Thursday, August 1, 2019

Arista revenue rises 17% as some cloud titan spending resumes

Arista Networks reported Q2 2019 revenue of $608.3 million, an increase of 2.2% compared to the first quarter of 2019, and an increase of 17.0% from the second quarter of 2018. GAAP gross margin was 64.1%. Non-GAAP net income was $198.6 million, or $2.44 per diluted share, compared to non-GAAP net income of $155.7 million, or $1.93 per diluted share in the second quarter of 2018.

For the third quarter of 2019, Arista is forecasting revenue between $647 million and $657 million.

"In Q2 2019, Arista raised the ante with innovative products in both 400G and Cognitive Campus. Our leadership in cloud area networking is now widely recognized by industry analysts, partners and customers,” stated Jayshree Ullal, Arista President and CEO.

On a conference call, Arista execs cited "some softness in demand" from cloud customers. Spending by cloud titans has resumed but is slower than in 2018. The new norm is no more double-digit growth in spending from cloud titans.
The cloud titan segment remains Arista's largest vertical.
Services represented 15.6% of overall sales.
There was a record number of new customers during the quarter
International sales account for 27% of revenues.
Although it is impacted by tariffs, Arista does not believe its gross margins will be impacted by the US-China trade war.'

Commenting on recent developments in 400G optics, Arista CTO Andy Bechtoelsheim said pluggable optics have led to a disaggregated model of switches and interfaces. Cloud providers typically will qualify at least three optical interface vendors for cost reasons and to diversify their supply chains. Arista believes the market for 400G ZR will be highly competitive.