Arista Networks Inc. delivered above expectations as it reported fiscal first-quarter earnings today that topped analysts’ estimates despite ongoing supply chain constraints.
The company also offered strong guidance, sending its stock higher in extended trading.
Arista reported first-quarter earnings before certain costs such as stock compensation of 84 cents per share on revenue of $877 million, up 31% from a year ago. Net income for the period jumped to $268.5 million from $198.8 million in the same quarter one year ago.
The results were better than expected, with Wall Street looking for earnings of just 81 cents per share on revenue of $856 million. Arista’s stock gained just over 1% on the report, having ticked up 2% earlier in the day.
Arista President and Chief Executive Jayshree Ullal (pictured) said the company managed to deliver record-breaking sales in the first quarter despite sustained supply chain challenges.
The company sells networking gear to enterprises such as high-speed switches that speed up communications for racks of computer servers in data centers. Its main customers are hyperscale data center operators such as Meta Platforms Inc., Microsoft Corp. and Google LLC. It also sells enterprise campus switches to companies that operate their own on-premises data centers, where it competes with the much larger rival Cisco Systems Inc.
The other aspect of Arista’s business is software services, including network management and security software that relies on artificial intelligence to identify the cause of faults, monitor user experience and identify network threats.
Arista’s hardware business is the bigger of the two, with product revenue reaching $724.7 million during the quarter, up from $539.1 million in the same period a year ago. Services revenue, meanwhile, came to $152.3 million, up from $128.4 million last year.
Although both of Arista’s business segments grew, the company did suffer from a lower gross margin of 63.9%, compared with 64.7% one year ago.
Looking to the next quarter, Arista offered a confident forecast. It said it sees revenue of $950 million to $1 billion in the second quarter, well ahead of Wall Street’s forecast of $917.7 million in sales.