Arista Networks (ANET) investor relations material

Executive summary

• Achieved first-ever $3+ billion revenue quarter in Q2 2026, up 37.7% year-over-year, driven by AI, enterprise, and switching/routing demand.

• Non-GAAP EPS grew 39.7% to $1.02, with net income reaching $1.3 billion; GAAP net income was $1.21 billion and diluted EPS $0.95.

• Recognized in the 2026 Fortune 500, Russell 50, and as a Leader in the Gartner Magic Quadrant for Enterprise Wired and Wireless LAN.

• EMEA led geographic growth with 55% year-over-year revenue increase, followed by Americas at 36% and APAC at 31%.

• Introduced 1.6 Tbps AI fabric platforms and next-gen 7060XE7 Series, optimizing scale and power efficiency.

Financial highlights

• Q2 2026 revenue: $3.036 billion, up from $2.205 billion in Q2 2025; product revenue $2.61 billion, service revenue $430.5 million.

• Non-GAAP gross margin: 63.4%, GAAP gross margin: 62.9%, both down year-over-year but above guidance due to tariff refunds and mix.

• Non-GAAP operating margin: 49.9%; GAAP operating margin: 45.4%.

• Cash and equivalents: $13.3 billion as of June 30, 2026; operating cash flow for first half of 2026: $2.78 billion.

• Deferred revenue: $6.87 billion; purchase commitments: $9.7 billion, reflecting long-term capacity planning.

Outlook and guidance

• Fiscal 2026 revenue guidance raised to $12.6 billion (40% growth); AI Fabrics goal at least $3.5 billion, campus at least $1.25 billion.

• Q3 2026 guidance: revenue ~$3.3 billion, non-GAAP gross margin ~63%, operating margin 48%-49%, EPS $1.06-$1.08.

• Gross margin for 2026 expected in 62%-64% range; operating margin 48%-49%; tax rate 21.5%.

• Management expects continued volatility in revenue and gross margin due to customer concentration and supply chain constraints.

• Existing liquidity is expected to be sufficient for at least the next 12 months.