Arista Networks — 2026Q3 earnings
reported 2026-08-04
EPS $1.02 vs $0.89 est — beat
next session +3.6% (close 2026-08-04 → 2026-08-05)
Source
Press release ↗Summary
Arista's second quarter of 2026 (reported 4 August) was its first $3 billion revenue quarter, with revenue up 37.7% year over year and non-GAAP EPS of $1.02 against $0.73 a year earlier. The release framed the quarter around the Arista 2.0 platform strategy and a new 1.6-terabit Etherlink AI-fabric portfolio. On the call the story was supply rather than demand: management raised the 2026 revenue outlook for the third time this year to $12.6 billion, tripled multiyear purchase commitments to roughly $9.7 billion, secured memory into 2027 and diversified to three contract manufacturers across three geographies - while the CEO still described the industry's component squeeze as a two-year problem that does not resolve until 2028.
Earnings call
Review
From the report
Arista's first $3+ billion quarter, with AI and enterprise demand lifting revenue 37.7% year over year and non-GAAP operating margin to 49.9%.
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Revenue was $3.036 billion, up 37.7% year over year and 12.1% sequentially. show quote
“Revenue of $3.036 billion, an increase of 12.1% compared to the first quarter of 2026, and an increase of 37.7% from the second quarter of 2025.”
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Non-GAAP diluted EPS was $1.02, against $0.73 in the same quarter a year earlier. show quote
“GAAP and non-GAAP diluted earnings per share of $0.95 and $1.02, respectively, compared to GAAP and non-GAAP diluted earnings per share of $0.70 and $0.73 in the second quarter of 2025.”
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Non-GAAP operating margin reached 49.9%, up from 48.8% a year earlier. show quote
“GAAP and non-GAAP operating margin of 45.4% and 49.9%, respectively, compared to GAAP and non-GAAP operating margin of 44.7% and 48.8% in the second quarter of 2025.”
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The CEO presented the first $3 billion quarter as evidence that the Arista 2.0 platform strategy is working. show quote
“As we deliver our first $3 billion quarter in Q2 2026, it is clear that our Arista 2.0 platform strategy is compelling”
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The new Etherlink platforms deliver up to 100 Tbps of system bandwidth and cut interconnect power consumption by roughly 60% versus traditional pluggable optics. show quote
“The new Etherlink™ platforms deliver up to 100 Tbps of system bandwidth and support Linear Pluggable Optics, cutting interconnect power consumption by approximately 60% compared to traditional pluggable optics.”
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Third-quarter 2026 guidance is approximately $3.3 billion of revenue with non-GAAP diluted EPS between $1.06 and $1.08. show quote
“For the third quarter of 2026, we expect: • Revenue of approximately $3.3 billion; • Non-GAAP operating margin of 48 - 49%; and • Non-GAAP diluted net income per share between $1.06 and $1.08.”
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From the call
Supply, not demand, is the binding constraint: guidance went up for the third time this year even as the CEO called the industry's component squeeze a two-year problem.
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Management raised the 2026 revenue outlook for the third time this year to $12.6 billion, an incremental $1.1 billion over the $11.5 billion projected in May 2026. show quote
“Given our improving stance in supply chain, we are excited to increase our guidance for the third time this year to $12.6 billion revenue in 2026. We are now projecting 40% annual growth, which is an incremental $2.1 billion over our Analyst Day goal of $10.5 billion and an incremental $1.1 billion over our recent projections of $11.5 billion in May of 2026.”
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The CEO said the component squeeze is industry-wide and lasts about two years, not resolving until 2028. show quote
“The industry is going to have a 2-year problem. I don't think we get out of it as an industry until 2028.”
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Multiyear purchase commitments nearly tripled from $3.6 billion a year ago to approximately $9.7 billion at the end of Q2 2026. show quote
“Arista is leaning in with our increased multiyear purchase commitments, now almost tripling from a year ago at $3.6 billion to approximately $9.7 billion by the end of Q2 2026.”
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Memory supply is secured for 2026 with visibility extending into 2027 across DDR4, DDR5 and NAND. show quote
“Our memory supply has been secured for 2026, and we have extended visibility well into 2027 across DDR4, DDR5 and NAND memory.”
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Manufacturing and distribution were diversified to three contract manufacturers and three distribution facilities spanning the US, Asia and Mexico. show quote
“We have now 3 contract manufacturers and 3 distribution facilities, providing geographic diversity in the U.S., in Asia and in Mexico.”
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Total deferred revenue was approximately $6.9 billion, with product deferred revenue up about $600 million sequentially. show quote
“Our total deferred revenue balance was approximately $6.9 billion, up from $6.2 billion in the prior quarter. The majority of the deferred revenue balance is product related. Our product deferred revenue increased approximately $600 million sequentially versus last quarter.”
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as of 2026-08-24