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Arista Networks Q3 revenue and earnings top expectations, revenue outlook higher as well amidst improving business trends

Shares of the networking equipment vendor rose in late trading as the company said it has been seeing a recovery from COVID-19 patterns in its market.
Written by Tiernan Ray, Senior Contributing Writer

Arista Networks, which competes with Cisco Systems selling network switching equipment, this afternoon reported Q3 revenue and profit per share that comfortably topped analysts' expectations, and forecast Q4 revenue higher as well, citing an improving business environment. 

Arista's chief financila officer, Ita Brennan, remarked that the company "saw continued improvement in underlying business trends in the quarter, with the Arista team working diligently with customers, supply chain and other partners to navigate the new COVID-19 operating environment." 

Arista is best known for selling high-speed switches to hyper-scale operators, particularly Facebook and Microsoft, though it has been expanding into Cisco's market for enterprise campus switching. 

Said Arista CEO Jayshree Ullal, "Our customers are validating our traction as we migrate from legacy to cognitive client to cloud deployments with a cumulative of 40 million cloud networking ports shipped by Q3 2020. Despite some COVID-19 turbulence, we believe Arista will only emerge stronger."

Arista's revenue in the three months ended in September declined by 7.5%, year over year, to $605.4 million, yielding earnings per share of $2.42. That was higher than the average Wall Street estimate for $581.6 million and $2.22 per share.

Gross profit margin in the quarter declined slightly to 63.6% from 63.7% in the prior quarter. On a non-GAAP basis, the company reported gross profit of 64.6%.

For the current quarter, the company sees revenue in a range of $615 million to $635 million, which is higher than the average estimate for $609 million. 

Gross profit margin is expected in a range of 63% to 65%, non a non-GAAP basis, while operating profit margin is expected to be roughly 37%. 

Arista stock rose by 6.4% in late trading.

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