Arista Networks Inc (NYSE:ANET) stock fell 6.91% (As on May 7, 11:27:13 AM UTC-4, Source: Google Finance) after the company  delivered strong earning results, but warned that both its gross margin and operating margin are set to decline on a sequential basis. The net income came to $813.8 million, up from $637.7 million in the year-ago quarter. During the quarter, Arista strengthened its AI network offerings, adding new capabilities to its EOS Smart AI Suite that aim to improve AI cluster performance and efficiency. The new features included a Cluster Load Balancing tool that helps to maximize AI workload performance with more consistent, low-latency network flows, and CloudVision Universal Network Observability, to aid in troubleshooting AI network workloads. DSOs came in at sixty four days, up from fifty four days in Q4, driven by billing linearity. Capital expenditures for the quarter were $32,000,000.

ANET in the first quarter of FY25 has reported the adjusted earnings per share of 64 cents, beating the analysts’ estimates for the adjusted earnings per share of 56 cents. The company had reported the adjusted revenue growth of 27.6 percent to $2.005 billion in the first quarter of FY25, beating the analysts’ estimates for revenue of $1.98 billion.  This impressive achievement was driven largely by the company’s focus on AI and cloud innovations.  Non-GAAP gross margin of 64.1%, compared to non-GAAP gross margin of 64.2% in the fourth quarter of 2024 and 64.2% in the first quarter of 2024. International revenues for the quarter came in at $4.00 $6,000,000 or 20.3% of total revenue, up from 16% in the last quarter. Operating expenses for the quarter were CAD327.4 million or 16.3% of revenue, down slightly from last quarter at CAD332.4 million. R and D spending came in at CAD209.4 million or 10.4 percent of revenue, down from $226,100,000 last quarter. Cash, cash equivalents and investments ended the quarter at approximately $8,150,000,000

In addition, Arista’s board of directors said it has approved an additional $1.5 billion in share repurchases.

For the current quarter, Arista said it expects to generate $2.1 billion in sales, ahead of Wall Street’s target of $2.03 billion. However, the company also said its gross margin and operating margin numbers are likely to decline in the current quarter on a sequential basis. Gross margin came to 64.1% in the first quarter, while operating margin was 47.8%, but it’s forecasting numbers of just 63% and 46% for the current quarter.