Same here. A sequential decline accompanied with a decline in op margins would be concerning to me, at least without inspecting it further. I believe that’s all AJ and I are saying.
Matt and AJ:
Hey…I am all for the trust but verify…and quite honestly I didn’t yet read the earnings report so I won’t comment further after this post.
The “normalized to 20-30%” comment isn’t that bothersome to me…it also wasn’t labeled as 2018…it was a longer term baseline growth rate that I thought was actually extraordinary if that were possible against CSCO 2-3% and others around 5%.
And again the same sequential decline occurred between 4th of 2016 and 1st of 2017…doesn’t seem draconian to me.
While I am invested in ANET, it isn’t a huge percentage so there is no test of wills from my perspective either…let’s dig in and get to the bottom of it for sure…wherever the evidence leads us
That is 40% year over year growth, but negative to even sequentially? Q4 is ANET’s best quarter of the year, and Q1 is seasonally its worse. And the market is worried that its worse quarter is not going to sequentially beat it last and best quarter of the year?
I believe PSTG had this same problem occur last year and it too turned out to be simple seasonality.
Well, anything to take down a stock who has travelled much further than most dare to treat and then some. It could have been a change in doormean at the corporate office, to someone who was known to work at a company that previously started mass layoffs, and thus ANET must be doing the same with the introduction of the this experience “layoff” doorman.
But, always something.
Will review earnings all tonight to see what if anything is up.
Hey…I am all for the trust but verify…and quite honestly I didn’t yet read the earnings report so I won’t comment further after this post.
Agreed, but just one more comment on seasonality.
Q4 has been their biggest quarter and Q1 the smallest, to the tune of 8% points roughly over the past two years. Based on last year’s revenue, that is $131M which isn’t insignificant.
I’m not concerned about any short term investors who are worried about next quarter’s guidance which looked just fine in my book.
Huh. Looks like the sequential flat growth is normal and that they do slightly beat guidance every Q1. Nice. Out of curiousity, does anybody know why this sequential growth is normally low every first quarter?
Still want to listen to the conference call but feeling better.
The CC was very good, you should give it a listen if you have concerns. There may be some subtleties that are lost in the transcript.
Yes they “loosely” guided for mid 20% growth for next year with the caveat that they only have good visibility one of two quarters out. They said they felt comfortable with that number. They also cited tough comps from last years 50% growth and made the point that they did not see that growth coming last year either.
My take (for whatever it’s worth) was that their standard yearly goal is 20-30% growth and that is what they are comfortable giving. I did not hear any change in their belief in their product or their opportunity. There were a couple nice shots across Cisco’s bow as well.
Arista has grown to my largest position and I added a little more AH as I believe they have years of growth ahead.
Huh. Looks like the sequential flat growth is normal and that they do slightly beat guidance every Q1. Nice. Out of curiousity, does anybody know why this sequential growth is normally low every first quarter?
From the context provided by Matt, I am going to predict $470-474M of revenue for Q1 18.
It is not surprising. I am with a large company and oversee hundreds of $M capital investment, we have policy of end of year capital budget, if not used, will lose it. So every year, we have this tendency to speed up capital spending in Q4 to hit the deadline. In Q1, people starts to relax a little bit and we always have lowest capital in Q1, no matter how good we plan. If network equipment fits similar capital pattern, I actually think it is pretty impressive they can do flat Q1 vs. Q4.
Yes, most equipment companies seasonally have Q4 as their best quarter. Almost universal. Look at PSTG as an example, why is storage biggest in Q4? It just is for capital budgeting reasons as gwsong states.
Something not mentioned here is that Arista earned $1.72 per share this quarter. The high (not the average, the high, and quite outlying earnings estimate for this year on Yahoo!) Is $7.20. Unless something really not Arista happens this year, Arista is on course to do at least $7.50 to $8 a share in earnings, as year over year earnings growth will be seen each quarter.
Next year, earnings per share is likely to be $2.55 a share. Even if earnings per share were sequentially flat for the next 3Qs you still get $7.68 in earnings per share for the coming year. And EPS is not going to be sequentially flat unless something really material has changed with the business. It seems quite likely that $8 a share or greater will be earnings for the next fiscal year.
That is what I predicted a year ago, and the highest analysts estimate out there, that is an outlier has to be raised, much less all the other analysts with earnings estimates in the mid $5 to low $6 range. IBD will again maintain Arista as a top rated stock as all the analyst estimates have to increase again for earnings per share.
Or, Arista’s business may be falling the way of the “resurgent” Cisco. Could happen.
I am the first one out if I feel revenue is going to fall off a cliff, or something else materially is wrong. That is my first impression on earnings after looking just after the earnings per share this quarter. Yes, $8 a share or more this year is likely. Thereafter $10 a share or more is likely for the following year with continuous and meticulous high margin growth.
May be too soon to call earnings per share for the following year, but earnings per share for the coming fiscal year, nothing is guaranteed, but as an analyst $8 a share appears to be a very likely outcome.
Yes, yes, those numbers look great… but I am also not at all impressed with guidance.
It was maybe Q2 last year where results where great and Jayshree said to not to expect this the next quarter, and then the next quarter the results came out and they were great again. So, I think some of what might be going on is that ANET management doesn’t want to set expectations too high.
For me, it’s an after hours buying opportunity as the disruption trend shows no signs of breaking. If ANET goes down more tomorrow, I’ll probably buy more. This isn’t a stock I expect to sell within the next 5 years.
The CC was very good, you should give it a listen if you have concerns. There may be some subtleties that are lost in the transcript.
Yes they “loosely” guided for mid 20% growth for next year with the caveat that they only have good visibility one of two quarters out. They said they felt comfortable with that number. They also cited tough comps from last years 50% growth and made the point that they did not see that growth coming last year either.
My take (for whatever it’s worth) was that their standard yearly goal is 20-30% growth and that is what they are comfortable giving. I did not hear any change in their belief in their product or their opportunity. There were a couple nice shots across Cisco’s bow as well.
Arista has grown to my largest position and I added a little more AH as I believe they have years of growth ahead.
Brian
Thanks for your take of the CC! It sounds like they typically under promise and over deliver. The market appears to have been hoping for bigger promises but I’m happy to scoop up some shares at a cheaper price. I added at just under $260 AH after reading some commentary here. My initial buy was at $65 in May 2015 and I added at the beginning of November at $197. I’m comfortable with my last buy even if it dips a bit lower. The trailing PE is now about 50 and the forward PE is likely to be only in the mid 30’s based on the AH price - not too expensive for recent annual revenue growth in the 45-50% range. I’m hopeful ANET has many years of growth ahead. With the price dip, its enterprise value is still less than 1/10th that of CSCO despite recent torrid growth. I plan to hold for many more years (unless the fundamental story changes) and won’t sweat the price swings.
Man I gotta say that my initial reaction to the conference call was to scale out of this stock. Used to hearing 50 percent growth YOY. But having this board and hearing so many calming voices has changed my outlook considerably.
Especially the guidance of Q1 after big Q2’S. I know Tom promised us a video of the Arista’s interview with readers of this board. Did I miss it?
I think the guidance is way too conservative that it spooked myself and alot of other investors. But tempering expectations and getting the hot money out of this stock is great for long term holders if the shares are getting picked up by big institutions who are taking the shares out of circulation.
I love Nvidia also, but with Nvidia they do so much business with the Chinese titans like Bidu, Alibaba, and Jd.com would love to see Arista come out with some press releases about deals with these players or is the law suit preventing this?
In my previous post I meant Arista has always has conservative Q1’s numbers after big Q4’s. After seeing that post by TMF Cochrane I am back on board in holding this stock. The Ceo is notoriously known as a bad forecaster. In her Cisco days the company would take Jayshree’s forecast and times it by 2.
I think she is learning…I for one don’t want to please analysts and the talking heads…I’m hoping she wants to please us, the shareholders 5 years down the road…slowly slowly catchee monkey.
Onwards and upwards but done correctly and eventually.
“Interested to know how a private investor arranges to place orders after hours”
Some brokerages let you do this, small investor or not. Vanguard, for instance, lets you trade for some of the after hours, not not in the early morning hours. I would guess that Interactive Brokers lets you trade in both times.
I recently bought some NDVA after hours, but I would have paid less if I had waited until the next day. Now it’s back up to where I bought it. Trading volume is much lower during these hours, and volatility higher.
Thanks. In the meantime, now that Morningstar has stopped showing after-hours and before-hours prices on their revamped website, would be grateful if you could tell me if you know another website which does show them?
