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Arista (ANET) Q2 Earnings & Revenues Beat Estimates, Down Y/Y
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Arista Networks, Inc. (ANET - Free Report) reported decent second-quarter 2020 results, with the top and the bottom line beating the respective Zacks Consensus Estimate. However, both figures declined on a year-over-year basis.
Net Income
On a GAAP basis, net income in the June-end quarter declined to $144.8 million or $1.83 per share from $189.2 million or $2.33 per share in the prior-year quarter, primarily due to lower operating income.
Non-GAAP net income came in at $167 million or $2.11 per share compared with $198.6 million or $2.44 per share in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate by 14 cents, with an earnings surprise of 7.1%.
Arista Networks, Inc. Price, Consensus and EPS Surprise
Quarterly total revenues fell 11.1% year over year to $540.6 million (but were at the upper end of the company’s guidance of $520-$540 million) due to COVID-19 related supply challenges. This resulted in extended lead time and shipment constraints. The top line, however, surpassed the consensus estimate of $530 million.
Arista generated 81% of total revenues from the Americas and the remainder from international operations. Almost 40% of the vertical mix was driven by cloud titans, followed by 35% from enterprises, including financial services, and 25% from service and cloud specialty providers. Product revenues declined to $421.4 million from $513.2 million, while Service revenues rose to $119.2 million from $95.2 million supported by renewals.
Other Details
Non-GAAP gross profit contracted to $349.9 million from $393.8 million, with the respective margins remaining stable at 64.7%. The non-GAAP gross margin was above the midpoint of the company’s guidance of 63-65%, reflecting software and services mix.
Non-GAAP operating income declined to $205.7 million from $235.1 million in the year-ago quarter with a margin of 38.1% and 38.7%, respectively.
Cash Flow & Liquidity
In the first half of 2020, Arista generated $333.1 million of net cash from operating activities compared with $366.5 million in the prior-year period. As of Jun 30, the cloud networking company had $800.2 million in cash and cash equivalents with $249 million of non-current deferred revenues.
Q3 Outlook
For the third quarter of 2020, Arista expects revenues of $570-$590 million. It anticipates a non-GAAP gross margin of 63-65% and a non-GAAP operating margin of nearly 37%.
Zacks Rank & Stocks to Consider
Arista carries a Zacks Rank #3 (Hold), at present.
Turtle Beach has a trailing four-quarter earnings surprise of 46.4%, on average.
T-Mobile has a trailing four-quarter earnings surprise of 19.4%, on average.
Clearfield has a trailing four-quarter positive earnings surprise of 45.6%, on average. The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Arista (ANET) Q2 Earnings & Revenues Beat Estimates, Down Y/Y
Arista Networks, Inc. (ANET - Free Report) reported decent second-quarter 2020 results, with the top and the bottom line beating the respective Zacks Consensus Estimate. However, both figures declined on a year-over-year basis.
Net Income
On a GAAP basis, net income in the June-end quarter declined to $144.8 million or $1.83 per share from $189.2 million or $2.33 per share in the prior-year quarter, primarily due to lower operating income.
Non-GAAP net income came in at $167 million or $2.11 per share compared with $198.6 million or $2.44 per share in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate by 14 cents, with an earnings surprise of 7.1%.
Arista Networks, Inc. Price, Consensus and EPS Surprise
Arista Networks, Inc. price-consensus-eps-surprise-chart | Arista Networks, Inc. Quote
Revenues
Quarterly total revenues fell 11.1% year over year to $540.6 million (but were at the upper end of the company’s guidance of $520-$540 million) due to COVID-19 related supply challenges. This resulted in extended lead time and shipment constraints. The top line, however, surpassed the consensus estimate of $530 million.
Arista generated 81% of total revenues from the Americas and the remainder from international operations. Almost 40% of the vertical mix was driven by cloud titans, followed by 35% from enterprises, including financial services, and 25% from service and cloud specialty providers. Product revenues declined to $421.4 million from $513.2 million, while Service revenues rose to $119.2 million from $95.2 million supported by renewals.
Other Details
Non-GAAP gross profit contracted to $349.9 million from $393.8 million, with the respective margins remaining stable at 64.7%. The non-GAAP gross margin was above the midpoint of the company’s guidance of 63-65%, reflecting software and services mix.
Non-GAAP operating income declined to $205.7 million from $235.1 million in the year-ago quarter with a margin of 38.1% and 38.7%, respectively.
Cash Flow & Liquidity
In the first half of 2020, Arista generated $333.1 million of net cash from operating activities compared with $366.5 million in the prior-year period. As of Jun 30, the cloud networking company had $800.2 million in cash and cash equivalents with $249 million of non-current deferred revenues.
Q3 Outlook
For the third quarter of 2020, Arista expects revenues of $570-$590 million. It anticipates a non-GAAP gross margin of 63-65% and a non-GAAP operating margin of nearly 37%.
Zacks Rank & Stocks to Consider
Arista carries a Zacks Rank #3 (Hold), at present.
Some better-ranked stocks in the broader industry are Turtle Beach Corporation (HEAR - Free Report) , T-Mobile US, Inc. (TMUS - Free Report) and Clearfield, Inc. (CLFD - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Turtle Beach has a trailing four-quarter earnings surprise of 46.4%, on average.
T-Mobile has a trailing four-quarter earnings surprise of 19.4%, on average.
Clearfield has a trailing four-quarter positive earnings surprise of 45.6%, on average. The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>