Investment Rating - The report provides an investment rating of "Outperform" for the company, indicating an expected total return over the next 12-18 months that exceeds the relevant market benchmark by more than 10% [23]. Core Insights - In Q2 2025, the company's revenue reached $2.2 billion, exceeding expectations by $100 million, with a year-over-year growth of 30.4% [7][8]. - The non-GAAP gross margin was reported at 65.6%, surpassing previous guidance of 63%, and showing improvements from both the previous quarter and year [7][8]. - The company has raised its full-year revenue growth expectation for 2025 from 17% to 25%, with the target revenue increased from $8.2 billion to $8.75 billion, driven by growth in AI, cloud, and enterprise sectors [9][10]. Revenue and Growth - Q2 2025 revenue was $2.2 billion, a 30.4% increase year-over-year, with software and service renewals contributing approximately 16.3% [7][8]. - The company expects Q3 revenue to be around $2.25 billion [11]. Profit Metrics - Operating income in Q2 2025 surpassed $1 billion for the first time, reaching $1.08 billion, which accounted for 48.8% of revenue; net profit was $923.5 million, or 41.9% of revenue [8]. - Diluted earnings per share were reported at $0.73, reflecting a year-over-year increase of 37.7% [8]. Gross Margin and Operating Margin - The expected gross margin for 2025 is projected to be between 63% and 64%, with an operating margin of approximately 48% [10]. AI Network Business Progress - The company has positioned its AI network solutions as the preferred platform for various AI accelerators, primarily supporting NVIDIA GPUs and initiating collaborations with AMD and other startups [12]. - The back-end AI network revenue target is set at $750 million, with overall AI network revenue expected to exceed $1.5 billion by 2025 [12][13]. - The Etherlink product portfolio is noted as the most comprehensive solution in the industry, enhancing GPU utilization and reducing data exchange times by 30% to 50% [13].

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]

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Core Viewpoint - Arista Networks reported strong quarterly earnings, exceeding expectations and showing significant year-over-year growth in both earnings and revenues [1][2]. Financial Performance - The company achieved quarterly earnings of $0.73 per share, surpassing the Zacks Consensus Estimate of $0.65 per share, and up from $0.52 per share a year ago, representing an earnings surprise of +12.31% [1]. - Revenues for the quarter reached $2.2 billion, exceeding the Zacks Consensus Estimate by 4.34%, and up from $1.69 billion in the same quarter last year [2]. Market Performance - Arista Networks shares have increased approximately 8.9% since the beginning of the year, outperforming the S&P 500's gain of 7.6% [3]. - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for continued outperformance in the near future [6]. Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.63 on revenues of $2.11 billion, while for the current fiscal year, the estimate is $2.58 on revenues of $8.35 billion [7]. - The Internet - Software industry, to which Arista Networks belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook for the sector [8].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Delaware 20-1751121 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 5453 Great America Parkway , Santa C ...

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 reached $2,200,000,000, a 30.4% increase year-over-year, exceeding guidance by $100,000,000 [7][18] - Non-GAAP gross margins were 65.6%, up from 64.1% in the previous quarter and 65.4% in the same quarter last year [18][20] - Operating income crossed $1,000,000,000 for the first time, landing at 48.8% of revenue [19][20] - Net income for the quarter was $923,500,000, or 41.9% of revenue, with diluted earnings per share of $0.73, a 37.7% increase from the prior year [20] Business Line Data and Key Metrics Changes - Software and service renewals contributed approximately 16.3% of total revenue [7] - R&D spending increased to $243,300,000, or 11% of revenue, reflecting higher new product introduction costs [19] - Sales and marketing expenses rose to $105,300,000, or 4.8% of revenue, as the company continued to focus on partner programs [19] Market Data and Key Metrics Changes - International revenues accounted for 21.8% of total revenue, up from 20.3% in the prior quarter, driven by stronger performance in the EMEA region [18] - The Americas contributed 78.2% of total revenue [7] Company Strategy and Development Direction - The company raised its 2025 annual revenue growth target to 25%, now aiming for $8,750,000,000, driven by momentum in AI, cloud, and enterprise sectors [8][25] - The AI center strategy is designed to complement the data center focus, enhancing networking capabilities for AI workloads [9] - The acquisition of VeloCloud aims to enhance the company's offerings in the SD-WAN space, particularly for managed service providers [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on a unique opportunity in the networking market, particularly in AI and cloud sectors [8][18] - The company anticipates continued momentum in the second half of the year, with a strong focus on execution priorities [26][27] Other Important Information - The company repurchased $196,000,000 of its common stock during the quarter, with $1,400,000,000 remaining in the repurchase program [20][21] - Deferred revenue increased to $4,100,000,000, with a significant portion linked to service contracts [22][23] Q&A Session Summary Question: Competitive Environment - Management acknowledged the competitive landscape but emphasized their innovation and differentiation at platform performance, feature level, and customer intimacy [33][35] Question: Strength in Cloud Demand - The increase in demand is attributed to a balanced deployment of cloud and AI, with pressure on both front-end and back-end networks [40][42] Question: VeloCloud Integration - The integration of VeloCloud is expected to enhance the company's channel efforts and cross-sell opportunities within existing accounts [46][48] Question: Scale Up vs. Scale Out - Management discussed the unique requirements for scale-up networking, particularly in AI rack deployments, and the potential for differentiation in this area [52][54] Question: Revenue Growth Drivers - The increase in guidance from 17% to 25% is driven by strong demand across enterprise campus, AI, and cloud sectors [58][63] Question: Deferred Revenue Growth - Deferred revenue growth is indicative of new product use cases, particularly in AI, and is expected to continue due to ongoing experimentation with new technologies [67][71] Question: Customer Concentration - The company noted a 10% concentration from two major customers, with a balanced approach to contributions from both large and smaller customers [80][82] Question: Sustainability of Growth - Management highlighted the importance of efficiency in maintaining margins and the coexistence with white box solutions [90][92]

Financial Performance - Total revenue for the second quarter was $2.21 billion, representing a year-over-year increase of 30.4% and exceeding estimates of $2.11 billion [2][5] - Adjusted EPS for the second quarter was 73 cents, surpassing estimates of 65 cents [5] - Gross margin for the second quarter was reported at 65.2% [2] Cash Position - Arista Networks ended the quarter with $2.23 billion in total cash and cash equivalents [2] Market Reaction - Following the earnings report, Arista Networks shares rose by 14.46% in after-hours trading, reaching $135.20 [3] Future Guidance - The company expects third-quarter revenue to be approximately $2.25 billion, which is above the estimates of $2.09 billion [3] Strategic Positioning - The CEO, Jayshree Ullal, stated that Arista is well-positioned in data-driven AI networking, emphasizing the company's focus on transformational innovation [2][3]

Investor Presentation August 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 third quarter and fiscal year 2025, statements regarding Arista's addressable market, products and services, innovation and leadership in data-driven AI networking. Forward-looking statements ar ...

Exhibit 99.1 Arista Networks, Inc. Reports Second Quarter 2025 Financial Results SANTA CLARA, Calif.- August 5, 2025 -- 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 second quarter ended June 30, 2025. Second Quarter Financial Highlights "Arista is well-positioned in data-driven AI networking, from client to cloud," said Jayshree Ullal, Chairperson and C ...

Core Insights - Arista Networks, Inc. (ANET) is set to report second-quarter 2025 earnings on August 5, with revenue and earnings estimates at $2.11 billion and $0.65 per share respectively [1][6] - Earnings estimates for Arista have increased by 0.8% to $2.58 per share for 2025 and by 1% to $2.97 for 2026 over the past 60 days [1] - The company has a strong earnings surprise history, averaging 11.8% over the last four quarters, with a recent surprise of 10.2% [2][6] Earnings Estimates and Trends - Current earnings estimates for Q2 2025 remain unchanged at $0.65 per share, with a slight increase in long-term estimates for 2025 and 2026 [2] - The earnings surprise history shows consistent outperformance against estimates, with the most recent quarter showing a 10.17% surprise [3] Factors Influencing Results - Strong demand driven by AI and software upgrades is expected to contribute to Q2 growth and long-term revenue increases [6][10] - Arista is a leader in the 100-gigabit Ethernet switching market and is gaining traction in 200- and 400-gig high-performance switching products [7] Product Innovations - The company has introduced new solutions aimed at enhancing AI-driven enterprise products, including a compact fanless 12-port PoE switch and ruggedized outdoor Wi-Fi 7 access points [9][10] - These innovations are designed to improve operational efficiency and support the growing demands of AI infrastructures [10] Market Performance - Over the past year, Arista's stock has increased by 54.4%, outperforming the industry average of 45.9% and competitors like Hewlett Packard and Cisco [11] Valuation Metrics - Arista's shares are currently trading at a forward price/earnings ratio of 43.96, which is higher than the industry average of 39.57 and its own historical mean of 35.92 [14] Competitive Landscape - The company faces significant competition in the cloud networking space, particularly from Cisco, which holds a dominant position in the data center networking market [18] Long-term Outlook - With strong fundamentals and a focus on quality and operational execution, Arista is well-positioned for long-term growth in the data-driven cloud networking sector [19] - The company’s emphasis on continuous portfolio enhancements and robust demand trends is likely to drive future revenue growth [19][20]