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Arista: Cloud Drove 'Spectacular' Year

Mitch Wagner

Demand for cloud technology drove a "spectacular" 2015 for Arista, CEO Jayshree Ullal said on an earnings call Thursday.

The company saw strong cloud demand in the enterprise but also particularly with hypercloud providers such as Microsoft Corp. (Nasdaq: MSFT) and Facebook , the company said in its earnings call for Q4 and full-year 2015, which ended Dec. 31. (See Arista Reports $837.6M 2015 Revenue, up 43.4%.)

"Arista has delivered a spectacular 2015," Ullal said in a prepared statement. "The inevitable shift from legacy enterprises to cloud workloads has fueled Arista's strong performance of profitable revenue growth and increasing market share."

Arista is seeing strong demand for its cloud technology among all its vertical sectors, but particularly among hypercloud providers, which Arista calls "cloud titans," and which make up a big part of Arista's business. Microsoft alone delivered 12% of revenue in 2015, continuing a run as Arista's biggest customer. Microsoft was Arista's only customer exceeding 10% of revenue.

Arista 2015 revenue was $837.6 million, up 43.4% year-over-year, with non-GAAP net income of $174.2 million or $2.44 per diluted share, compared with $105.5 million or $1.54 per diluted share in fiscal 2014.

For the fourth quarter, revenue was $245.4 million, up 41.5% year-over-year and 12.8% sequentially. Non-GAAP net income was $57.5 million, or $0.80 per diluted share, compared with $37.3 million, or $0.53 per diluted share in the fourth quarter of 2014.

For the first quarter of 2016, Arista expects revenue between $232 million and $240 million, non-GAAP gross margin of 62% to 65% and non-GAAP operating margin about 26%.

Arista traded at $61.88 up 6.41% after-hours Thursday.

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Arista expects continued growth, based on the growing market as enterprises shift to private, public and hybrid clouds, a trend which Ullal described on the call as "pretty inevitable." Arista's primary market is the data center, which has "lots of headroom," she said.

Ullal also called out growth potential in the transition from standalone routers to routers integrated with spine switches -- an area where Arista recently introduced product. (See Archrivals Cisco, Arista Beef Up Cloud Support and Arista Introduces Data Center Interconnections.)

Also on the call, Arista said it is preparing an alternative version of its flagship EOS operating system, in case of a final ruling against Arista in an ongoing intellectual property lawsuit filed by Cisco Systems Inc. (Nasdaq: CSCO) (See Arista Writing Alternative EOS – Just in Case)

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to wagner@lightreading.com.

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