Arista Networks, Inc. Q3 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q3 revenue: $605.4 million, down 7.5% year-over-year but above guidance and up 12% from Q2.
  • Non-GAAP EPS: $2.42, down 10% year-over-year.
  • Gross margin: 64.6%, consistent with Q2 and above midpoint of guidance.
  • Strong momentum from enterprise and campus markets, with cloud titans remaining the largest vertical.
  • International revenue: 25% of total, up from 19% in Q2.
  • Software and services: 21% of revenue (vs. 22% in prior quarter).

Key Business Highlights

  • Record number of new customer logos and million-dollar customers in Q3.
  • Diversified vertical performance:
    • Cloud titans: ~37% of revenue.
    • Enterprise and financials: ~37% combined.
    • Cloud service providers & telecom providers: ~26%.
  • Asia-Pacific and European regions showed strong recovery from Q2.
  • Company reiterates expectation for double-digit growth in 2021, supported by rebounding demand from cloud titans, enterprise, and service providers.

Strategic and Product Updates

  • Three long-term growth pillars:
    • Core cloud and data center networking.
    • Adjacent markets including routing and cognitive campus networking.

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Operator: Welcome to the Third Quarter 2020 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 Web site following this call. I will now turn the call over to Mr. Curtis McKee, Director of Corporate and Investor Development. Sir, you may begin. Curtis McKee: 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 third quarter ending September 30, 2020. If you would like a copy of the release, you can access it online at our Web site. During the course of this conference call, Arista Networks management will make forward-looking statements, including those relating to our financial outlook for the fourth quarter of the 2020 fiscal year, longer term financial outlook for the 2021 and beyond, our total addressable market and strategy for addressing these market opportunities, the potential impact of COVID-19 on our business, our product innovation and the benefits of recent acquisi

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