Arista Networks experienced a slight decline in the stock market after the networking equipment company released its fourth-quarter results, which slightly surpassed the estimates of analysts.
Solid Performance in Q4
During the December quarter, Arista Networks achieved revenue of $1.54 billion, marking a 21% increase compared to the same period last year. This result was within the company’s guidance range of $1.5 billion to $1.55 billion and slightly above the Street consensus forecast of $1.53 billion.
Additionally, Arista Networks exceeded expectations by posting a non-GAAP gross margin of 64.9%, surpassing its own forecast of 63%. Adjusted profit per share also outperformed, reaching $2.08, compared to the Street consensus of $1.70.
Positive Outlook for Q1
Arista Networks is hopeful for the future as it anticipates revenue in the range of $1.52 billion to $1.56 billion for the first quarter of this year. The company also expects a non-GAAP gross margin of 62% and a non-GAAP operating margin of 42%. Analysts previously estimated revenue of $1.53 billion and a profit per share of $1.66 for the quarter.
High Expectations Met with Investor Disappointment
Investor expectations were quite high leading up to the fourth-quarter report. Arista Networks heavily relies on Microsoft and Meta, both of which have projected a significant increase in capital spending for AI data centers by 2024.
Despite strong financial results, the market reacted negatively, causing the company’s stock to drop by 5.5% to $266.57 in late trading. This decline may be attributed to investors’ desires for even stronger performance.
Throughout the year, Arista Networks’ shares had previously surged 19% and more than doubled in value over the past 12 months.
