Arista Q4 Earnings Beat Estimates on Solid Demand, Revenues Surge Y/Y

Core Insights - Arista Networks, Inc. (ANET) reported strong fourth-quarter 2024 results, with significant year-over-year growth in revenues and adjusted earnings, driven by robust demand trends and innovative product launches [1][4] Financial Performance - GAAP net income for the reported quarter reached $801 million or 62 cents per share, up from $613.6 million or 48 cents in the previous year, primarily due to higher revenues [2] - Non-GAAP net income was a record high of $830.1 million or 65 cents per share compared to $664.3 million or 52 cents in the year-ago quarter, beating the Zacks Consensus Estimate by 8 cents [2] - For the full year 2024, GAAP net income improved to $2.852 billion or $2.23 per share from $2.087 billion or $1.65 in 2023, while non-GAAP net income was $2.91 billion or $2.27 per share compared to $2.199 billion or $1.73 in the previous year [3] Revenue Growth - Revenues surged to $1.93 billion from $1.54 billion in the prior-year quarter, driven by strength in the enterprise vertical and innovative solutions for cloud and enterprise networks [4] - Total revenues for 2024 reached $7 billion, an increase from $5.86 billion in 2023 [5] - Product sales totaled $1.6 billion, up from $1.31 billion in the year-ago quarter, while service revenues increased to $322.3 million from $230.1 million [6] Market Position - The Americas contributed 84% to total revenues, with international revenues making up the remainder, highlighting Arista's strong market traction in high-performance switching products [7] Profitability Metrics - Non-GAAP gross profit rose to $1.23 billion from $1 billion, with respective margins of 64.2% and 65.4%, despite a year-over-year margin decline [8] - Total operating expenses increased to $431.3 million from $359.3 million, with R&D costs rising to $285 million from $211.5 million [9] Cash Flow and Liquidity - In 2024, Arista generated $3.7 billion of net cash from operating activities compared to $2.03 billion in the previous year, with cash and cash equivalents totaling $2.76 billion as of December 31, 2024 [10] Future Outlook - For Q1 2025, management expects revenues in the range of $1.93-$1.97 billion, with a non-GAAP gross margin estimated at 63% and an operating margin approximated at 44% [12] - For the full year 2025, revenues are expected to improve approximately 17% year over year, with a gross margin of 60-62% and an operating margin of 43-44% [13]