Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Arista (ANET) Q2 Earnings Hit Record High, Surpass Estimates

By Zacks Investment ResearchStock MarketsAug 03, 2021 01:44AM ET
www.investing.com/analysis/arista-anet-q2-earnings-hit-record-high-surpass-estimates-200595848
Arista (ANET) Q2 Earnings Hit Record High, Surpass Estimates
By Zacks Investment Research   |  Aug 03, 2021 01:44AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
HLIT
+1.89%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SEAC
+1.13%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
KN
+0.16%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ANET
-0.32%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Arista Networks (NYSE:ANET), Inc. ANET reported strong second-quarter 2021 results, wherein both the bottom and the top lines beat the respective Zacks Consensus Estimate, driven by a healthy momentum in the enterprise vertical and solid customer additions. Adjusted earnings and revenues also improved significantly year over year.

Net Income

On a GAAP basis, net income in the reported quarter improved to $196.9 million or $2.47 per share from $144.8 million or $1.83 per share in the prior-year quarter, primarily driven by top-line growth.

Excluding non-recurring items, non-GAAP net income was record high at $216.8 million or $2.72 per share compared with $167 million or $2.11 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 17 cents.

Revenues

Quarterly total revenues were up 30.8% year over year to $707.3 million and was well ahead of the company’s guidance of $675-$695 million. The rise was primarily led by solid customer additions and growth in the enterprise vertical, partially offset by shipment constraints resulting from the COVID-19 operating environment and supply-chain disruptions. The top line surpassed the consensus estimate of $687 million.

Arista generated 73% of total revenues from the Americas and the remainder from international operations with EMEA (Europe, Middle East and Africa) accounting for 16% and APAC (Asia Pacific region) contributing 11% of total revenues. Product revenues jumped to $566.5 million from $421.4 million, while Service revenues grew to $140.9 million from $119.2 million, supported by renewals and subscriptions. In terms of the vertical mix, cloud titans was the largest vertical followed by enterprise, financials, specialty cloud providers and service providers. With improved customer demand and visibility, the company is taking decisive steps to improve inventory levels and manufacturing capacity in order to negate supply-chain headwinds. Arista is increasingly offering software-driven, data-centric approach to help customers build their cloud architecture and augment their cloud experience.

Other Details

Non-GAAP gross profit improved to $461.4 million from $349.9 million for respective margins of 65.2% and 64.7%. The non-GAAP gross margin was at the higher end of the company’s guidance of 63-65%, reflecting healthy software and services mix.

Total operating expenses increased to $234.8 million from $177.1 million in the prior-year quarter owing to higher R&D costs, high variable compensation and other headcount-related charges, partially offset by lower COVID-related travel and marketing expenses. Non-GAAP operating income jumped to $271.7 million from $205.7 million in the year-ago quarter with corresponding margins of 38.4% and 38.1%, respectively.

Cash Flow & Liquidity

In the first six months of 2021, Arista generated $518 million of net cash from operating activities compared with $333.1 million in the prior-year period. As of Jun 30, 2021, the cloud networking company had $893.7 million in cash and cash equivalents with $216.7 million of non-current deferred tax liabilities. Arista did not repurchase any shares during the quarter. Notably, the company has purchased $763 million worth of shares to date since the initiation of its $1 billion share repurchase program in second-quarter 2019.

Q3 Outlook

The company expects to witness continued growth within its enterprise vertical in the forthcoming quarters with customer mix being the key driver. For the third quarter of 2021, Arista expects revenues of $725-$745 million. It anticipates a non-GAAP gross margin of 63-65% and a non-GAAP operating margin of around 37%.

Zacks Rank & Stocks to Consider

Arista currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader industry are Knowles (NYSE:KN) Corporation KN, Harmonic (NASDAQ:HLIT) Inc. HLIT and SeaChange International (NASDAQ:SEAC), Inc. SEAC, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Knowles has a long-term earnings growth expectation of 10%. It delivered an earnings surprise of 10.8%, on average, in the trailing four quarters.

Harmonic has a long-term earnings growth expectation of 15%. It delivered an earnings surprise of 68.1%, on average, in the trailing four quarters.

SeaChange International has a long-term earnings growth expectation of 10%. It delivered an earnings surprise of 12.2%, on average, in the trailing four quarters.


Zacks' Top Picks to Cash in on Artificial Intelligence

In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.

See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Harmonic Inc. (HLIT): Free Stock Analysis Report

SeaChange International, Inc. (SEAC): Free Stock Analysis Report

Arista Networks, Inc. (ANET): Free Stock Analysis Report

Knowles Corporation (KN): Free Stock Analysis Report

To read this article on Zacks.com click here.
Arista (ANET) Q2 Earnings Hit Record High, Surpass Estimates
 

Related Articles

Jesse Cohen/Investing.com
Expect A Wild October By Jesse Cohen/Investing.com - Sep 30, 2022 3

October is historically the U.S. stock market’s most volatile month Market focus on nonfarm payrolls report, CPI, Q3 earnings Brace for more violent swings in the coming...

Declan Fallon
Relief Bounce Negated In One Day By Declan Fallon - Sep 30, 2022 2

It was always going to be a tough sell given the speed at which markets pushed down into a retest of June lows last week, but I would have thought a bounce would have lasted longer...

Arista (ANET) Q2 Earnings Hit Record High, Surpass Estimates

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email