Arista Networks, Inc. ANET reported strong third-quarter 2024 results, with revenues and adjusted earnings soaring year over year, driven by robust demand trends. Innovative product launches and steady customer additions backed by the company’s best-in-class portfolio strength ensured top-line expansion, while steady margin improvement contributed to earnings growth. Both the bottom and the top lines beat the respective Zacks Consensus Estimate.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net Income
GAAP net income in the reported quarter improved to $747.9 million or $2.33 per share from $545.3 million or $1.72 per share in the year-ago quarter, mainly propelled by higher revenues.
On a non-GAAP basis, net income was a record high at $769.1 million or $2.40 per share compared with $581.4 million or $1.83 per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by 31 cents.
Arista Networks, Inc. Price, Consensus and EPS Surprise
Arista Networks, Inc. price-consensus-eps-surprise-chart | Arista Networks, Inc. Quote
Revenues
Revenues surged to $1.81 billion from $1.51 billion in the prior-year quarter, driven by strength in the enterprise vertical. The company introduced various solutions for cloud, Internet service providers and enterprise networks to meet the rising demands of AI/ML-driven network architectures. These innovations enabled Arista to deliver a superior customer experience and increase customer engagement. The top line beat the consensus estimate of $1.76 billion.
Net quarterly sales from Products totaled $1.52 billion compared with $1.28 billion in the year-ago quarter. Service revenues increased to $287.1 million from $223.9 million. Arista witnessed positive demand trends owing to its strong product portfolio, which is highly scalable, programmable and provides data-driven automation, analytics and world-class support services.
Net sales from the Americas contributed 81.7% to total revenues, while international revenues accounted for the remainder. Driven by its relentless pursuit of innovative products, Arista maintains a strong leadership position in the Data Center and Cloud Networking vertical.
Other Details
Non-GAAP gross profit rose to $1.17 billion from $951.8 million for respective margins of 64.6% and 63.1%. The margin was above the company’s guidance and was buoyed by stronger enterprise margins and supply-chain discipline.
Total operating expenses were $376.5 million, up from $339.7 million in the year-ago quarter. Research & development costs rose to $235.8 million from $212.4 million. Sales and marketing expenses also increased to $106.8 million from $102 million due to a rise in headcount, new product introduction costs and higher variable compensation expenditures.
Cash Flow & Liquidity
In the first nine months of 2024, Arista generated $2.68 billion of net cash from operating activities compared with $1.51 billion in the year-ago period. As of Sept. 30, 2024, the company had $3.18 billion in cash and cash equivalents and $142.1 million in other long-term liabilities. During the quarter, the company repurchased $65.2 million worth of shares at an average price of $318.4 per share.
Outlook
For the fourth quarter of 2024, management expects revenues in the range of $1.85-$1.9 billion owing to healthy growth momentum. Non-GAAP gross margin is estimated in the range of 63-64%, and non-GAAP operating margin is approximated at 44%.
The company expects healthy demand trends in the remainder of 2024, backed by the strength of its existing portfolio and new product introductions. The company expects healthy traction from Etherlink AI platforms that are ultra-Ethernet consortium compatible, validating the migration from InfiniBand to Ethernet.
For 2025, management expects revenues to improve 15-17% year over year, with a gross margin of 60-62% and an operating margin of 43-44%.
Zacks Rank
Arista currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Upcoming Releases
Light & Wonder, Inc. LNW is scheduled to release third-quarter 2024 earnings on Nov. 12. The Zacks Consensus Estimate for earnings is pegged at a loss of $1.16 per share.
Keysight Technologies, Inc. KEYS is due to release fourth-quarter fiscal 2024 earnings on Nov. 19. The Zacks Consensus Estimate for earnings is pegged at $1.57 per share, implying a decline of 21.1% from the year-ago reported figure.
Workday, Inc. WDAY is slated to release third-quarter fiscal 2025 earnings on Nov. 26. The Zacks Consensus Estimate for earnings is pegged at $1.72 per share, indicating growth of 12.4% from the year-ago reported figure.
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