Arista (ANET) Q2 Revenue Jumps 30%

Core Insights - Arista Networks reported strong Q2 2025 earnings, with GAAP revenue of $2.20 billion, a 30.4% increase year-over-year, exceeding analyst estimates by $97.8 million [1][2] - Non-GAAP EPS reached $0.73, surpassing the consensus estimate of $0.65 by 12.4%, reflecting robust demand in cloud and AI networking [1][2] - The company achieved record operational income and margin expansion, driven by innovation in enterprise networking products [1][5] Financial Performance - Q2 2025 Non-GAAP EPS was $0.73, up 37.7% from $0.53 in Q2 2024 [2] - GAAP revenue for Q2 2025 was $2.21 billion, a 30.4% increase from $1.69 billion in Q2 2024 [2] - Non-GAAP gross margin was 65.6%, slightly up from 65.4% year-over-year, while non-GAAP operating margin increased to 48.8% from 46.5% [2][5] - Net income under GAAP was $888.8 million, a 33.6% increase from $665.4 million in Q2 2024 [2] Company Overview - Arista Networks specializes in high-speed network switches and software for cloud, data centers, and large enterprises, with a focus on its Extensible Operating System (EOS) [3] - The company serves major cloud providers and is expanding into sectors like financial services, healthcare, and government [3] Strategic Priorities - Recent priorities include enhancing AI-driven networking capabilities, broadening enterprise offerings, and focusing on innovation [4] - Key success factors involve advancing switching hardware, providing software-enabled network management, and maintaining operational efficiency [4] Recent Developments - The company introduced new AI-driven networking products, including enterprise switching solutions and Wi-Fi 7 access points, and acquired the VeloCloud SD-WAN product line [6] - Cash flow from operations reached $1.84 billion in the first half of FY2025, with R&D spending at $296.5 million [7] - Inventory was increased to $2.06 billion to mitigate potential trade disruptions, alongside a new $1.5 billion share repurchase plan [7] Future Outlook - Management projects Q3 FY2025 revenue of approximately $2.25 billion, with targeted non-GAAP gross margin around 64% and operating margin about 47% [8] - The company maintains a cautious approach due to uncertainties related to tariffs and geopolitical volatility [9]