Summary
Arista Networks, Inc. (ANET) reported strong financial results for the nine months ended September 30, 2019. Total revenue increased by 19.4% year-over-year to $1.86 billion, driven by a 17.6% rise in product revenue and a 30.6% surge in service revenue. Net income saw a significant increase of 280% to $599.2 million, largely due to a substantial legal settlement expense in the prior year that did not recur. The company's balance sheet remains robust, with total assets growing to $3.62 billion and a strong cash position of over $1 billion in cash and cash equivalents. Operating cash flow was healthy at $635.9 million for the nine-month period. Management noted some volatility in demand from large end customers, contributing to slower revenue growth in certain periods, and expects this trend could continue in the near term. However, the company continues to invest in research and development and sales and marketing to drive future growth, particularly in campus switching and WiFi networking markets. The company also authorized a $1 billion stock repurchase program, demonstrating a commitment to returning value to shareholders.
Financial Highlights
53 data points| Revenue | $654.41M |
| Cost of Revenue | $237.14M |
| Gross Profit | $417.27M |
| R&D Expenses | $118.73M |
| Operating Expenses | $188.67M |
| Operating Income | $228.61M |
| Interest Expense | $0 |
| Net Income | $208.90M |
| EPS (Basic) | $0.17 |
| EPS (Diluted) | $0.16 |
| Shares Outstanding (Basic) | 1.22B |
| Shares Outstanding (Diluted) | 1.29B |
Key Highlights
- 1Total revenue for the nine months ended September 30, 2019, increased by 19.4% to $1.86 billion compared to the prior year.
- 2Net income for the nine months ended September 30, 2019, surged by 280% to $599.2 million, significantly boosted by the absence of a large legal settlement expense from the prior year.
- 3Gross margin remained strong, albeit with a slight decrease to 63.9% for the nine months, primarily due to increased product transition costs and inventory-related charges.
- 4Operating cash flow was robust, with $635.9 million generated for the nine months ended September 30, 2019.
- 5The company ended the period with a strong liquidity position, holding $1.1 billion in cash and cash equivalents and $1.35 billion in marketable securities as of September 30, 2019.
- 6A $1 billion stock repurchase program was authorized in April 2019, with approximately $785.4 million remaining as of September 30, 2019.
- 7Management highlighted demand volatility from certain large end customers and anticipates this could impact near-term revenue growth.