third quarter 2026
Filed Nov 3, 2026Arista reported Q3 2026 revenue of $3.66 billion, up 58.5% year over year and 20.5% sequentially, with GAAP operating margin of 44.9% and Q4 revenue guidance of $3.9 - $4.0 billion.
Revenue growth reached 58.5%, management described it as the highest year-over-year revenue growth since the IPO, GAAP operating margin expanded to 44.9%, and Q4 revenue guidance is above the reported Q3 revenue level.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 product revenueGAAP | $3.19B | – | – |
| Q3 2026 service revenueGAAP | 467.6M | – | – |
| Q3 2026 total revenueGAAP | 3.66B | 20.5% | 58.5% |
| Q3 2026 total cost of revenueGAAP | 1.33B | – | – |
| Q3 2026 gross profitGAAP | $2.33B | – | – |
| Q3 2026 gross marginGAAP | 63.6 % | – | – |
| Q3 2026 gross profitnon-GAAP | $2.34B | – | – |
| Q3 2026 gross marginnon-GAAP | 64.0 % | – | – |
| Q3 2026 research and development expenseGAAP | 486.9M | – | – |
| Q3 2026 sales and marketing expenseGAAP | 156.6M | – | – |
| Q3 2026 general and administrative expenseGAAP | 39.8M | – | – |
| Q3 2026 total operating expensesGAAP | 683.3M | – | – |
| Q3 2026 income from operationsGAAP | $1.64B | – | – |
| Q3 2026 operating marginGAAP | 44.9 % | – | – |
| Q3 2026 income from operationsnon-GAAP | $1.80B | – | – |
| Q3 2026 operating marginnon-GAAP | 49.1 % | – | – |
| Q3 2026 other income (expense), netGAAP | 273.1M | – | – |
| Q3 2026 income before income taxesGAAP | 1.92B | – | – |
| Q3 2026 provision for income taxesGAAP | 355.1M | – | – |
| Q3 2026 net incomeGAAP | $1.56B | – | – |
| Q3 2026 net incomenon-GAAP | $1.53B | – | – |
| Q3 2026 basic net income per shareGAAP | $ 1.24 | – | – |
| Q3 2026 diluted net income per shareGAAP | $ 1.22 | – | – |
| Q3 2026 diluted net income per sharenon-GAAP | $ 1.20 | – | – |
| Nine months ended September 30, 2026 total revenueGAAP | 9.40B | – | – |
| Nine months ended September 30, 2026 product revenueGAAP | $8.11B | – | – |
| Nine months ended September 30, 2026 service revenueGAAP | 1.30B | – | – |
| Nine months ended September 30, 2026 gross profitGAAP | $5.91B | – | – |
| Nine months ended September 30, 2026 gross marginGAAP | 62.9 % | – | – |
| Nine months ended September 30, 2026 income from operationsGAAP | $4.18B | – | – |
| Nine months ended September 30, 2026 operating marginGAAP | 44.4 % | – | – |
| Nine months ended September 30, 2026 income from operationsnon-GAAP | $4.60B | – | – |
| Nine months ended September 30, 2026 operating marginnon-GAAP | 49.0 % | – | – |
| Nine months ended September 30, 2026 net incomeGAAP | $3.80B | – | – |
| Nine months ended September 30, 2026 net incomenon-GAAP | $3.94B | – | – |
| Nine months ended September 30, 2026 diluted net income per shareGAAP | $ 2.98 | – | – |
| Nine months ended September 30, 2026 diluted net income per sharenon-GAAP | $ 3.09 | – | – |
| Nine months ended September 30, 2026 net cash provided by operating activitiesGAAP | 3.98B | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| ProductProduct revenue was reported in the condensed consolidated income statements. | $3.19B | – | – |
| ServiceService revenue was reported in the condensed consolidated income statements. | 467.6M | – | – |
fourth quarter of 2026 outlook
- Revenue$3.9 - $4.0 billion
- NoteNon-GAAP operating margin of 48 - 49%
- NoteNon-GAAP diluted net income per share of $1.26 - $1.30
Capital returns
- Repurchases of common stock: — for the nine months ended September 30, 2026; $(983.0) million for the nine months ended September 30, 2025.
What drove it
- Management cited strong momentum across customer sectors and increased relevance for the generative and agentic AI era.
- Arista launched open standards-based rack-scale architectures for scale-up and scale-out AI networks with AMD, Arm, Broadcom, d-Matrix, Meta, Microsoft, and Qualcomm.
- The Etherlink™ SU-144 architecture supports up to 144 accelerators per rack in a single hop and scales up to 1,024 XPUs via cross-rack topologies.
- The company outlined a scale-across networking strategy for geographically distributed AI fabrics up to one million XPUs.
Concerns
- GAAP gross margin was 63.6 %, below 64.6 % in the third quarter of 2025, while non-GAAP gross margin was 64.0 %, below 65.2 %.
- Inventories were 3,209.8 million as of September 30, 2026, compared with 2,247.1 million as of December 31, 2025.
- The filing identifies risks related to tariffs, supply constraints, dependence on a predominant merchant silicon vendor, large purchases by a limited number of customers, export restrictions, and gross-margin variability.
- Q4 non-GAAP operating-margin guidance of 48 - 49% is below Q3 non-GAAP operating margin of 49.1 % at the upper end and below it at the lower end.
What to watch
- Delivery against fourth-quarter revenue guidance of $3.9 - $4.0 billion.
- Delivery against fourth-quarter non-GAAP operating-margin guidance of 48 - 49%.
- Progression of gross margin after Q3 GAAP gross margin of 63.6 %.
- Inventory management following inventories of 3,209.8 million.
- Revenue contribution from the announced scale-up, scale-out, and scale-across AI networking architectures.
Balance sheet and cash flow
- Cash and cash equivalents of $ 2,288.1 million as of September 30, 2026, compared with $ 1,963.9 million as of December 31, 2025.
- Marketable securities of 12,070.9 million as of September 30, 2026, compared with 8,779.1 million as of December 31, 2025.
- Inventories of 3,209.8 million as of September 30, 2026, compared with 2,247.1 million as of December 31, 2025.
- Accounts receivable of 2,327.8 million as of September 30, 2026, compared with 1,886.9 million as of December 31, 2025.
- Deferred revenue of 5,102.2 million current and 1,737.3 million non-current as of September 30, 2026.
- Purchases of property and equipment were $(184.9) million for the nine months ended September 30, 2026, compared with $(82.5) million for the nine months ended September 30, 2025.
- Net cash used in investing activities was $(3,659.1) million for the nine months ended September 30, 2026, compared with $(2,577.1) million for the nine months ended September 30, 2025.
- Cash, cash equivalents and restricted cash at the end of the period were $ 2,289.6 million, compared with $ 2,328.0 million.
Analysis
Arista delivered $3.66 billion of Q3 2026 revenue, up 58.5% from the third quarter of 2025 and 20.5% from the second quarter of 2026. Product revenue was $ 3,190.0 million and service revenue was 467.6 million. Management characterized the result as its highest year-over-year revenue growth since the IPO and cited momentum across customer sectors tied to generative and agentic AI networking demand.
Profitability expanded at the operating level despite lower gross margins. GAAP operating margin was 44.9 %, compared with 42.4 % a year earlier, and non-GAAP operating margin was 49.1 %, compared with 48.6 %. In contrast, GAAP gross margin declined to 63.6 % from 64.6 %, while non-GAAP gross margin declined to 64.0 % from 65.2 %. GAAP net income was $ 1,560.4 million and GAAP diluted net income per share was $ 1.22; non-GAAP net income was $ 1,530.8 million and non-GAAP diluted net income per share was $ 1.20.
For the first nine months, total revenue was 9,402.3 million versus 6,517.9 million in the prior-year period, and net cash provided by operating activities was 3,977.4 million versus 3,110.0 million. The balance sheet carried $ 2,288.1 million of cash and cash equivalents and 12,070.9 million of marketable securities at September 30, 2026. Inventories increased to 3,209.8 million from 2,247.1 million at December 31, 2025, while the company reported no common-stock repurchases during the first nine months of 2026.
The Q4 outlook calls for $3.9 - $4.0 billion of revenue, non-GAAP operating margin of 48 - 49%, and non-GAAP diluted net income per share of $1.26 - $1.30. The revenue outlook extends the reported Q3 revenue level, while the operating-margin range brackets a level below Q3's 49.1 % non-GAAP operating margin. Investors should focus on execution of the AI networking architecture launches, gross-margin progression, inventory management, and delivery on the Q4 outlook.
Management, verbatim
Arista registered another momentous quarter with the highest year-over-year revenue growth since our IPO and record profitability, surpassing even my high expectations.
Jayshree Ullal, Chairperson and CEO of Arista Networks
This strong momentum across customer sectors highlights our increased relevance for the generative and agentic AI era.
Jayshree Ullal, Chairperson and CEO of Arista Networks
This quarter brought a true trifecta for our company, setting new record highs in revenue growth, net income, and EPS.
Chantelle Breithaupt, CFO
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparison with prior guidance is unavailable.
- Free cash flow was not reported.
- Quarterly operating cash flow was not reported.
- Debt balances were not reported.
- Dividend declaration or payment was not reported.
- Q3 prior-quarter values for product revenue, service revenue, gross profit, operating expenses, operating income, net income, and EPS were not reported.
- Percentage changes for product revenue, service revenue, costs, operating expenses, operating income, net income, and cash flow were not reported on their respective rows.
- Q4 gross-margin guidance, operating-expense guidance, and tax-rate guidance were not reported.
Written by an AI language model 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 checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.