Cloud network company Arista Networks Inc. ticked all of the right boxes today as it delivered its second-quarter financial results today, beating estimates on earnings and revenue and posting strong guidance for the next period too.

Yet the company’s stock fell anyway in the after-hours trading session.

The company reported second-quarter earnings before certain costs such as stock compensation of $2.72 per share on revenue of $707.3 million, up a solid 31% from the year ago period.

That came in ahead of both its own Wall Street’s guidance. The company had previously forecast revenue in a range of $675 million to $695 million, while Wall Street was looking for sales of just $687 million and earnings of $2.54 per share.

The company also reported gross margins of 65.2%, above its earlier projected range of 63% to 65%. Net income for the quarter came to $216.8 million.

Arista Chief Executive Jayshree Ullal (pictured) said the strong performance reflects the company’s continued momentum and diversification across its top verticals and product lines. “We are on the cusp of network software and data-driven transformation,” she said.

Arista’s products include high-speed networking switches that are primarily used by hyperscale data center operators such as Facebook Inc. and Microsoft Corp. It also sells enterprise campus switches, competing with its much larger rival Cisco Systems Inc.

The other side of Arista’s business is its network management and security software, which is infused with artificial intelligence that helps to identify the cause of faults, monitor user experiences and identify network threats.

During the quarter, product revenue came to $556.4 million, while software services added $140.8 million. The company also announced it surpassed 50 million cloud network ports shipped cumulatively during the second quarter.

Arista Chief Financial Officer Ita Brennan said he was pleased with the strong performance this quarter and added that the company “continued to work with customers and partners to navigate a challenging supply environment.”

“Networks become more strategic in a digital economy, and Arista is positioned well to take advantage of the trend,” said Constellation Research Inc. analyst Holger Mueller. “Its 20% growth is testament for that. With new products like CloudVision having been announced, the product roadmap looks attractive and should help Arista to grow further.”

Looking to the third quarter, Arista said it’s confident that sales will land within a range of $725 million and $745 million, which is well ahead of Wall Street’s forecast of $697 million in sales.

Photo: SiliconANGLE