Arista Surges 20% on Earnings Blowout

Mitch Wagner

Microsoft and other cloud providers helped Arista deliver fantastic financial results, despite an ongoing lawsuit from Cisco.

Arista revenue was $405.2 million, up 50.8% year-over-year and 20.8% sequentially, for the second quarter, which ending June 30 and was reported Thursday. Net income was $105.5 million, or $1.34 per diluted share, up from $53.7 million or $0.74 per diluted share, year-over-year. For the third quarter, Arista expects revenues of $405 million to $420 million, well above consensus of $377.5 million, according to SeekingAlpha.

Arista traded at $173.01 mid-afternoon Friday, up 19.84%

The vertical industry Arista calls "cloud titans" accounted for Arista's top customers, followed by cloud specialty providers, service providers, financials and other tech enterprises, according to a transcript of Thursday's earnings call. Microsoft in particular accounts for more than 10% of Arista's business, with "no appreciable change in that mix," CEO Jayshree Ullal said.

Arista CEO Jayshree Ullal. Photo by Theolive123 (Own work) [CC BY-SA 4.0], via Wikimedia Commons
Arista CEO Jayshree Ullal. Photo by Theolive123 (Own work) [CC BY-SA 4.0], via Wikimedia Commons

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The good news defies an ongoing lawsuit filed by Cisco, charging that Arista violated Cisco's intellectual property. Arista suffered a setback late last month, as the US International Trade Commission ruled to keep a ban in place blocking Arista from importing networking switches to the US. (See Arista Switch Ban Stays in Place for Now.)

Arista is working to meet demand, CFO Ita Brennan said on Thursday's earnings call. The company is "now firmly focused on implementing product redesigns and working with customers on qualification so that we can meet their needs in compliance with the orders," she said. Arista is "at scale" with its US manufacturer and executives believe they "have the capacity to support US customer demand from this site. In addition, we have worked to solidify our US supply chain and believe we can now support a more consistent use of US-based sourcing as needed."

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8/7/2017 | 8:20:19 PM
Despite the Cisco dark cloud, Arista still booms. 

Will there be a day of reckoning. Is Arista just profiting off of Cisco IP? Only time will tell us. 
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