Arista Networks, Inc. (ANET - Free Report) reported solid fourth-quarter 2018 financial results, wherein both the bottom line and the top line surpassed the respective Zacks Consensus Estimate, and increased year over year.
Net Income
On a GAAP basis, net income increased to $170.2 million or $2.10 per share from $103.8 million or $1.29 per share in the year-ago quarter driven by top-line growth. For full-year 2018, net income decreased to $327.9 million or $4.06 per share from $422.5 million or $5.35 per share in 2017 due to higher operating expenses, which is largely attributable to legal settlement.
Quarterly non-GAAP net income came in at $182.2 million or $2.25 per share compared with $137.3 million or $1.71 per share in the year-ago quarter. The bottom line beat the consensus estimate by 21 cents.
Arista Networks, Inc. Price, Consensus and EPS Surprise
Revenues
Quarterly total revenues increased 27.3% year over year to $595.7 million and was above the company’s guidance of $582-$594 million, driven by healthy overall demand with strength across the business, particularly in the cloud titans vertical. The top line surpassed the Zacks Consensus Estimate of $589 million. Product revenues improved to $503.2 million from $407.2 million while Service revenues rose to $92.5 million from $60.7 million. For full-year 2018, revenues increased 30.7% year over year to $2,151.4 million.
Other Quarterly Details
Non-GAAP gross profit was $382.1 million compared with $308.3 million in the prior-year quarter. Non-GAAP gross margin was 64.1%, down from 65.9% and was just above the mid-point of management’s guidance of 63-65%. This was reflective of healthy mix of cloud titan revenues as expected and some incremental costs related to the previously announced trade tariff.
Total operating expenses were $181.4 million compared with $167.8 million in the year-ago quarter. Operating income came in at $193.6 million compared with $139.4 million a year ago. Non-GAAP operating margin improved to 37.3% from 36.1% in the prior-year quarter.
Cash Flow and Liquidity
For full-year 2018, Arista generated $503.1 million of cash from operating activities compared with $631.6 million in 2017. As of Dec 31, 2018, the cloud networking company had $650 million of cash and cash equivalents with $228.6 million of non-current deferred revenue balance compared with the respective tallies of $859.2 million and $187.6 million a year ago.
Outlook
Arista is well positioned with its key cloud customers and is focused on expanding presence across all the verticals. For first-quarter 2019, the company projects revenues in the range of $588-$598 million. The company anticipates non-GAAP gross margin of 63-65% and non-GAAP operating margin of approximately 35%.
Looking Ahead
While driving the cloud area networking, Arista boasts the number one market position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. The company has successfully integrated two M&A transactions, Mojo Networks for Cognitive Wi-Fi in the campus and Metamako for ultra-low latency networking, which remain additional tailwinds for business growth. Moreover, it is earning a strategic role with customers deploying transformative cloud networking. Arista aims to sustain profitable revenue growth and healthy cash generation in 2019 and beyond on the back of industry-leading product offerings.
Zacks Rank and Stocks to Consider
Arista currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Altice USA, Inc. (ATUS - Free Report) , Plantronics, Inc. and TESSCO Technologies Incorporated , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altice currently has a forward P/E (F1) of 36x.
Plantronics currently has a forward P/E (F1) of 9.9x.
TESSCO currently has a forward P/E (F1) of 19.6x.
Zacks' Top 10 Stocks for 2019
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Free: See Our Top Stock and 4 Runners Up >>
Arista Networks, Inc. (ANET - Free Report) reported solid fourth-quarter 2018 financial results, wherein both the bottom line and the top line surpassed the respective Zacks Consensus Estimate, and increased year over year.
Net Income
On a GAAP basis, net income increased to $170.2 million or $2.10 per share from $103.8 million or $1.29 per share in the year-ago quarter driven by top-line growth. For full-year 2018, net income decreased to $327.9 million or $4.06 per share from $422.5 million or $5.35 per share in 2017 due to higher operating expenses, which is largely attributable to legal settlement.
Quarterly non-GAAP net income came in at $182.2 million or $2.25 per share compared with $137.3 million or $1.71 per share in the year-ago quarter. The bottom line beat the consensus estimate by 21 cents.
Arista Networks, Inc. Price, Consensus and EPS Surprise
Revenues
Quarterly total revenues increased 27.3% year over year to $595.7 million and was above the company’s guidance of $582-$594 million, driven by healthy overall demand with strength across the business, particularly in the cloud titans vertical. The top line surpassed the Zacks Consensus Estimate of $589 million. Product revenues improved to $503.2 million from $407.2 million while Service revenues rose to $92.5 million from $60.7 million. For full-year 2018, revenues increased 30.7% year over year to $2,151.4 million.
Other Quarterly Details
Non-GAAP gross profit was $382.1 million compared with $308.3 million in the prior-year quarter. Non-GAAP gross margin was 64.1%, down from 65.9% and was just above the mid-point of management’s guidance of 63-65%. This was reflective of healthy mix of cloud titan revenues as expected and some incremental costs related to the previously announced trade tariff.
Total operating expenses were $181.4 million compared with $167.8 million in the year-ago quarter. Operating income came in at $193.6 million compared with $139.4 million a year ago. Non-GAAP operating margin improved to 37.3% from 36.1% in the prior-year quarter.
Cash Flow and Liquidity
For full-year 2018, Arista generated $503.1 million of cash from operating activities compared with $631.6 million in 2017. As of Dec 31, 2018, the cloud networking company had $650 million of cash and cash equivalents with $228.6 million of non-current deferred revenue balance compared with the respective tallies of $859.2 million and $187.6 million a year ago.
Outlook
Arista is well positioned with its key cloud customers and is focused on expanding presence across all the verticals. For first-quarter 2019, the company projects revenues in the range of $588-$598 million. The company anticipates non-GAAP gross margin of 63-65% and non-GAAP operating margin of approximately 35%.
Looking Ahead
While driving the cloud area networking, Arista boasts the number one market position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. The company has successfully integrated two M&A transactions, Mojo Networks for Cognitive Wi-Fi in the campus and Metamako for ultra-low latency networking, which remain additional tailwinds for business growth. Moreover, it is earning a strategic role with customers deploying transformative cloud networking. Arista aims to sustain profitable revenue growth and healthy cash generation in 2019 and beyond on the back of industry-leading product offerings.
Zacks Rank and Stocks to Consider
Arista currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Altice USA, Inc. (ATUS - Free Report) , Plantronics, Inc. and TESSCO Technologies Incorporated , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altice currently has a forward P/E (F1) of 36x.
Plantronics currently has a forward P/E (F1) of 9.9x.
TESSCO currently has a forward P/E (F1) of 19.6x.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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