Arista Networks beats expectations, but stock dives on mediocre guidance
All those data centers are going to need a lot of switches and routers as well as GPUs.
Arista Networks, which makes electronic gear and software and services used to connect, run, and monitor data center servers and networks, reported better-than-expected Q3 results after the close of trading on Tuesday.
But the stock still plunged more than 10% in the aftermath of the report, as Tuesday’s ugly mood on Wall Street stretched into the after-hours session — a sentiment which hasn’t improved in early trading on Wednesday, with ANET trading 11% lower as of 5:08am ET.
Here’s how the switch and router maker did:
Adjusted earnings per share of $0.75 vs. Wall Street expectations for $0.72, according to FactSet.
Sales of $2.31 billion vs. an expected $2.26 billion, per FactSet data.
A non-GAAP Q3 gross margin, a measure of how profitable a company’s core products are to produce, of 65.2% vs. the 64.2% FactSet consensus estimate.
Guidance for Q4 sales of $2.3 billion to $2.4 billion vs. the $2.33 billion expected on Wall Street.
Guidance for a Q4 non-GAAP gross margin of 62% to 63% vs. the 62.9% forecast.
Arista shares have rallied about 40% this year as networking equipment makers are seeing strong orders for the gear needed to fill the AI data centers hyperscalers like Amazon, Meta, and Microsoft are building. That gain has outpaced some rival router makers, like Cisco, which is up a bit more than 20%.
