Investor Presentation November 2025 Safe Harbor Forward-Looking Statements - This presentation and accompanying oral presentation contain "forward-looking statements" regarding our future performance, including but not limited to estimates regarding revenue, non-GAAP gross margin, and non-GAAP operating margin for the fourth quarter and fiscal year 2025 and 2026, statements regarding Arista's addressable market, products and services, innovation and leadership in data-driven networking. Forward-looking stat ...

Financial Performance - Revenue for Q3 2025 was $2.308 billion, representing a 4.7% increase from Q2 2025 and a 27.5% increase from Q3 2024[5] - GAAP net income for Q3 2025 was $853.0 million, or $0.67 per diluted share, compared to $747.9 million, or $0.58 per diluted share in Q3 2024[5] - Non-GAAP net income for Q3 2025 was $962.3 million, or $0.75 per diluted share, compared to $769.0 million, or $0.60 per diluted share in Q3 2024[5] - Non-GAAP EPS growth for Q3 2025 was 25% year-over-year, reflecting strong demand and disciplined execution[3] - GAAP gross profit for Q3 2025 was $1,490.2 million, up from $1,161.7 million in Q3 2024, representing a 28.4% increase[21] - Non-GAAP net income for the nine months ended September 30, 2025, reached $2,712.0 million, compared to $2,079.4 million in the same period of 2024, reflecting a 30.5% growth[21] - GAAP diluted net income per share for Q3 2025 was $0.67, up from $0.58 in Q3 2024, a 15.5% increase[21] - The company reported a net cash provided by operating activities of $3,110.0 million for the nine months ended September 30, 2025, compared to $2,677.3 million in 2024, a growth of 16.1%[27] Margins - GAAP gross margin for Q3 2025 was 64.6%, slightly down from 65.2% in Q2 2025 and up from 64.2% in Q3 2024[5] - Non-GAAP gross margin for Q3 2025 was 65.2%, compared to 65.6% in Q2 2025 and 64.6% in Q3 2024[5] - For Q4 2025, the company expects revenue between $2.3 billion and $2.4 billion, with a non-GAAP gross margin of 62-63% and a non-GAAP operating margin of 47-48%[10] Assets and Liabilities - Total current assets increased to $15,184.8 million as of September 30, 2025, from $11,910.9 million at the end of 2024, marking a 27.0% rise[25] - Cash and cash equivalents decreased to $2,326.6 million from $2,762.4 million, indicating a decline of 15.8%[25] - Total liabilities rose to $6,141.7 million as of September 30, 2025, compared to $4,049.1 million at the end of 2024, an increase of 51.6%[25] - Deferred revenue increased significantly to $3,520.7 million in Q3 2025 from $1,727.3 million in Q4 2024, a rise of 103.4%[25] Expenses - Stock-based compensation expense for the nine months ended September 30, 2025, was $306.1 million, compared to $254.6 million in the same period of 2024, an increase of 20.2%[21] Corporate Developments - Arista Networks appointed Kenneth Duda as President and Chief Technology Officer, and Tyson Lamoreaux as Senior Vice President of Cloud and AI Networking[5] - The company announced the introduction of AI agents to streamline network operations and an observability blueprint for modern AI workloads[5] - Arista Networks is collaborating with industry leaders to deliver Ethernet for Scale-Up Networks (ESUN), promoting open standards-based solutions[5] Business Combinations - The company completed cash paid for business combinations amounting to $300.0 million during the nine months ended September 30, 2025[27]

Market Overview - U.S. equity markets are experiencing a midday retreat on November 4, 2025, with major indexes pulling back as investors digest corporate earnings and economic data, alongside cautious sentiment in the technology sector [1][2] - The S&P 500 has declined approximately 1.3% by midday, the Dow Jones Industrial Average is down around 0.9%, and the Nasdaq Composite has seen a drop of 1.5% [2] Economic Data and Events - Investors are monitoring key economic data releases, including U.S. JOLTS Job Openings, International Trade in Goods and Services, and Factory Orders reports [3] - Upcoming reports include the ISM Services Business Activity index and the ADP Employment Change report, which are crucial due to the ongoing U.S. government shutdown [4] Technology Sector Performance - Palantir Technologies shares fell between 8% and 10% despite exceeding earnings forecasts and raising revenue guidance, attributed to profit-taking and concerns over high valuation [6] - Other tech stocks like Nvidia and Microsoft also experienced declines, with Nvidia down 1.7% to 2.8% and Microsoft down 0.7% [6] Automotive and Consumer Discretionary - Tesla shares slid 2.7% after Norway's sovereign wealth fund announced intentions to vote against CEO Elon Musk's compensation package [7] - Norwegian Cruise Line saw an 11% drop following a mixed earnings report and forecast [7] Earnings Reactions - Zoetis shares plunged 13% after revising its sales forecast downwards, while IDEXX Laboratories surged 14.8% after reporting strong earnings [8] - Ferrari announced a 7.4% year-over-year increase in net revenues, with diluted earnings per share reaching Euro 2.14 [9] Upcoming Earnings - Key companies scheduled to report earnings include Advanced Micro Devices, Shopify Inc., Arista Networks, Uber Technologies, Amgen, Eaton Corporation, Pfizer, and Spotify Technology [10]

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Core Insights - This week is significant for earnings reports from major tech companies, including Palantir Technologies, Advanced Micro Devices, Uber Technologies, and others [1] Earnings Reports Overview - A total of ten companies are reporting earnings this week, indicating a busy period for the stock market [1] - The companies reporting include PLTR, AMD, HOOD, UBER, QCOM, APP, SHOP, ARM, ANET, and DDOG [1] Implied Volatility and Options Trading - Implied volatility tends to be high before earnings announcements due to market uncertainty, leading to increased demand for options [2] - After earnings announcements, implied volatility typically decreases to normal levels [3] - Traders can estimate the expected price range for stocks by analyzing the option chain, specifically the at-the-money put and call options [3] Expected Price Movements - Expected price movements for various stocks have been outlined, with notable percentages indicating potential volatility: - PLTR – 10.4% - AMD – 9.0% - UBER – 7.4% - SHOP – 11.2% - ANET – 10.8% - HOOD – 10.2% - QCOM – 6.8% - APP – 14.0% - ARM – 10.7% [4] Trading Strategies - Traders can utilize expected moves to structure their trades, with bearish traders potentially selling bear call spreads outside the expected range [5] - Bullish traders may consider selling bull put spreads or naked puts for higher risk tolerance [5] - Neutral traders can explore iron condors, ensuring short strikes remain outside the expected range [6] - It is advised to use risk-defined strategies and maintain small position sizes when trading options over earnings [6]

Investment Focus - Amazon is the largest player in the cloud industry with a global market share of 30%, benefiting from scale effects that stabilize and improve margins [1] - Google is expected to see improvements in margins due to rising IaaS cloud scale, with a projected margin increase of over 20% by year-end [1] - Alibaba's cloud revenue reached 33.4 billion RMB in Q1 FY26, demonstrating strong growth driven by instant retail and cloud business resilience [1] Hardware & AI - Arista Networks is a leader in high-end data center network switches, with expected revenue contribution of at least $750 million from AI backend switches in 2025 [3] - NVIDIA's data center business, which accounts for 88% of its revenue, is projected to see strong growth driven by AI capital expenditures, with a target price of $204.35 based on a 30x FY2027 EPS [4] - SK Hynix is expected to benefit from recovering downstream inventory and a doubling of HBM sales this year, with a target price of KRW 280,555 [3] Internet & Services - Tencent Music is expected to see steady revenue growth driven by its core subscription business and new high-margin services, with a focus on expanding its content offerings [4] - Futu Holdings is projected to maintain strong growth in paid user numbers and AUM, benefiting from its virtual asset business and competitive valuation [6] - JoYY's core overseas live streaming business is stabilizing, supported by a favorable policy environment and strong industry demand [5] Pharmaceuticals - Hansoh Pharmaceutical is expected to see innovative drug revenue exceed 10 billion in 2025, with a significant contribution from milestone payments [8] - Innovent Biologics is focusing on expanding its ADC platforms, with potential peak sales of its pipeline products reaching 100 billion [8] - Kintor Pharmaceutical's innovative pipeline is expected to drive significant revenue growth, with a strong cash reserve of over $2 billion [9]

Core Insights - Arista Networks Inc. reported a record non-GAAP operating income of $1.08 billion in Q2, marking the first time it exceeded $1 billion, with an operating margin increase to 48.8% from 46.5% year-over-year [1][8] - The company's business model shows strong momentum, particularly in AI networking, with significant renewals in software and services despite a 13.2% increase in operating expenses [2] - Efficient supply chain and inventory management contributed to an improved gross margin of 65.6%, surpassing the guidance of 63% and up from 65.4% a year ago [3] Financial Performance - Accounts payable days increased to 65 from 49 in the previous quarter, enhancing cash flow and liquidity, allowing for more investment in R&D and marketing [4] - Arista projects an operating margin of 47% for Q3 and 48% for 2025, indicating continued operational strength [4][8] Competitive Landscape - Arista faces competition from Hewlett Packard Enterprise and Cisco Systems, with HPE reporting a non-GAAP operating profit of $777 million, a 0.8% year-over-year increase, while Cisco's non-GAAP operating income rose to $5.03 billion, up 13.3% year-over-year [5][6] Market Performance - Arista's shares have increased by 56.1% over the past year, outperforming the industry growth of 28.6% [7] - The company trades at a forward price-to-sales ratio of 19.43, which is above the industry average [10] Earnings Estimates - The Zacks Consensus Estimate for Arista's earnings for 2025 has seen an upward revision over the past 60 days, reflecting positive market sentiment [11]

Core Insights - Arista Networks, Inc. (ANET) is set to report Q3 2025 earnings on November 4, with revenue and earnings estimates of $2.24 billion and $0.72 per share, respectively, reflecting increases from $1.81 billion and $0.60 in the same quarter last year [1][5] - Earnings estimates for Arista have risen by 0.4% to $2.82 per share for 2025 and by 2.2% to $3.25 for 2026 over the past 60 days [1][2] Earnings Surprise History - Arista has a four-quarter average earnings surprise of 12.8%, consistently beating estimates, with a surprise of 12.3% in the last reported quarter [2][3] Factors Influencing Performance - The company is gaining traction in high-performance switching products and maintaining leadership in 100-gigabit Ethernet switches, driven by strong demand from enterprise customers [6] - Investments in AI for Networking centers in India are expected to enhance local production capabilities and spur innovation [7] - The acquisition of VeloCloud's SD-WAN portfolio is anticipated to expand Arista's product offerings and customer base, enhancing its end-to-end networking solutions [8] Market Performance - Over the past year, Arista's stock has increased by 58.3%, outperforming the industry average of 29% and competitors like Hewlett Packard (19.2%) and Cisco (30.6%) [10] Valuation Metrics - Arista is currently trading at a premium valuation, with a price/earnings ratio of 49.79, compared to the industry average of 38.83 and its own historical mean of 36.86 [12] Investment Considerations - The company benefits from strong momentum and diversification across its product lines, positioning itself well for growth in the data-driven cloud networking sector [14] - Arista's cloud networking solutions offer high capacity, predictable performance, and programmability, with ongoing innovations in various technical areas [15] Competitive Landscape - Arista faces significant competition in cloud networking, particularly from Cisco, which dominates the data center networking market, as well as other large vendors like Brocade and Dell [16] Long-term Outlook - With solid fundamentals and improving earnings estimates, Arista is expected to benefit in the long run, supported by a focus on quality and operational execution [17]

Company Overview - Arista Networks Inc (NYSE:ANET) specializes in cloud-based networking solutions and related software for data centers, AI, and enterprise operations, along with providing network services, support, and hardware solutions [1] Market Insights - Jim Cramer highlighted Arista Networks as a stock with "monster gains" this year, indicating strong performance and potential for further growth [1] - Cramer emphasized the leadership of CEO Jayshree Ullal, describing her as an "amazing CEO" and suggesting that the stock is likely to continue rising [1] Short Selling Dynamics - The stock has been experiencing a gradual increase, while short sellers have been increasing their positions, indicating a potential for volatility if positive news emerges [1]

Group 1 - Major technology companies Microsoft, Alphabet, and Meta Platforms are set to report earnings after market close on Wednesday [1] - Healthcare companies Eli Lilly and Company and Merck & Company Inc. will report pre-market on Thursday, followed by Apple Inc. and Amazon.com Inc. after market close [1] - The following week will see further technology earnings reports from Advanced Micro Devices, Arista Networks, QUALCOMM Incorporated, and Arm Holdings after market close on Tuesday and Wednesday [1]