Arista Networks Inc(NYSE: ANET) stock surged over 11.9% in the pre-market session on November 3rd, 2017 (as of 8:46AM EDT ; Source: Google finance) driven by the solid third quarter of 2017 performance. They reported a revenue rise of 50.8% yoy to $437.6 million. Service revenues accounted over 13% of revenue. The group’s International revenues performance was also strong which rose 25% yoy to 128.3 million during the quarter. The group’s Americas segment contributed 71% of overall revenue, driven by the highest shipments and organic growth this quarter. Non-GAAP gross margins reached 64.4%. The group’s diluted earnings per share number enhanced 95% yoy to $1.62.
Better than forecasted demand from their major cloud titan customers drove the performance. The group’s major customers included cloud titans, Tier 1 and 2 service providers, cloud specialty providers, high tech enterprises and financials. They also witnessed solid response for their 100-gigabit routing and switching deployments, which saw over 50% growth in the last three quarters, instead of the 20% to 30% consensus growth predicted by their analysts. The group launched several products like shifting from legacy Places-in-the-Network to Places-in-the-Cloud, called PICs. Their Cloud software platform is based on their virtual EOS Router and CloudVision Cloud Tracer for visibility metrics. The group even extended their customer testing cycle and qualification time, extending the completion for three of their cloud titan customers into Q4 2017. But this led to a lower cloud titan business in the third quarter.
Meanwhile, the group has been expanding their market share in high performance data center switching, both in ports and in revenue. As per Crehan Research, they reported that Arista had 14.2% and 15% in dollars and ports, respectively, of market share.
For the fourth quarter, the group forecasts a revenues in the range of $450 million to $464 million, which is a 40%-plus year-over-year growth at the upper end of their range. They continue to work closely with customers on the qualification of their 945-related product redesign, while the group forecasts this to have a certain impact on their business in the quarter.
Arista Networks stock delivered 101.7% returns to shareholders in this year to date.