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Why Is Arista Networks (ANET) Down 5.7% Since Last Earnings Report?
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A month has gone by since the last earnings report for Arista Networks (ANET - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Arista Networks due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Arista Networks, Inc. before we dive into how investors and analysts have reacted as of late.
Arista Q2 Earnings Surpass Estimates on Solid Revenue Growth
Arista reported strong second-quarter 2026 results with both adjusted earnings and revenues beating the Zacks Consensus Estimate.
The company posted a strong 37.7% year-over-year revenue increase, reflecting broad-based growth across its artificial intelligence (AI), cloud and enterprise networking businesses, supported by healthy customer demand and improved product availability.
Net Income
GAAP net income in the reported quarter increased to $1.21 billion or 95 cents per share from $888.8 million or 70 cents per share in the year-ago quarter, driven by higher revenues.
On a non-GAAP basis, net income was $1.3 billion or $1.02 per share compared with $934.2 million or 73 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate of 89 cents.
Revenues
Quarterly revenues increased to $3.04 billion from $2.2 billion in the prior-year quarter, mainly due to solid growth in both Product and Service segments. The top line beat the consensus estimate of $2.83 billion.
Net quarterly sales from Products totaled $2.61 billion compared with $1.88 billion in the year-ago quarter, driven by strong demand for AI and enterprise networking solutions and improved supply chain execution.
Service revenues increased to $430.5 million from $327.8 million, reflecting continued growth in the installed customer base and higher maintenance and support services.
Other Details
Non-GAAP gross profit rose to $1.92 billion from $1.45 billion for respective margins of 63.4% and 65.6%. Total operating expenses were $532.3 million, up from $452.4 million in the year-ago quarter. Non-GAAP operating income for the quarter increased to $1.51 billion from $1.08 billion, with respective margins of 49.9% and 48.8%.
Cash Flow & Liquidity
In the first six months of 2026, Arista generated $2.78 billion in cash compared with $1.84 billion in the year-ago period. As of June 30, 2026, the company had $2.29 billion in cash and cash equivalents and $338.8 million in other long-term liabilities.
Outlook
For the third quarter of 2026, management expects revenues to be approximately $3.3 billion, driven by healthy growth momentum and solid demand trends. Non-GAAP operating margin is expected to be 48-49%, and non-GAAP earnings per share are expected to be between $1.06 and $1.08.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 22.82% due to these changes.
VGM Scores
At this time, Arista Networks has a average Growth Score of C, a grade with the same score on the momentum front. However, the stock has a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Arista Networks has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Arista Networks belongs to the Zacks Internet - Software industry. Another stock from the same industry, AppFolio (APPF - Free Report) , has gained 16.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
AppFolio reported revenues of $281.12 million in the last reported quarter, representing a year-over-year change of +19.3%. EPS of $1.71 for the same period compares with $1.38 a year ago.
AppFolio is expected to post earnings of $1.78 per share for the current quarter, representing a year-over-year change of +35.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for AppFolio. Also, the stock has a VGM Score of B.
View the Zacks #1 Rank List
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Why Is Arista Networks (ANET) Down 5.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Arista Networks (ANET - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Arista Networks due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Arista Networks, Inc. before we dive into how investors and analysts have reacted as of late.
Arista Q2 Earnings Surpass Estimates on Solid Revenue Growth
Arista reported strong second-quarter 2026 results with both adjusted earnings and revenues beating the Zacks Consensus Estimate.
The company posted a strong 37.7% year-over-year revenue increase, reflecting broad-based growth across its artificial intelligence (AI), cloud and enterprise networking businesses, supported by healthy customer demand and improved product availability.
Net Income
GAAP net income in the reported quarter increased to $1.21 billion or 95 cents per share from $888.8 million or 70 cents per share in the year-ago quarter, driven by higher revenues.
On a non-GAAP basis, net income was $1.3 billion or $1.02 per share compared with $934.2 million or 73 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate of 89 cents.
Revenues
Quarterly revenues increased to $3.04 billion from $2.2 billion in the prior-year quarter, mainly due to solid growth in both Product and Service segments. The top line beat the consensus estimate of $2.83 billion.
Net quarterly sales from Products totaled $2.61 billion compared with $1.88 billion in the year-ago quarter, driven by strong demand for AI and enterprise networking solutions and improved supply chain execution.
Service revenues increased to $430.5 million from $327.8 million, reflecting continued growth in the installed customer base and higher maintenance and support services.
Other Details
Non-GAAP gross profit rose to $1.92 billion from $1.45 billion for respective margins of 63.4% and 65.6%. Total operating expenses were $532.3 million, up from $452.4 million in the year-ago quarter. Non-GAAP operating income for the quarter increased to $1.51 billion from $1.08 billion, with respective margins of 49.9% and 48.8%.
Cash Flow & Liquidity
In the first six months of 2026, Arista generated $2.78 billion in cash compared with $1.84 billion in the year-ago period. As of June 30, 2026, the company had $2.29 billion in cash and cash equivalents and $338.8 million in other long-term liabilities.
Outlook
For the third quarter of 2026, management expects revenues to be approximately $3.3 billion, driven by healthy growth momentum and solid demand trends. Non-GAAP operating margin is expected to be 48-49%, and non-GAAP earnings per share are expected to be between $1.06 and $1.08.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 22.82% due to these changes.
VGM Scores
At this time, Arista Networks has a average Growth Score of C, a grade with the same score on the momentum front. However, the stock has a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Arista Networks has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Arista Networks belongs to the Zacks Internet - Software industry. Another stock from the same industry, AppFolio (APPF - Free Report) , has gained 16.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
AppFolio reported revenues of $281.12 million in the last reported quarter, representing a year-over-year change of +19.3%. EPS of $1.71 for the same period compares with $1.38 a year ago.
AppFolio is expected to post earnings of $1.78 per share for the current quarter, representing a year-over-year change of +35.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for AppFolio. Also, the stock has a VGM Score of B.