Light Reading
Arista soared on the wings of its cloud, services provider, financial and technology industry customers.

Arista Stock Jumps On Meteoric Growth

Mitch Wagner
8/7/2014
50%
50%

Arista's stock jumped 8.81% in after-hours trading Thursday after reporting a whopping 65.2% year-on-year growth, and a 17.7% sequential increase, in second-quarter revenues to $137.9 million.

Arista Networks Inc. traded at $78.58 at 5:42 p.m. EDT after its first earnings report as a public company.

Not a bad opening act for the data center switch vendor as it takes to the big stage.

The vendor's gross margin of 67.7% was better than the 64.6% recorded a year earlier but down slightly from the 69.4% achieved in the first quarter of this year. Net income was $21.6 million, giving an earnings per share (EPS) of $0.34, compared with $10.3 million (an EPS of $0.18) a year ago.

The company, which has built its business around the growing demand for virtualized and SDN-enabled switching, expects further growth in the third quarter, as it anticipates revenues of between $142 million and $150 million and a gross margin of 64%-66%. (See Arista Looking for Love in IT Places, Arista Announces Datacenter Switches and Arista's New Hardware Packs SDN.)

Is that kind of growth sustainable? Jayshree Ullal, Arista President and CEO, believes so. The company's core customers -- "cloud titans," Tier 2 service providers, finance firms and high-tech enterprises -- will continue to boost sales into the future.

Jayshree Ullal, Arista president and CEO (center); Andy Bechtolsheim, founder, chief development officer and chairman (left); Kenneth Duda: founder, CTO and SVP, software engineering
Jayshree Ullal, Arista president and CEO (center); Andy Bechtolsheim, founder, chief development officer and chairman (left); Kenneth Duda: founder, CTO and SVP, software engineering

Deployments in those companies start small, but then grow over time as vendors earn the company's trust. "We believe [that] in all our major verticals, we have tremendous opportunities to deepen share," Ullal said.

Cloud providers build out networks in real time, when customers sign on, noted the CEO -- they don't build in anticipation of future demand, or to create demand.


Learn more about SDN and virtualization at Light Reading's Data Center Infrastructure channel.


Only one customer comprises more than 10% of Arista's revenues in the second quarter -- Microsoft. Arista would not comment on its earnings call exactly how much revenue Microsoft provides, but Arista noted when it filed for its IPO that Microsoft generated 22% of its revenues in 2013. (See Arista up 32% on IPO and Arista Faces Legal Challenge as It Files for $200M IPO .)

Over time, Microsoft's share of Arista's revenue will settle to 10%-20%. "Microsoft will always continue to be a very important customer to us," CFO Kelyn Brannon said.

Arista is seeing growth outside the US, driven at least in part by its US customers growing internationally and taking Arista with them. International business made up 25% of revenue in the most recent quarter, up from 18% in the previous quarter and 17% a year ago, Brannon said. Arista is focused on the same four verticals internationally that drive its US growth, mainly in developed countries -- such as the UK, Germany, Netherlands, Japan, South Korea and Australia -- that favor large data center projects.

Also driving growth for Arista is a partnership with VMware Inc. (NYSE: VMW), which provides virtualization software that complements Arista's hardware. Colt Technology Services Group Ltd (London: COLT) is deploying VMware software on Arista hardware as a big part of its drive to data center and network virtualization. (See Colt Pulls the Trigger on Data Center Virtualization.)

VMware and Arista have a common rival -- the same one that pretty much every other networking company faces -- in Cisco Systems Inc. (Nasdaq: CSCO).

— 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.

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
From 4G to 5G: Alcatel-Lucent's Dave Geary

11|25|14   |   09:09   |   (1) comment


Dave Geary, President of Wireless at Alcatel-Lucent, talks about the evolution of the 4G market, small cells, partnerships, 5G and the IoT.
LRTV Huawei Video Resource Center
Building a Secure Telefonica Network With Huawei's High-End Firewall

11|24|14   |   4:37   |   (0) comments


Andrew Davies, IP architect of the Telefonica, a leading digital communications company, discusses the Huawei security gateway solution and putting the solution into the testbed.
LRTV Huawei Video Resource Center
Huawei Partners with Spirent to Verify CE12816's 10GE Port & TRILL Networking Capabilities

11|24|14   |   2:50   |   (0) comments


Spirent Communications is the world's leading supplier for telecom testing appliances and solutions. Spirent has been in a close partnership with Huawei for a long time.
LRTV Huawei Video Resource Center
Saudi Airlines & Its ICT Transformation

11|24|14   |   2:07   |   (0) comments


In this video, Saudi Airlines discusses its network problems and how Huawei's Agile Network is its all-in-one solution.
LRTV Huawei Video Resource Center
Huawei's Agile Switch Benefiting Saudi Arabia's Yamamah Hospital

11|24|14   |   2:40   |   (0) comments


Saudi Arabia's Yamamah Hospital speaks about how Huawei's Agile Switch has improved the medical service's network infrastructure.
LRTV Huawei Video Resource Center
FanPlay & Huawei Build a Wireless Agile Smart Stadium

11|24|14   |   2:13   |   (0) comments


FanPlay is a cloud-based white label service, which is effectively a football fan engagement platform underpinned by mobile payment technology.
LRTV Huawei Video Resource Center
Building an Agile Stadium

11|24|14   |   3:54   |   (0) comments


Stadiums may be thousands of tons of concrete and steel, but they now need to be agile. Being at the stadium may not be as alluring as it once was. Sports franchises and stadium operators discuss how to get fans back.
LRTV Huawei Video Resource Center
Huawei Helps ChinaCache Tackle Challenges in the Internet Industry

11|24|14   |   3:09   |   (0) comments


ChinaCache is China's largest content distribution network supplier. Huawei's CE12800 has provided ChinaCache with very strong support in its establishment of an infrastructure network.
LRTV Huawei Video Resource Center
Cefinity on Managed Security Services & Next-Generation Firewall

11|24|14   |   7:05   |   (0) comments


Cefinity is a cloud management service provider in Southeast Asia. Ivan Zhang, CEO of the company, discusses the implementation of security service management in the cloud era.
LRTV Huawei Video Resource Center
Huawei's Agile Gateway in the Eyes of Cefinity

11|24|14   |   2:11   |   (0) comments


Cefinity is a managed service provider for enterprise networks. The company currently uses Huawei's AR series routers for the most complete range of functions. CEO Ivan Zhang speaks about the advantages of the AR series routers.
LRTV Huawei Video Resource Center
CTO of Bus-Online Talks About Huawei's Agile Gateway

11|24|14   |   2:53   |   (0) comments


Bus-Online covers around 100 million users everyday. In addition to providing mobile TV, and advertising services to the public, Bus-Online has also entered the field of mobile Internet.
LRTV Huawei Video Resource Center
Amsterdam ArenA as an Agile Campus

11|24|14   |   3:31   |   (0) comments


The Amsterdam ArenA, home of the Ajax soccer team, can be a crowded space. ArenA has partnered with Huawei to work on bringing ample bandwidth to 53,000 people at the same time.
Upcoming Live Events
December 2, 2014, New York City
December 3, 2014, New York City
December 8-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
April 14, 2015, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
Irish Telecom outlines the rise of VoIP technology, including its adoption within businesses and their perception of its quality.
Hot Topics
$38.3M: Ain't That a Kik in the SMS
Sarah Reedy, Senior Editor, 11/20/2014
Net Neutrality Even Mark Cuban Could Love
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/26/2014
Do You Have a 2020 Vision?
Dennis Mendyk, Vice President of Research, Heavy Reading, 11/21/2014
Why 5G Is a Different Beast
Robert Clark, 11/26/2014
New Juniper CEO Can Be Thankful for $14.5M
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/25/2014
Like Us on Facebook
Twitter Feed