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Arista (ANET) Beats Q1 Earnings Estimates on Solid Revenues
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Arista Networks, Inc. (ANET - Free Report) reported healthy first-quarter results with solid top and bottom-line growth year over year, driven by robust demand trends. Easing supply chain woes and steady customer additions backed by the company’s best-in-class portfolio strength ensured top-line expansion, while steady margin improvement contributed to earnings growth. Both the bottom and the top lines beat the respective Zacks Consensus Estimate.
Net Income
GAAP net income in the reported quarter improved to $637.7 million or $1.99 per share from $436.5 million or $1.38 per share in the year-ago quarter. The increase was mainly propelled by higher net sales.
On a non-GAAP basis, net income was $637.7 million or $1.99 per share compared with $452.5 million or $1.43 per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimates by 25 cents.
Arista Networks, Inc. Price, Consensus and EPS Surprise
Revenues surged to $1.57 billion from $1.35 billion in the prior-year quarter, driven by the strength in the enterprise vertical. The company introduced various solutions for cloud, Internet service providers and enterprise networks to meet the rising demands of AI/ML-driven network architectures. These innovations enabled Arista to deliver a superior customer experience and increase customer engagement. The top line beat the consensus estimate of $1.54 billion.
Net quarterly sales from Product totaled $1.33 billion compared with $1.17 billion in the year-ago quarter. Service revenues increased to $242.5 million from $179.3 million. Arista witnessed positive demand trends owing to its strong product portfolio that is highly scalable, programmable and provides data-driven automation, analytics and world-class support services.
Net sales from the Americas contributed 80% to total revenues, while international revenues accounted for the remainder. Driven by its innovation, Arista maintains a strong leadership position in the Data Center and Cloud Networking vertical.
Other Details
Non-GAAP gross profit rose to $1.01 billion from $814.3 million, with non-GAAP gross margin of 64.2% and 60.3%, respectively. The margin was above the company’s guidance.
Total operating expenses were $341.2 million, up from $319.9 million in the year-ago quarter. Research & development costs rose to $208.4 million from $201.4 million. Sales and marketing expenses also increased to $105.1 million from $93.5 million due to a rise in headcount, new product introduction costs and higher variable compensation expenditures.
Cash Flow & Liquidity
In the first quarter of 2024, Arista generated $513.8 million of net cash from operating activities compared with $374.5 million in the year-ago period. As of Mar 31, 2024, the company had $2.09 billion in cash and cash equivalents and $132.3 million in other long-term liabilities.
During the quarter, the company repurchased $62.7 million worth of shares and an additional $82 million subsequently in April for a total consideration of $144.7 million at an average price of $269.80 per share. With this, Arista completed its existing $1 billion share repurchase program, repurchasing 8.5 million shares at an average price of $117.20 per share. Management authorized a new $1.2 billion stock repurchase program, which commenced in May 2024 and expires in May 2027.
Outlook
For the second quarter of 2024, management expects revenues in the range of $1.62-$1.65 billion. Non-GAAP gross margin is estimated at 64% and non-GAAP operating margin is approximated at 44%.
The company expects further easing of supply chain anomalies and an improvement in lead time in 2024. However, it anticipates a moderation in consumer spending, mainly for cloud titan customers. It expects a steady improvement in gross margin owing to the optimization of manufacturing output.
Cogent Communications Holdings, Inc. (CCOI - Free Report) is scheduled to release first-quarter 2024 earnings on May 9. The Zacks Consensus Estimate is pegged at a loss of 80 cents per share, suggesting a decline of 715.4% from the year-ago reported figure.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release first-quarter 2024 earnings on May 9. The Zacks Consensus Estimate for earnings is pegged at $1.61 per share, indicating growth of 15% from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 7.3%. AKAM delivered an average earnings surprise of 6.5% in the last four reported quarters.
Keysight Technologies, Inc. (KEYS - Free Report) is set to release second-quarter fiscal 2024 earnings on May 20. The Zacks Consensus Estimate for earnings is pegged at $1.38 per share, implying a decline of 34.9% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 4.1%. KEYS delivered an average earnings surprise of 6.4% in the last four reported quarters.
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Arista (ANET) Beats Q1 Earnings Estimates on Solid Revenues
Arista Networks, Inc. (ANET - Free Report) reported healthy first-quarter results with solid top and bottom-line growth year over year, driven by robust demand trends. Easing supply chain woes and steady customer additions backed by the company’s best-in-class portfolio strength ensured top-line expansion, while steady margin improvement contributed to earnings growth. Both the bottom and the top lines beat the respective Zacks Consensus Estimate.
Net Income
GAAP net income in the reported quarter improved to $637.7 million or $1.99 per share from $436.5 million or $1.38 per share in the year-ago quarter. The increase was mainly propelled by higher net sales.
On a non-GAAP basis, net income was $637.7 million or $1.99 per share compared with $452.5 million or $1.43 per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimates by 25 cents.
Arista Networks, Inc. Price, Consensus and EPS Surprise
Arista Networks, Inc. price-consensus-eps-surprise-chart | Arista Networks, Inc. Quote
Revenues
Revenues surged to $1.57 billion from $1.35 billion in the prior-year quarter, driven by the strength in the enterprise vertical. The company introduced various solutions for cloud, Internet service providers and enterprise networks to meet the rising demands of AI/ML-driven network architectures. These innovations enabled Arista to deliver a superior customer experience and increase customer engagement. The top line beat the consensus estimate of $1.54 billion.
Net quarterly sales from Product totaled $1.33 billion compared with $1.17 billion in the year-ago quarter. Service revenues increased to $242.5 million from $179.3 million. Arista witnessed positive demand trends owing to its strong product portfolio that is highly scalable, programmable and provides data-driven automation, analytics and world-class support services.
Net sales from the Americas contributed 80% to total revenues, while international revenues accounted for the remainder. Driven by its innovation, Arista maintains a strong leadership position in the Data Center and Cloud Networking vertical.
Other Details
Non-GAAP gross profit rose to $1.01 billion from $814.3 million, with non-GAAP gross margin of 64.2% and 60.3%, respectively. The margin was above the company’s guidance.
Total operating expenses were $341.2 million, up from $319.9 million in the year-ago quarter. Research & development costs rose to $208.4 million from $201.4 million. Sales and marketing expenses also increased to $105.1 million from $93.5 million due to a rise in headcount, new product introduction costs and higher variable compensation expenditures.
Cash Flow & Liquidity
In the first quarter of 2024, Arista generated $513.8 million of net cash from operating activities compared with $374.5 million in the year-ago period. As of Mar 31, 2024, the company had $2.09 billion in cash and cash equivalents and $132.3 million in other long-term liabilities.
During the quarter, the company repurchased $62.7 million worth of shares and an additional $82 million subsequently in April for a total consideration of $144.7 million at an average price of $269.80 per share. With this, Arista completed its existing $1 billion share repurchase program, repurchasing 8.5 million shares at an average price of $117.20 per share. Management authorized a new $1.2 billion stock repurchase program, which commenced in May 2024 and expires in May 2027.
Outlook
For the second quarter of 2024, management expects revenues in the range of $1.62-$1.65 billion. Non-GAAP gross margin is estimated at 64% and non-GAAP operating margin is approximated at 44%.
The company expects further easing of supply chain anomalies and an improvement in lead time in 2024. However, it anticipates a moderation in consumer spending, mainly for cloud titan customers. It expects a steady improvement in gross margin owing to the optimization of manufacturing output.
Zacks Rank
Arista currently has a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Cogent Communications Holdings, Inc. (CCOI - Free Report) is scheduled to release first-quarter 2024 earnings on May 9. The Zacks Consensus Estimate is pegged at a loss of 80 cents per share, suggesting a decline of 715.4% from the year-ago reported figure.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release first-quarter 2024 earnings on May 9. The Zacks Consensus Estimate for earnings is pegged at $1.61 per share, indicating growth of 15% from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 7.3%. AKAM delivered an average earnings surprise of 6.5% in the last four reported quarters.
Keysight Technologies, Inc. (KEYS - Free Report) is set to release second-quarter fiscal 2024 earnings on May 20. The Zacks Consensus Estimate for earnings is pegged at $1.38 per share, implying a decline of 34.9% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 4.1%. KEYS delivered an average earnings surprise of 6.4% in the last four reported quarters.