Arista Networks beats expectations and its profits rise, sending its stock higher – News

Shares of Arista Networks Inc. were flying high in late trading today after the company posted strong second-quarter results, beating expectations on earnings and revenue and seeing its adjusted operating income cross the $1 billion milestone for the first time.

The company reported earnings before certain costs such as stock compensation of 65 cents per share, easing past the analyst consensus estimate of 59 cents. Revenue for the period came to exactly $2 billion, up 10% from a year earlier and surpassing the Street’s forecast of $1.96 billion by a fairy comfortable margin.

The results meant Arista was able to grow its bottom line, and it reported a net profit of $813.8 million in the quarter, up from $655.4 million one year earlier.

Arista’s business has been booming ever since the beginning of the artificial intelligence craze that kicked off with the emergence of ChatGPT in late 2022. The company benefits because it sells essential data center gear, such as premium network switches for cloud computing providers and high-performance routers and leaf and spine switches for data center operators.

These components are in high demand, because AI data centers rely on enormous clusters of graphics processing units that work in tandem with one another, hence the need for the rapid data center communications infrastructure that Arista provides.

Arista boasts an impressive customer base, serving major players in the AI industry such as Meta Platforms Inc., as well as stock exchange operators such as Deutsche Börse and the world’s top racing league, Formula One.

Arista Chairperson and Chief Executive Jayshree Ullal (pictured) said her company is well-positioned to carry on its momentum in data-driven AI networking. “Our customers are decisively standardizing on our best-of-breed platform to bring transformational innovation and impact to their technology endeavors,” she added.

Her confidence was backed up by strong guidance for the current quarter, with Arista targeting revenue of approximately $2.25 billion, well ahead of Wall Street’s target of $2.12 billion.

Arista was fairly busy in the prior quarter, swooping to make a key acquisition in the shape of VeloCloud SD-WAN from Broadcom Inc. in a deal that was reportedly worth around $1 billion. VeloCloud was one of the pioneers of software-defined wide-area networks, and sells industry-leading cloud-based SD-WAN products with integrated security, which are expected to complement Arista’s high-end 7000 Series routers that run the Cloud EOS operating system.

Most important, VeloCloud fills a gap in Arista’s product portfolio, so it can now offer end-to-end networking solutions spanning high-end switches for data centers to Wi-Fi and now SD-WAN.

Also in June, Arista announced that it had hired former Fastly Inc. CEO Todd Nightingale as its new President and Chief Operating Officer. He joins a deep bench of talented executives at Arista that includes Ken Duda, Mark Foss, John McCool and Ullal. In particular, Nightingale’s prior experience at Meraki, an early cloud networking leader that was later acquired by Cisco Systems Inc., should be invaluable to the company as it looks to expand into new markets.

Arista’s stock has had a wild ride of late. With the announcement of U.S. President Donald Trump’s “Liberation Day” tariffs in April, it fell by as much as 46%, only to rebound quickly, emerging as one of the biggest gainers on the S&P 500 in July.

The stock jumped again, up more than 12% in extended trading on the back of today’s results, and is now up just over 6% in the year to date.

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