Cloud networking giant Arista Networks Inc. delivered quarterly financial results today that topped Wall Street’s guidance and followed with a strong outlook, but its stock traded down slightly in late trading.
The company reported a net income for its third quarter of $354 million, with earnings before certain costs such as stock compensation coming to $1.25 per share. Revenue rose 12% from the same period a year earlier, to $1.06 billion. The results were much better than expected, since Wall Street analysts had modeled earnings of just $1.04 per share on sales of $856.1 million.
Arista Networks President and Chief Executive Jayshree Ulaal (pictured) said her company continues to outpace its peers in the networking industry as it delivered record revenue for the quarter. “Clearly, we are entering the next phase of Arista’s evolution in products, customer intimacy and new market expansion,” she said.
Arista is an emerging player in the networking space that’s focused on selling premium equipment such as high-speed switches that speed up communications between racks of computer servers in data centers. Most of Arista’s switches are sold to hyperscale data center operators such as Meta Platforms Inc., Google LLC and Microsoft Corp. In addition, Arista sells enterprise campus switches to smaller firms that run their own data centers on-premises, where it competes more directly with Cisco Systems Inc.
The second aspect of Arista’s business is network management and security software and services. It sells software that’s used by companies to keep their networks running smoothly and identify the causes of faults, monitor user experiences and tackle security threats.
Arista has been steadily growing its market share in both cloud computing and corporate networks, and the company’s stock received a big boost last week when Meta laid out some aggressive capital spending plans for 2023. Investors believe it will be one of the main beneficiaries of Meta’s expanded outlay.
However, its stock didn’t do so well today, falling 1.5% in the extended trading session after declining less than that in the regular session.
Nonetheless, Arista is clearly optimistic about the immediate future. For the fourth quarter, the company is forecasting revenue of between $1.18 billion and $1.2 billion, above Wall Street’s consensus estimate of $1.09 billion.
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