Arista Networks, Inc. Q4 FY2025 earnings call

• 2025 was a defining year for Arista with revenue reaching $9,000,000,000, up 28.6%, non-GAAP gross margin 64.6%, and non-GAAP operating margin 48.2%.
• International growth was over 40% annually. Surpassed strategic goals of $800,000,000 in campus and branch expansion and $1,500,000,000 in AI center networking.
• Customer sector revenue in 2025: cloud and AI titans 48%, enterprise and financials 32%, AI and specialty providers 20%.
• Launched Blue Box initiative with NetDI diagnostics, saw strong 800 gig adoption, co-designing AI rack systems with 1.6 switching emerging in 2026.
• New leadership appointments, including co-presidents Kenneth Duda and Todd Nightingale, and senior vice president Tyson Lamoreaux.
• Employee count reached approximately 5,200 including VeloCloud acquisition.

In 2025, Arista's core cloud AI and data center products, built on the differentiated Arista EOS stack, contributed approximately 65% of revenue. The network adjacencies market, including routing and cognitive AI-driven AIVA campus, accounted for approximately 18% of revenue. The network software and services based on subscription models, such as A-Care, CloudVision, etc., contributed approximately 17%. For Q4 2025, total revenues were $2,490,000,000, up 28.9% year over year. International revenues for the quarter were $528,300,000, or 21.2% of total revenue.

• 2026 fiscal year revenue guidance raised to 25% growth, reaching $11,250,000,000.
• AI networking revenue raised from $2,750,000,000 to $3,250,000,000; campus revenue goal maintained at $1,250,000,000.
• 2026 gross margin range 62% - 64%.
• Q1 2026 revenue guidance approximately $2,600,000,000, gross margin 62%-63%, operating margin approximately 46%.

• Supply chain constraints, including memory and silicon fabrication cost increases.
• Inventory management challenges due to component costs and lead times.
• Inflationary pressures affecting the business.
• Uncertainties in meeting acceptance criteria for new customers which could impact revenue projections.
• Potential variability in product deferred revenue due to timing of customer acceptance and shipment.

Q: Regarding the one or two additional 10% customers, what are the factors that make or break them?

A: There are variables such as meeting acceptance criteria and timing, along with supply chain allocation and inflation. Demand is there but multiple variables will decide the final number.

Q: What is the reason for the 25% growth visibility?

A: Demand is there but there are variables like capital spending by customers, supply chain allocation, and it's early in the year so precise visibility is limited.

Q: Quantify revenue and gross margin impact from memory dynamics?

A: Memory prices have worsened, Arista has been absorbing costs but in 2026 it's worse, prices are extremely high, and shortages are being faced, but the guide is set with mitigation plans in place.