01—Abstract
Summary
Summary of the 10-Q filed May 6, 2026. Cited figures are marked; the original filing is the authoritative source.
Arista Networks, Inc. (ANET) reported strong revenue growth in the first quarter of 2026, with total revenue increasing by 35.1% year-over-year to $2.71 billiona.
This growth was primarily driven by a 36.6% surge in product revenue, indicating robust demand for its switching and routing platforms, and a 27.3% increase in service revenue reflecting the expanding customer base. The company also saw a significant improvement in operating cash flow, which more than doubled to $1.7 billionb, largely due to a substantial increase in deferred revenue. While the company demonstrated strong top-line and cash flow performance, the gross margin saw a slight decrease from 63.7% to 61.9%, attributed to a higher proportion of sales to large customers who typically receive greater discounts.
Operating expenses also increased, with R&D and Sales & Marketing expenses growing by 29.0% and 21.4% respectively, reflecting continued investment in product development and global expansion. Despite these investments and margin pressure, net income grew by 25.7% to $1.02 billion, and diluted EPS increased to $0.80c. The company maintains a strong liquidity position with approximately $12.4 billion in cash, cash equivalents, and marketable securities.
02—Key points
Key Highlights
- Total revenue grew 35.1% year-over-year to $2.71 billion, driven by strong demand for product and service offerings.
- Product revenue increased by 36.6% to $2.31 billion, indicating continued strength in core networking solutions.
- Service revenue rose 27.3% to $397.7 million, demonstrating growth in post-contract support and renewals.
- Operating cash flow saw a substantial increase of 163.7% to $1.7 billion, bolstered by strong deferred revenue growth.
- Net income increased by 25.7% to $1.02 billion, with diluted EPS growing to $0.80 from $0.64 in the prior year.
- Gross margin slightly decreased to 61.9% from 63.7%, primarily due to increased sales to large, discount-receiving customers.
- The company maintained a robust balance sheet with $12.4 billion in cash, cash equivalents, and marketable securities as of March 31, 2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Arista Networks, Inc. kept $0.38.
- Revenue$2.71B100.0%
- Cost of revenue−$1.03B38.1%
- Gross profit$1.68B61.9%
- Operating costs−$519.0M19.2%
- Operating income$1.16B42.7%
- Interest, other & tax−$134.9M5.0%
- Net income$1.02B37.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 6, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $2.71B$2.00B | +35.1% |
| Cost of Revenue | $1.03B$728.70M | +41.6% |
| Gross Profit | $1.68B$1.28B | +31.4% |
| R&D Expenses | $343.70M$266.40M | +29.0% |
| Operating Expenses | $519.00M$417.30M | +24.4% |
| Operating Income | $1.16B$858.80M | +34.8% |
| Net Income | $1.02B$813.80M | +25.7% |
| EPS (Basic) | $0.81$0.65 | +24.6% |
| EPS (Diluted) | $0.80$0.64 | +25.0% |
| Shares Outstanding (Basic) | 1.26B1.26B | −0.2% |
| Shares Outstanding (Diluted) | 1.27B1.28B | −0.4% |
05—Questions
Frequently Asked Questions
What is driving Arista's revenue growth in the first quarter of 2026?
Arista's revenue growth is primarily driven by strong customer demand for its switching and routing platforms, which resulted in a 36.6% increase in product revenue. Additionally, service revenue grew by 27.3%, reflecting continued expansion of its customer installed base and support contracts. Overall total revenue increased by 35.1% year-over-year.
Why did Arista's gross margin decrease slightly?
The gross margin decreased from 63.7% to 61.9%. This was primarily attributed to an increased proportion of sales to large end customers who typically receive higher discounts as part of their contracts. Pricing pressures from competition and supply chain cost increases also contribute to margin fluctuations.
How has Arista's cash flow performance changed?
Arista demonstrated significantly improved cash flow from operations, increasing by 163.7% to $1.7 billion for the three months ended March 31, 2026. This improvement was largely due to a substantial increase in deferred revenue ($826.2 million) from customer PCS and product contracts, as well as higher income tax payables. The company ended the quarter with a strong liquidity position of approximately $12.4 billion in cash, cash equivalents, and marketable securities.
What are the company's key investments and how are they impacting expenses?
Arista continues to invest in research and development (R&D) and sales and marketing (S&M). R&D expenses increased by 29.0% due to headcount growth and new product introduction costs. S&M expenses rose by 21.4% driven by increased personnel costs. These investments are part of the company's strategy to enhance its cloud networking platform, introduce new products, and expand its global sales force.
06—Continue