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ANET Arista Networks

Participants
Charles Yager Director, Product and Investor Advocacy
Jayshree Ullal President and Chief Executive Officer
Kenneth Duda Founder, Chief Technology Officer and Senior Vice President, Software Engineering
Ita Brennan Chief Financial Officer
Anshul Sadana Chief Operating Officer
Meta Marshall Morgan Stanley
Ryan Koontz Rosenblatt Securities
Jason Ader William Blair
Rod Hall Goldman Sachs
Amit Daryani Evercore
Jeff Kvaal Wolfe Research
Sami Badri Credit Suisse
Paul Silverstein Cowen
James Fish Piper Sandler
David Vogt UBS
Samik Chatterjee JPMorgan
Fahad Najam MKM Partners
Simon Leopold Raymond James
Aaron Rakers Wells Fargo
Tim Long Barclays
Alex Henderson Needham
Jon Lopez Vertical Group
George Notter Jefferies
Ben Bollin Cleveland Research
Jim Suva Citigroup Research
Call transcript
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Operator

Welcome to the Fourth Quarter 2020 Arista Networks Financial Results Earnings Conference Call.

During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. [Operator Instructions] As a reminder, this conference is being recorded and will be available for replay from the Investor Relations section at the Arista website following this call. the to turn now will call Mr. over I and Yager, Director Advocacy. Product of Charles Investor begin. may you Sir,

Charles Yager

Thank XXXX. afternoon, are results announcing operator. and afternoon, With quarter Networks’ you, Arista Good fourth and for Ita me joining you President December a Financial ending on its us. Brennan, for Networks Arista’s fiscal today’s Officer. Executive issued the call Chief Jayshree Chief Arista everyone, Ullal, XX, Officer; and This thank release press

the of release, can you would copy If website. a online it our you at like access

to obligation non-GAAP measures this been after a statements. materially statements undertake to our have call. those and note these could During Networks’ cause of on of them differ that our and expressed the subject views financial We on potential use detail most statements relating certain we discuss our recent financial call, these anticipated adjusted business, total innovation year, benefits course strategy update uncertainties outlook our of this the and are in which this in today Form acquisitions, results market apply documents that financial and specifically to by should XXXX recent charges. and XX-K, our with which the management actual please market future. and certain including no as statements we for opportunities, COVID-XX risks not rely XX-Q conference Form on the the SEC, Arista These these of call term addressing the of to quarter filed you forward-looking will forward-looking our longer in from basis and in exclude make our first the on fiscal Also, for the impact to are outlooks, as representing those addressable product

to financial that, these Jayshree. financial turn the measures provided to release. over With measures call have I’ll earnings our non-GAAP press reconciliations GAAP of We in

Jayshree Ullal

one pandemic Thank you, of fourth us and world taught that thing us, XXXX this Charles. everyone, In in adapting If it's our importance earnings XXXX, for for joining afternoon has rapidly. Thank you, quickly changed our there's real-time. quarter call. the

your our families are handled placing for proud trust I QX delivered partners we XXXX these business found all As revenue. team, their $X.XX. and some including we contract of to that of this unknowns prepare as and XXXX of and many Back support were with safe thank employees ways emerging, million and to so us. hope and in where our well $XXX.X vaccines supply revenues created continuity. of software during quarter healthy specifics. shutting A-Care our communicating of new closed, services uncertainties with am and a our to and their a of virtual earnings leadership our times. norm were the unprecedented renewals a non-GAAP for lot approximately a certainly customers as how We our products we've With XX% access offices we times. manufacturers in lead resulted chain had cohesive customers, you of share our for down for contributed and and longer constraints per

providers, specialty a In fourth new of place, result the and and We've and followed registered Cloud past margin was quarter. by customer place. year. record cumulative for and service our by X,XXX providers vertical. QX decade. customers the was customers, the direct provider gross a software our services third contribution financials this of the over in We both surpassed largest cloud now second, campus Enterprise the XXXX, vertical Titan have momentum dollar was and XX% tied in non-GAAP million Our logos at for and and influenced mix enterprise quarter a enterprise higher number

ranges terms concentration Cloud sector XX% XXXX. XX%, trends, provided. was and see with at for the providers at of effective financials Enterprises, at approximately have XX.X% approximately year consistent than XX%, only at In customer greater XX%, approximately we Titans including we Microsoft the

geographical differentiated at and based XX%, contribution customers. higher stronger and We international core reiterate data our the more evolutions. One, Cloud center with QX, three on XX% with was a line these our products to architecture major principle on based and XXXX, Titans, spine going believe X a at cloud our In multi-year diversified highly terms on growth Arista part turbulent the EOS, Despite of built is cloud-first product we slightly Arista especially mix, for Americas with XXXX. products emerge As.

We in range contribute expect future. XX% to this the approximately XX% to

second the the routers cognitive is campus entry and adjacencies, market into routing replacing our network workspaces. Our with

to We to the approximately adjacencies XX% in alternative together legacy two range expect these a as compelling networks. to XX%, contribute of incumbent

acquisition. or models, Our subscription software on third software response in DMS, detection licenses that We are software and net Please are category advanced DANZ generally is core or as recent Security Switch router, Big Awake our that adjacent subscription-based predict services. network network and perpetual with such contribute XX% included fabric, in not CloudVision, Based approximately services multi-cloud and range. note counted and the monitoring the product Acare, these and lines. of EOS will Arista here

post network a data-driven. from undergoing places in relevance COVID-XX to has in paradigm. analyst data-centric silos industry transformation helping we opinion, networking and we that is actually of that As to cloud-first network And network Arista's customers era. metamorphosis a with their the digital research cognitive ahead, or point value cloud seamless this customers is has shown in that the pandemic concur. the believe our The increased look the

workloads home, really to devices, video, is whether workspaces. blurring The Arista locations, OT, and As client-to-cloud and networks workflows. all experience between cloud, We user for elastic transit IoT, the more address users, boundary more the of believe this is into your explosion well-positioned and mobility it's office, the we data-driven of Teleworker workspaces.

observability have centers data And world's gained A a Arista's on based software-driven this and XXXX helped largest QX example to acquisition the a experience. Big cognitive has we cloud networking for of good us modernize we Switch or some providers earlier fabric our of expertise XXXX. of DMS powering trusted did partner. contextual DANZ that is in as are We this introduction that monitoring

Zero Our a cements the that relevance also we and month this network Trust of launched protection differentiated Vision security.

to Our to Trust our response is and network part holistic aspect Zero network cloud these of detection union A network our network. cloud-first the segmentation, awareness and situational key of of requires and strategy visibility principles every bring security.

and part state and Arista of it observability So as we a security inherently and bring designed functions, it the network to architecture foundation. be routing, must and AI-driven

invite Duda, our and of President of latest Chief to Engineering, some like Ken? I'd and Senior Technology Founder our Software Officer on this, Ken with security. So share Vice to innovations

Kenneth Duda

for framework of top Arista. Thanks, security Jayshree. is mind A Trust at Zero

in than secure so into network ever important by For else. talk focused, than needs have fine so This that itself. networking addressing a was it foremost, to sense our concern years, one XXXXs, for making first is our integrating devices security makes security on more the is and products. is the connectivity everything without from greater bolt-on can many that security today no everything providing Arista day but directly vendors connectivity network sure of the of customers, many security-conscious is where operators

specifies operator into to to segmentation The about assigns security Macro-Segmentation I'd on segments device or and to policy. little using. connecting, network this that's the go Based already called on call innovative MSSG, You've type are that MSSG. permitted the the Service feature deeper another communicate. a acquisition endpoints Awake progress they AI-driven a in With detection user device then heard Arista operator and/or like segments. applications Groups, which of and of of Specifying pairs the the are response.

the not manufacturing the or even center, connect finance particular, be enforces The For to applications laptops whether completely endpoint and can another. wired the example, In policy that but or operator data other policy change changes whether the permit working engineering to wireless, the applications or reassigning campus to policy remotely. might the network one to important. segment quite requiring corporate network. in uniformly, MSSG an of address to to on the policy, different can assignment, independent which including any without a is not on-premises

For suspiciously, device can MSSG triggering be and off that user Arista's adversary they detected. any works standards-based tipping device deploy networks. XXX% the packets quarantined events thus, so existing device into any is network proprietary have cetera, without and adding investigated change with example, be on segment to can et untrusted incrementally an to been compromised it the that without trailers, encapsulations, the reassigned easy behaves if the without headers,

led solutions. in relying which high-performance for enforcement hardware scale classification, TCAMs implemented Finally, switch to on for expensive is has in competing problems entirely without

a in security integrated an and switching larger larger devices. is that is in and Arista secure example of to such so is performance view shelf. customers of provisioning, off This I'm Moore's is including Our of set to from scale aspects an the to security. visibility, Law routing delighted able as just as enabling a the networking, course, monitoring, operating solutions into trend where that beyond and you, process move automation are but provide to manageability, Jayshree. network, a modern helping is feature the essential be larger And and mainstream, integration afterthought MSSG and building and, address play role, challenges many Back a in not Thanks. perspective, other

Jayshree Ullal

art and just the customers in we building your best-in-class and proprietary wait an networking I software engineering Clearly, for more the you to modernize as team has network, just programmability, can't and world-class with to and must the with Thank And all adjective architecture of to security a this credit networks. of you, turn Ken. silo are it. and founding secure cloud Arista, mentioned. build fatigued mastered and to noun innovation quality from see Ken, agility greatness you

In time, to spoke our workspaces about campus is I last that market. adjacent next-generation another progress addition key routing

operating over cloud, yielding have To In and XXXX. and us different customer The on Arista's been customers of for its service we summary, in one XX silos XXX stack with in disparate has six simplification our on XXX in BGP campus, made Arista fatigue features segment good routing silos. in give delivered we VXLAN, context platforms a these alone, and of generating investments innovation investments contrast and you releases routing, standards-based software are routing. own just stark enterprise systems this, data years center, in cloud of Our across many over current EOS provider have WAN, EVPN, demonstrates and for wins. the data footprint result each in to introduced brought these routing, and traction going XXXX

longer building harnessing is industry networking change across truly are data and stack unify upon and no And to heritage financial this poised turn our specifics. and software for that CloudVision. We is enough for ripe network put, to Ita? the sets Simply like consistently we're a to I'd one for With Ita archiving transition mediocre good inflection good The we and it one believe data EOS enough multi-year data-driven networking. cloud to networking over is ahead. and why acceptable. this that,

Ita Brennan

selected end million is to the of of our results well of our in XXXX Jayshree, XXXX for This excludes Thanks, and up good non-GAAP and $XXX afternoon. XX.X% upper were provided charges non-cash $XXX.X QX reconciliation analysis in earnings full based other Total $XXX year impacts, our A our guidance QX year-over-year on acquisition-related results and guidance and release. certain all non-GAAP items. stock-based full and million. million, of our revenues is and to compensation non-recurring GAAP QX above

on COVID improvements second While with represented wave-related shipments last supply for approximately in quarter. we software XX% Service from at continue disruptions. somewhat to million, revenue, slightly remained International and revenue, of third the or chain total renewals strive XX% came and some quarter, quarter. in for the XX% quarter up the third revenues constrained support from XX% the of $XXX.X in front, total down

on XX.X% guidance our and enterprise customers our a up XX%, in of of due cloud heavier gross expenses basis businesses shipments While quarter. end improvement last the revenue, third approximately to reflecting location region quarter-over-quarter in - XX% were titan largely $XXX.X is QX were our upper to Overall mix our for quarter $XXX.X customers, of the the from million. by the by mix year-over-year period. did of quarter At see the some of shift incremental XX%. or and healthy margins a this in a in million, at Operating to our geographical deployments in we financial

top compensation and XX% new our charges. marketing improve. up We during variable with last the quarter continued continue from the investments lower period. spending line by other came operating X.X% R&D as increase up offset in to headcount-related $XXX.X for $XX.X was year somewhat Sales $XX.X reflected spending quarter revenue, expense or of $XXX.X last revenue, expense This at increased the product of costs, in employee million million, increased performance and introduction quarter. to from million million, or

lower we reminder, marketing continue and a As to expenses. COVID-related benefit from travel

came approximately quarter $XX.X of compliance-related Our $XX revenue million, revenue, million, at last or costs of quarter at normal up G&A in fourth activities. X% from reflecting

future Our revenue. rate interest million, for expense the amounts. million, favorable unfavorable quarter a structural net XX.X%. and a was some $XXX.X statute Overall, operating The revenue. one-time reserves, of in for $XXX.X effect, million our FX XX.X% approximately was for the which for was a rate or of quarter periods. effective of will the XX.X% million the return income tax expense more rate in or and income $X.X to expired the was release and Other tax income by $X.X included some resulted limitations the period. tax the favorable income XX.X% of Other of of and rate included This income, this in likely offset quarter of

diluted resulting up $X.XX, of in prior approximately diluted the X% number XX.X the year. per shares, million share for Our number earnings quarter a share from was

To share of cash Now cash $XXX in and approximately cash of or the and at balance million ended generated operations billion. investments year shareholders we of XX%, million, uses year, from the form equivalents to sheet. turning this on to returned Cash, for $XXX our of approximately the repurchases. $X.XX the recap

to which billion million, consideration closed two repurchased of the To approximately million, worth $XXX business. fund $XXX million the X.X cash over XX%, for million approximately shares Board to in shares, QX against retaining year, acquisitions, commencing date, authorization $XXX used XXXX. of we repurchase during in the balance we addition, three In have $X or years or our

remaining will opportunistically the mandate. against continue We execute to

working in million period. cash for in fourth in and to were investments the days period, operations from came of up in $XXX.X continued Turning prior from the reflecting XX quarter. of to operational up cash X.X the Inventory quarter. $XXX the days, in in reflecting X buffer the billings to $XXX performance from period, million increased performance components from last DSOs million solid in XX at down we turns the linearity times and income We generated net certain the quarter, QX, Inventory as products. continue times, capital.

renewal deferred This product $XXX was increase from The deferred total fourth typical of Our of small and a balance the is related up product QX, revenue timing linked vary quarter-over-quarter basis. activity $XXX million, largely deployments. reflected million payable the in amount service a directly inventory services $X.X revenue receipts renewals, days quarter payments. revenue to the down expenditures million. in XX QX. deferred new on from to term were of days, days level Accounts and of service reflecting Capital were XX timing and for quarter which can

in by declines of in other cloud our fiscal saw Now revenue, business the offset for turning and growth with diversification beyond. sectors. market XXXX, in somewhat first to titan We our quarter outlook the good expected

annual rate with we of which for and the perspective, We growth software XXXX, expect expect cloud our provider time. combination line allowed and business continued make combined to with a for solid to titan with meaningful the of XX% growth contribution. with continue believe the to these areas in combined enterprise a more top strength consensus Looking these a line over comparatives to customers, is product we year-over-year XX%. trends, and adjacencies From services favorable rates in contributor growth the year,

deceleration XXXX. line in note also we likely top second some rates will recovery year-over-year through as half quarterly in should move growth result that our You XXXX

front, the outlook XX% continue margin gross gross will of mix customer margin XX% to our driver. the overall reiterate to On with we remaining key

business. the committed Turning across go investments to go-to-market forward the and innovation in growth spending business. remain expansion and results to continued support support to This making R&D in investments. We enterprise to based includes investments campus and

diluted back monitor need as outlook tax for to impacts Effective new on business our results approximately however, non-recurring operating attempt turn the to Charles? Charles. and million of This non-cash our be to and to of and COVID-XX its based compensation a other impact will is million, revenues situation, of understanding is this shares continue Finally, for the on first all any XX.X% XX% is guidance approximately QX, non-GAAP million above quarter, mitigate stock-based follows, as our unfolds. $XXX margin rate challenges approximately and discussion uncertain backdrop, to and guidance as which of and inherently reflects XX an our XX%, supply With approximately excludes call our margin situation chain. with current the items we to $XXX shares. and will XX%. of to gross I expected now is,

Charles Yager

Ita. you, Thank

Q&A to away. now like move going you a themselves limit to Arista everyone We single earnings understanding. time to of are your to for Operator, I’d the question. portion Thank to Due the it call. request take please constraints, that

Operator

Instructions] Morgan from Stanley. Your comes first Marshall [Operator question Meta with

line Your is open.

Meta Marshall

Great. Macro around the announced comment Segmentation of kind kind Thank Maybe you. - a just you security of portfolio. just

needs as upon need kind Thanks. that and to think Just need expand portfolio, the features are other the to other that data functionalities your just, that needs? you of, customer out you security broadening think you just base partnerships different address will you'll or campus maybe than that the center

Jayshree Ullal

we've robust had Meta. as very set know, Thanks, partnerships. of And a you

center one the the aspect network. only But So the will network of protecting we data or on be working is securing campus.

different with firewall of sure You you vendors. - make types have to work

to multi-cloud the zones. and the have You cloud protect

You devices identity. and the protect the have to

our more our to partners as Okta. [Technical ClearPass roles So mapping Macro and with Forescout a Difficulty] Segmentation We Aruba, as like more identity and enforce fronts. with well and partnerships has lot enforcement of multiple firewall

say just security too thing to is, do. network the with be We'll working I the want important is Arista So partners. first and and to securing for these protecting

the too. Ken other to encryption way also see whether I'd and to it campus, or we network-wide security, data segmentation and all love Anshul wireless. capabilities center ahead, how whether But about. and and bringing of for is the more we the Looking more And comment in down many privacy, talked forms because pop the the security in it's securing forms and our to or networks

that? Ken So something Anshul, say more do you to or want about

Anshul Sadana

customers enterprise add? apps way service extremely no marrying we're Sure, ways, connect it's to quite there what know, on Jayshree. X,XXX enterprise connect anything Me Hops, your Different it to one encryption Middle, Vaseline of different The on and And cloud you approach so functionality is whether side, happens different cloud to the cloud And and there's There tunneling, with our these Helping as Connect, Meet single types more for focused want of important. Express, enabling apps. Direct different the to are forms enterprises taking different channels on. our more providers. EVPN you Ken, and In to

Kenneth Duda

we Yes. prevention. have secure we for features, segmentation to including I links, the intrusion simply newest in is security multistage hardware advanced support second for - IPSEC classification, just ACLs we've portfolio including Packet to announcement other But area. a of and wireless add several that robust made our this Mac that wanted already, features individual

a to of in that, are a help networking So with future course, us customers network anyone that I to secure the more solution. solutions. who said, fully well, able partner, looking And secured already think be build build on, can

Meta Marshall

Great. Thanks. Okay.

Curtis McKee

Thanks, Meta.

Operator

question comes Securities. Ryan from next with Koontz Your Rosenblatt

is open. line Your

Ryan Koontz

ask Hi. the I chain. to supply about wanted Thanks semi for question. you

you feel times you're about I us lead hear what's your comfort key from color comfortable inventory there? are obviously, capacity us quarter it. in about more do and give out, on talked issues, You with your production little what appreciate give and you suppliers on, on a going building Can some you parts. there? seeing the out you. to starting commitments you stretch feel Thank We

Jayshree Ullal

starting we with as of constrained we Ryan, March. been Sure. said, much XXXX, have

issue supply entire So the been a real for this chain. has

chain well some plan We while components, have for. still I her and build we say lead very as ahead the and team, taken is that we that great of could have semiconductor supply partners, we if time steps, more we out team remiss, have as large still for to some lead have. constrained. And these we but the would be products parts with than times long Ita extremely lot some our didn't Anshul use a important inventory I

Ryan Koontz

much. very Thanks Helpful.

Jayshree Ullal

Ryan. Thanks,

Operator

Your Ader Jason Blair. next William with question comes from

Your line is open.

Jason Ader

of is both? can about or it's Yes. that's you you talk Jayshree, just the infrastructure? enterprise and more the in Thank the what's momentum portfolio you. your Or build-out distribution would driving sales say maybe your of it product it's expanded,

Jayshree Ullal

Yes.

the We've simple side. both. Jason, it answer, think product been making both I investments on is is multiyear the

Schmidt, huge thing in that's have to also but Ashwin both being it, And all, and the the just clicking It's center in product best-of-breed I and use data single center Anshul started crossed vision is the would in a internationally. are of product and years out one ago. the say also customers with but going CloudVision few been to since US a X,XXX First OS, beyond both capacity, and thing data roles We capability. building invest really our and over we this different shipping cases. the Chris customers our cloud team a But differentiator. third resonating

just not that quality operate made a and it, of for So to build much more it I to complete. experience ability network, but great to the experience has think them

would I go-to-market products, operation experience. say and So great a and high-quality then great

Jason Ader

Great. you. Thank

Jayshree Ullal

Jason. Thanks,

Operator

Your next question comes from Rod Goldman Hall Sachs. with

is open. Your line

Rod Hall

to Yes. the you the about ask to that vertical regards against question. expectations. for beat wanted solidly just with pretty providers, I our Thanks guys

and year your So little weak. curious are to cloud about can cetera? just it year? this a cloud color thinking that. growth et you there. And single-digit curious Thanks. more bit on just little this I'm And rate, want if guys growth don't grow you maybe thoughts you But is Maybe a are what then cloud bit still a talk was

Jayshree Ullal

was us volatile. Right, year. and Cloud Rod. Well, for very Titan as tough visibility you been pretty on last has know, difficult The cloud

penetration starting Tier Tier hand, X, our we've as we're both well been cloud make as Tier good telling as providers X other service you, to X providers. in On the

make come Titans. So that the up to some volatility of has for nicely up in our

our the asking overall felt sectors. in took And three there in have things were terms all because reflection the much in had some and we we But that? volatility that Anshul, the of down. five an view, products But you the firing and you add were our new verticals on we did on had, of question, partnership no is in all our was happen. may is of decisions with In comment we Titans. did so we XXX-gig of strength Cloud we year, QX, titans, all Anshul, that, of preferred intimacy in we delays longer achieve to in their to want qualification want on in you to spite to do

Anshul Sadana

work And well partnership half the is Sure. ramping will both large. see as we for the cloud. co-development for believe along Jason, XXX-gig, are collaboration, second us fairly with these do coming Titan XXX-gig of to our well, already will Cloud with year. titans cloud we start believe numbers we the well we as The

seen rates, our solid but believe never will we you'll obviously, them. with So have remain growth business

Operator

And your next…

Rod Hall

And… you. Thank

Jayshree Ullal

Thanks, Rod.

Rod Hall

to on comment that, don't you if know I had on I providers. was any going but. say

Jayshree Ullal

be on well us. Providers are is It when to investing. provider tend a seasonal. doing for They depends

of strong, some think the specialty them investments back very prior coming had and less I they providers, year. are our So

not cloud. on a to the public need be And suggests. them that recognizing And name the cloud, some as specialty of just rely also they are

optimistic feeling are effect we So about. more it's

Rod Hall

Great.

Thanks, Okay. Jayshree.

Jayshree Ullal

Thanks, Rod.

Operator

Evercore. Your question Amit next with from comes Daryani

Your line is open.

Amit Daryani

has XX%, March, I I all, think, all will good to XX%. And guess given think implied the of XXXX full had. a guidance the question congrats year calendar be on guide, think year-over-year. First about quarter I the I is, the my up as year be craziness XX% really really on

I decelerate just XXX-gig the comments, through why compares, think do up the especially you Thank Beyond go about will talk think Anshul growth year, back ramping as about given the you. we could in made half? maybe you the

Jayshree Ullal

two you line to the You of and numbers really at started lower we with from And it's a year I first I some recover half. was obviously, trend very think look had Amit, kind revenue year about year, the right? very really if in respectable constrained of mean, Yes. a top last it the exit then, number. all halves,

it a has to with comps. of do So lot the

I about than just necessarily year-over-year of it target this how progress the a that we trying particular XXXX. to think because through think growth of more you rate, as have to the year we move in just terms volatility year, in saw

Ita Brennan

And Amit, But our yes, always of is to are Cloud with just know, add our long-term. confident than we that, near-term better you to our visibility as Titans. position

And we go forward we'll So know the better as to quarter-by-quarter. I'm forecast. looking on sure raising you

Anshul Sadana

Amit, don't again. ask questions those

Amit Daryani

- very you much. she just Unlike, thank

Operator

with Your next question Wolfe comes from Jeff Kvaal Research.

open. is line Your

Jeff Kvaal

either in extent what those of fourth and stand SD that in the And you the your that's in the peers are of And to particular then, table left a guidance I market or to categories. Yes. the value secondarily, with both about the in you question. WAN? us proposition guess, for you what Thank magnitude on first, of make the lot of taking And the I bring you in frame for Good perhaps for your up much WiFi as afternoon. perhaps for bit you, a guess, where well? Jayshree up could Anshu. Could a revenue help because factor will they in quarter? first the I quarter understand us

Jayshree Ullal

we'll Okay, to two-part do we'll Jeff, our best. question, address try your

WiFi component but based Wifi, workspaces to directly specific traditional are architecture. or portfolio, cognitive competing or important view of our we overall Cisco very with the we a not as anybody this controller Aruba So else on

been WiFi vendor, and to WiFi. accessory not inference, has to an We're can that approach architecture WiFi AI-driven wired optical our provide so optics. and you So that across to much we an connect optics very like our as seamlessly approach view cognitive but

and wired WiFi. supports CloudVision So

and We have that a Wifi. supports unified wired edge

will LTE to WiFi may customers or into Our XG. migration need lead or as XG

data So center we architecture to wireless, wired, not leaf it's into our a critical market us, campus. the feature, WiFi is almost bringing segment, a that the extended unified to technology spine a from but and

more So modern think are and looking workspaces. looking we're it our at at competitors I traditionally,

we very of the As space. some an at we've extension market and for not been in of WAN that features are look attributes of SD-WAN, SD-WAN that our clear We routing.

So we're like Might. we're -- to low-end but other supplying Meraki or branch than not offices VeloCloud SMBs where that that, market in

Operator

from Badri And question Credit your comes Suisse. Sami with next

Your line is open.

Sami Badri

Jayshree, run very of number came XXXX? quantified as I you rate has My basis. has Thank to Q a in Or you to do where give rate And some switching question at it revenue of time have quantification us run think campus guided more point kind Thank opportunity. a be enterprise Has to much. with that before, fourth able guys or us at Could or accelerated? want to contracted? Hi. be line from that the you of you you you.

Jayshree Ullal

think we that. achieved we $XXX least I achieve million to told Sami, wanted certainly at XXXX, we you in and

and we In give our And to as in we'll it. fact, goal double you is year, exceeded this year that progresses. quantification more the

Obviously, I think large some has it's We're slowed dramatically. going to of I So on we're executing campus well. decision-making, it's COVID won't better. down say the track. changed but get

Sami Badri

you. Thank it. Got

Operator

from Paul next Silverstein with comes Your question Cowen.

is line Your open.

Paul Silverstein

maybe Jayshree was be what did would basic million, ancillary is I'm certainly and monitoring, these talk just but it I the various full then not the you automation, rest would XX%. team. If the tell correctly, take clarification, wasn't less The into it entry question. you confirm for And Jayshree, math your meaningfully $XXX with math wondering, year about less, of markets, was? be clarification it fabric a hoping if for more. cetera. et Facebook can over Just that the us could the down than whether question that,

which of in terms some suspect breakdown, essentially fabric for type you of any the of gave coming news zero. off the revenue. appreciate, But thoughts growth? think are what on monitoring I us I like contribution ground I

of can you're touched growth But Big presence Switch as can give to us you a You albeit center for with monitoring granularity at switching of I while much of would the type as looking any what summit? think you for outside acquisition, data sense that now.

Ita Brennan

down they're year. of XX.X% last year. below the just Paul, I obviously, up Yes, close this to XX% they on mean, Facebook. revenue were And

think So gives you I with, that to right? something work

Paul Silverstein

Okay.

Jayshree Ullal

licenses, types DANZ, know, Analyzer And built And software. perpetual in our two subscription. call you with a and with switches do monitoring some routers. that's Paul, of then we we There's as there's what the where the Data

subscription. we're converting our peers, perpetual not many unlike into just So of

subscription-based CloudVision, new Switch, software really monitoring, router. US acquisition very new about Awake Big we're of then the markets recent Our markets, fabric, DANZ very, our like is excited Security. multi-cloud obviously, And

but So and the a starting the -- will number. revenue obviously subscription, off we're small trail

would small it numbers. if remiss grow those double-digits didn't So on be we

growth annual faster We believe grow leave XX% we when than expect our described. Ita to our execution. show to we XX% I that that much

Paul Silverstein

what on that thoughts be could Any in contribution? dollar

Jayshree Ullal

expected I to what is renewals say Well, in did be of ahead. the A-Care software Services, we and software, it range these all between XX% looking

Paul Silverstein

ahead. Looking

Jayshree Ullal

revenue that think trends, the important think again, as bookings. it's I And because of not to lags exact revenue

Curtis McKee

you, Thank Paul.

question? Next

Operator

Your question James Sandler. Piper next comes from Fish with

Your open. line is

James Fish

the on Congrats guys. Hey, quarter.

which some what massive you a guessing underneath. largest uptick the entire actually cut. cloud large did wanted it pretty that that could to why hyperscaler And you strength Rod's up, I'm the of related talk deferred imply actually on by to even haircut, actually around cut historical still not with was an I'm happen up curious has XX%, disclosure, about year, if go second off Just for just QX, this, it's Appreciate would year-end backing was had that customer it somewhere before. but had but the your question another vertical exposure given the

vertical cloud through the kind us Thank if of you. just specifically? curious So can more walk you titans

Jayshree Ullal

Sure, James.

right? First cloud they them, know. customers, suspects list consist of you that your titan but our we usual scale are major of only cloud verticals And all, the

besides So discussed clarify Facebook, customers question. the your in a Facebook titan and past. to we've do Microsoft lot cloud other we have

change in As especially they And late a know, that, you product of XXXX. cycle. of loss also skipped March second they their XXXX had and saw -- the we in line service where the

do to we're want it that looking So anything or? more forward back. to coming Anshul, you to add

Anshul Sadana

rolled there happened and CD quarters out, had stated their almost plans We've on changes on. And it. as what everything we That's cycle transparent fairly actually, the for so deployments I think been four ago. with

James Fish

it. Got Thanks.

Operator

Your from UBS. David next question with Vogt comes

Your line open. is

David Vogt

great guys and Thanks, quarter.

that provide of you can detail supply disruption you by is, the nature quick on might the around in on ability of like the maybe timing an Can sort sort mean look what in your lost a just more quarter and maybe of So What you're around disruptions. sector the I follow-up it maybe And the comment of quarter? experienced? sales? more the of first magnitude the seeing impact where you those the recover exposure to Thanks.

Ita Brennan

that than activities So that did I right, around lost right? them with we're don't chain, sure a because we're of what's a lead extended last have more that's actually of to fourth very right? quarter, -- working planning chain, it's it right? it's anything to on most think that head -- I time think, environment hoped, hoped because the saw sell I into them, And closely different we as in not it's that quarter than suppliers an we we're customers mean and And in The carefully business, as supply more of disruptions some the we capacity I see losing is had where QX, manufacturing talked we in to just just into else, we supply this some that and make we if COVID look, time we're position. I similar think we COVID-related know well, recovery of to been. more had So off different important prioritizing with Yes. we locations.

So in business make just I have to to continuing environment. great there's of lose don't liked, just that. we no We stay disruption right? numbers, prioritize, we of to close that but the So didn't sure we're out maybe would much as we're think, customers make trying also progress as coming to part as and changes

Jayshree Ullal

team, just leadership. Anshul's the doing can, want good we We're manufacturing best And that is led we with to a haven't the but really acknowledge doing recovered. I by McCool job John

Operator

JPMorgan. from with comes Samik question next Your Chatterjee

Your line is open.

Samik Chatterjee

strong Great. are you focus see. what are in part the to that's of probably guess, the like have and Jayshree, are you Is good my there? to you when band still just it seeing the you check, drivers are of growth I overall of to of enterprise we cycles wanted Or the But more with campus seeing are next on long. bit how a relation center enterprise, data in logos question. center in terms new sales a momentum on -- customer you enterprise, what existing land of Thanks customers? results part base? data guys I taking core for But you mention did

Jayshree Ullal

that's Many good at leader the should they us looking their customers thought question. enterprise Samik, a Yes. workloads with Actually, in really are on how the as proceed cloud.

some capability more them what So of center them, premise with finding to creating of end many we're their I think is they workloads some the cloud, of need for but consultative data by workloads. move virtue being that up

we land had than So more new dollar this enterprise as our sharing but number customer on as We logos. customers, customers. new includes are only existing best absolutely one million logos, campus. It quarters that and of expand includes well ever not

center a there campus, So data and lot you that wasn't so in was just of can imagine there.

Samik Chatterjee

Perfect. Thank you.

Jayshree Ullal

Samik. Thanks,

Operator

Fahad Najam with Your MKM next question from Partners. comes

Your open. line is

Fahad Najam

customers? Radi about from you're and to achieve center often order expanding operators should architecture silicon about my we talking network. question. question impacting reduce We cloud data hear layers hyperscale in XXX expand that Thank their revenue big from How they that search your a Redi the picture I think outlook number had of the Should in on photonics today? gig about talking your to hyperscale you the for the using taking architectures.

Jayshree Ullal

Yes.

longer Just to than at planning anybody this. right? before calls step perfect for if And and XXX-gig. we XXX-gig and in half. market much is We Anshul, have to optics, is both XXX-gig, expect one number just out believe especially I in So the typically And general, and look by back second easily right? a the XXX-gig Arista in times XX term, doing it production answer today XXX, mainly XXX-gig, including he's is hand the year, you shifted so in the a bigger XXX-gig

So But this we're and XXX, XXX still in of more? Ansul, you XXX-gig, have do some the year. I world believe,

Anshul Sadana

the but your Fahad, discussion, clusters, on is futuristic going to a At the larger is right because next of to happen or time, because in the and cost their saving always significant is that on collapse point, this layers sort in power. years. one two network Absolutely. to is it like would question terabits single balanced same Cloud large of Customers not something these switch that's that in enough. the adding throughput a bigger that's layer network. And one a a to layer. may have of Save more And like as which results our as result some for you not in we of XXX still They know, of support switch. that, largest Titans, big can a

in where today, engaged XX-gig constantly move we're from is these we the SerDes, So XXX-gig XXX-gig which as we cord are discussions to SerDes.

hits, come to five. that. ears will these I that's But least very the come some I predict by at maybe And out, points see it hard think, architectural XXX these of think may of Some changes. It's when gigs end, really you'll be when that's up. six this years out,

Jayshree Ullal

Anshul. you, Thank visionary. very That's

Operator

comes question next Leopold Your from Simon with James. Raymond

line Your is open.

Simon Leopold

if wanted on use see, cases. the touch to the for routing Thanks question. could you taking I

a the routing us expansion appreciate give feature revenue of the I But switching data for in growth these a terms outlook that is and set. there's if contributing the as deployments? your you of that remarks Thanks. routing. in bit cases well color your a prepared wide little of more as center mentioned You in within maybe area can bit And functional between and spectrum this the network

Jayshree Ullal

Simon, bringing cloud routing mobile use cases that of service Anshul, itself, residential with doing et something add network. as many cloud-like where looking know, cetera. there's looking of routing service build especially providers. part to many provider – We that? and and more to peering service third, edge a a building same edge customers edge, edge this the of you adjacency. where in were enterprises specific be areas. into to second, describe inside do are then Sure. center I for very want you and is important an extension very or we which people Telco are could they EBP capability their in there's well, is providers, could data three points, I is think, would but with these also There a conjunction are which providers. success go and in And And in our very our principles sort our the cloud Then be

Anshul Sadana

the at to connecting else points to the everything customers. the and to pivot so then service backbone and much center, the pretty Internet, the DS cloud to data connecting it's providers Just Internet backbone, the

keep lot I we're that journey. very in think we but think more to that well, well that lot actually a has been marching a along still doing be growing There's done, There's do done. fairly I space.

Simon Leopold

Any quantification offer? can you

Jayshree Ullal

XX% As little count of we our forward. with looking adjacent business, is, with a goal to for be to opening together said this routing. remember, bit also struggled And we campus XX% our remarks, how sector to in the

we routing about So try to disciplined counting when there's be very only routing.

core. So if still goes switching, it it's combined into with

Simon Leopold

Thanks for that.

Jayshree Ullal

you. Thank

Operator

comes next with from question Aaron Your Rakers Fargo. Wells

Your open. is line

Aaron Rakers

in guide, that the consider, I'm discussion giving did you largest also context next-generation see that Thanks take around view taking the of back that largest it's the ' second congratulations comes to a of AMDs, of and Lake you and with Arista about to apologize kind this I'd fruition thought Milan, into the and if Hey, to is XX% guidance for cycle this, customer, looks this to how the a customer, year-over-year. I like CapEx curious your How question, context up commentary Yes. how your on conservative guide CapEx something go the the server on Ice quarter. but and for about you your outlook rather filters in move just the second factor let's full and that Or that year? business. that into also

you how that? curious thought about Just

Jayshree Ullal

question. an think excellent that's I Aaron,

a view and a we Given our we to that And the much are just going we on not last take it's more multiyear of do some is view. the in forecasts, really got time, think that pragmatic burned XXXX. spend,

XXXX for improvements good XXXX but not we're specifically, at there's counting CapEx to So from going to some clearly be this year. all

Aaron Rakers

be of cycle business server remind to me again? again Just your how of clear, kind trails

Jayshree Ullal

good don't you describe Yes. why Anshul, a that? That's question.

Anshul Sadana

short many they in to ways. here to any their in CapEx try in titan correlated say spend term. short-term long-term, And would I what correlate cloud not because business do our the to Aaron, different can only is, us never spend the it's

Jayshree Ullal

lag few the quarters, a building, a CapEx be think network. we there's cooling, server So before of typically, the storage conditioning, air And can right? of

Aaron Rakers

That’s much. helpful. Thank you very

Jayshree Ullal

Thank you, Aaron.

Operator

Barclays. from question with next comes Long Tim Your

line open. is Your

Tim Long

existing business how I I and we're if Could the cross-selling Canvas growth some to thinking products outside might the Thank far bit areas I could. customers, switch splits customers, growth cross-sell you. new those to and about kind when adjacencies where are the could wonder getting a lines, core you of you talked -- just to you. talk talk those that little new a might much think expecting little routing Thank starting about about just are would about portfolio and these be and the of how But software really of of assume you to strong? you're synergistic. about bit is areas software or service into core out those new the as pretty customers what you as

Jayshree Ullal

Tim, a good that's question. No, Yes. really

routing our and for strength think as in sale customers. will it's customers sales of go is And way our rely very achieve I same big true It's the to a adjacency with very and we large segments well. on campus. to our force directed for much natural bets existing because a

In customers. subscription channels spending with campus, so it's always on in However, to the complement connected. partner X,XXX and we software that more lot will a energy services, and distribution. we're will of not of on augment and rely And that time while our how the of case on adjacencies or case

team and the systems salespeople, not amount of creating engineering fair expertise. but are really on just a Anshul putting hiring effort So

building different aspect same So customer, may is building they a week important often, an for a DMS, that may they because expertise that maker. but be be for the decision

more little a somewhat nuanced subscription, is and the go-to-market similar that but for So adjacency. software the for

Tim Long

you. Thank Okay. Great.

Jayshree Ullal

Tim. Thanks,

Operator

Alex with question from next Your Needham. comes Henderson

is line Your open.

Alex Henderson

implication pipelining patterns of traffic very of and over of at codes much. emergence to that's edge talk CI/CD particularly about service change I you and a hoping mesh micro of products time, the services, could your around how the going you've that little therefore, the the compute you think would the IT bit infrastructure, a was And Thank and purchasing cloud the that talking simply really play in and strategy. critical. about effectively been if and out individuals architectural in in in protection points becomes applications time. cloud I long And places we this edge. points cloud data -- for the change makes the

like and micro-services, are the you of the those impacting and aspects of business? how CI/CD So Kubernetes, your adoption emergence thinking about pipeline

Jayshree Ullal

this add very data-driven I XG, line cetera, in little if we whether I don't But WAN, to the sources Ken, Ken a a coming in Edge, network multi-cloud, our address believe develop the to detail. think, is the XG. way to software. the we to still general, Kubernetes, more? know relevant is more wireless, you want are et on

Kenneth Duda

Yes. that Sure. in directions, aware well and we're there I ways. think those relevance a our we're very of maximizing couple No, of

computing out a The first fabric. whole is for networking what's Kubernetes that physical required your model across scaling for application is horizontally uniform

to low Also of need able as You lot edge, like different physical be same to to where need mentioned that belong need the reasons regardless are in places, edge And a deployed. be enterprises you application some compute. you from with to architecture physical edge latency well. they cloud to for clusters use in them various on-premises of Kubernetes deploy the

the it's on-prem, of have whether Kubernetes-based of CloudVision underlying process need sort that's a rollout compute for infrastructure studios. edge And there's so environments, same those repeatable with we've achieved or in And to what cloud. this the

about they the our talked spin enables mind. of much enabled call. we've -- this can supporting up new in us Kubernetes earnings to create absolutely studios if know in But context the and automation with deployments, customers CloudVision new easily to pods frameworks, don't I So so fabric

Jayshree Ullal

a And for probably Day, for this Analyst more is tuned but great here. topic stay Alex,

Alex Henderson

I answer. you. Thank the appreciate

Jayshree Ullal

Alex. Thanks,

Operator

from next Jon with Group. Lopez Your comes Vertical question

open. is line Your

Jon Lopez

much. up, like And what best or you really, deferred wondering could wondering The some and to you if so us had maybe strong, about I think whether so I just that about And in there. was I wondering couple deferred influence of was get just was Ita, back. deferred. when that, talk in second really if I'm talked we that? you a on that, Thank any within tripped talk short-term don't was years. perhaps a layers then multiple in in, could And about which you wake happened years product

you those discuss can that, maybe things So sorry but just quickly? all for

Ita Brennan

in really by fairly around driver a services. large renewals, big I the had renewals mean of we right? some That's far larger is was of quarter, and customers services the a a in services typically I small. but driver. uptick product, renewal it little and is period QX QX prior biggest renew bit mean the There's

stuff, product that's and really services. a but new the right? more it, It's smaller pure part Just services of much new customer, much,

Jayshree Ullal

is Awake that early small too too And number. call and to

Ita Brennan

Yes.

Jon Lopez

you. Got

Thanks the for help. Okay.

Ita Brennan

John. Thanks,

Jayshree Ullal

Thanks, John.

Operator

comes with Jefferies. question George Notter next Your from

Your open. line is

George Notter

of XXX-gig will deploying opportunity you. thoughts the Thanks be if in And a XXX-gig the just coming Thank you customers wanted new you an how question. installed to much your upgrade initial to XXX-gig port I you lot XXX-gig? early of Or growth? stages? there's the from do for ramp see on think some base net the

Jayshree Ullal

you said Well, and I And especially tied XXX-gig available lot that haven't our we optics. as think, I've the on spine, this, strong in COVID, besides cloud there's XXX-gig move a still with being correlation, George, effective we a tributaries. a had of XXX-gig need always customers to past, XXX-gig

year I we by half. be a shifted XXX-gig really in see of XXX-gig year, is deployed, especially think will this is all the but second that a

XX XXX-gig Just customers, about some this over have we in customers we fashion. have deploying to give context, X,XXX in already while

X% providers. our in augment relevant to with and both we continue about high-end be base, and So than enterprise cloud of it's X% aggregate or our less so as service XXX-gig and will XXX-gig,

Operator

from Cleveland Your next question with Bollin comes Ben Research.

is line Your open.

Ben Bollin

more Do that for Specifically, contract terms, have gain there average high-level driving or your Could see to you about Ita, of thoughts invoice the transition? as address Thank would hyperscale traction helpful. methodology be service then Thanks. Good recurring the with length And a be customers you afternoon. you and opportunities on any accounts? really opportunity? little what revenue software types question. I'd do you and taking verticals bit in interested

Ita Brennan

Sure, Ben.

I as and but and verticals be target. for and see the subscription seeing biggest get well, I verticals, we'll And lot in there's many the attractive of and financial lot sub we're the these of a in love and there, into clearly to software most enterprises would think interest it of verticals subscription, more. two expect for others markets software financials. I would big areas the be already a that

Jayshree Ullal

upfront of of you it's and -- I contract a type to of so term like, built billing on of may this the mean, customer. kind collecting usually, that's And lot so collecting Yes. we're change is upfront, kind over time, kind we're the if of But cash that two been a far. term, depending and three-year far, the and model. size

Ben Bollin

Thank you.

Jayshree Ullal

Thanks.

Operator

comes Suva question last from Your with Jim Research. Citigroup

Your line is open.

Jim Suva

granulation you. and Thank my outlook. sincere on good And results

Jayshree Ullal

Thank you, Jim.

Jim Suva

I which you I it's those out seems off asking if year, coming out lot out XX%, the strength? your remarks, of, those heard for for is trying think a three you're was XX%, that and the I In incorrectly. almost I percents, Because and providers, the the guidance to most it's you. maybe XX% all it look easy bridging more some next service long, but I'm I'm up think the like markets is, think vertical at I'm from comp. reason of Thank just seeing that prepared year figure Was numbers like that or for And I mixes your thrown question XX%. said, long-term

Jayshree Ullal

you thank Jim, wishes. for Yes. good the

QX, think we is our best how year indicator So the the of for exact roll revenue will trends are but out. not ahead it

out, every So how we'll keep to you quarter of not updating but rolling out. it's how idea it's an give turning it actually

first that, right? three titans, big in is is it's The enough. sectors cloud there So sector because

have that look individual just number, to You at others. of

specialty enterprise cloud service and third and together, The financials XX; second which the is together. providers the is is and other

look the pointed if out, ahead, you the titans to to they're large a believe growth, at you look three all if contributed number. but Anshul of our as off obviously, strongly has the vital base. cloud So And sectors QX, are operating we

in in the grow and to we large a number So able sectors titans. be should other faster cloud still carry

Jim Suva

you the and Thank details for congratulations.

Jayshree Ullal

Thank you so much.

Charles Yager

concludes This Arista XXXX the Jim. Thanks, call. earnings QX

provides which for the presentation, you us which a today. website. on you posted Thank access of information, have joining Investors additional can our section We

Operator

Thank concludes today's you and This for ladies gentlemen. joining, call.

You may disconnect. now