AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 29/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · EOS integration, lengthy qualification and growing support renewals support plausible switching friction. Issuer-reported market leadership corroborates commercial success. However, qualification concerns entry into a relationship, and open standards reduce proprietary lock-in. The passages establish differentiation more clearly than a durable barrier to replacement.
durability · 2/4 · Annual revenue growth across 2022–2025 and subsequent support growth show sustained demand. Customers' interest in extending EOS and CloudVision suggests an enduring platform relationship. Neither demonstrates protection across competitive replacement cycles, while open standards limit exclusivity. Durability of the competitive barrier remains mixed.
customer dependency · 2/4 · Strategic qualification effort, demand for a common operating platform and support renewals indicate operational engagement. These are indirect dependency measures, without quantified migration burdens. Customers' previously exercised ability to modify purchase commitments shows that engagement does not ensure protected future hardware volumes.
erosion resilience · 2/4 · Multi-year growth, expanding first-half 2026 service revenue and reported customer satisfaction support continued commercial strength. Gross-margin compression, flexible orders and historical concentration leave meaningful exposure. No supplied displacement evidence establishes either strong protection against erosion or realized competitive deterioration; the assessment therefore remains mixed.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · Revenue and service growth combine demand, installations and renewals without isolating prices. Gross-margin compression can reflect costs or mix as well as pricing. The supplied passages disclose neither observed price changes nor a price-volume-mix bridge, so realized pricing cannot be graded in either direction.
retention · 3/4 · Fiscal 2025 service revenue increased 27.7% through initial and renewal support contracts; first-half service revenue rose from $640.1 million in 2025 to $828.2 million in 2026. This supports strong continuing demand indirectly. New installations contribute, and reported satisfaction does not supply a renewal or retention rate.
margin resilience · 2/4 · GAAP gross margin was 64.1% in both fiscal 2024 and 2025, then declined from 64.5% to 62.4% between first-half 2025 and 2026. GAAP operating margin improved from 43.8% to 44.1%. This demonstrates mixed resilience, without separating pricing from operating efficiency, costs or product mix.
contractual freedom · 1/4 · Sales primarily use purchase orders, and some customers have previously cancelled, delayed, reduced or otherwise modified commitments with little notice. That is concrete evidence of weak protection over committed business. It supports a fragile terms assessment, although Arista's precise discretion to impose prices or renegotiate them remains undisclosed.
Predictability79
5 consecutive published annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 10.55
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 14.68
- observedAnnualPeriods
- 5.00
Financial strength—
Missing required inputs: interestCoverageGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or reported pretax profit plus reported gross interest expense. Reported EBIT is distinct from GAAP operating income and gross interest. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope. An original fully reconciled nonnegative liability partition proves the existing endpoint grade across every permitted borrowing amount and original rounding interval. The bounded component does not estimate a debt amount or leverage ratio.
- debtFcfGrade
- 100.00
- netDebtEbitGrade
- 100.00
- currentRatioGrade
- 100.00
- borrowingLowerBound
- 0.00
- borrowingUpperBound
- 1054.15
- Current ratio (x)
- 3.05
Capital allocation91
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or EBIT calculated from reported pretax profit plus reported gross interest expense; the issuer-reported EBIT is distinct from GAAP operating income and gross interest; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. ROIC remains undefined for nonpositive invested capital; the explicit asset-return alternative does not change the ROIC chart. Missing financial inputs alone never trigger an alternative. Return grade is exactly 100: the minimum three-year average pretax return exceeds 25% even with all reported liabilities as the upper borrowing bound and every input within its original stated accuracy. Exact debt and return percentages remain unknown; no ROIC percentage is imputed. Does not establish acquisition quality or buyback timing.
- operatingReturnGrade
- 100.00
- 3-year average dilution (%)
- 0.87
- 3-year average SBC / revenue (%)
- 5.01
- cashConversionGrade
- 100.00
- operatingReturnLowerBound
- 29.78
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Fiscal 2025 generated $4,371.9 million operating cash against $119.5 million capital/intangible purchases, $300 million acquisition spending and $1,603.1 million repurchases. First-half 2026 cash generation remained strong, partly aided by deferred revenue. Purchase commitments rose from $6.8 billion to $9.7 billion; allocation returns and dilution control remain incompletely demonstrated.
incentive alignment · 2/4 · Disclosed outstanding CEO equity has annual and three-year performance conditions, supplemented by ownership guidelines and mandatory restatement recovery. Counterweights include annual non-GAAP cash metrics, counting unvested time-based RSUs toward ownership, and compliance described as met or on track. These are actual arrangements, without proof of future vesting or universal ownership compliance.
execution · 3/4 · First-half revenue increased from $4,209.6 million in 2025 to $5,744.7 million in 2026, alongside service growth and improved GAAP operating margin. Operating cash generation reached $2.8 billion. These reported outcomes support strong execution indirectly, while market demand and favorable working-capital movements also contributed.
governance · 2/4 · Independent compensation decisions and mandatory restatement recovery provide concrete safeguards. Combined CEO/chair roles and classified director terms temper oversight strength. The May 2026 compensation proposal passed with 624,907,669 votes for and 410,157,079 against; substantial opposition limits any inference that shareholder concerns were resolved.
Evidence
Our cloud networking solutions consist of our Extensible Operating System ("EOS®"), a set of network applications and our Ethernet switching and routing platforms.
Form 10-Q filed 2026-08-05; cloud networking solution components. · Filed 05/08/2026
Customers, especially our large customers, often view the purchase of our products as a significant and strategic decision and require considerable time to evaluate, test and qualify our products prior to making a purchase decision and placing an order.
Form 10-Q filed 2026-08-05; customer evaluation, testing and qualification. · Filed 05/08/2026
Arista’s campus portfolio was driven by customers desiring the same quality and operational efficiency available from EOS and CloudVision® throughout their entire enterprise network.
Form 10-K filed 2025-02-19; campus demand for EOS and CloudVision. · Filed 19/02/2025
In addition, service revenue increased by $309.7 million, or 27.7%, in the year ended December 31, 2025 compared to 2024, as a result of continued growth in initial and renewal support contracts as our customer installed base has continued to expand.
Proxy statement filed 2026-04-16; fiscal 2025 initial and renewal support contract growth. · Filed 16/04/2026
•are based on advanced open and standards-based technology that avoids what is often expensive vendor lock-in, and
Form 10-K filed 2026-02-17; open standards and avoidance of vendor lock-in. · Filed 17/02/2026
Moreover, because our sales are based primarily on purchase orders, some of our customers have previously and could continue to cancel, delay, reduce or otherwise modify their purchase commitments with little or no notice to us.
Form 10-Q filed 2026-08-05; purchase-order flexibility and prior customer modifications. · Filed 05/08/2026
We have experienced annual revenue growth rates of 28.6%, 19.5%, 33.8%, and 48.6% in 2025, 2024, 2023 and 2022, respectively.
Form 10-K filed 2026-02-17; annual revenue growth rates for 2022–2025. · Filed 17/02/2026
(Unaudited, in millions, except per share amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Revenue:
Product
$
2,605.2
$
1,877.0
$
4,916.5
$
3,569.5
Service
430.5
327.8
828.2
640.1
Total revenue
3,035.7
2,204.8
5,744.7
4,209.6
Cost of revenue:
Product
1,047.5
707.3
2,009.4
1,380.0
Service
77.9
58.9
148.2
114.9
Total cost of revenue
1,125.4
766.2
2,157.6
1,494.9
Gross profit
1,910.3
1,438.6
Earnings release filed 2026-08-04; unaudited income statement, three and six months ended June 30, 2026 and 2025, in millions except per-share amounts. · Filed 04/08/2026
(Unaudited, in millions, except percentages and per share amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
GAAP gross profit
$
1,910.3
$
1,438.6
$
3,587.1
$
2,714.7
GAAP gross margin
62.9
%
65.2
%
62.4
%
64.5
%
Stock-based compensation expense
7.4
5.8
14.4
11.3
Intangible asset amortization
7.0
2.6
14.0
5.8
Non-GAAP gross profit
$
1,924.7
$
1,447.0
$
3,615.5
$
2,731.8
Non-GAAP gross margin
63.4
%
65.6
%
62.9
%
64.9
%
GAAP income from operations
$
1,378.0
$
986.2
$
2,535.8
$
1,845.0
GAAP operating margin
45.4
%
44.7
%
44.1
%
43.8
%
Stock-based compensation expense
120.4
85.2
241.3
178.2
Intangible asset amortization
15.3
5.0
30.6
10.6
Non-GAAP income from operations
$
1,513.7
$
1,076.4
$
2,807.7
$
2,033.8
Non-GAAP operating margin
49.9
%
48.8
%
48.9
%
48.3
%
GAAP net income
$
1,212.9
$
888.8
$
2,235.8
$
1,702.6
Stock-based compensation expense
120.4
85.2
241.3
178.2
Intangible asset amortization
15.3
5.0
30.6
10.6
(Gains)/losses on strategic investments
(6.0)
(5.4)
(8.8)
(10.9)
Tax benefits on stock-based awards(1)
(30.9)
(32.1)
(65.3)
(80.1)
Income tax effect on non-GAAP exclusions(1)
(10.0)
(7.3)
(23.7)
(20.3)
Non-GAAP net income(1)
$
1,301.7
$
934.2
$
2,409.9
$
1,780.1
GAAP diluted net income per share
$
0.95
$
0.70
$
1.75
$
1.34
Non-GAAP adjustments to net income per share(1)
0.07
0.03
0.14
0.06
Non-GAAP diluted net income per share(1)
$
1.02
$
0.73
$
1.89
$
1.40
Weighted-average shares used in computing diluted net income per share
1,276.0
1,271.2
1,274.9
1,275.2
Summary of Stock-Based Compensation Expense:
Cost of revenue
$
7.4
$
5.8
$
14.4
$
11.3
Research and development
70.1
53.2
142.3
110.2
Sales and marketing
32.2
18.8
62.0
38.7
General and administrative
10.7
7.4
22.6
18.0
Total
$
120.4
$
85.2
$
241.3
$
178.2
(1) Prior period amounts have been updated to conform to the current period presentation to reflect the change in methodology for calculating non-GAAP income taxes associated with stock-based awards.
Earnings release filed 2026-08-04; GAAP/non-GAAP reconciliation, three and six months ended June 30, 2026 and 2025, including presentation footnote. · Filed 04/08/2026
•GAAP gross margin of 64.1%, compared to GAAP gross margin of 64.1% in fiscal year 2024.
Earnings release filed 2026-02-12; fiscal 2025 versus fiscal 2024 GAAP gross margin. · Filed 12/02/2026
During the six months ended June 30, 2026, cash provided by operating activities was $2.8 billion, consisting of net income of $2.2 billion, a net decrease of $476.4 million in working capital requirements, and favorable non-cash adjustments to net income of $64.3 million.
Form 10-Q filed 2026-08-05; operating cash flow for six months ended June 30, 2026. · Filed 05/08/2026
The reduction in working capital requirements primarily consisted of an increase in deferred revenue of $1.5 billion primarily resulting from an increase in product deferred revenue related to customer contracts with acceptance terms and an increase in customer PCS contracts, and a $198.4 million increase in income tax payables related to timing of payments.
Form 10-Q filed 2026-08-05; deferred revenue and tax-payable contributions to first-half 2026 working capital. · Filed 05/08/2026
As of December 31, 2025, we had non-cancellable purchase commitments not recorded on our balance sheet of $6.8 billion, of which $6.3 billion have confirmed receipt dates within 12 months, and $0.5 billion have confirmed receipt dates greater than 12 months.
Form 10-K filed 2026-02-17; non-cancellable purchase commitments as of December 31, 2025. · Filed 17/02/2026
As of June 30, 2026, we had non-cancellable purchase commitments not recorded on our balance sheet of $9.7 billion, of which $9.4 billion have expected receipt dates within 12 months, and $0.3 billion have expected receipt dates greater than 12 months.
Form 10-Q filed 2026-08-05; non-cancellable purchase commitments as of June 30, 2026. · Filed 05/08/2026
The non-cash adjustments to net income were driven by stock-based compensation of $241.3 million, and offset by a $213.1 million increase in deferred taxes primarily due to the increase in deferred revenue.
Form 10-Q filed 2026-08-05; first-half 2026 stock compensation and deferred-tax cash-flow adjustments. · Filed 05/08/2026
We did not repurchase any shares during the six months ended June 30, 2026.
Form 10-Q filed 2026-08-05; no repurchases during six months ended June 30, 2026. · Filed 05/08/2026
One such award is subject to performance against revenue and operating income goals that has three performance periods in each of fiscal year 2024, 2025 and 2026 (the portion eligible to be earned in 2025, the “2025 AOP PRSUs”), and the other such award is subject to performance against 3-year compound annual growth rate goals for the period of fiscal 2024 through fiscal 2026 (“2024 CAGR PRSUs”).
Proxy statement filed 2026-04-16; outstanding CEO annual and three-year performance award conditions. · Filed 16/04/2026
All of the equity delivered to our CEO is performance-contingent with the 2024 CAGR PRSUs, which are 50% of the Outstanding CEO PRSUs, based on 3-year performance.
Proxy statement filed 2026-04-16; performance-contingent CEO equity and three-year award proportion. · Filed 16/04/2026
The guidelines provide that our non-employee directors and covered executives should accumulate and hold, within five years from the date such non-employee director or covered executive was appointed to such role, an investment level in our common stock of three times the value of the non-employee director’s annual retainer for service on our board of directors (not including any additional fees received for committee service, lead independent director service, or meeting attendance), three times the covered executive’s annual base salary, or six times in the case of our CEO.
Proxy statement filed 2026-04-16; ownership guideline multiples and five-year accumulation period. · Filed 16/04/2026
The following types of holdings are included for our stock ownership guidelines: shares of our common stock, shares of our common stock underlying unvested RSUs subject to time-based vesting alone, and any other shares of our common stock in which our the covered executive holds a beneficial interest.
Proxy statement filed 2026-04-16; holdings eligible for ownership guidelines, including unvested time-based RSUs. · Filed 16/04/2026
Our non-employee directors and covered executives have met or are on track to meet these guidelines based on their current rate of stock accumulations in the time frame set out in the guidelines.
Proxy statement filed 2026-04-16; ownership compliance described as met or on track. · Filed 16/04/2026
This policy provides for the
non-discretionary
recovery of excess incentive-based compensation from current and former executive officers in the event of an accounting restatement, whether or not the executive officer was at fault for the restatement, in accordance with the SEC and NYSE requirements.
Proxy statement filed 2026-04-16; mandatory recovery of excess incentive compensation following restatement. · Filed 16/04/2026
Disclosures Regarding our Short-Term Cash Performance Incentive Program
Our response
•
As described in our prior annual proxy materials, payouts under our short-term cash incentive program are primarily dependent on the achievement of rigorous financial performance metrics for revenue and non-GAAP operating income for the year, and no payout is made unless we achieve at least 85% of the revenue metric target.
Proxy statement filed 2026-04-16; annual cash incentive metrics and revenue payout threshold. · Filed 16/04/2026
Independence. Our Compensation Committee is made up solely of independent directors and makes all executive compensation decisions.
Proxy statement filed 2026-04-16; independent compensation committee decision-making. · Filed 16/04/2026
Ullal has served as our Chief Executive Officer and a member of our board of directors since October 2008 and as our Chairperson of the Board since December 2023.
Proxy statement filed 2026-04-16; combined CEO and board chair roles. · Filed 16/04/2026
2. Advisory Vote on Named Executive Officer Compensation
For
Against
Abstained
Broker Non-votes
624,907,669
410,157,079
862,319
99,356,888
The stockholders approved, on an advisory basis, the compensation of the Company’s named executive officers.
Form 8-K filed 2026-06-02; May 29, 2026 advisory compensation vote results. · Filed 02/06/2026
1.To elect three Class III directors to serve until the 2029 annual meeting of stockholders and until their successors are duly elected and qualified;
Form 8-K filed 2026-06-02; Class III director terms through the 2029 annual meeting. · Filed 02/06/2026
•Received a 2026 net promoter score of 89, indicating that 94% of customers are strongly positive about the company
Earnings release filed 2026-05-05; issuer-reported 2026 net promoter score and customer sentiment. · Filed 05/05/2026
Since we began shipping our products in 2008, we have experienced rapid growth, and, according to market research in 2024, we have achieved the leadership position in overall data center Ethernet switch ports and revenue and continue to lead the market in higher speed Ethernet port shipments of 100G and above.
Form 10-K filed 2025-02-19; issuer's account of 2024 Ethernet switching market research. · Filed 19/02/2025
Condensed Consolidated Statements of Cash Flows
(Unaudited, in millions)
Twelve Months Ended December 31,
2025
2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
3,511.4
$
2,852.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
72.6
62.0
Stock-based compensation
439.2
355.4
Deferred income taxes
(312.0)
(492.9)
Other
(27.1)
(53.6)
Changes in operating assets and liabilities:
Accounts receivable, net
(746.4)
(106.1)
Inventories
(412.5)
110.6
Other assets
(937.4)
(234.2)
Accounts payable
260.5
(51.6)
Other liabilities
119.4
47.8
Deferred revenue
2,452.0
1,285.2
Income taxes, net
(47.8)
(66.5)
Net cash provided by operating activities
4,371.9
3,708.2
CASH FLOWS FROM INVESTING ACTIVITIES:
Earnings release filed 2026-02-12; unaudited cash-flow statement, twelve months ended December 31, 2025 and 2024, in millions. · Filed 12/02/2026
Proceeds from maturities of marketable securities
3,432.5
2,058.6
Proceeds from sale of marketable securities
144.3
48.8
Purchases of marketable securities
(6,748.4)
(4,526.1)
Purchases of property, equipment and intangible assets
(119.5)
(32.0)
Cash paid for business combination, net of cash acquired
(300.0)
—
Other
14.9
(6.6)
Net cash used in investing activities
(3,576.2)
(2,457.3)
CASH FLOWS FROM FINANCING ACTIVITIES:
Earnings release filed 2026-02-12; investing cash flows for fiscal 2025 and 2024, continuing the cash-flow statement. · Filed 12/02/2026
Proceeds from issuance of common stock under equity plans
57.7
60.2
Tax withholding paid on behalf of employees for net share settlement
(50.5)
(58.4)
Repurchase of common stock
(1,603.1)
(423.6)
Net cash used in financing activities
(1,595.9)
(421.8)
Effect of exchange rate changes
1.7
(4.8)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(798.5)
824.3
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —Beginning of period
2,763.8
1,939.5
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period
$
1,965.3
$
2,763.8
9
Investor Contacts:
Arista Networks, Inc.
Earnings release filed 2026-02-12; financing cash flows for fiscal 2025 and 2024, continuing the cash-flow statement. · Filed 12/02/2026
Meta Platforms and Microsoft, two of our Cloud and AI Titan end customers, each accounted for more than 10% of our total revenue for the years ended December 31, 2024, and December 31, 2023.
Form 10-K filed 2025-02-19; two named customers each exceeding 10% of total revenue in 2024 and 2023. · Filed 19/02/2025
