Some quotes from ANET Q1 22 call

Arista Networks reported today, it was a strong quarter reinforcing the positivity from the “cloud titans” as Arista refer to them.

I’ve included some quick quotes here, but was very positive from a demand point of view, especially at Cloud Titan and Enterprise levels. Their perception of the supply chain issues is that it’s not getting better and potentially getting worse.

I’m not sure how many board companies would be impacted by the supply chain issues (semiconductors), but any that are running their own datacenters may experience some margin pressure. Cloudflare, Nvidia, Roku, …?

But their perception of the demand environment for next-gen networking is that “strong” at least until first half of 2023, so 12+ months away. Another positive report as far as I can see.


On visibility and demand.

“…Last quarter, our visibility was very strong for 2022. This quarter, our visibility continues to be very strong for 2023. But I would also add that, in particular, the Cloud Titans and some enterprises are starting to plan for 2023. They have to start thinking about it now that we’re in Q2 here. So all this to suggest that the demand is strong for this year. We expect demand to be strong at least for the first half of next year from a planning purposes…”.

“… We are seeing no change in the enterprise momentum. It’s strong. We haven’t seen any slowdown, maybe it will later on. You have the impact of inflation trends, who knows? But at the moment, things are looking very strong…”.

“… So we’re placing a bet on long-term demand, a multiyear double-digit growth and accordingly planning for it. And so you don’t need to read any more or any less on to it, except we’re bullish about demand and we’re planning for multiple years…”.

“… As we progress through 2022, demand metrics remain strong across the business with particular strength from our Cloud Titan, other cloud and enterprise customers…”

On the supply chain

“…So supply chain is getting worse because of the extended lead times, not just because of that because we were planning for that, but because of the sudden surprising decommit. So when they’re trying to build a product and ship it out and suddenly we don’t have these last 2 components, it just freezes the whole supply chain and our ability to commit to revenue… So our ability in Q1 to shift more was very much there, but a constraint in Q1 to ship more was also problematic because we couldn’t get the parts. And that is the story for Q2 and perhaps will go into Q3 as well.”

“…supplier decommits make forecasting accelerated shipment momentum difficult. These decommits also have a negative impact on gross margin as we must turn to other sources to try to backfill decommitted components in the quarter”.