Arista Networks, Inc. Q2 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q2 2021 revenue reached $707.3M, up 30.8% year-over-year and above guidance of $675M–$695M.
  • Non-GAAP EPS was a record $2.72, up approximately 29% from the prior year.
  • Non-GAAP gross margin was 65.2%, slightly above the high end of guidance (63%–65%), supported by strong enterprise and software mix.
  • Services and subscription software contributed 22.3% of revenue, up from 21.4% in Q1.
  • International revenue was 27% of total revenue, up from 25% in Q1.
  • Operating income was $271.7M (38.4% of revenue).
  • Cash and investments totaled $3.3B, with $263M in operating cash flow for the quarter.
  • Deferred revenue rose to $746M from $720M in Q1.

Business Commentary

  • Cloud Titans remained Arista’s largest vertical, followed closely by Enterprise. Financials and Specialty Cloud tied for third; Service Provider ranked fourth.
  • Enterprise momentum was particularly strong, with notable wins in retail, finance, and media.
  • Arista surpassed 50 million cumulative cloud networking ports shipped.
  • High‑performance port shipments (100/200/400G) exceeded 2.5M in the first half of 2021, establishing leadership across these segments.
  • Arista sees 2021 as the first major inflection year for 200G and 400G deployments, with adoption expected to accelerate over the next several years.

Supply Chain Environment

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Operator: Welcome to the Second Quarter 2021, Arista Networks 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. [Operator Instructions]. As a reminder, this conference is being recorded and will be available for replay from the Investor Relations section at the Arista website following this call. I will now turn the call over to Mr. Charles Yeager, Director of Product and Investor Advocacy. Sir, you may begin. Charles Yager: Thank you, Operator. Good afternoon, everyone and thank you for joining us. With me on today's call are Jayshree Ullal, Arista Networks President and Chief Executive Officer, and Ita Brennan, Arista's Chief Financial Officer. This afternoon, Arista Networks issued a press release announcing the results for its fiscal second-quarter ending June 30, 2021. If you'd like a copy of the release, you can access it online at our website. During the course of this conference call, Arista Network's management will make forward-looking statements, including those relating to our financial outlook for the third quarter of the 2021 fiscal year, longer-term financial outlooks for 2021 and beyond, our total addressable market, and strategy for addressing these market opportunities, the potential impact of COVID-19 on our business, product innovation, and the benefits of the acquisition, which are s

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