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]