ANET Communication Equipment
Arista Networks, Inc.
Arista Networks sells high-speed Ethernet switches and routers, along with its EOS operating system and CloudVision software, for AI clusters, cloud data centers, enterprise campuses, and wide-area networks. Two large customers account for 42% of revenue. FY2025 revenue rose 28.6% to $9.0 billion with a 64.1% gross margin, and operating income was $3.86 billion. Arista has no debt and held $10.7 billion of cash and marketable securities at year-end. Manufacturing is outsourced, and it relies mainly on Broadcom for switching chips. Q2 2026 revenue topped $3 billion for the first time, up 37.7% year over year.
Last updated
Analysis last edited: October 7, 2026 · Financial data fetched: October 7, 2026 12:12 (SEC EDGAR) · Source 10-K filed: February 17, 2026
Next update expectedAfter FY2026’s 10-K is filed (roughly 60–90 days after fiscal year end (sooner for larger filers)), financials and analysis will be refreshed.
01
Company profile
- Legal name
- Arista Networks, Inc.
- Headquarters
- SANTA CLARA, CA
- Incorporated in
- Delaware
- Fiscal year end
- 12/31
- Exchange & ticker
- NYSE: ANET
- Industry
- Communication Equipment
- CIK
- 1596532
- Website
- https://www.arista.com/ ↗
Workforce (as of FY2025 year-end)
Employees
5,115
Source: Form 10-K (FY2025) cover page and business description
02
Earnings calendar
When the company reports each quarter: the quarter-end date, the day results were released, and when the 10-Q or 10-K was filed.
Next report
Q3 FY2026
Quarter end: September 2026. In past years, Q3 results were released 30–38 days after quarter end (Nov 4, 2025; Nov 7, 2024; Oct 30, 2023). No date has been announced in the sources this site uses.
Reporting pattern
- Fiscal year ends around December 31.
- Reports four times a year: three quarterly reports (10-Q) and an annual report (10-K) for Q4.
- Earnings releases came 30–49 days after quarter end over the last 12 quarters.
| Quarter | Quarter ended | Earnings release (8-K) | Report filed (10-Q / 10-K) |
|---|---|---|---|
| Q2 FY2026 | Jun 30, 2026 | Aug 4, 2026 (+35 days) | Aug 5, 2026 10-Q (+36 days) |
| Q1 FY2026 | Mar 31, 2026 | May 5, 2026 (+35 days) | May 6, 2026 10-Q (+36 days) |
| Q4 FY2025 | Dec 31, 2025 | Feb 12, 2026 (+43 days) | Feb 17, 2026 10-K (+48 days) |
| Q3 FY2025 | Sep 30, 2025 | Nov 4, 2025 (+35 days) | Nov 5, 2025 10-Q (+36 days) |
| Q2 FY2025 | Jun 30, 2025 | Aug 5, 2025 (+36 days) | Aug 6, 2025 10-Q (+37 days) |
| Q1 FY2025 | Mar 31, 2025 | May 6, 2025 (+36 days) | May 7, 2025 10-Q (+37 days) |
| Q4 FY2024 | Dec 31, 2024 | Feb 18, 2025 (+49 days) | Feb 19, 2025 10-K (+50 days) |
| Q3 FY2024 | Sep 30, 2024 | Nov 7, 2024 (+38 days) | Nov 8, 2024 10-Q (+39 days) |
| Q2 FY2024 | Jun 30, 2024 | Jul 30, 2024 (+30 days) | Jul 31, 2024 10-Q (+31 days) |
| Q1 FY2024 | Mar 31, 2024 | May 7, 2024 (+37 days) | May 8, 2024 10-Q (+38 days) |
| Q4 FY2023 | Dec 31, 2023 | Feb 12, 2024 (+43 days) | Feb 13, 2024 10-K (+44 days) |
| Q3 FY2023 | Sep 30, 2023 | Oct 30, 2023 (+30 days) | Oct 31, 2023 10-Q (+31 days) |
Source: SEC EDGAR filing history. Release dates are the dates the earnings release was furnished to the SEC on Form 8-K (Item 2.02), which is normally the day results are announced. Fiscal years are labeled by the calendar year in which they end.
03
Flagship products & services
Core
AI, cloud, and data center networking
Examples: Etherlink portfolio: 7800R AI Spine, 7060 AI Leaf, 7700R4 Distributed Etherlink Switch
Ethernet switching for scale-up, scale-out, and scale-across AI clusters and cloud data centers.
Cognitive Adjacencies
Campus and routing
Examples: Campus switches, Wi-Fi access points, VeloCloud SD-WAN
Extending the data-center model to enterprise campuses and branch offices.
Cognitive Networks
Software and services
Examples: EOS, CloudVision, AVA, NDR, DANZ Monitoring Fabric, A-Care
Network operating system, management, security, monitoring, and support.
Categories follow Arista's 10-K, Item 1. Arista doesn't disclose revenue by these categories.
04
Recent strategic focus
FY2025 developments from the 10-K, and the latest quarter from the Q2 2026 earnings release.
First $3B quarter
Q2 2026 revenue was $3.036B (+37.7% year over year) with a GAAP operating margin of 45.4%; Arista guided Q3 2026 revenue to about $3.3B.
Source: Q2 2026 earnings release (8-K filed 2026-08-04)
Deferred revenue doubled
Total deferred revenue rose to $5.37B from $2.79B as AI trials and acceptance terms increased.
Source: Form 10-K (FY2025)
Leadership additions
Todd Nightingale joined as President and COO, and Kenneth Duda became President and CTO.
Source: Proxy statement (DEF 14A, 2026)
Share repurchases
Arista bought back $1.60B of stock in 2025; $817.9M of authorization remained at year-end.
Source: Form 10-K (FY2025)
Capex ÷ D&A (FY2025)
1.65x
Well above depreciation — expansion-stage investment
formulacapital expenditures ÷ depreciation & amortization
e.g.$120M ÷ $73M = 1.65x
termsCapital expenditures (capex) · Depreciation & amortization (D&A)
R&D-to-revenue ratio (FY2025)
13.7%
formularesearch & development expense ÷ revenue × 100
e.g.$1,237M ÷ $9,006M × 100 = 13.7%
M&A spend (5-year total)
$442M
Latest year: $300M
Cash-flow-statement spending on acquisitions, net of cash acquired
Where the money goes, over time
Unit: $M. Capex went from $65M in FY2021 to $120M in FY2025
- Capex
- R&D
- M&A spend
formulacapital expenditures ÷ depreciation & amortization
termsCapital expenditures (capex) · Depreciation & amortization (D&A)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-17
05
Key figures at a glance
FY2021–FY2025, 5 years.
Revenue (FY2025)
$9.01B
As reported in the 10-K
Revenue CAGR (4 years)
+32.2%▲favorable
formula(last-period revenue ÷ first-period revenue) ^ (1 ÷ years) − 1
e.g.($9,006M ÷ $2,948M) ^ (1÷4) − 1 = 32.2%
termsCAGR · ^ (exponent) · Revenue (net sales)
Operating margin (FY2025)
42.8%▲favorable
+11.5pt vs. 4 years ago
formulaoperating income ÷ revenue × 100
e.g.$3,856M ÷ $9,006M × 100 = 42.8%
ROE (FY2025)
31.4%▲favorable
5-year average: 30.1%
As reported in the 10-K
P/B (FY2025 end)
13.31x
formulaP/E × EPS ÷ BVPS (= period-end share price ÷ book value per share)
e.g.47.6x × $2.75 ÷ $9.85 = 13.31x
Period-end (fiscal year-end) value, not today's P/B
EV/EBITDA (FY2025 end)
42.1x
formula(market cap + interest-bearing debt − cash and equivalents) ÷ (operating income + depreciation & amortization)
e.g.($167,318M + $0M − $1,964M) ÷ ($3,856M + $73M) = 42.1x
termsEV/EBITDA · Market capitalization · Interest-bearing debt · EBITDA · Depreciation & amortization (D&A)
Period-end (fiscal year-end) value, not today's multiple
- ▲
Revenue grew +32.2% a year over 4 years (strong growth)
From $2.95B in FY2021 to $9.01B in FY2025. The annualized rate (CAGR) makes it possible to compare growth pace across companies of different sizes.
- ▲
Operating margin improved: 31.4% → 42.8%
How much operating profit is left per $100 of revenue. It moved +11.5 points over 4 years — pricing power, cost control, and product mix all show up here.
- ▲
Equity ratio is 63.6% (a high level of financial stability)
The share of total assets funded by equity rather than debt. 50%+ is often read as low bankruptcy risk, though the right level varies by industry (real estate and leasing run lower, for instance).
- ▲
Free cash flow was positive in 5 of 5 years
Operating cash flow minus capital expenditures: the cash left over after funding the business’s own investment, available for dividends, buybacks, acquisitions, or debt paydown. A negative year can mean heavy investment, or weak core earnings — worth distinguishing.
- ▲
ROE averaged 30.1% over 5 years (latest: 31.4%)
How much profit was generated on shareholders’ equity. Roughly 10%+ is often cited as solid for a U.S. company, though this varies a lot by industry and capital intensity.
06
Business model
Arista reports one segment. It sells switching and routing hardware running its own EOS software, plus software and support subscriptions, through a direct sales force and channel partners.
01 what it draws on
Inputs & resources
- Merchant silicon, mainly from Broadcom
- Contract manufacturers Jabil, Sanmina, and Foxconn
- About 5,115 employees
02 what it does
Activities
- Designing switches, routers, and Wi-Fi access points
- Developing EOS, CloudVision, and AVA AI-assisted operations software
- Support services (A-Care)
03 who it serves
Customers
- Cloud and AI Titans
- AI and Specialty Providers (including AI neoclouds)
- Enterprises, financial institutions, and government agencies
04 how money comes in
How it earns
- Product sales (84% of FY2025 revenue)
- Support and subscription services (16%)
How the business makes money
- Product revenue $7.58B (+28.8%) and service revenue $1.43B (+27.7%) in FY2025.
- Gross margin held at 64.1% in both 2024 and 2025.
Revenue by segment (FY2025)
Unit: $M — bar length = revenue, (%) = share of total company revenue
Product
7,577 (84%)Service
1,429 (16%)
Source: Form 10-K (FY2025) — MD&A, results of operations Arista operates as one reportable segment; shown here is revenue by type.
07
Where it earns
Many U.S.-listed companies earn most of their revenue outside the U.S. — this breaks down revenue by country/region so it's clear where the business actually makes its money.
Largest market (FY2025)
Americas — 79% of revenue
Revenue by country / region (FY2025)
Unit: $M — bar length = revenue, (%) = share of total company revenue
Americas
7,122 (79%)Europe, Middle East and Africa
1,070 (12%)Asia-Pacific
813 (9%)
Source: Form 10-K (FY2025) — MD&A, revenue by geography Non-Americas revenue rose from 18.2% to 20.9% of total, mainly from shifts in where large global customers bought.
08
Contract structure
Short-term or spot sales carry different earnings quality than long-term or auto-renewing contracts — this shows how the company actually contracts with its customers.
Sales are mostly hardware purchase orders, which customers have canceled, delayed, or reduced at short notice in the past. Support contracts renew over time, and deferred revenue more than doubled in 2025 as AI customer trials and acceptance terms grew.
- Spot / one-off transaction
Product sales
$7.58B (84% of FY2025 revenue)
Typical term: Purchase orders; some new AI products sold with trials or acceptance periods
Revenue is deferred until acceptance where contracts require it.
Support services (PCS)
$1.43B (16%)
Typical term: Initial and renewal support contracts
Grew 27.7% as the installed base expanded.
Deferred revenue
$5.37B at year-end 2025, up from $2.79B
Typical term: Current $4.00B; non-current $1.37B
Source: Form 10-K (FY2025) — Balance sheet; MD&A; Risk Factors
09
Alliances & capital ties
Equity stakes, joint ventures, and strategic partnerships disclosed across the 10-K, 8-Ks, and proxy statement.
Business partnership
Broadcom
Arista's predominant merchant silicon vendor for switching chips; the 10-K says product development depends on continued collaboration with Broadcom. In June 2025 Arista bought the VeloCloud business from Broadcom.
Business partnership
Jabil, Sanmina, Foxconn (Hon Hai)
Primary contract manufacturers, building Arista products in Malaysia, Vietnam, Mexico, and other countries.
10
Customers & suppliers
Who the company sells to and buys from. Companies rarely name either, so named counterparties come only from the company's own filings and press releases; otherwise this lists the concentration figures the 10-K discloses.
Customers
Cloud and AI Titans, AI and specialty providers, and enterprises including financial services firms and government agencies; partners include distributors, resellers, systems integrators, and OEMs.
Named by the company
None named in the 10-K or the company’s press releases.
What the filings disclose
- Two end customers accounted for 26% and 16% of FY2025 revenue (20% and 15% in 2024; 18% and 21% in 2023). The 10-K doesn't name them. (Form 10-K (FY2025), Risk Factors)
Suppliers
Contract manufacturers and component suppliers, some sole-source.
Named by the company
None named in the 10-K or the company’s press releases.
What the filings disclose
- Primary contract manufacturers: Jabil, Sanmina, and Foxconn (Hon Hai). (Form 10-K (FY2025), Item 1)
- Broadcom is the predominant merchant silicon vendor for switching chips. (Form 10-K (FY2025), Item 1)
11
Competitors & peers
Competitors the 10-K names, and the peer group the company itself chose in its proxy statement. Nothing here is this site's own pick.
Arista's 10-K says the data center and campus networking markets have historically been dominated by Cisco, with competition from other large equipment vendors and white box switches. In AI back-end networks, Ethernet competes with InfiniBand and NVLink, often sold with Nvidia GPUs.
Competitors named in the 10-K
Data center and campus networking
- Cisco Systemssite ↗
- Dell Technologiessite ↗
- Extreme Networkssite ↗
- Hewlett Packard Enterprisesite ↗
- Huaweisite ↗
- Juniper Networkssite ↗
- NVIDIAsite ↗
Also white box vendors using open-source operating systems. HPE has acquired Juniper.
Peer group the company chose
Fiscal 2026 executive compensation peer group, from the proxy statement. Peers are companies the board considers comparable — for example when setting executive pay — not necessarily direct competitors.
Companies in computer networking, communication products and services, and software, with revenue of about 0.5x–2.5x and market capitalization of about 0.3x–2x Arista's, and preferably revenue growth of 10% or more.
- Akamai Technologiessite ↗
- Advanced Micro Devicessite ↗
- Autodesksite ↗
- Cadence Design Systemssite ↗
- Cienasite ↗
- CrowdStrikesite ↗
- Digital Realtysite ↗
- Equinixsite ↗
- Fortinetsite ↗
- Intuitive Surgicalsite ↗
- NetAppsite ↗
- Palo Alto Networkssite ↗
- ServiceNowsite ↗
- Synopsyssite ↗
- Workdaysite ↗
- Zscalersite ↗
Added for fiscal 2026 based on market capitalization
Source: Proxy statement (DEF 14A, filed 2026-04-16) — Compensation Discussion and AnalysisCompany names link to this site’s analysis where one exists; “site ↗” opens the company’s own website.
12
M&A history
Companies acquired over the last five years, plus older large acquisitions that still anchor a current business — what each was bought to do, and what happened afterward. From the 10-K, 8-Ks, and the company's press releases.
Arista made one acquisition in FY2025.
Cash spent on acquisitions, FY2021–FY2025: $442M
Jun 2025
VeloCloud (from Broadcom)
$300.0M in cash
A secure, AI-optimized cloud WAN (SD-WAN) portfolio.
- Stated purpose (company)
- Connecting data centers and distributed campus and branch offices, complementing Arista's existing portfolio.
Source: Form 10-K (FY2025) — Note 4
13
Five years of financials
Each chart's axis holds a single unit (never mixing dollars, %, and $/share). The table's per-period header links to the filing the numbers came from.
Revenue over time
Unit: $M
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-17
Profit over time (operating → net)
Unit: $M
- Operating income
- Pretax income
- Net income
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-17
Margins over time
Unit: %
- Operating margin
- Net margin
formulaoperating income ÷ revenue × 100
formulanet income attributable to the company ÷ revenue × 100
Cash flow over time
Unit: $M (below zero = cash went out)
- Operating CF
- Investing CF
- Free CF
formulacash flow from operations − capital expenditures
termsFree cash flow (FCF) · Cash flow from operations (operating CF) · Capital expenditures (capex)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-17
Financial stability & capital efficiency
Unit: %
- Equity ratio
- ROE
formulatotal equity ÷ total assets × 100 (as reported in the 10-K)
termsStockholders’ equity · Total assets
formulanet income ÷ average equity (beginning + ending, ÷2) × 100 (as reported in the 10-K)
termsNet income (attributable to the company) · Stockholders’ equity
Earnings per share (EPS) and dividend per share
Unit: $
- EPS
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-17
| Line item | FY2021In next year’s 10-K | FY202210-K on EDGAR ↗ | FY202310-K on EDGAR ↗ | FY202410-K on EDGAR ↗ | FY202510-K on EDGAR ↗ |
|---|---|---|---|---|---|
| Income statement ($M) | |||||
| Revenue | 2,948 | 4,381 | 5,860 | 7,003 | 9,006 |
| Operating income | 925 | 1,527 | 2,257 | 2,945 | 3,856 |
| Pretax income | 931 | 1,582 | 2,422 | 3,265 | 4,250 |
| Net income (attributable) | 841 | 1,352 | 2,087 | 2,852 | 3,511 |
| Revenue growthcalc(this year’s revenue − last year’s revenue) ÷ last year’s revenue × 100 | — | 48.6% | 33.8% | 19.5% | 28.6% |
| Operating margincalcoperating income ÷ revenue × 100 | 31.4% | 34.9% | 38.5% | 42.0% | 42.8% |
| Net margincalcnet income attributable to the company ÷ revenue × 100 | 28.5% | 30.9% | 35.6% | 40.7% | 39.0% |
| Balance sheet ($M) | |||||
| Total assets | 5,734 | 6,775 | 9,957 | 14,044 | 19,449 |
| Total equity | 3,979 | 4,886 | 7,219 | 9,995 | 12,371 |
| Equity ratio | 69.4% | 72.1% | 72.5% | 71.2% | 63.6% |
| ROE | 21.1% | 30.5% | 34.5% | 33.1% | 31.4% |
| Cash flow ($M) | |||||
| Operating CF | 1,016 | 493 | 2,034 | 3,708 | 4,372 |
| Investing CF | -926 | 216 | -687 | -2,457 | -3,576 |
| Financing CF | -361 | -655 | -84 | -422 | -1,596 |
| Free cash flowcalccash flow from operations − capital expenditures | 951 | 448 | 2,000 | 3,676 | 4,252 |
| Cash and equivalents | 621 | 672 | 1,939 | 2,762 | 1,964 |
| Per share & other | |||||
| EPS ($) | 0.66 | 1.07 | 1.65 | 2.23 | 2.75 |
| BVPS ($) | 3.23 | 3.98 | 5.78 | 7.92 | 9.85 |
| P/E (x) | 54.7 | 28.4 | 35.7 | 49.6 | 47.7 |
| EV/EBITDA (x)calc(market cap + interest-bearing debt − cash and equivalents) ÷ (operating income + depreciation & amortization) | 46.5 | 23.7 | 31.2 | 46.1 | 42.1 |
| P/B (x)calcP/E × EPS ÷ BVPS (= period-end share price ÷ book value per share) | 11.12 | 7.62 | 10.19 | 13.95 | 13.31 |
P/B and EV/EBITDA use each period’s period-end (fiscal year-end) figures, not the current share price. Figures without a "calc" tag are as reported in the Form 10-K (five-year selected financial data and the consolidated financial statements), pulled automatically from SEC EDGAR. Where a later filing restated a prior period, the restated figure is used.
14
Is ROIC above WACC?
ROIC (the return on money invested in the business) above WACC (the cost of raising that money) means the company is creating value. WACC is an estimate, so its assumptions can be adjusted below.
ROIC (FY2025)
27.2%
formulaoperating income × (1 − tax rate) ÷ invested capital × 100 *invested capital = interest-bearing debt + total equity (average of beginning/ending)
e.g.$3,856M × (1 − 21%) ÷ $11,183M × 100 = 27.2%
termsOperating income · Effective tax rate · Invested capital · Interest-bearing debt · Total equity
WACC (this site’s estimate)
13.63%
formulacost of equity × equity weight + cost of debt × (1 − tax rate) × debt weight
e.g.Equity weight: $167.32B ÷ ($167.32B + $0) = 100.0%
e.g.Debt weight: $0 ÷ ($167.32B + $0) = 0.0%
e.g.WACC: 13.6% × 100.0% + 4.0% × (1 − 21%) × 0.0% = 13.63%
termsCost of equity · Equity weight (E/(D+E)) · Cost of debt · (1 − tax rate) · Debt weight (D/(D+E)) · Market capitalization
WACC 13.63% is this site’s estimate under the assumptions below (not a figure the company has published)
- Risk-free rate
- 4%
- β
- 1.75 (price-derived adjusted beta)
- Equity risk premium
- 5.5%
- Cost of equity
- 13.63%
- Cost of debt
- 4.00% (no debt on record, using the risk-free rate)
- Effective tax rate
- 21%
- Capital structure (equity : debt)
- 100% : 0%
ROIC over time, vs. WACC
Unit: % — bars = each period's ROIC, horizontal line = latest WACC. Bars above the line are green, below are red
- ROIC (above WACC)
- ROIC (below WACC)
- WACC 13.63%
formulaoperating income × (1 − tax rate) ÷ invested capital × 100 *invested capital = interest-bearing debt + total equity (average of beginning/ending)
termsOperating income · Effective tax rate · Invested capital · Interest-bearing debt · Total equity
formulacost of equity × equity weight + cost of debt × (1 − tax rate) × debt weight
termsCost of equity · Equity weight (E/(D+E)) · Cost of debt · (1 − tax rate) · Debt weight (D/(D+E)) · Market capitalization
Try different WACC assumptions
β and the equity risk premium are estimates with a real range of plausible values — move the sliders to check whether ROIC > WACC still holds. The defaults reflect 2026-09.
Initial β: 1.75 (price-derived adjusted beta. Raw β 2.12, R² 0.39, 130 weeks)
formula0.67 × β + 0.33 (β = the slope of weekly stock returns regressed on weekly market returns)
e.g.0.67 × 2.123 + 0.33 = 1.752
termsβ (beta)
Period 2024-04-12–2026-10-06, using S&P 500 ETF (SPY) as the market proxy. Source: Yahoo Finance price history.
formularisk-free rate + β × equity risk premium
e.g.4.0% + 1.75 × 5.5% = 13.6%
termsCAPM · Risk-free rate · β (beta) · Equity risk premium (market risk premium)
formulaP/E × net income ≈ period-end share price × shares outstanding (= market cap)
termsP/E · Net income (attributable to the company) · Market capitalization · Market value of equity
formulainterest expense ÷ interest-bearing debt × 100 (clamped to 0–10%; falls back to the risk-free rate if there’s no debt)
15
What the price implies (DCF)
A company's value can be written as its free cash flow divided by (cost of capital − perpetual growth). Working that backwards from the market's valuation shows how much growth the share price assumed — compared here with the company's actual past growth.
Growth the price implies (FY2025)
10.9%
Perpetual FCF growth: g = r − FCF ÷ EV = 13.6% − 2.7%
Past FCF growth (FY2021–FY2025)
+45.4%
Compound annual rate, 4 years
Past revenue growth (FY2021–FY2025)
+32.2%
Compound annual rate, 4 years
Inputs (FY2025): free cash flow $4.25B (operating CF − capex); enterprise value $156.58B = market cap $167.32B + debt $0 − cash and short-term investments $10.74B; r = WACC of 13.6% using this page’s default assumptions (β 1.75, risk-free 4.0%, market premium 5.5%).
Try your own assumptions
V = FCF ÷ (r − g). It starts at the implied growth rate, where the theoretical value equals today’s enterprise value.
Theoretical enterprise value
$157.5B
FCF $4.25B ÷ (13.6% − 10.9%)
Theoretical ÷ actual enterprise value
1.01x
Above 1x: these assumptions value the business above the market did
How sensitive the answer is
Theoretical ÷ actual enterprise value for each combination of r and g.
| g \ r | 11.6% | 12.6% | 13.6% | 14.6% | 15.6% |
|---|---|---|---|---|---|
| 0% | 0.23x | 0.22x | 0.20x | 0.19x | 0.17x |
| 2% | 0.28x | 0.26x | 0.23x | 0.22x | 0.20x |
| 4% | 0.36x | 0.32x | 0.28x | 0.26x | 0.23x |
| 6% | 0.48x | 0.41x | 0.36x | 0.32x | 0.28x |
| 8% | 0.75x | 0.59x | 0.48x | 0.41x | 0.36x |
A simplified model for seeing what the market price assumes, not a forecast or a target price. It treats free cash flow as growing at one constant rate forever; the result swings widely with small changes in r and g, and is undefined when g reaches r. Free cash flow here is operating cash flow minus capex, which is after interest — a full DCF of enterprise value would use cash flow before interest. Market cap and enterprise value use the fiscal year-end price, not today’s.
16
Earnings quality
The same reported profit can mean different things depending on whether it's backed by cash, driven by the core business, or the result of a one-off item. Four checks below.
- ✓
Operating CF ÷ net income: averages 1.02x
Profit is backed by cash coming in.
- ✓
Accrual ratio (latest): -5.1%
A small share of profit rests on accounting estimates.
- ✓
Core-earnings share (operating income ÷ pretax income): 91%
Most profit comes from core operations.
- !
Days sales outstanding: 64 → 76 days
Receivables are growing faster than revenue — worth checking for looser collection terms or channel stuffing.
Operating CF vs. net income
Unit: $M — operating CF above net income means profit is backed by cash
- Operating CF
- Net income
formulacash flow from operations ÷ net income attributable to the company
termsCash flow from operations (operating CF) · Net income (attributable to the company)
formula(net income − operating CF) ÷ average total assets × 100
termsNet income (attributable to the company) · Cash flow from operations (operating CF) · Total assets
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-17
Profit bridge (FY2025)
Unit: $M — what moved profit from operating income to net income
- Profit (each stage)
- Pushed profit up
- Pushed profit down
formulaoperating income ÷ income before income taxes × 100
termsOperating income · Income before income taxes (pretax income)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-17
Receivables & inventory days
Unit: days — days grow when receivables or inventory build up faster than sales
- Days sales outstanding
- Days inventory outstanding
formulaperiod-end receivables ÷ revenue × 365
formulaperiod-end inventory ÷ revenue × 365
termsInventory · Revenue (net sales)
Worked examples (latest period)
formulacash flow from operations ÷ net income attributable to the company
e.g.$4,372M ÷ $3,511M = 1.25x
termsCash flow from operations (operating CF) · Net income (attributable to the company)
formulaoperating income ÷ income before income taxes × 100
e.g.$3,856M ÷ $4,250M × 100 = 91%
termsOperating income · Income before income taxes (pretax income)
formulaperiod-end receivables ÷ revenue × 365
e.g.$1,887M ÷ $9,006M × 365 = 76 days
17
Strengths & weaknesses
Strengths
1. High profitability
Gross margin of 64.1% and operating income of $3.86B on $9.0B revenue (about 43%) in FY2025.
Evidence: Form 10-K (FY2025)
2. Rapid growth
Revenue grew from $2.95B (FY2021) to $9.0B (FY2025); Q2 2026 revenue rose 37.7% year over year to $3.04B.
Evidence: SEC EDGAR XBRL; Q2 2026 earnings release
3. Debt-free balance sheet
No debt on the balance sheet, with $10.7B of cash, cash equivalents, and marketable securities at year-end 2025.
Evidence: Form 10-K (FY2025), balance sheet and MD&A liquidity
4. Light capital needs
Manufacturing is outsourced; capital spending was $120M in 2025 against $4.37B of operating cash flow.
Evidence: SEC EDGAR XBRL
Weaknesses
1. Customer concentration
Two end customers accounted for 26% and 16% of FY2025 revenue, and two customers have each exceeded 10% in every one of the last three years.
Evidence: Form 10-K (FY2025), Item 1 and Risk Factors
2. Supplier dependence
Arista relies primarily on Broadcom for switching chips, and neither it nor its contract manufacturers generally has written supply-guarantee agreements with component providers.
Evidence: Form 10-K (FY2025), Item 1
3. Large purchase obligations
$6.8B of non-cancellable purchase obligations at year-end 2025, $6.3B of them due within 12 months.
Evidence: Form 10-K (FY2025), Note 5
18
What draws investors to it
Why the stock can look attractive to investors — each point paired with what has to hold for it to stay true, and the opposing view. This is this site's analysis, not a recommendation to buy or sell.
P/E (FY2025)
47.7x
Price at fiscal year-end ÷ diluted EPS
Dividend yield (FY2025)
—
Dividends per share ÷ fiscal year-end price
Payout ratio (FY2025)
—
Dividends per share ÷ diluted EPS
FCF yield (FY2025)
2.5%
(Operating CF − capex) ÷ market cap
1. AI networking growth
Revenue grew 28.6% in 2025 and 37.7% in Q2 2026, driven by switching and routing shipments.
- What has to hold
- AI clusters keep adopting Ethernet at scale.
- The other side
- Two customers make up 42% of revenue, and InfiniBand and NVLink compete in AI back-end networks.
Evidence: Form 10-K (FY2025); Q2 2026 earnings release
2. Cash-rich and debt-free
$10.7B of cash and securities, no debt, and buybacks of $1.6B in 2025.
- What has to hold
- High margins hold as the business scales.
- The other side
- Large customers generally receive lower pricing, so mix can pressure margins.
Evidence: Form 10-K (FY2025)
Arista doesn't pay a dividend. Per-share figures reflect the 4-for-1 stock split of December 2024.
19
Resilience
How well the company could absorb a bad year: its financial buffer, how its revenue and profit held up in the worst year on record, and what the 10-K says about the business's exposure to shocks. Figures and filing statements only — no overall rating.
1. Financial buffer (FY2025)
Cash & short-term investments ÷ debt due within a year
—
$10.74B vs. —
Interest coverage (operating income ÷ interest expense)
Not disclosed
Interest expense isn’t reported as a separate line.
Free cash flow ÷ dividends paid
—
2. Worst year in the record, and the recovery
| Figure | Worst year-over-year change | Back to the prior level? |
|---|---|---|
| Revenue | No decline in the record | — |
| Operating income | No decline in the record | — |
Covers only the 5 fiscal years on record (FY2021–FY2025), which may not include a full recession — the worst year here isn’t necessarily how the company would fare in a severe downturn.
3. Business resilience (from the 10-K)
No debt and large cash
$10.7B of cash, cash equivalents, and marketable securities at year-end 2025; the balance sheet shows no debt.
Source: Form 10-K (FY2025), liquidity
Recurring support revenue
Service revenue of $1.43B from initial and renewal support contracts.
Source: Form 10-K (FY2025), MD&A
Supply commitments
$6.8B of purchase obligations could become a burden if demand falls.
Source: Form 10-K (FY2025), Note 5
20
Risks (including geopolitical)
Starting from the 10-K's Risk Factors section, organized by category — geopolitical, currency, raw materials, regulatory, disaster, and more — with impact and likelihood assessed by this site.
Risk map
Vertical = impact on results, horizontal = likelihood. Upper right = most severe. Numbers match the list below (placement is this site’s own assessment).
Likelihood →
"Company disclosure" vs. "this site’s assessment"
The description and mitigation for each risk are this site’s summary of the 10-K’s "Risk Factors" section. Impact and likelihood are this site’s own assessment, not the company’s — where the company discloses its own likelihood assessment, that is noted in the summary.
Impact is judged from how large the affected business is relative to total revenue/profit, and from the risk’s track record of moving results in the past. Likelihood is judged from the filing’s wording and the current business environment (already occurring, or recurring).
- 1Customers & sales
Large customers' spending swings
- Company disclosure (summarized from the 10-K)
- Big customers' bulk purchases may slip between quarters or be canceled when they change capital spending plans; AI customers may overestimate demand for their build-outs.
- Company’s stated mitigation
- Expanding into enterprise, campus, and AI and specialty providers.
- This site’s assessment
- Impact High / Likelihood High
- 2Competition & technology shift
Competing technologies and vendors
- Company disclosure (summarized from the 10-K)
- Cisco has historically dominated data center and campus networking; Ethernet competes with InfiniBand and NVLink for back-end AI clusters, often sold with Nvidia GPUs; white box switches put pressure on prices.
- Company’s stated mitigation
- A single EOS software stack across products.
- This site’s assessment
- Impact High / Likelihood Med
- 3Supply chain
Component shortages and tariffs
- Company disclosure (summarized from the 10-K)
- Limited and sole-source suppliers, tightening memory supply, and U.S. tariffs and retaliatory measures could raise costs or delay shipments.
- Company’s stated mitigation
- Multiple contract manufacturers in several countries.
- This site’s assessment
- Impact Med / Likelihood Med
- 4Customers & sales
Revenue timing from acceptance terms
- Company disclosure (summarized from the 10-K)
- More customer trials and acceptance provisions in AI deals make product deferred revenue, and therefore quarterly revenue, more volatile.
- Company’s stated mitigation
- Not stated.
- This site’s assessment
- Impact Med / Likelihood High
21
What to watch going forward
- Revenue share of the two largest customers.
- AI networking demand and Ethernet versus InfiniBand/NVLink.
- Deferred revenue and purchase obligations.
- Growth of campus and VeloCloud SD-WAN.
- Gross margin under supply and tariff pressure.
22
Source documents
This page's financial figures come from the Form 10-Ks listed below. Check the original filings for full detail.
Last updated
Analysis last edited: October 7, 2026 · Financial data fetched: October 7, 2026 12:12 (SEC EDGAR) · Source 10-K filed: February 17, 2026
Next update expectedAfter FY2026’s 10-K is filed (roughly 60–90 days after fiscal year end (sooner for larger filers)), financials and analysis will be refreshed.
This page is this site’s own analysis based on public information, and does not represent Arista Networks, Inc.’s views. It is not a recommendation to buy or sell any security, and this site does not guarantee the accuracy of any figure or statement here. Always verify against the original source documents before making an investment decision.