Arista Networks reported September-quarter earnings and revenue that handily beat analyst estimates amid large orders from Facebook parent Meta Platforms. The company's revenue outlook for ANET stock came in above expectations.
The maker of computer networking gear reported earnings after the market close on Monday.
For the three months ended Sept. 30, Arista earnings rose 69% from a year earlier to $1.25 per share, topping estimates of $1.04. Revenue grew 57% to $1.18 billion vs. forecasts for $1.06 billion.
A year earlier, Arista earnings were 74 cents a share on revenue of $749 million.
Arista Stock: High Expectations
For the December quarter, Arista forecast revenue in a range of $1.175 billion to $1.2 billion. Analysts had predicted revenue of $1.09 billion. On Nov. 3, Arista Networks holds an investor day.
"Arista beat Q3 sales by 11%, EPS by 20%, and guided Q4 2022 sales 9% above expectations," Raymond James analyst Simon Leopold said in a note to clients. "This stock remains tricky; the key is understanding growth sustainability. The set-up into 2023 is very respectable with double-digit growth, but deceleration often leads to multiple compression."
ANET stock popped 5.7% to close at 127.71 on the stock market today.
High capital spending by Meta Platforms has been a growth driver in 2022. Meta has upped spending on cloud computing infrastructure. Another big customer is Microsoft.
While Meta Platforms' capital spending is expected to stay strong in 2023, overall spending on cloud infrastructure could moderate, analysts say.
Meta Platforms A Big Customer
"ANET continues to benefit from investments in cloud titan led by MSFT and Meta and share gains at enterprise customers," Barclays analyst Tim Long said in his note to clients.
"Management tone remains cautiously optimistic with steady lead times, visibility and demand across different verticals despite ongoing supplier de-commits and elevated component costs," Long went on to say. "For Q4, ANET guides above consensus for revenue and operating margin with incrementally better supply chain and operating expense discipline."
Heading into the earnings report for ANET stock, the computer networking firm had a Relative Strength Rating of 87 out of a best-possible 99. But ANET stock has retreated 15% in 2022.
Arista sells switches that speed up communications among racks of computer servers packed into data centers. Its chief rivals are Cisco Systems and Juniper Networks.
According to analysts, Arista is gaining ground in the so-called "enterprise" market — large companies, government agencies and educational institutions.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
