Arista Networks, Inc. Q3 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Record quarterly revenue of $748.7 million, up 23.7% year-over-year and above guidance ($725M–$745M).
  • Non-GAAP EPS reached a record $2.96, up ~22.5% year-over-year.
  • Non-GAAP gross margin of 64.9%, at the upper end of the 63%–65% target range.
  • Services and subscription software made up 21.5% of revenue (slightly down from 22.3% in Q2).
  • International revenue represented 25% of total revenue, down from 27% in Q2.

Business Drivers & Market Trends

  • Demand remains exceptionally strong across all five verticals: Cloud Titans, Enterprise, Financials, Specialty Cloud, and Service Providers.
  • Cloud Titans regained momentum after prior years of volatility; Enterprise growth is now a major driver, with continued double‑digit expansion expected.
  • Supply chain issues are significant: component lead times have stretched to 50–80 weeks, with price hikes of 15%–200% across materials and logistics.
  • Arista has shifted from “build-to-forecast” to “build-to-invest,” doubling purchase commitments to $2.1B to secure long-term supply.

Product & Technology Highlights

  • Routing portfolio gaining traction with edge use cases (multi-cloud edge, metro edge, and 5G RAN edge).

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Operator: Welcome to the Third 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 given at that time. . 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. Ms. A - Liz Stine, Arista's Director of Investor Relations, you may begin. Liz Stine: 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 2021. If you would like a copy of the release, you can access it online at our website. 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 2021 fiscal year. Longer-term financial outlook for 2022 and beyond. Our total addressable market and strategy for addressing these market opportunities. The potential impact of COVID -19 on our business, product innovation the imply of supply -- the impact of supply shortages and manufacturing constraints on our business, including lea

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