Shares of the cloud networking company Arista Networks Inc. gained more than 9% in extended trading today after it beat Wall Street’s expectations with its third-quarter results and offered strong guidance thanks to improving supply chain restraints and renewed enterprise spending in coming months.

The company reported net income for the third quarter of $581.4 million, up from a profit of $391.9 million in the year ago period. Earnings before certain costs come to $1.83 per share, well above the consensus estimate of $1.58 per share. Revenue grew by 28%, to $1.51 billion, beating Wall Street’s target of $1.48 billion.

Arista Networks is a rising star in the computer networking industry, rivaling the much bigger Cisco Systems Inc. with premium equipment such as high-speed switches that accelerate communications between racks of computer servers in corporate data centers.

Chief Executive Jayshree Ullal (pictured) hailed the “strong results,” saying the company benefited from increased customer momentum in both the enterprise and the cloud and artificial intelligence sectors.

Amid optimism that the economy is showing signs of recovery, enterprises have reportedly been spending more money on cloud computing services to support their growing needs around AI. Moreover, easing supply chain concerns have enabled Arista to cater better to the demands of its enterprise customers, such as Microsoft Corp.

Holger Mueller of Constellation Research inc. told SiliconANGLE that Arista Networks is a company that’s firing on all cylinders. “It is proving that the networking business is both a growth and a profit opportunity in the 2020s,” he said. “Investors will be watching with anticipation to see if it can keep up its good form and deliver again in the fourth quarter, and so far it is looking good for an end of year flourish.”

For the coming quarter, Arista is targeting revenue of between $1.5 billion and $1.55 billion, ahead of the analyst target of $1.47 billion.

Last week, one of Arista’s main rivals, Juniper Networks Inc., also reported strong third-quarter results that beat expectations, though it was more cautious concerning its guidance. Executives of that company also cited upbeat spending from cloud computing giants as the reason for its strong performance.

Photo: SiliconANGLE