Financial Data and Key Metrics Changes - In Q4 2025, total revenues reached $2.49 billion, reflecting a year-over-year increase of 28.9% and exceeding guidance of $2.3 billion to $2.4 billion [18] - For the fiscal year 2025, total revenue was $9 billion, with a non-GAAP gross margin of 64.6% and an operating margin of 48.2% [6][22] - Net income for Q4 was $1.05 billion, marking the first time the company surpassed $1 billion in net income for a quarter [22] - Diluted earnings per share for Q4 was $0.82, up 24.2% year-over-year, while for the fiscal year, it was $2.98, a 28.4% increase [23] Business Line Data and Key Metrics Changes - Cloud and AI titans contributed 48% to annual customer sector revenue, while enterprise and financials accounted for 32%, and AI and specialty providers contributed 20% [7] - Services and subscription software represented approximately 17.1% of revenue in Q4, down from 18.7% in Q3 [18] - The core sector revenue was driven by high-performance switching, contributing 65% of total revenue [9] Market Data and Key Metrics Changes - International revenues for Q4 were $528.3 million, or 21.2% of total revenue, up from 20.2% in the previous quarter [19] - The company reported strong growth in both Asia and Europe, with international growth exceeding 40% annually [6] Company Strategy and Development Direction - The company aims for aggressive growth in AI networking, raising its 2026 revenue guidance to $3.25 billion for AI centers and maintaining a goal of $1.25 billion for cognitive campus and branch [27] - The strategy includes expanding into new markets and enhancing product offerings, particularly in AI and cloud networking [12][14] - The company is focused on maintaining its leadership in high-performance switching and expanding its partnerships with AI and cloud titans [9][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 25% annual growth in 2026, despite challenges related to supply chain constraints and rising costs [17][28] - The company is optimistic about the demand for networking solutions driven by AI and cloud technologies, indicating a growing total addressable market exceeding $100 billion [17] - Management acknowledged the impact of inflation and supply chain issues on operations but emphasized a commitment to innovation and customer satisfaction [16][28] Other Important Information - The company repurchased $620.1 million of its common stock in Q4 at an average price of $127.84 per share, with a total of $1.6 billion repurchased in fiscal year 2025 [23][24] - The total deferred revenue balance increased to $5.4 billion, with product deferred revenue rising by approximately $469 million compared to the previous quarter [26] Q&A Session Summary Question: What are the factors affecting the potential new 10% customers? - Management indicated that acceptance criteria and timing are critical factors, along with demand and supply chain considerations [33] Question: What is the cautious outlook for the rest of the year? - Management clarified that visibility is affected by customer CapEx and the timing of new product shipments, particularly related to AI [41] Question: Can you quantify the revenue and gross margin impact from memory dynamics? - Management acknowledged challenges in the memory market and indicated that while they are comfortable with their guidance, there may be price increases for certain products [50][51] Question: How much of the AI revenue guidance is based on scale-up networking opportunities? - Management noted that current configurations are a mix of scale-out and scale-up, with expectations for significant growth in AI networking [58] Question: How does the company plan to participate in the build-out of model builders' infrastructure? - Management highlighted the importance of network infrastructure for model builders and indicated plans to collaborate with cloud titans [64]

Financial Data and Key Metrics Changes - Arista Networks achieved record revenue of $9 billion for fiscal year 2025, reflecting a growth of 28.6% year-over-year [5] - Q4 2025 revenues were $2.49 billion, up 28.9% year-over-year, exceeding guidance of $2.3 billion to $2.4 billion [19] - Non-GAAP gross margin for the year was 64.6%, with Q4 gross margin at 63.4%, slightly above guidance [5][20] - Operating income for Q4 was $1.2 billion, or 47.5% of revenue, contributing to an annual operating income of $4.3 billion, or 48.2% of revenue [22] - Net income for Q4 was $1.05 billion, marking the first time Arista delivered over $1 billion in net income in a quarter [22] Business Line Data and Key Metrics Changes - Cloud and AI titans contributed 48% to annual customer sector revenue, while enterprise and financials accounted for 32%, and AI and specialty providers contributed 20% [6] - Services and subscription software represented approximately 17.1% of revenue in Q4, down from 18.7% in Q3 [19] - The core cloud AI and data center products drove 65% of revenue, with significant adoption of 800 gigabit products [9] Market Data and Key Metrics Changes - International revenues for Q4 were $528.3 million, or 21.2% of total revenue, up from 20.2% in the previous quarter [20] - Arista's customer base exceeded 10,000 cumulative customers, with strong traction in the 5-10 million and 1 million customer categories [12] Company Strategy and Development Direction - Arista aims for aggressive growth in AI networking, raising its 2026 AI centers revenue goal from $2.75 billion to $3.25 billion [17][28] - The company is committed to investing in innovation, sales, and scaling the business to maintain its status as a leading pure-play networking company [29] - Arista is focusing on expanding its cognitive campus and branch solutions, targeting $1.25 billion in revenue for 2026 [10][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 25% annual growth in 2026, raising revenue guidance to approximately $11.25 billion [17][28] - The company acknowledged challenges related to supply chain constraints and rising costs but remains optimistic about demand for its products [17][29] - Management highlighted the importance of customer acceptance criteria and the timing of shipments as variables affecting future growth [35][44] Other Important Information - Arista's cash, cash equivalents, and marketable securities totaled approximately $10.74 billion at the end of Q4 [23] - The company repurchased $620.1 million of its common stock in Q4, with a total of $1.6 billion repurchased in fiscal year 2025 [24][25] - Deferred revenue balance increased to $5.4 billion, with product-related deferred revenue rising by approximately $469 million [27] Q&A Session Summary Question: What are the factors affecting the potential for new 10% customers? - Management indicated that variables such as acceptance criteria and demand are critical, with confidence in meeting these criteria despite supply chain challenges [35] Question: What is the outlook for growth visibility in 2026? - Management clarified that while demand is strong, the timing of shipments and acceptance criteria for new products are key factors influencing visibility [44] Question: How do memory dynamics impact revenue and gross margin? - Management acknowledged that supply chain constraints are affecting memory prices, which may lead to a one-time increase in selected SKUs [51][103] Question: What is the expected behavior of product deferred revenue? - Management noted that product deferred revenue can fluctuate based on new deployments and acceptance criteria, making it difficult to predict future movements [73][112]

Core Viewpoint - Arista Networks forecasts annual revenue exceeding Wall Street estimates, driven by consistent demand for its electronic hardware amid the growing data landscape [1] Group 1: Company Performance - Arista Networks is betting on steady demand for its electronic hardware, indicating confidence in its product offerings [1] - The company’s revenue forecast suggests a positive outlook for its financial performance in the upcoming year [1] Group 2: Industry Trends - The expanding presence of data is a key factor contributing to the demand for networking equipment, highlighting a trend in the industry towards increased reliance on electronic hardware [1]

Core Viewpoint - Arista Networks Inc. reported strong fourth-quarter earnings, exceeding analyst expectations, which led to a significant increase in stock price during extended trading hours [1][2]. Financial Performance - Quarterly earnings were reported at 82 cents per share, surpassing the Street estimate of 76 cents [2]. - Revenue for the quarter reached $2.49 billion, exceeding the analyst consensus estimate of $2.38 billion and showing an increase from $1.93 billion in the same period last year [2]. - The company achieved a milestone of shipping a cumulative total of 150 million ports, indicating strong momentum in its Arista 2.0 initiative [2]. Growth and Future Outlook - Arista reported profitable growth with total revenue of $9 billion, exceeding both AI networking and campus expansion goals [3]. - For the first quarter of 2026, the company expects revenue of approximately $2.6 billion, higher than the $2.45 billion analyst estimate [4]. - Non-GAAP gross margin is projected to be between 62% and 63%, with a non-GAAP operating margin of approximately 46% [4].

Exhibit 99.1 Arista Networks, Inc. Reports Fourth Quarter and Year End 2025 Financial Results SANTA CLARA, Calif.- February 12, 2026 -- Arista Networks, Inc. (NYSE: ANET), an industry leader in data-driven, client-to-cloud networking for large AI, data center, campus, and routing environments, today announced financial results for its fourth quarter and the full year ended December 31, 2025. • Revenue of $2.488 billion, an increase of 7.8% compared to the third quarter of 2025, and an increase of 28.9% from ...

Core Viewpoint - Arista's stock is experiencing a decline ahead of its earnings report, influenced by concerns raised from Cisco's recent report regarding the adverse effects of high memory prices on the industry [1] Company Summary - Arista Networks is facing a drop in its stock price as investors react to Cisco's earnings report, which has reignited fears about the impact of elevated memory costs on the company's financial performance [1]

Group 1 - Arista Networks (NYSE:ANET) is recognized as one of the top 11 communication equipment stocks favored by hedge funds [1] - Analyst Michael Genovese from Rosenblatt raised the price target for Arista Networks from $140 to $165, indicating a 20% upside potential at current levels while maintaining a Neutral rating [1][2] - The company is expected to announce its fourth-quarter results soon, with positive developments noted in recent wins and opportunities [2] Group 2 - Arista Networks specializes in high-performance, software- and data-driven client-to-cloud networking solutions, focusing on AI, data center, and routing architectures [4] - The company emphasizes low latency, automation, high-speed, and scalability, serving diverse market segments including cloud service providers, financial services, government, healthcare, education, and energy [4] - Recent developments in Microsoft's AI chip rollout are seen as beneficial for Arista, as it reduces dependency on Nvidia and supports Ethernet-driven scale-up for AI workloads [3]

Company Performance - Arista Networks, Inc. (NYSE:ANET) is recognized as one of the best performing stocks in the S&P 500 over the last five years [1] - As of February 6, 2026, approximately 90% of analysts maintain a bullish outlook on Arista Networks, indicating a potential upside of 27.5% to a consensus price target of $164.00 [2] Analyst Ratings and Predictions - On January 5, 2026, Piper Sandler upgraded Arista Networks to 'Overweight', increasing its target price from $145 to $159, while Melius Research kept a 'Buy' rating with a target of $200 [3] - Analysts forecast that 2026 will be a Year of Refresh for Arista, driven by enterprise adoption, greater exposure to AI and hyperscalers, and a moderate valuation that enhances model visibility despite competition from Nvidia and whitebox solutions [3] Product and Market Position - Arista Networks develops and markets cloud networking solutions, including EOS software and Ethernet switching platforms, catering to hyperscale users, enterprise clients, and AI data centers globally [5] - In its Q4 2025 investor letter, Giverny Capital Asset Management highlighted Arista as a major contributor, emphasizing its advanced switches and routers for hyperscale users like Microsoft and Meta Platforms [4] - The EOS software is noted for its effectiveness in managing capacity bottlenecks and optimizing data flow in large cloud networks [4]

Industry Overview - Cloud computing has seen significant adoption across the business ecosystem, enabling users to access and store data over the Internet without managing physical servers, thus driving innovation and digital transformation [2][3] - The global cloud computing market is projected to grow from $943.7 billion in 2025 to $3,349.6 billion by 2033, representing a CAGR of 16% [6] Cost Efficiency and Flexibility - The pay-per-use pricing model allows enterprises to only pay for the computing resources they use, reducing operating costs associated with on-site data centers and IT management [4] - Cloud computing enhances productivity and scalability while providing a secure network with low latency and reliable data backup facilities [4] Cloud Computing Categories - Cloud computing services are categorized into IaaS, PaaS, serverless, and SaaS, offering varying levels of control and management options [5] Key Players - Alphabet Inc. has transitioned from a search engine provider to a leading cloud computing technology provider, with Google Cloud being a significant growth driver [9] - Microsoft Azure offers a wide range of IaaS and PaaS solutions, with increased availability in over 60 regions globally, enhancing its competitive position [12][13] - IBM has strengthened its position in the hybrid cloud market through acquisitions like Red Hat, which aids enterprises in digital transformation [15][16] - Arista Networks provides cloud networking solutions with a focus on high capacity, programmability, and performance, differentiating itself in the industry [17][18][19] Investment Opportunities - The thematic investing screen can help identify high-potential stocks in the cloud computing domain, making it easier for investors to capitalize on emerging trends [7]

While high-profile chipmakers and software leaders have fueled much of the artificial intelligence (AI) rally, some of the most important enablers of AI growth have remained largely under the radar. One such company is Arista Networks (ANET), which is quietly powering the networking infrastructure that allows AI workloads to scale efficiently. As the firm prepares to report its fourth-quarter results on Feb. 12, investors will be watching closely to see whether strong AI-driven demand can continue support ...