Arista Networks posted revenue of $595.4 million for its first quarter ended March 31, 2019, essentially flat compared to the fourth quarter of 2018, and an increase of 26% from the first quarter of 2018. GAAP gross margin was 63.9%, compared to GAAP gross margin of 62.9% in the fourth quarter of 2018 and 64.1% in the first quarter of 2018. GAAP net income amounted to $201.0 million, or $2.47 per diluted share, compared to GAAP net income of $144.5 million, or $1.79 per diluted share in the first quarter of 2018. Non-GAAP net income was $187.7 million, or $2.31 per diluted share, compared to non-GAAP net income of $134.1 million, or $1.66 per diluted share in the first quarter of 2018.
“Arista’s Q1 results demonstrate our consistent execution and profitability despite the seasonality of the quarter. We are witnessing the deployment of cloud principles into new enterprise markets,” stated Jayshree Ullal, Arista President and CEO.
The cloud titan segment was once again Arista’s largest vertical in Q1.
International sales amounted to 26%.
Regarding its Q2 guidance, Arista said it expects slower growth than its normal pattern:
- Revenue between $600 million and $610 million;
- Non-GAAP gross margin between 64% to 65%, and
- Non-GAAP operating margin of approximately 36%
On a conference call, Arista executives said the massive spending by cloud titans in 2018 has led to a period of absorption in the first half of 2019. Specifically, one of Arista’s hyperscale cloud titan customers has placed most orders on hold for Q2. Company executives said the sudden slowdown in orders from this cloud titan occurred in mid-March. Weaker spending by other cloud titans is also expected in Q2. The Service Provider segment is also lackluster. Meanwhile, enterprise sales momentum is healthy.
Arista’s board of directors also authorized a $1.0 billion stock repurchase program.
