partly due to effective accounts receivable management. The adoption of new lease accounting standards (ASC 842) led to the recognition of significant operating lease right-of-use assets and liabilities on the balance sheet, impacting property and equipment figures but not cash flow. Investors should note the ongoing litigation with OptumSoft, though Phase I favored Arista. Management expects continued revenue growth, albeit at a potentially slower rate due to scaling and some large customer demand slowdown, emphasizing ongoing investment in innovation and market expansion.
Financial Highlights
53 data points| Revenue | $595.42M |
| Cost of Revenue | $214.85M |
| Gross Profit | $380.57M |
| R&D Expenses | $119.67M |
| Operating Expenses | $186.23M |
| Operating Income | $194.34M |
| Interest Expense | $0 |
| Net Income | $201.03M |
| EPS (Basic) | $0.17 |
| EPS (Diluted) | $0.15 |
| Shares Outstanding (Basic) | 1.21B |
| Shares Outstanding (Diluted) | 1.30B |
Key Highlights
- 1Total revenue increased by 26.0% year-over-year to $595.4 million.
- 2Gross profit increased by 25.6% to $380.6 million, with gross margin at 63.9%.
- 3Net income grew significantly by 39.1% to $201.0 million.
- 4Research and Development expenses increased by 16.9% to $119.7 million, indicating continued investment in innovation.
- 5Sales and Marketing expenses rose by 21.2% to $51.1 million, supporting business expansion.
- 6Cash and cash equivalents and marketable securities totaled $2.2 billion as of March 31, 2019, indicating strong liquidity.
- 7The company adopted ASC 842 (Leases), which impacted balance sheet presentation but not current period cash flow from operations.