Arista’s $405.2 million in Q2 revenues represents a 20.8 percent increase compared to the first quarter of 2017, and a 50.8 percent increase year-over-year.
Arista reported non-GAAP net income of $105.5 million, or $1.34 per diluted share, compared to non-GAAP net income of $53.7 million, or $0.74 per diluted share, in the second quarter of 2016.
“All of the verticals grew very well, all double-digit percentage growth,” CEO Jayshree Ullal said on a call with investors. “Cloud titans was number one and clearly our largest contributor, as it typically is.”
Cloud specialty providers and service providers were Arista’s second and third top verticals, respectively. “They were number two and three, almost neck and neck, followed by financials and the rest of enterprise,” Ullal added.
Ullal didn’t name the company’s other cloud titan customers. When asked about the pace of business from these accounts — excluding Microsoft — she didn’t give specifics. “Microsoft wasn’t the only contributor,” Ullal said. “We had a number of cloud titans and cloud specialty providers contributing into the number. And their pace of growth is equal or better.”
Arista expects Microsoft to be a “north of 10 percent [of revenue] customer” in the future, despite the fact that Azure will use competitor Cisco’s Nexus data center switches. Ullal said the move won’t impact Arista’s business.
“Nothing has really changed,” she said. “When I look at cloud in general, and Microsoft, cloud titans tend to favor and want a dual-vendor strategy.” Ullal added that Arista is the primary vendor for “many cloud accounts,” including Microsoft.
Cisco-Arista Patent Battle
In multiple lawsuits, Cisco claimed Arista infringed on some of its patentable technology and command-line interface (CLI) comments. Cisco also said Arista used a Cisco-like interface as a selling point for its switching technology.
In June, the U.S. Patent Trial and Appeal Board (PTAB) sided with Arista and invalidated Patent ‘668 — the second of two patents that the International Trade Commission (ITC) had ruled Arista infringed upon.
The PTAB ruling followed a similar decision in May. At that time, the PTAB invalidated patent ‘577, which Arista had also been found to infringe.
On the call with investors, Arista CFO Ita Brennan said legal expenses associated with ongoing lawsuits cost the company $12 million in the second quarter. She projected legal costs would remain the same for the third quarter.
When asked about the clashing ITC and PTAB rulings, Ullal said “this is the legal system at work for you and we are clearly disappointed. I will let the legal pundits decide if this is really a fair policy or needs reform.”
Arista projected third quarter revenues of between $405 and $420 million.