Arista Networks (ANET) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $1.69 billion, up 15.9% year-over-year, driven by strong demand for switching, routing, and AI networking platforms, with services and software support renewals contributing 17.6% of revenue.

• Non-GAAP EPS was $2.10 and GAAP EPS $2.08, with non-GAAP gross margin at 65.4% and GAAP gross margin at 64.9%, both showing significant improvement year-over-year.

• Net income for Q2 2024 was $672.6 million (non-GAAP) and $665.4 million (GAAP), up over 35% year-over-year.

• Celebrated 10th anniversary as a public company, now supporting over 10,000 customers and 100 million ports deployed.

• Launched EtherLink AI platforms and next-gen Multi-Domain Segmentation Service, expanding AI networking and zero trust capabilities.

Financial highlights

• Product revenue grew 12.8% year-over-year to $1.42 billion; service revenue rose 35.3% to $267.1 million in Q2 2024.

• Non-GAAP gross margin: 65.4%; GAAP gross margin: 64.9%, both up from prior year.

• Operating income: $785.6 million (non-GAAP), $699.6 million (GAAP); operating margin improved year-over-year.

• Cash, equivalents, and investments: $6.3 billion; operating cash flow for first half of 2024 was $1.5 billion.

• Deferred revenue at June 30, 2024: $2.12 billion, up from $1.08 billion a year ago.

Outlook and guidance

• FY2024 revenue growth guidance raised to at least 14%; Q3 revenue expected between $1.72–$1.75 billion.

• Non-GAAP gross margin guidance for Q3: 63–64%; operating margin around 44%.

• Effective tax rate expected at 21.5%; diluted shares ~321 million.

• Management expects continued volatility in customer demand and order timing, especially from large cloud customers.

• Continued investment in R&D and go-to-market initiatives.