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Arista Networks’ stock jumps in after-hours trading on strong financial results
Cloud networking company Arista Networks Inc. ticked all of the right boxes today, delivering fourth-quarter earnings that came in well ahead of Wall Street’s forecasts and posting strong guidance for the next quarter as well.
The company reported a profit before certain costs such as stock compensation of $2.49 per share on revenue of $648.5 million. Wall Street analysts were expecting the company to report earnings of $2.39 per share on revenue of $630 million.
For the full year, Arista posted earnings of $7.99 per share on revenue of $2.32 billion, down from $2.41 billion a year ago.
Arista Chief Executive Jayshree Ullal (pictured) said in a statement that she was pleased to see the company return to growth in the quarter. “With our laser focus on customer success, pristine financials and transformative innovations, Arista is well-positioned to continue our momentum in the post-pandemic era,” she said.
Arista mainly sells high-speed networking switches to hyperscale data center operators such as Facebook Inc. and Microsoft Corp. But in recent times it has also emerged as a serious competitor in the enterprise campus switching market that its larger rival Cisco Systems Inc. dominates. It also sells management software for cloud-based networks.
Over the past couple of years, Arista has began transitioning its business, slowly moving away from its focus on products and into services. But despite this transition, the company managed to grow both its product and service revenue in the quarter.
“That’s a good sign overall,” said Constellation Research Inc. analyst Holger Mueller. “Investors will be happy it was able to grow its service-to-product ratio in revenue mix from 19% in 2019 to 26.5% in 2020. And with margins on services being higher, Arista looks more valuable than it did a year ago.”
Indeed, investors reacted positively. Arista’s stock gained more than 6% in after-hours trading, having initially risen more than 20%.
For the first quarter of 2021, Arista forecast revenue of between $630 million and $650 million, well ahead of Wall Street’s forecast of $609 million.
Photo: SiliconANGLE
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