Arista Networks, Inc. (NYSE: ANET), an industry leader in
data-driven, client to cloud networking for large data center,
campus and routing environments, today announced financial results
for its fourth quarter and the full year ended December 31,
2021.
Fourth Quarter Financial Results
- Revenue of $824.5 million, an increase of 10.1% compared to the
third quarter of 2021, and an increase of 27.1% from the fourth
quarter of 2020.
- GAAP gross margin of 63.4%, compared to GAAP gross margin of
63.9% in the third quarter of 2021 and 63.9% in the fourth quarter
of 2020.
- Non-GAAP gross margin of 64.3%, compared to non-GAAP gross
margin of 64.9% in the third quarter of 2021 and 65.0% in the
fourth quarter of 2020.
- GAAP net income of $239.3 million, or $0.75 per diluted share,
compared to GAAP net income of $183.0 million, or $0.58 per diluted
share, in the fourth quarter of 2020.
- Non-GAAP net income of $262.4 million, or $0.82 per diluted
share, compared to non-GAAP net income of $197.7 million, or $0.62
per diluted share, in the fourth quarter of 2020.
Full Year Financial Results
- Revenue of $2.95 billion, an increase of 27.2% compared to
fiscal year 2020.
- GAAP gross margin of 63.8%, compared to GAAP gross margin of
63.9% in fiscal year 2020.
- Non-GAAP gross margin of 64.8%, compared to non-GAAP gross
margin of 65.0% in fiscal year 2020.
- GAAP net income of $840.9 million, or $2.63 per diluted share,
compared to GAAP net income of $634.6 million, or $2.00 per diluted
share, in fiscal year 2020.
- Non-GAAP net income of $915.0 million or $2.87 per diluted
share, compared to non-GAAP net income of $718.4 million or $2.26
per diluted share, in fiscal year 2020.
“I am delighted with Arista's record 2021 milestones in
innovation, diversified customer momentum and earnings. We have
executed well to establish Arista among the fastest growing
networking companies in this decade," stated Jayshree Ullal,
President and CEO of Arista Networks.
Commenting on the company's financial results, Ita Brennan,
Arista’s CFO said, “The Arista team has shown great resilience and
flexibility throughout 2021, maintaining operational excellence in
the face of industry-wide challenges and delivering our first
billion-dollar cash flow year.”
Fourth Quarter Company Highlights
- Arista Expands Extensible Operating System for Data-Driven
Cloud Networking - Arista Networks announced the next major
expansion of the Arista EOS® network stack with the introduction of
the EOS Network Data Lake (NetDL™). Coupled with the AI/ML-driven
Autonomous Virtual Assist (Arista AVA™) and a broad ecosystem of
industry leaders, Arista is extending the EOS network stack
architecture to provide a high-fidelity data lake capability for
the next era of data-driven networking.
- Arista Expands 400G for Enterprise and Cloud Customers -
Arista, a leader in data-driven networking, announced the next
generation of the widely deployed 7050X and 7060X Series, providing
performance and cost benefits for customers of all sizes as they
transition to 400G networks.
- Arista Joins Microsoft Intelligent Security Association for
Integration with Microsoft Azure Sentinel to Help Improve Customer
Security – Arista announced it has joined the Microsoft Intelligent
Security Association (MISA), an ecosystem of independent software
vendors and managed security service providers that have integrated
solutions to better defend against a world of increasing threats.
Arista was nominated based on an integration between Arista’s NDR
platform and Microsoft Azure Sentinel. This integration enables
faster remediation of threats by combining network context and
threat detection with log-based and endpoint insights within Azure
Sentinel.
Full Year Company Highlights
- Arista Networks delivers Multi-domain Segmentation for Zero
Trust Enterprise - Simplified network segmentation with dynamic
partner integrations
- Arista Networks Expands its Cognitive Campus with the Latest
Generation Wi-Fi 6E Solution - New access point extends the
benefits of Arista’s cognitive unified edge to meet enterprise IoT
and collaborative applications requirements
- Arista Expands Extensible Operating System for Data-Driven
Cloud Networking - EOS Network Data Lake architecture endorsed by
Equinix, Palo Alto Networks, Red Hat, Slack, Splunk, VMware, and
Zscaler
- Arista Expands 400G for Enterprise and Cloud Customers -
Next-generation 7050X and 7060X delivers two times the
performance
- KuppingerCole has recognized Arista NDR as a leader in the 2021
Leadership Compass for Network Detection and Response (NDR)
Financial Outlook
For the first quarter of 2022, we expect:
- Revenue between $840 million to $860 million;
- Non-GAAP gross margin of 63% to 64%; and
- Non-GAAP operating margin of approximately 38%.
Guidance for non-GAAP financial measures excludes stock-based
compensation expense, amortization of acquisition-related
intangible assets, and certain non-recurring items. A
reconciliation of non-GAAP guidance measures to corresponding GAAP
measures is not available on a forward-looking basis (see further
explanation below under “Non-GAAP Financial Measures”).
Prepared Materials and Conference Call Information
Arista’s executives will discuss the fourth quarter and year end
2021 financial results on a conference call at 1:30 p.m. Pacific
time today. To listen to the call via telephone, dial (888)
330-2502 in the United States or +1 (240) 789-2713 from
international locations. The Conference ID is 5655862.
The financial results conference call will also be available via
live webcast on Arista’s investor relations website at
https://investors.arista.com/. Shortly after the conclusion of the
conference call, a replay of the audio webcast will be available on
Arista’s investor relations website.
Forward-Looking Statements
This press release contains “forward-looking statements”
regarding our future performance, including quotations from
management, statements in the section entitled “Financial Outlook,”
such as estimates regarding revenue, non-GAAP gross margin and
non-GAAP operating margin for the first quarter of 2022 and
statements regarding the benefits of Arista’s products.
Forward-looking statements are subject to known and unknown risks,
uncertainties, assumptions and other factors that could cause
actual results, performance or achievements to differ materially
from those anticipated in or implied by the forward-looking
statements including risks associated with: the impact of the
COVID-19 pandemic on our business; the impact of supply shortages
and manufacturing constraints on our business including lead time
and inventory purchases, increased costs of components,
interruptions or delays in shipments; the rapid evolution of the
networking market; any failure to successfully pursue new products
and service offerings and expand into adjacent markets; a decline
in our revenue growth rate; unpredictability of our results of
operations; adverse economic conditions or reduced information
technology and network infrastructure spending; excess inventory;
deferral, reduction or cancellation of orders from end customers;
intense competition; expansion of our international sales and
operations; investment or acquisition in other businesses;
seasonality; our ability to attract new large end customers or sell
products and services to existing end customers; our ability to
increase market awareness of our company and new products and
services; product quality problems; our ability to anticipate
technological shifts and develop products to meet those
technological shifts; our ability to protect, defend and maintain
our intellectual property rights; vulnerabilities in our products
and failure of our products to detect security breaches our
intellectual property rights; and tax, tariff, import/export
restrictions; and other future events. Additional risks and
uncertainties that could affect us can be found in our most recent
filings with the Securities and Exchange Commission including, but
not limited to, our annual report on Form 10-K and quarterly
reports on Form 10-Q. You can locate these reports through our
website at https://investors.arista.com/ and on the SEC’s website
at https://www.sec.gov/. All forward-looking statements in this
press release are based on information available to the company as
of the date hereof and we disclaim any obligation to publicly
update or revise any forward-looking statement to reflect events
that occur or circumstances that exist after the date on which they
were made.
Non-GAAP Financial Measures
This press release and accompanying table contain certain
non-GAAP financial measures including non-GAAP gross profit,
non-GAAP gross margin, non-GAAP income from operations, non-GAAP
operating margins, non-GAAP net income and non-GAAP diluted net
income per share. These non-GAAP financial measures exclude
stock-based compensation expense, amortization of
acquisition-related intangible assets, certain non-recurring
charges or benefits, and the income tax effect of these non-GAAP
exclusions. In addition, non-GAAP financial measures exclude net
tax benefits associated with stock-based awards, which include
excess tax benefits, and other discrete indirect effects of such
awards. The company uses these non-GAAP financial measures
internally in analyzing its financial results and believes that
these non-GAAP financial measures are useful to investors as an
additional tool to evaluate ongoing operating results and trends.
In addition, these measures are the primary indicators management
uses as a basis for its planning and forecasting for future
periods.
Non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for the comparable GAAP financial
measures. Non-GAAP financial measures are subject to limitations,
and should be read only in conjunction with the company's
consolidated financial statements prepared in accordance with GAAP.
Non-GAAP financial measures do not have any standardized meaning
and are therefore unlikely to be comparable to similarly titled
measures presented by other companies. A description of these
non-GAAP financial measures and a reconciliation of the company’s
non-GAAP financial measures to their most directly comparable GAAP
measures have been provided in the financial statement tables
included in this press release, and investors are encouraged to
review the reconciliation.
The company’s guidance for non-GAAP financial measures excludes
stock-based compensation expense, amortization of
acquisition-related intangible assets, and other non-recurring
items. The company does not provide guidance on GAAP gross margin
or GAAP operating margin or the various reconciling items between
GAAP gross margin and GAAP operating margin and non-GAAP gross
margin and non-GAAP operating margin. A reconciliation of the
non-GAAP financial measures guidance to the corresponding GAAP
measures on a forward-looking basis is not available because
stock-based compensation expense is impacted by the company’s
future hiring and retention needs and the future fair market value
of the company’s common stock, all of which are difficult to
predict and subject to constant change. The actual amount of
stock-based compensation expense will have a significant impact on
the company’s GAAP gross margin and GAAP operating margin.
About Arista Networks
Arista Networks is an industry leader in data-driven, client to
cloud networking for large data center, campus and routing
environments. Arista’s award-winning platforms deliver
availability, agility, automation, analytics and security through
CloudVision® and Arista EOS®, an advanced network operating system.
For more information, visit www.arista.com.
ARISTA, CloudVision, CloudEOS and MSS are among the registered
and unregistered trademarks of Arista Networks, Inc. in
jurisdictions around the world. Other company names or product
names may be trademarks of their respective owners. Additional
information and resources can be found at www.arista.com.
ARISTA NETWORKS, INC.
Condensed Consolidated
Statements of Operations
(Unaudited, in thousands,
except per share amounts)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
2021
2020
Revenue:
Product
$
667,955
$
518,281
$
2,377,727
$
1,830,842
Service
156,504
130,201
570,310
486,670
Total revenue
824,459
648,482
2,948,037
2,317,512
Cost of revenue:
Product
270,809
210,436
958,363
749,962
Service
30,936
23,462
108,895
85,664
Total cost of revenue
301,745
233,898
1,067,258
835,626
Total gross profit
522,714
414,584
1,880,779
1,481,886
Operating expenses:
Research and development
157,879
133,847
586,752
486,594
Sales and marketing
74,786
67,671
286,171
229,366
General and administrative
24,261
18,428
83,117
66,242
Total operating expenses
256,926
219,946
956,040
782,202
Income from operations
265,788
194,638
924,739
699,684
Other income, net
1,500
5,542
6,140
39,179
Income before income taxes
267,288
200,180
930,879
738,863
Provision for income taxes
27,993
17,222
90,025
104,306
Net income
$
239,295
$
182,958
$
840,854
$
634,557
Net income attributable to common
stockholders:
Basic
$
239,295
$
182,958
$
840,854
$
634,557
Diluted
$
239,295
$
182,958
$
840,854
$
634,557
Net income per share attributable to
common stockholders (1):
Basic
$
0.78
$
0.60
$
2.74
$
2.09
Diluted
$
0.75
$
0.58
$
2.63
$
2.00
Weighted-average shares used in computing
net income per share attributable to common stockholders (1):
Basic
307,521
303,456
306,512
303,936
Diluted
319,753
317,044
319,238
317,860
_____________________
(1) Prior period results have been adjusted to reflect the
four-for-one stock split effected in the form of a stock dividend
in November 2021.
ARISTA NETWORKS, INC.
Reconciliation of Selected
GAAP to Non-GAAP Financial Measures
(Unaudited, in thousands,
except percentages and per share amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2021
2020
2021
2020
GAAP gross profit
$
522,714
$
414,584
$
1,880,779
$
1,481,886
GAAP gross margin
63.4
%
63.9
%
63.8
%
63.9
%
Stock-based compensation expense
2,246
1,554
7,444
6,272
Intangible asset amortization
5,464
5,464
21,857
17,480
Non-GAAP gross profit
$
530,424
$
421,602
$
1,910,080
$
1,505,638
Non-GAAP gross margin
64.3
%
65.0
%
64.8
%
65.0
%
GAAP income from operations
$
265,788
$
194,638
$
924,739
$
699,684
Stock-based compensation expense
51,243
40,095
186,875
137,042
Intangible asset amortization
7,159
7,562
29,235
24,086
Acquisition-related costs (1)
—
1,215
—
13,933
Non-GAAP income from operations
$
324,190
$
243,510
$
1,140,849
$
874,745
Non-GAAP operating margin
39.3
%
37.6
%
38.7
%
37.7
%
GAAP net income
$
239,295
$
182,958
$
840,854
$
634,557
Stock-based compensation expense
51,243
40,095
186,875
137,042
Intangible asset amortization
7,159
7,562
29,235
24,086
Acquisition-related costs
—
1,215
—
13,933
Gain on investment in privately-held
companies
—
(4,164
)
—
(4,164
)
Tax benefit on stock-based awards
(30,470
)
(19,802
)
(115,154
)
(60,880
)
Income tax effect on non-GAAP
exclusions
(4,814
)
(10,188
)
(26,813
)
(26,163
)
Non-GAAP net income
$
262,413
$
197,676
$
914,997
$
718,411
GAAP diluted net income per share
attributable to common stockholders (2)
$
0.75
$
0.58
$
2.63
$
2.00
Non-GAAP adjustments to net income
0.07
0.04
0.24
0.26
Non-GAAP diluted net income per share
$
0.82
$
0.62
$
2.87
$
2.26
Weighted-average shares used in computing
diluted net income per share (2)
319,753
317,044
319,238
317,860
Summary of Stock-Based Compensation
Expense:
Cost of revenue
$
2,246
$
1,554
$
7,444
$
6,272
Research and development
27,097
23,184
99,770
79,913
Sales and marketing
12,388
11,188
46,521
34,944
General and administrative
9,512
4,169
33,140
15,913
Total
$
51,243
$
40,095
$
186,875
$
137,042
___________________
(1)
Represents non-recurring costs associated
with our acquisitions, which primarily include retention bonuses,
professional and consulting fees, and restructuring costs.
(2)
Prior period results have been adjusted to
reflect the four-for-one stock split effected in the form of a
stock dividend in November 2021.
ARISTA NETWORKS, INC.
Condensed Consolidated Balance
Sheets
(Unaudited, in
thousands)
December 31, 2021
December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
620,813
$
893,219
Marketable securities
2,787,502
1,979,649
Accounts receivable
516,509
389,540
Inventories
650,117
479,668
Prepaid expenses and other current
assets
237,735
94,922
Total current assets
4,812,676
3,836,998
Property and equipment, net
78,634
32,231
Acquisition-related intangible assets,
net
93,555
122,790
Goodwill
188,397
189,696
Investments
20,247
8,314
Operating lease right-of-use assets
65,182
77,288
Deferred tax assets
442,295
441,531
Other assets
33,443
30,071
TOTAL ASSETS
$
5,734,429
$
4,738,919
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
202,636
$
134,235
Accrued liabilities
226,643
143,357
Deferred revenue
593,578
396,259
Other current liabilities
86,972
94,392
Total current liabilities
1,109,829
768,243
Income taxes payable
69,916
53,053
Operating lease liabilities,
non-current
56,527
72,397
Deferred revenue, non-current
335,734
254,568
Deferred tax liabilities, non-current
129,074
227,936
Other long-term liabilities
54,749
42,431
TOTAL LIABILITIES
1,755,829
1,418,628
STOCKHOLDERS’ EQUITY:
Common stock (1)
31
30
Additional paid-in capital (1)
1,530,046
1,292,409
Retained earnings
2,456,823
2,027,614
Accumulated other comprehensive income
(8,300
)
238
TOTAL STOCKHOLDERS’ EQUITY
3,978,600
3,320,291
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
5,734,429
$
4,738,919
______________________
(1) Prior period results have been
adjusted to reflect the four-for-one stock split effected in the
form of a stock dividend in November 2021.
ARISTA NETWORKS, INC.
Condensed Consolidated
Statements of Cash Flows
(Unaudited, in
thousands)
Twelve Months Ended December
31,
2021
2020
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
840,854
$
634,557
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and other
50,334
44,590
Noncash lease expense
17,112
16,970
Stock-based compensation
186,875
137,042
Deferred income taxes
(99,290
)
(9,144
)
(Gain) on investments in privately-held
companies, net
—
(4,164
)
(Gain) on sale of marketable
securities
—
(9,432
)
Amortization of investment premiums
26,847
10,381
Changes in operating assets and
liabilities:
Accounts receivable, net
(126,969
)
10,673
Inventories
(170,449
)
(235,318
)
Prepaid expenses and other current
assets
(134,814
)
13,846
Other assets
(4,220
)
4,965
Accounts payable
66,681
41,161
Accrued liabilities
83,524
2,728
Deferred revenue
278,485
50,352
Income taxes payable
6,223
8,805
Other liabilities
(5,337
)
17,102
Net cash provided by operating
activities
1,015,856
735,114
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from maturities of marketable
securities
1,455,465
1,545,689
Purchases of marketable securities
(2,317,264
)
(2,688,064
)
Business combinations, net of cash
acquired
—
(227,420
)
Purchases of property, equipment and
intangible assets
(64,736
)
(15,384
)
Escrow receipts from past business
acquisitions
1,299
—
Investments and notes receivable in
privately-held companies
(19,933
)
3,399
Proceeds from sale of marketable
securities
19,607
772,978
Net cash used in investing activities
(925,562
)
(608,802
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of common stock
under equity plans
67,245
57,556
Tax withholding paid on behalf of
employees for net share settlement
(16,482
)
(8,722
)
Repurchase of common stock
(411,645
)
(395,173
)
Net cash used in financing activities
(360,882
)
(346,339
)
Effect of exchange rate changes
(1,816
)
1,966
NET DECREASE IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
(272,404
)
(218,061
)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
—Beginning of period
897,454
1,115,515
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
—End of period
$
625,050
$
897,454
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220214005672/en/
Investor Contacts:
Arista Networks, Inc. Liz Stine, 408-547-5885 Director, Investor
Relations liz@arista.com
Venk Nathamuni, 408-547-5959 Head of Corporate Finance, M&A,
IR venk@arista.com
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