Insights

Why Arista Networks Was Trading Flat Today After Crushing Q2 Estimates

What happened

After experiencing an after-market pop on Monday, Arista Networks (NYSE: ANET) rose nearly 5% in Tuesday trading. Later in the day investor sentiment cooled on the stock, leaving it basically flat over Monday’s close as of late afternoon trading. Those initial flurries of excitement were due to the company’s latest set of quarterly results.

So what

Arista unveiled its second-quarter results following Monday’s market close. These revealed that the cloud-based networking specialist notched its first billion-dollar quarter, with revenue hitting $1.05 billion for the period. This was a robust 49% higher on a year-over-year basis. Not to be outdone, non-GAAP (adjusted) net income rocketed 58% higher to reach nearly $343 million ($1.08 per share).

Both headline figures trounced the average analyst estimates. Collectively, prognosticators following the stock were modeling less than $980 million on the top line, and only $0.92 in adjusted, per-share net income.

In its earnings release, Arista quoted its CFO Ita Brennan as saying that “We are pleased with overall business momentum in the quarter with strong revenue growth driving significant EPS upside and demonstrating the inherent operational leverage of the business model.”

Now what

Arista proffered selected guidance for its current (third) quarter, stating that it anticipates another billion-dollar-plus frame with revenue of almost $1.03 billion to nearly $1.08 billion. Non-GAAP operating margin should come in at roughly 39%. No bottom-line forecasts were provided.

After the initial euphoria about the results, it seems investors were taking heed of the more cautious post-earnings notes being published by some analysts. For example, Barclays‘ Tim Long wrote that “We expect most upside is already priced in at current levels with tougher comparisons coming.”

“Facebook (on its Q2 earnings call) also hinted at potential moderation in 2023 capital spending,” he added, referring to the core Meta Platforms business unit that is an important Arista client.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Eric Volkman has positions in Meta Platforms, Inc. The Motley Fool has positions in and recommends Arista Networks and Meta Platforms, Inc. The Motley Fool recommends Barclays. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Rebate Rewards

Level 2 Rebate

Deposit $2,000 and get $200 Rebate
$ 200 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $2,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $200 Rebate
Popular

Level 1 Rebate

Deposit $1,000 and get $100 Rebate
$ 100 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $1,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $100 Rebate

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here To Get Started
EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here For More Info