Arista delivers earnings in line with forecasts, but stock dips after-hours

Arista delivers earnings in line with forecasts, but stock dips after-hours

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Arista Networks Inc. delivered fourth-quarter results that were more or less in line with Wall Street’s projections, though its revenue forecast for the current period came in ahead of analysts’ estimates.

The company reported net income of $613.6 million, rising from a profit of $427.1 million in the same period one year ago. Earnings before certain costs such as stock compensation came to $2.08 per share, matching the Street’s target, while revenue rose 2% from a year earlier, to $1.54 billion, just ahead of the $1.53 billion forecast.

Arista also announced its full-year results for fiscal 2023, delivering total revenue of $5.86 billion, up 34% from the prior year. All told, the company’s profit hit $2.19 billion, up from $1.45 billion the year before.

If those results may were just a tad disappointing, Arista officials expressed confidence that things are likely to pick up going forward. For the first quarter of fiscal 2024, the company is forecast revenue of between $1.52 billion and $1.56 billion, the midpoint of which is ahead of the Street’s call for $1.53 billion in sales. Arista also sees a gross margin of 62%, just shy of the Street’s call for a 63% gross margin.

“We are cautiously optimistic about achieving our AI revenue goal of at least $750 million in AI networking in 2025,” Arista Chief Executive Jayshree Ullal (pictured) said on a call with analysts.

Arista is a rising star in the computer networking industry, rivaling the much larger Cisco Systems Inc. with premium network equipment such as high-speed switches that accelerate communications between racks of servers in corporate data centers.

Throughout the last year, the company made some notable progress in its product development and market positioning, introducing its next-generation 7130 Series of network switches for ultra-low latency networking while expanding its zero-trust network architecture. The company also announced a key hire, saying it has appointed Chantelle Breithaupt as its new chief financial officer. In addition, Arista continued to innovate in areas such as artificial intelligence-powered network identity services.

Arista’s outgoing CFO Ita Brennan said the company’s strong performance in fiscal 2023 underscores its focus on profitable revenue growth, its desire to expand its enterprise and campus footprint, and its ability to leverage its research and development investments.

Although Arista’s executives were united in their optimism, Wall Street’s response to the report was significantly less enthusiastic. The company’s stock fell more than 6% in after-hours trading. However, the stock had gained more than 111% in the 12 months prior to today’s report.

Arista’s main rival Cisco is expected to post its quarterly financial results on Wednesday afternoon.

Photo: SiliconANGLE

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