Arista Networks is buying Mojo Networks, which does cloud-managed WiFi, or what it calls “Cognitive WiFi.” This will be Arista’s first acquisition, and the company expects to close the purchase during its third quarter. Arista didn’t say how much it’s paying for Mojo, a Mountain View, California-based company that was founded in 2002. Mojo has raised $69.4 million in funding.
Arista says the synergy between the two companies is compelling for its campus customers. The company only recently got into campus switching. In May it announced its new Campus Spline Ethernet platforms to help enterprise customers extend their data center networking practices to their campus networks.
At first blush, a WiFi acquisition seems a little far afield for a data center switching company. And Jefferies analyst George Notter expressed that sentiment. “We’re troubled by the Mojo acquisition,” writes Notter in a research note. “This is a change in strategy – specifically, Arista is now headed fully into the campus networking market.”
Notter said that Jefferies “felt comfortable” with Arista’s announcement of campus core switching products because it leveraged the company’s existing R&D and product portfolio.
“Now with Mojo, they’re buying a portfolio of access points, wiring closet/stackable/POE switches – i.e. fully entering the campus market. These types of M&A deals – where a company moves orthogonal to their core business – make us wonder if something is wrong with the base business itself.”
Arista yesterday also reported its financial results for its second quarter ended June 30, 2018. And on the conference call with investors Arista CEO Jayshree Ullal addressed the company’s entrance into campus.
“You might be thinking, ‘Why did we enter this market,’” she said. “And the simple fact is our customers have been asking us to do so for some time. We believe, [Mojo’s] cloud-managed Cognitive WiFi is a very natural complement to our next-generation campus and cloud networking portfolio.”
She added that in the past, WiFi was always a second-class citizen to wired, but “what we’re seeing now with 802.1ax and performances in general is WiFi is approaching multi-gigabit speed just like wired is. So the synergy for us is to really focus on making Mojo a software-based acquisition.”
The entire Mojo team of about 250 people will join Arista Networks, including its CEO Rick Wilmer and its founder and CTO Pravin Bhagwat.
When Arista announced its campus switching in May, the company also said it was working with Hewlett Packard Enterprise’s (HPE’s) Aruba. On yesterday’s earnings call Ullal said, “During this time, we remain committed to our HPE Aruba partnership for mutual customers and to also promote open and multi-vendor interoperability.”
In terms of its earnings report yesterday, Arista said its revenues for the quarter were $519.8 million, an increase of 28.3 percent year over year. It reported non-GAAP net income of $155.7 million, or $1.93 per share, compared to non-GAAP net income of $105.5 million, or $1.34 per share, in the second quarter of 2017.
Ullal said the quarter was a record one for Arista, and the company has achieved $2 billion in annual run rate revenue.