Summary
Arista Networks, Inc. (ANET) reported a strong second quarter for 2019, demonstrating robust revenue growth and a significant improvement in profitability compared to the prior year's challenging period which included a substantial legal settlement. Total revenue increased by 17.0% year-over-year to $608.3 million, driven by a 15.4% rise in product revenue and a 26.7% increase in service revenue. Net income more than doubled to $189.3 million, with diluted earnings per share (EPS) at $2.33. The company's financial position remains solid, with cash and cash equivalents increasing substantially to $944.4 million, reflecting healthy operating cash flow generation. Operationally, Arista continues to invest in research and development, with R&D expenses increasing by 9.8% to support its cloud networking platform and new product initiatives. Despite some noted slowdown in demand from certain large end customers during Q2 2019, the overall growth trajectory is positive, supported by continued expansion and upgrades from existing cloud network customers and increasing market acceptance of newer switch products. The company also announced a new $1.0 billion stock repurchase program, indicating confidence in its financial health and commitment to returning value to shareholders.
Financial Highlights
53 data points| Revenue | $608.32M |
| Cost of Revenue | $218.13M |
| Gross Profit | $390.19M |
| R&D Expenses | $114.30M |
| Operating Expenses | $183.35M |
| Operating Income | $206.84M |
| Interest Expense | $0 |
| Net Income | $189.25M |
| EPS (Basic) | $0.15 |
| EPS (Diluted) | $0.15 |
| Shares Outstanding (Basic) | 1.22B |
| Shares Outstanding (Diluted) | 1.30B |
Key Highlights
- 1Total revenue for Q2 2019 increased by 17.0% to $608.3 million compared to the prior year.
- 2Net income for Q2 2019 significantly improved to $189.3 million, up from a net loss of $155.3 million in Q2 2018 (which included a $405 million legal settlement).
- 3Diluted earnings per share (EPS) were $2.33 for Q2 2019, a substantial increase from -$2.08 in the prior year's quarter.
- 4Cash and cash equivalents increased significantly to $944.4 million as of June 30, 2019, up from $649.9 million at the end of 2018.
- 5Research and development expenses increased by 9.8% to $114.3 million, reflecting continued investment in innovation.
- 6A new $1.0 billion stock repurchase program was authorized in April 2019, with approximately $900 million remaining as of June 30, 2019.
- 7Service revenue saw strong growth of 26.7%, indicating increased adoption and renewal of post-contract support.