Arista Networks (ANET) Tops Q2 EPS by 39c, Beats on Revenues; 3Q Revenue Guidance Above Consensus

Arista Networks (NYSE: ANET) reported Q2 EPS of $1.34, $0.39 better than the analyst estimate of $0.95. Revenue for the quarter came in at $405.2 million versus the consensus estimate of $360.4 million.

Second Quarter Financial Highlights

• Revenue of $405.2 million, an increase of 20.8% compared to the first quarter of 2017, and an increase of 50.8% from the second quarter of 2016.
• GAAP gross margin of 64.1%, compared to GAAP gross margin of 63.9% in the first quarter of 2017 and 63.8% in the second quarter of 2016.
• Non-GAAP gross margin of 64.4%, compared to non-GAAP gross margin of 64.2% in the first quarter of 2017 and 64.1% in the second quarter of 2016.
• GAAP net income of $102.7 million, or $1.30 per diluted share, compared to GAAP net income of $38.9 million, or $0.53 per diluted share, in the second quarter of 2016.
• Non-GAAP net income of $105.5 million, or $1.34 per diluted share, compared to non-GAAP net income of $53.7 million, or $0.74 per diluted share, in the second quarter of 2016.

"As we complete our third anniversary of becoming a public company, I am pleased with our record results in Q2 2017,” stated Jayshree Ullal, Arista President and CEO. “Our substantial financial performance, customer success and industry recognition has accelerated the migration to mainstream cloud networking.”

Financial Outlook

For the third quarter of 2017, we expect:

• Revenue between $405 and $420 million.
• Non-GAAP gross margin between 61% to 64%, and
• Non-GAAP operating margin of approximately 30%.

Guidance for non-GAAP financial measures excludes legal expenses of approximately $12 million associated with the OptumSoft and Cisco litigation, including bond costs related to the importation and sale of affected products and components during the presidential review period of the 945 investigation, stock-based compensation expense, including excess tax benefits on stock-based awards, and other non-recurring expenses. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis (see further explanation below).

GUIDANCE:

Arista Networks sees Q3 2017 revenue of $405-420 million, versus the consensus of $377.67 million.

For earnings history and earnings-related data on Arista Networks (ANET) click here.

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