Home & Office

Arista CEO: Supply-chain disruption to continue into 2023

CEO Ullal said supply of parts has taken 'two steps forward and one step back'
Written by Tiernan Ray, Senior Contributing Writer

Networking technology pioneer Arista Networks this afternoon reported Q4 revenue and profit that both topped Wall Street's expectations, and an outlook for this quarter's revenue that was higher as well. 

The report sent Arista shares up 8% in late trading. 

Despite the upbeat report and forecast, CEO Jayshree Ullal told analysts during the company's conference call Monday evening that disruption of the global supply chain that is affecting its sales of network switches will continue into 2023. 

"And so despite the supply chain obstacles that we now expect to continue into 2023, we have emerged stronger," Ullal told analysts. 

Some progress with suppliers in November yielded to further supply disruption as the Omicron variant of COVID-19 emerged, she said.  

Supply chain, we felt, improved in November when we met with you all at the Analyst Day, but declined in January, when we started seeing some de-commits from some of our component vendors. So, I would describe our supply chain shortages as 2 steps forward and 1 step backward. We don't like the 1 step backward, but between the Omicron virus, the labor shortages, the logistics and the component shortages, we're certainly experiencing another wave of uncertainty in Q1 over here. Q1 isn't the great indicator of supply chain improving.

In the company's press release, Ullal said in prepared remarks, "I am delighted with Arista's record 2021 milestones in innovation, diversified customer momentum and earnings. 

"We have executed well to establish Arista among the fastest growing networking companies in this decade."

Said CFO Ita Brennan, "The Arista team has shown great resilience and flexibility throughout 2021, maintaining operational excellence in the face of industry-wide challenges and delivering our first billion-dollar cash flow year."

Revenue in the three months ended in December rose to $824.5 million, yielding a net profit of 82 cents a share, excluding some costs.

Analysts had been modeling $790 million and 73 cents per share.

The company's gross profit margin, on a non-GAAP basis, was 64.3%, down from 65% a year earlier and 64.9% in the prior quarter. 

Cash from operations in the year rose to $1.015 billion, while capital investment was $64.7 million, leaving free cash flow of $950 million.

For the current quarter, the company sees revenue in a range of $840 million to $860 million, above consensus of $831.6 million.

Arista expects gross profit in a range of 63% to 64%, it said.

Editorial standards