Arista Networks, Inc. (ANET): Results of Operations and Financial Condition
Arista Networks, Inc. (ANET) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Arista Networks, Inc. Reports Second Quarter 2026 Financial Results • Delivered 40% growth in non-GAAP EPS year-over-year as the company achieved its first $3+ billion revenue quarter. • Recognized on the 2026 Fortune 500 list of the largest United States corporation
How this was made
The 30-second read
Why it matters
Traders can update near-term estimates and positioning based on the quantified Q3 revenue and non-GAAP EPS range, plus margin guidance.
Market read
Primary earnings and guidance disclosure for a major AI/data-center networking supplier, with explicit Q3 targets that can reprice the stock and sector expectations.
What to watch
The filing notes GAAP vs non-GAAP reconciliation limitations for forward periods; if investors anchor on GAAP margins, the guidance may be less supportive than non-GAAP suggests.
Arista Networks reported its first $3+ billion revenue quarter, with revenue of $3.036 billion and non-GAAP diluted net income per share of $1.02.
Revenue increased 37.7% year-over-year and 12.1% sequentially, while GAAP and non-GAAP operating margins increased year-over-year and third-quarter revenue guidance was approximately $3.3 billion.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $3,035.7 million | 12.1% | 37.7% |
| Product revenueGAAP | $2,605.2 million | – | – |
| Service revenueGAAP | $430.5 million | – | – |
| Total cost of revenueGAAP | $1,125.4 million | – | – |
| Gross profitGAAP | $1,910.3 million | – | – |
| Gross marginGAAP | 62.9% | – | – |
| Gross profitnon-GAAP | $1,924.7 million | – | – |
| Gross marginnon-GAAP | 63.4% | – | – |
| Research and development expenseGAAP | $348.2 million | – | – |
| Sales and marketing expenseGAAP | $150.3 million | – | – |
| General and administrative expenseGAAP | $33.8 million | – | – |
| Total operating expensesGAAP | $532.3 million | – | – |
| Income from operationsGAAP | $1,378.0 million | – | – |
| Operating marginGAAP | 45.4% | – | – |
| Income from operationsnon-GAAP | $1,513.7 million | – | – |
| Operating marginnon-GAAP | 49.9% | – | – |
| Other income (expense), netGAAP | $126.3 million | – | – |
| Income before income taxesGAAP | $1,504.3 million | – | – |
| Provision for income taxesGAAP | $291.4 million | – | – |
| Net incomeGAAP | $1,212.9 million | – | – |
| Net incomenon-GAAP | $1,301.7 million | – | – |
| Basic net income per shareGAAP | $0.96 | – | – |
| Diluted net income per shareGAAP | $0.95 | – | – |
| Diluted net income per sharenon-GAAP | $1.02 | – | 40% |
| Weighted-average diluted sharesGAAP | 1,276.0 million | – | – |
| Six-month total revenueGAAP | $5,744.7 million | – | – |
| Six-month product revenueGAAP | $4,916.5 million | – | – |
| Six-month service revenueGAAP | $828.2 million | – | – |
| Six-month gross marginGAAP | 62.4% | – | – |
| Six-month operating marginGAAP | 44.1% | – | – |
| Six-month net incomeGAAP | $2,235.8 million | – | – |
| Six-month diluted net income per shareGAAP | $1.75 | – | – |
| Six-month non-GAAP diluted net income per sharenon-GAAP | $1.89 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| ProductNo separate product revenue driver was quantified in the filing. | $2,605.2 million | – | – |
| ServiceNo separate service revenue driver was quantified in the filing. | $430.5 million | – | – |
third quarter of 2026 outlook
- Revenueapproximately $3.3 billion
- NoteNon-GAAP operating margin of 48 - 49%.
- NoteNon-GAAP diluted net income per share between $1.06 and $1.08.
Capital returns
- Repurchases of common stock: — for the six months ended June 30, 2026.
- Proceeds from issuance of common stock under equity plans: $33.4 million for the six months ended June 30, 2026.
- Tax withholding paid on behalf of employees for net share settlement: $31.2 million for the six months ended June 30, 2026.
What drove it
- Revenue increased 37.7% from the second quarter of 2025 and 12.1% compared to the first quarter of 2026.
- The CFO described second-quarter growth as strong and broad-based.
- The company introduced 1.6 Tbps AI fabric platforms, including liquid-cooled options optimized for scale-up, scale-out, and scale-across networks.
- The 7060XE7 Series delivers up to 100 Tbps of system bandwidth and supports Linear Pluggable Optics.
- Arista was named a Leader in the 2026 Gartner Magic Quadrant for Enterprise Wired and Wireless LAN.
Concerns
- GAAP gross margin was 62.9%, compared with 65.2% in the second quarter of 2025.
- Non-GAAP gross margin was 63.4%, compared with 65.6% in the second quarter of 2025.
- Inventories were $2,535.3 million at June 30, 2026, compared with $2,247.1 million at December 31, 2025.
- Accounts receivable were $2,266.2 million at June 30, 2026, compared with $1,886.9 million at December 31, 2025.
What to watch
- Third-quarter revenue guidance of approximately $3.3 billion.
- Third-quarter non-GAAP operating margin guidance of 48 - 49%.
- Third-quarter non-GAAP diluted net income per share guidance between $1.06 and $1.08.
- The gross-margin trajectory following second-quarter GAAP gross margin of 62.9% and non-GAAP gross margin of 63.4%.
- Progress of 1.6 Tbps AI fabric platforms and the 7060XE7 Series.
Balance sheet and cash flow
- Cash and cash equivalents: $2,290.2 million at June 30, 2026, compared with $1,963.9 million at December 31, 2025.
- Marketable securities: $11,053.1 million at June 30, 2026, compared with $8,779.1 million at December 31, 2025.
- Accounts receivable: $2,266.2 million at June 30, 2026, compared with $1,886.9 million at December 31, 2025.
- Inventories: $2,535.3 million at June 30, 2026, compared with $2,247.1 million at December 31, 2025.
- Deferred revenue, current: $5,100.7 million at June 30, 2026, compared with $4,002.6 million at December 31, 2025.
- Deferred revenue, non-current: $1,765.2 million at June 30, 2026, compared with $1,369.8 million at December 31, 2025.
- Total assets: $23,720.1 million at June 30, 2026, compared with $19,448.6 million at December 31, 2025.
- Total liabilities: $8,922.4 million at June 30, 2026, compared with $7,078.1 million at December 31, 2025.
- Net cash provided by operating activities: $2,776.5 million for the six months ended June 30, 2026, compared with $1,841.8 million for the six months ended June 30, 2025.
- Purchases of property and equipment: $84.2 million for the six months ended June 30, 2026, compared with $52.4 million for the six months ended June 30, 2025.
- Net cash used in investing activities: $2,445.1 million for the six months ended June 30, 2026, compared with $1,391.0 million for the six months ended June 30, 2025.
- Net cash used in financing activities: $1.5 million for the six months ended June 30, 2026, compared with $991.0 million for the six months ended June 30, 2025.
- Cash, cash equivalents and restricted cash, end of period: $2,291.6 million for the six months ended June 30, 2026, compared with $2,226.9 million for the six months ended June 30, 2025.
Analysis
Arista reported revenue of $3,035.7 million in the second quarter of 2026, its first $3+ billion revenue quarter. Revenue increased 37.7% from the second quarter of 2025 and 12.1% compared with the first quarter of 2026. Product revenue was $2,605.2 million and service revenue was $430.5 million. Management characterized the performance as strong, broad-based growth and linked its platform strategy to client, campus, data center, and AI infrastructure.
Profitability expanded at the operating level. GAAP income from operations was $1,378.0 million, with a 45.4% operating margin compared with 44.7% in the prior-year quarter. Non-GAAP income from operations was $1,513.7 million and non-GAAP operating margin was 49.9%, compared with 48.8%. GAAP net income was $1,212.9 million and GAAP diluted net income per share was $0.95. Non-GAAP net income was $1,301.7 million and non-GAAP diluted net income per share was $1.02, compared with $0.73 in the second quarter of 2025.
Gross-margin performance deserves attention because it moved lower year-over-year despite the stronger revenue and operating-margin results. GAAP gross margin was 62.9%, compared with 65.2%, while non-GAAP gross margin was 63.4%, compared with 65.6%. Total operating expenses were $532.3 million, including $348.2 million of research and development expense, $150.3 million of sales and marketing expense, and $33.8 million of general and administrative expense.
Cash generation was substantial over the first six months. Net cash provided by operating activities was $2,776.5 million, compared with $1,841.8 million in the prior-year six-month period. At June 30, 2026, cash and cash equivalents were $2,290.2 million and marketable securities were $11,053.1 million. The filing reported no repurchases of common stock for the six months ended June 30, 2026, while purchases of property and equipment were $84.2 million.
For the third quarter of 2026, Arista expects revenue of approximately $3.3 billion, non-GAAP operating margin of 48 - 49%, and non-GAAP diluted net income per share between $1.06 and $1.08. The outlook calls for revenue above the reported second-quarter level while indicating a non-GAAP operating-margin range below the second-quarter 49.9% result. The company also highlighted 1.6 Tbps AI fabric platforms, liquid-cooled options, and the 7060XE7 Series as product developments supporting AI fabric deployments.
Management, verbatim
As we deliver our first $3 billion quarter in Q2 2026, it is clear that our Arista 2.0 platform strategy is compelling. Customers see networking as the central nervous system for infrastructure from the client to campus to data and AI centers.
Jayshree Ullal, Chairperson and CEO of Arista Networks
Our second quarter 2026 reflects strong, broad-based growth, with revenue up 37.7% and EPS up 39.7%. This performance underscores the strength of our market position and the continued dedication of our global team.
Chantelle Breithaupt, Arista’s CFO
Not in the filing
stated, not guessed- Prior-quarter product revenue, service revenue, gross profit, gross margin, operating income, net income, and EPS were not provided.
- Separate year-over-year and sequential percentage changes for product revenue and service revenue were not provided.
- Free cash flow was not reported.
- Debt was not reported.
- Dividend declaration or payment was not reported.
- Third-quarter GAAP guidance, gross-margin guidance, operating-expense guidance, and tax-rate guidance were not provided.
- Previous-release outlook was not provided, so comparison with prior guidance is unavailable.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is an SEC Form 8-K (Item 2.02) attaching Arista’s Q2 2026 results and Q3 2026 outlook, including product and AI fabric platform updates.
Ticker impact
Arista reported Q2 2026 revenue of $3.036B and guided Q3 2026 revenue to about $3.3B with non-GAAP EPS $1.06 to $1.08.
Bias toward upside follow-through if the market focuses on the $3.3B revenue guide and margin outlook.
The filing is a primary earnings release with quantified results and forward guidance (revenue, non-GAAP operating margin, and non-GAAP diluted EPS range), which typically moves expectations and estimates quickly.
Market effects
Reinforces demand signals for AI fabric and high-speed Ethernet switching, supporting the broader data-center networking capex narrative.
Primarily US-listed large-cap tech sentiment, with potential spillover to other networking and semiconductor names exposed to AI infrastructure spending.
AI networking demand and guidance can influence global supply-chain expectations for optical/interconnect and data-center equipment.
Counterpoint
Non-GAAP metrics exclude items like stock-based compensation and amortization, so the market may discount the headline EPS/margins versus GAAP profitability.
Key entities
- companyArista Networks, Inc.
Reported Q2 2026 financial results and provided Q3 2026 guidance in an 8-K earnings release.
- executiveJayshree Ullal
CEO and Chairperson quoted on the platform strategy and first $3B+ revenue quarter.
- executiveChantelle Breithaupt
CFO quoted on broad-based growth and EPS/revenue increases.
