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Arista Networks, Inc. Reports Third Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

Cloud Networking Adoption Drives Record Revenue and EPS

- Arista Networks, Inc. (NYSE: ANET), an industry leader in software-driven cloud networking solutions for large data center and computing environments, today announced financial results for its third quarter ended September 30, 2015.

Third Quarter Financial Highlights

Revenue of

$217.5 million

, an increase of

compared to the third quarter of 2014, and an increase of

from the second quarter of 2015.

Non-GAAP gross margin of

, compared to non-G AAP gross margin of

in the third quarter of 2014 and 65.8% in the second quarter of 2015.

, compared to GAAP gross margin of

in the third quarter of 2014 and 65.4% in the second quarter of 2015.

Non-GAAP net income of $42.4 million, or $0.59 per diluted share, compared to non-GAAP net income of $28.1 million, or $0.40 per diluted share, in the third quarter of 2014.

GAAP net income of $28.7 million, or $0.39 per diluted share, compared to GAAP net income of $21.9 million, or $0.30 per diluted share, in the third quarter of 2014.

"Arista is witnessing the mainstream acceptance of open and programmable cloud networking across the globe,

stated Jayshree Ullal, Arista President and CEO. “I am delighted by our customer traction across four major verticals and our consistent profitable revenue growth."

Commenting

on the company's financial results, Ita Brennan, Arista’s CFO, said, "We are pleased with yet another record revenue quarter, as we grew our top line 40% year over year, with continued strong profitability while funding significant product and technology innovation.”

Company Highlights

Announced a new service capability for CloudVision® called Macro-Segmentation Service

(MSS™). MSS provides automated insertion of Security and other in-line L4-7 services within any Software Driven Cloud Networking Infrastructure. MSS has been endorsed by our technology alliance ecosystem partners VMware, Palo Alto Networks, Check Point Software, Fortinet, and F5 Networks who are each working with us to deliver MSS support for their platforms.

Introduced a new portfolio of data center switches that address the demand for 25/50/100GbE switching.

Arista EOS

(extensible operating system) features such as

Smart System Upgrade

with hitless software upgrades, hitless speed change and network rollback, provide customers with non-stop operational tools for building cloud scale networks.

Demonstrated integration with HP OneView at VMworld 2015, as a joint converged network offering.

Financial Outlook

For the fourth quarter of 2015, we expect:

Revenue between $238 and $242 million.

Non-GAAP gross margin between 62% to 65%, and

Non-GAAP operating margin of approximately 26%.

Guidance for non-GAAP financial measures excludes legal expenses associated with the OptumSoft and Cisco litigation, stock-based compensation and other non-recurring expenses. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis.

Prepared Materials and Conference Call Information

Arista executives will discuss third quarter 2015 financial results on a conference call at 1:30 p.m. Pacific time today. To listen to the call via telephone, dial 1-877-201-0168 in the United States or 1-647-788-4901 from outside the US. The Conference ID is 50091413.

The financial results conference call will also be available via live webcast on our investor relations website at

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 statements in the section entitled “Financial Outlook,”

such as estimates regarding revenue, non-GAAP gross margin and non-GAAP operating margin for the fourth quarter of FY 2015. Forward-looking statements are subject to a number of uncertainties and risks that could cause actual results to differ materially from those anticipated in the forward-looking statements including: Arista Networks’

limited operating history; risks associated with Arista Networks’

rapid growth; Arista Networks’

customer concentration; the dispute with Cisco Systems, Inc. and Optumsoft, Inc.;...


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