Arista Networks, Inc. Q1 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Revenue of $2.71B, up 35.1% year-over-year and above guidance of $2.6B.
  • Gross margin of 62.4%, down from 63.4% last quarter due to lower enterprise mix.
  • Net income of $1.11B (40.9% of revenue); diluted EPS of $0.87, up 31.8% year-over-year.
  • Operating cash flow reached a record $1.69B; inventory rose slightly to $2.38B.
  • Deferred revenue surged to $6.2B from $5.37B last quarter, driven by acceptance timelines for new AI products.

Updated 2026 Outlook

  • Full-year revenue growth raised from 25% to 27.7%, now targeting ~$11.5B.
  • AI fabrics revenue forecast increased from $3.25B to $3.5B (more than double 2025 levels).
  • Campus revenue target maintained at $1.25B.
  • Gross margin expected between 62% and 64% for the year; operating margin at ~46%.

Q2 2026 Guidance

  • Revenue: ~$2.8B.
  • Gross margin: 62%–63%.
  • Operating margin: 46%–47%.
  • Diluted EPS: ~$0.88.

Business Momentum and Market Positioning

  • Arista achieved #1 market share in high‑speed switching (>10GbE) for 2025, overtaking several incumbents.
  • Significant traction in AI networking across three fabric categories: scale-up, scale-out, scale-across.

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Operator: Welcome to the first quarter 2026 Arista Networks, Inc. financial results earnings conference call. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. If you need to reach an operator at any time during the conference, please press the star key followed by zero. As a reminder, this conference is being recorded and will be available for replay from the Investor Relations section on the Arista website following this call. Mr. Rudolph Araujo, Arista's head of investor advocacy, you may begin. Thank you, Regina. Rudolph Araujo: Good afternoon, everyone, and thank you for joining us. With me on today's call are Jayshree Ullal, Arista Networks, Inc. Chairperson and Chief Executive Officer, and Chantelle Breithaupt, Arista's Chief Financial Officer. This afternoon, Arista Networks, Inc. issued a press release announcing its fiscal first quarter results for the period ending 03/31/2026. If you want a copy of this release, you can find it on our website. During the course of this conference call, Arista Networks, Inc. management will make forward-looking statements, including those relating to our financial outlook for the second quarter of the 2026 fiscal year, longer-term business model and financial outlooks for 2026 and beyond, our total addressable market and strategy by addressing these market opportunities, including AI, inventory management

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