Cloud networking company Arista Networks Inc. saw its stock dip in after-hours trading today despite beating its targets on profit and revenue.

The company reported a second-quarter profit before certain costs such as stock compensation of $2.11 per share on revenue of $540.6 million, down 11% from a year ago but up 3% from the first quarter.

Wall Street had the company down for a profit of $1.95 per share on revenue of $529.7 million.

Arista Networks President and Chief Executive Jayshree Ullal said in a statement she was pleased with the company’s performance and proud of its team’s tenacity. “Arista’s market position has been reinforced as we were placed in the leader’s category by two renowned market analyst firms,” she said.

The company has indeed emerged as a serious challenger to networking giant Cisco Systems Inc. in recent years. It makes its money selling network switches that handle traffic at massive “hyperscale” data centers owned by big web companies such as Facebook Inc. and Yahoo Inc.

Arista reported product revenue of $421.4 million in the quarter, down 18% from a year ago. But services revenue was up 25%, to $119.2 million.

For the next three-month period, Arista said it’s expecting revenue of between $570 million and $590 million, well ahead of Wall Street’s forecast of $562.2 million.

Despite this optimism, Arista’s stock was down 5% in after-hours trading. It wasn’t immediately clear why investors were selling off, but these days it’s often because the outlook wasn’t as strong as they had hoped.

“We are pleased with our overall business execution in the quarter, with the team continuing to work closely with customers, supply chain and other partners as we collectively navigate the COVID-19 operating environment,” said Arista Chief Financial Officer Ita Brennan.

Photo: Arista Networks