Arista Networks Inc (NYSE: ANET) reported better-than-anticipated fiscal 2022 fourth-quarter results. The cloud networking solutions provider also issued a better-than-anticipated 1Q 2023 outlook. The stock of Arista ended Tuesday’s trading at $141.46, up $5.46 or 4.01% from its prior close.
The Santa Clara, California-based company reported fourth-quarter revenues of $1.28 billion, an increase of 54.70% from $824.50 million in the comparable quarter last year.
For the fourth quarter, which ended December 31, 2022, Arista Networks recorded a net income of $427.10 million, or $1.35 per share, compared with $239.30 million, or $0.75 per share, in the quarter that ended December 31, 2021.
Excluding, stock-based compensation expense, intangible asset amortization, acquisition-related costs, unrealized gain on equity investments, and tax benefit on stock-based awards, among others, the Q4 2022 non-GAAP net income was $445.15 million, or $1.41 per share, up from $262.41 million, or $0.82 per share, in Q4 2021.
Analysts surveyed by Refinitiv had anticipated the company to report earnings of $1.21 per share on revenues of $1.20 billion.
Regarding the results, Ita Brennan, CFO of Arista, issued the following statement: “Our outstanding fourth quarter financial results epitomize our focus on provable revenue growth, leveraging R&D and go-to-market investments across the business.”
Segment wise:
- Product revenues were $1.097 billion, an increase of 64.20% from last year.
- Service revenues rose by 14.20% y-o-y to $178.69 million.
Non-GAAP gross margin was 61% in 4Q 2022, a slight decrease from 64.30% in 4Q21.
Arista sells a major portion of its switches to firms operating large data centers. This includes Google LLC, Microsoft Corp, and Meta Platforms Inc. The company also offers enterprise-level campus switches to small firms that run in-house data centers. In this case, Arista competes with Cisco Systems, Inc.
Looking forward, Arista forecasts fiscal 2023 first-quarter revenues in the range of $1.275 billion to $1.325 billion. Wall Street analysts anticipate the company to post revenues of $1.21 billion. The company also projects a non-GAAP operating margin of roughly 40%. Non-GAAP gross margin is expected to be 60%.
The quarterly earnings beat and robust 1Q23 outlook are expected to keep the stock of Arista slightly bullish in the short term.
The historical price chart indicates that the stock of Arista Networks is rising after consolidating in the 118–130 range. The stock is also trading above its 50-day moving average, while the MACD indicator is showing a positive reading. Therefore, we anticipate the stock to remain in an uptrend in the next few trading sessions.
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