Arista Networks, Inc. Q1 FY2026 earnings call

Arista had velocity in all sectors in Q1, leading in high-speed switching. Discussed AI fabric use cases: scale up, scale out, scale across. Shared customer wins like Neo Cloud AI network, service provider upgrade, insurance services modernization, manufacturing deployment. Mentioned Innovate 2026 event with high customer engagement.

Revenues in Q1 were $2.71 billion, up 35.1% year-over-year and above guidance. International revenues were $418.9 million, 15.5% of total. Gross margin 62.4%. Operating expenses $396.8 million. Operating income $1.29 billion. Net income $1.11 billion. Diluted EPS $0.87.

2026 fiscal year revenue growth raised to 27.7% to $11.5 billion. AI target $3.5 billion. Q2 guidance: revenues ~$2.8 billion, gross margin 62%-63%, operating margin 46%-47%, diluted EPS ~$0.88.

Industry-wide shortages of wafers, silicon chips, CPUs, optics, memory. Elevated procurement costs. Long lead times affecting supply continuity and impacting gross margin.

Q: On scale across and revenue contribution, A: Scale across will contribute at least a third of AI number.

Q: On scale up progress, A: At least five to seven rack opportunities in design.

Q: On supply impact on revenue, A: Supply chain issues limit revenue growth.

Q: On AI use cases and Neo Cloud, A: Neo Cloud is underappreciated but strong, diverse accelerators create opportunities.