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Arista (ANET) Tops Q1 Earnings Estimates on Solid Revenues
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Arista Networks, Inc. (ANET - Free Report) reported impressive first-quarter 2023 results, with the bottom and the top line beating their respective Zacks Consensus Estimate. Strong performance in Data Center and Cloud Networking businesses, easing supply chain woes and healthy customer additions backed by the company’s best-in-class portfolio strength ensured a top-line expansion year over year.
Net Income
GAAP net income in the reported quarter rose to $436.5 million or $1.38 per share from $272.3 million or 85 cents per share in the year-ago quarter. The improvement was mainly propelled by higher net sales.
On a non-GAAP basis, net income was $452.5 million or $1.43 per share compared with respective figures of $ 268.5 million or 84 cents per share reported in the year-ago quarter. The bottom line beat the Zacks Consensus Estimates by 8 cents.
Arista Networks, Inc. Price, Consensus and EPS Surprise
During the quarter, revenues surged to $1,351.3 million from $877.1 million reported in the prior-year quarter, owing to an improvement in component supply that enhanced the manufacturing output consistency. The company introduced various solutions for cloud, Internet service providers and enterprise networks to match the rising demands of AI/ML driven network architectures and unveiled WAN routing system. These innovations enabled Arista to deliver a superior customer experience and increase customer engagement. The top line beat the consensus estimate of $1,306 million.
Net sales from Product totaled at $1,172.1 million compared with $724.7 million in the year-ago quarter. Service revenues increased to $179.3 million from $152.3 million reported in the prior-year quarter. Arista witnessed positive demand trends owing to its strong product portfolio that are highly scalable, programmable and provide data-driven automation, analytics and world class support services.
Net sales from the Americas contributed 82.5% to total revenues. Revenues from the international market stood at $236 million, contributing 17.5% to total revenues. Healthy demand in cloud networks supported the top-line growth in the domestic market. Driven by its innovation, Arista continues to maintain a strong leadership position in Data Center and Cloud Networking vertical.
Other Details
Non-GAAP gross profit rose to $814.3 million from $560.9 million, with a gross margin of 60.3% and 63.9%, respectively. The margin is line with company’s guidance.
Total operating expenses were $319.9 million, up from $275.9 million reported in the year-ago quarter. Research & development costs rose to $201.4 million from $172 million. Sales and marketing expenses also increased by 15.8% year over year to $93.5 million due to an increase in headcount, new product introduction costs and higher variable compensation expenditures.
Cash Flow & Liquidity
In first-quarter 2023, Arista generated $374.5 million of net cash from operating activities. As of Mar 31, 2023, the company had $956.3 million in cash and cash equivalents and $58.3 million in long-term liabilities. Arista repurchased common stock worth $82.3 million at an average price of $111.9 per share in the quarter.
Outlook
For the second quarter of 2023, management expects revenues in the range of $1.35-$1.4 billion. Non-GAAP gross margin is estimated at 61% and non-GAAP operating margin is approximated at 40%. Effective tax rate is approximated at 21.5% with 317 million shares.
The company expects further easing of supply chain anomalies and an improvement in lead time. However, it anticipates a moderation in consumer spending, mainly for cloud titan customers. ANET expects a steady improvement in gross margin owing to the optimization of manufacturing output.
Bandwidth Inc. (BAND - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 354.47%, on average, in the trailing four quarters. It operates as a Communications Platform-as-a-Service (CPaaS) provider, offering avant-garde software application programming interfaces for voice and messaging services. It is the only application programming interface (API) platform provider that owns a Tier 1 network with enhanced network capacity, primarily catering to business enterprises.
With 8,800 on-net rate centers, it delivers unparalleled network quality and proactively monitors network operations 24/7 to resolve quality issues, capitalizing on an efficient cost structure for seamless connectivity and speed-to-market.
Meta Platforms Inc. (META - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 8.56%, on average, in the trailing four quarters. Meta Platforms is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like photo and video sharing app Instagram and WhatsApp messaging app owing to acquisitions.
Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first mover’s advantage in this market. However, as developed regions mature, Meta has taken measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.
Workday Inc (WDAY - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 7.67%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 11.24%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
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Arista (ANET) Tops Q1 Earnings Estimates on Solid Revenues
Arista Networks, Inc. (ANET - Free Report) reported impressive first-quarter 2023 results, with the bottom and the top line beating their respective Zacks Consensus Estimate. Strong performance in Data Center and Cloud Networking businesses, easing supply chain woes and healthy customer additions backed by the company’s best-in-class portfolio strength ensured a top-line expansion year over year.
Net Income
GAAP net income in the reported quarter rose to $436.5 million or $1.38 per share from $272.3 million or 85 cents per share in the year-ago quarter. The improvement was mainly propelled by higher net sales.
On a non-GAAP basis, net income was $452.5 million or $1.43 per share compared with respective figures of $ 268.5 million or 84 cents per share reported in the year-ago quarter. The bottom line beat the Zacks Consensus Estimates by 8 cents.
Arista Networks, Inc. Price, Consensus and EPS Surprise
Arista Networks, Inc. price-consensus-eps-surprise-chart | Arista Networks, Inc. Quote
Revenues
During the quarter, revenues surged to $1,351.3 million from $877.1 million reported in the prior-year quarter, owing to an improvement in component supply that enhanced the manufacturing output consistency. The company introduced various solutions for cloud, Internet service providers and enterprise networks to match the rising demands of AI/ML driven network architectures and unveiled WAN routing system. These innovations enabled Arista to deliver a superior customer experience and increase customer engagement. The top line beat the consensus estimate of $1,306 million.
Net sales from Product totaled at $1,172.1 million compared with $724.7 million in the year-ago quarter. Service revenues increased to $179.3 million from $152.3 million reported in the prior-year quarter. Arista witnessed positive demand trends owing to its strong product portfolio that are highly scalable, programmable and provide data-driven automation, analytics and world class support services.
Net sales from the Americas contributed 82.5% to total revenues. Revenues from the international market stood at $236 million, contributing 17.5% to total revenues. Healthy demand in cloud networks supported the top-line growth in the domestic market. Driven by its innovation, Arista continues to maintain a strong leadership position in Data Center and Cloud Networking vertical.
Other Details
Non-GAAP gross profit rose to $814.3 million from $560.9 million, with a gross margin of 60.3% and 63.9%, respectively. The margin is line with company’s guidance.
Total operating expenses were $319.9 million, up from $275.9 million reported in the year-ago quarter. Research & development costs rose to $201.4 million from $172 million. Sales and marketing expenses also increased by 15.8% year over year to $93.5 million due to an increase in headcount, new product introduction costs and higher variable compensation expenditures.
Cash Flow & Liquidity
In first-quarter 2023, Arista generated $374.5 million of net cash from operating activities. As of Mar 31, 2023, the company had $956.3 million in cash and cash equivalents and $58.3 million in long-term liabilities. Arista repurchased common stock worth $82.3 million at an average price of $111.9 per share in the quarter.
Outlook
For the second quarter of 2023, management expects revenues in the range of $1.35-$1.4 billion. Non-GAAP gross margin is estimated at 61% and non-GAAP operating margin is approximated at 40%. Effective tax rate is approximated at 21.5% with 317 million shares.
The company expects further easing of supply chain anomalies and an improvement in lead time. However, it anticipates a moderation in consumer spending, mainly for cloud titan customers. ANET expects a steady improvement in gross margin owing to the optimization of manufacturing output.
Zacks Rank & Other Stocks to Consider
Arista currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bandwidth Inc. (BAND - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 354.47%, on average, in the trailing four quarters. It operates as a Communications Platform-as-a-Service (CPaaS) provider, offering avant-garde software application programming interfaces for voice and messaging services. It is the only application programming interface (API) platform provider that owns a Tier 1 network with enhanced network capacity, primarily catering to business enterprises.
With 8,800 on-net rate centers, it delivers unparalleled network quality and proactively monitors network operations 24/7 to resolve quality issues, capitalizing on an efficient cost structure for seamless connectivity and speed-to-market.
Meta Platforms Inc. (META - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 8.56%, on average, in the trailing four quarters. Meta Platforms is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like photo and video sharing app Instagram and WhatsApp messaging app owing to acquisitions.
Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first mover’s advantage in this market. However, as developed regions mature, Meta has taken measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.
Workday Inc (WDAY - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 7.67%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 11.24%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.