ANET - Proud Moments on Q3 CC

I believe everybody has known about the Q3 earnings result of ANET. As Saul said, ANET kicked it out of the park. I will not reiterate that in this post but would like to mention several proud moments emphasized by CEO on CC.

Proud moment 1 (about awards)
“In terms of Q3 recognition, we received some key awards that we’re really proud of. The Bay Area News Group published the Bay Area News Top Workplaces and Arista has been named number 5 out of 95 companies in the large company category with more than 500 employees. We also received accolades from Fortune Magazine as number 10 out of 100 of the top fastest growing companies in America.”

Proud moment 2 (about R&D expense and talent recruiting)
“I think our engineers know that they have unlimited hiring capabilities, but they have a very high bar. So we continue to hire very, very well in engineering head count, but frankly, many of them don’t make our bar. So if we are limiting hiring, it’s not because we don’t want to hire, but because we are limited by the talent pool in a geography. So one of the things we are doing is expanding geographies beyond our headquarters here in Santa Clara. But I just want to high-five and give kudos to our engineering team for dexterously developing new products, doing very good engineering recruiting and still keeping the bar high. I’m very proud of that.”

Proud moment 3 (about software-only revenue)
One analyst asked:
“Could you comment on your software-only revenue and how meaningful it’s becoming? You mentioned over 150 FlexRoute software licenses and you also have CloudVision.”
And the CEO answered:
“…Thank you for letting me speak about that. This is a proud moment, because I think it’s an indication of how the networking business is truly migrating to software-driven networking. We not only exceeded 150 routing customers, but we have now also crossed 200 CloudVision customers. And we have several trials going on. So my anticipation is while it is not yet reportable, so, it’s not material revenue, and again, because it’s a software subscription over multiple years, I expect in the next two years that this business can become approximately a 5% of our revenue.”

Proud moment 4 (about international revenue)
“This is one of our prouder moments, I think, because we had a lot of international shipments in Q3 and we had a particularly strong Asia-Pac and EMEA. It broke out to where EMEA was 18%, and the APJ was about 11%. We had a very strong quarter for new customers acquired internationally with over half of the customers – new customers we acquired were international. But the organic international customer revenue has been growing faster than the company average. This removes out any global customers which may be headquartered in the United States. But the organic international customer revenue has actually been very strong for us.”

The table below demonstrates the Percentage of International Revenue to Total Revenue. We can notice that the share of international revenue is stably increasing.

FY2013	FY2014	FY2015	FY2016	2017Q1	2017Q2	2017Q3
19%	22%	24%	24%	21%	25%	29%


I did a post on New Paradigm on the earnings, but I decided not to even post the details in the end. Arista is simply the finest company in almost every facet that I have ever invested in.

If you want to see leverage in the business model, printing cash (more than $200 million this quarter alone added to their $1.1 billion, all without taking on debt or doing secondaries and with stock dilution that is almost nonexistent), destroying competition…just name it.

I have never heard an analyst ask if Arista was spending too little on R&D to any other company despite the fact Arista clearly is at the cutting edge of technology and new product, and yet they do so with such great efficiency. Why? It is EOS, their software. Everything else is simply off the shelf hardware that EOS and Arista engineers are better able to optimize in multiple facets than any of their competitors.

Look, just read the earning call for yourself. Do some due diligence to understand some of the terms and context, and then get back to me if you think I am speaking with a bit of hyperbole.

There is Tom Brady, and then there is everyone else (lets exclude Aaron Rogers from this metaphor).



Hi Tinker,

You seem to be very angry :slight_smile:
Please relax, it is just “a same old beat but different day!”


There is Tom Brady, and then there is everyone else (lets exclude Aaron Rogers from this metaphor).

Since he is now retired from playing football, I will refrain from taking offense at you also excluding Peyton Manning.

Very glad to have bought some Arista stock a few weeks back (thanks in large part to seeing it discussed here on the board…along with other places in the Motley Fool universe).