Arista Grows 3Q16 Revenues Despite Shortages

Various component shortages put strain on networking vendor as new HPE partnership is set to be signed

By Sean Michael Kerner | Posted Nov 4, 2016
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Arista Networks reported its third quarter fiscal 2016 financial results on November 3, showing continued growth as the company gears up for a big partnership with Hewlett Packard Enterprise (HPE).

For the quarter, Arista reported revenue of $290.3 million, for a 33.4 percent year-over-year gain. Net Income grew to $51.4 million, up from $28.7 million in the third quarter of 2015. Looking forward, Arista provided fourth quarter fiscal 2016 guidance for revenues to be in the range of $310 million to $320 million.

"Our new products,the 7500R Series and 7280R Series, as well as our highly differentiated EOS platform, fueled our growth across our top verticals," Arista CEO Jayshree Ullal said during her company's earnings call with financial analysts.

Ullal said that in the third quarter, Arista announced its next-generation telemetry product based on EOS and CloudVision. She noted that the Arista Telemetry products leverage open source solutions such as HBase and standards such as OpenConfig to capture, stream, store, classify and view real-time actions.

While Arista is growing, it is experiencing some growing pains, especially in fulfilling customer demand. Ullal said that increased demand has created some challenges for the supply side of Arista's business.

"We are working diligently to address component shortages and ramp our new San Jose, U.S.-based contract manufacturing facility," Ullal said.

According to Ullal, the component shortages were across the board, including switches, cables, optics and 100 gigabit gear. She added that Arista has been working closely with component vendors to deal with shortages, though the unexpected high level of demand has made it a real challenge.

"I feel like my CEO title right now stands for Chief Expedite Officer, and so I'm prioritizing all my top customers very, very highly and it isn't easy when you don't have the parts to give all of them all they want," Ullal said. "Where we cannot prioritize and ship everything, we've worked with them (customers) on partials."

On a more positive note Ullal is very optimistic about a new partnership with Hewlett Packard Enterprise (HPE) to resell Arista equipment.

"We'll supply the networking component and they will pile on the converged components, which is the compute and the storage and sometimes the OneView integration with CloudVision," Ullal said.

HPE already has its own networking assets, but in Ullal's view there are many areas of synergy between the two companies.

"The agreement itself is actually officially getting signed next week, November 7," Ullal said. "So right now, we have the enthusiasm and we look forward in 2017 to convert that into real partnership and real wins."

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist

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