Arista Networks at Goldman Sachs conference: AI demand drives growth By Investing.com

On Tuesday, 08 September 2026, Arista Networks (ANET) used the Goldman Sachs Communacopia + Technology Conference 2026 to outline a business that is growing quickly, but still faces supply chain strain and long deployment cycles. Management said demand from AI infrastructure and data center networking helped the company cross $3 billion in quarterly revenue for the first time, while also noting that customer acceptance, chip lead times and power constraints can delay when that demand turns into revenue. Arista said it reached a historic milestone by topping $3 billion in quarterly revenue, a sign of continued momentum in AI infrastructure and data center networking. Gross margin guidance for 2026 stayed at 62% to 64%. Management said the company's R&D spending remains in the 8% to 10% of revenue range, even as absolute dollars rise sharply with growth. Executives said Arista's strategy is built around a single networking portfolio that serves hyperscalers, NeoClouds, enterprises and campus customers without forcing trade-offs in capital allocation. Arista again highlighted its EOS operating system as a major competitive advantage. The company also defended its merchant silicon model. NeoClouds remain a key growth area, but management described the segment as high risk and high reward. The company's operational strength is reflected in its financial health metrics. Arista maintains a robust current ratio of 2.96 and holds more cash than debt on its balance sheet. The company's gross profit margin of 63% aligns closely with management's guidance range, while return on equity stands at 31%. According to InvestingPro, ANET earns a "GREAT" Financial Health score of 3.49 out of 5, with particularly strong marks for growth and profitability. Investors seeking comprehensive analysis can access ANET's detailed Pro Research Report, one of 1,400+ reports transforming complex Wall Street data into clear, actionable intelligence. Campus networking is becoming a larger opportunity. Management spent much of the call on the next phase of AI networking. Executives also described the three main AI networking layers. Scale-up Ethernet is still early, but management sees it as a longer-term opportunity. On margins and supply, Arista said it is still working through a complex environment. Capital allocation remains centered on working capital. During the question-and-answer session, management returned to the theme of broad investment across the portfolio. Supply chain visibility was another focus. Management also discussed how customer profiles differ in open and closed ecosystems. On deferred revenue, executives said the balance reflects shipped and invoiced products that are waiting for customer acceptance. NeoCloud risk management also came up in the Q&A. Campus networking and scale-across AI networking were both presented as long-run growth drivers. Arista's full remarks at the Goldman Sachs Communacopia + Technology Conference 2026 provide more detail on its growth plans, supply chain outlook and AI networking strategy. Readers can refer to the full transcript below. Moderator: Great. Good morning, everybody. Welcome to the Arista Fireside Chat at the Goldman Sachs Communacopia and Technology Conference. My name is Mike Ng, and I cover Arista and comm tech here at the firm. It's my privilege to welcome Arista's President and CTO, Ken Duda, alongside Chantelle Breithaupt, who's the CFO. We have about 35 minutes for today's presentation, but first and foremost, Ken, Chantelle, thank you so much for joining us today. It's an absolute pleasure. Chantelle Breithaupt, CFO, Arista Networks: Yeah, thank you for having us. Great to be here after a long weekend. Moderator: Yeah, exactly. Well, to kick things off, Arista crossed a historic milestone last quarter with its first $3 billion revenue quarter. Networking is an absolutely critical part of client, campus, data center, and AI environments. Maybe start and talk about how you're balancing the strategic investments between scaling the core AI and data center switching fabric product portfolio versus what you're doing in software, campus, and routing. Ken Duda, President and CTO, Arista Networks: Yeah. Thanks, Michael. We are so excited about what's happening in networking, because the network is absolutely the lifeblood of so many different kinds of operations. It connects everything together. When the network ain't working, ain't nothing working. It's super reliability critical, and we feel like our opportunity to continue to grow and expand in that space is just really exciting to me. With regard to your question about how do we invest, one of the great things about our business is we don't have to think about it in those terms, right? It's not sort of a, well, do we do it, invest here? Do we invest there? It's like, no. What we do is we work very closely with the world's most sophisticated hyperscaler operators, customize solutions for them, bring in the newest technologies. I think you see that now with XPO, liquid-cooled optics, and that sort of thing, get all that working at scale. Those investments that we make in the hardware and the software, the technology, naturally flow across the ecosystem into the broader markets, the specialty operators, ultimately into the enterprises. We are investing along the entire chain there. It is not a sort of A or B decision. Chantelle Breithaupt, CFO, Arista Networks: Yeah, the only thing I would add to Ken's comments, which absolutely resonate with me in the sense of how we approach the company, it is a benefit and it is not confusing for a capital allocation strategy or investment strategy when you are just pure play networking, right? We love all those children equally because they are all important in a networking portfolio. If you think about our guide for this year being $12.6 billion, roughly 40% growth, that is a lot of absolute dollars added if you maintain 8%-10% of R&D to revenue for Ken and his team. We are super excited, and we have room for all of those things to be invested in. Moderator: Great. That is a fantastic segue. Maybe you can talk a little bit about that revenue guidance for this year. What specific customer demand signals or supply chain improvements and availability inform that upward revision? Where do you feel like you have the most visibility today, and potentially, opportunities for upside optionality? Chantelle Breithaupt, CFO, Arista Networks: Yeah, sure. Jayshree and I were super excited to raise the guidance by over $1 billion in the last call. I would say two things were true to make that a comfortable position for us. The first thing was, if I go back to the Q1 earnings call, back to the scenario that no one thought was popular but was definitely needed, talking about supply chain constraints across the industry. We got more comfortable with supply chain. We leaned into purchase commitments. We had some of our vendors rally that we needed to rally. We had to make sure the team inside the company was on their A game to make sure this happened. Supply chain was something we were comfortable with, Michael. The second thing is, by the time you get to that August timeframe, we have two quarters of PO transactional visibility, so we could see through to the end of the year. Supply chain improvements with PO visibility timing, those two things came together to give us confidence. I think if you were to look at what could give us even more upside to that guide raise, it is that the supply chain eases up even more. I think that we are not out of the woods. I do not think anyone in the industry is out of the woods for supply chain constraints. But if that gets a little bit more opened up, there could be some potential for upside. Moderator: Great. Are there any particular areas of the supply chain or component availability that would ring true in terms of things getting better, leading to potential upside? Chantelle Breithaupt, CFO, Arista Networks: I do not know if it is one, because it is different customers have different things. But it is everything from some of the peripherals to some of the main things, main components that come into it. So, we have agreements on chips and memory, but there is PCBs and there is sometimes there is power cables and things like that just kind of whack-a-mole through the year. So we will just keep our eye on it. Moderator: Great. Chantelle Breithaupt, CFO, Arista Networks: Yeah. Moderator: I wanted to ask about EOS and competitive differentiation. It is an important competitive moat for Arista. I think it is a competitive advantage when you put Arista against any white box vendor. So maybe you can talk a little bit about EOS, its differentiation, and has that changed over the years, as white box operating systems potentially get better? Ken Duda, President and CTO, Arista Networks: Yeah. The situation with open source NOS is that it may be open source, it is not free. It takes a deep technical expertise to actually get all the components together, assemble them into an image, and get that to actually work on the hardware platforms and use cases of interest. I'm not foreseeing any deep penetration there outside of a handful of hyperscaler operators who I don't believe are even saving a single dollar here, honestly. What they're gaining is multi-sourcing of their software environment. They cannot accept the operational risk of being beholden to a single vendor. That's the core driver, I believe, for what's happening in that part of the market. The competitive differentiation of EOS is very strong in the hyperscaler use cases. We're seeing still good traction with EOS, even as they attempt an open source strategy, especially in high demand routing use cases where you need fast reconvergence, you need to deal with large routing tables, you need rapid convergence when something changes in a network, getting the hardware tables updated quickly, and under the memory constraints of the platform, we see significant advantage there. But for the broader market, I don't even think the open source operating systems are a realistic option. There, the competitive differentiation of EOS lies in the quality. The fact that you can count on the software really working, and customer after customer tells me how much they appreciate having a switch software stack that they can really count on. Moderator: Ken, maybe just to follow up on that, are there certain products or areas of the network stack where EOS is critically important, whether that be in the spine or the leaf or certain AI use cases, whether that be scale out versus scale-across? How would you just think about where EOS' competitive differentiation matters the most and shines the most? Ken Duda, President and CTO, Arista Networks: Well, again, I think it's really important to think about the hyperscaler market separately from really any of the other market segments. The Neo Cloud operators are in a different category. Certainly, the enterprises are in a different category. Part of the strength of Arista is applying the same software. We have the same operating system, not just the same brand. It's the same code running across that entire spectrum, and the advantages that we bring vary across that spectrum. There's not a simple answer to your question. I would say that what we see in the hyperscalers, where we have the greatest differentiation is, again, in routing. Moderator: Okay. Ken Duda, President and CTO, Arista Networks: We have a very advanced routing stack, all the policy controls, all the different tunnel encapsulation types of MPLS stack. It's simply not available in the open source world. Whereas with the Neo Cloud operators and with the enterprises, it's the quality of EOS, the manageability through CloudVision, having a single software that runs across all of their use cases, whether it's a Cognitive Campus use case, a WAN use case, a cloud use case, or of course, in the data center. Having that consistency of operation is a really important differentiator for us as well. Moderator: Great. I wanted to ask about merchant silicon in your high-end Ethernet switches. You guys obviously have a really great relationship with Broadcom, I guess most recently for the Tomahawk 6. What are the advantages of using merchant silicon versus developing your own from a supply availability perspective? Has working with merchant silicon and the allocation risk associated with that been a concern at all? Ken Duda, President and CTO, Arista Networks: Well, the supply chain, of course, is a great concern. We have supply, we have demand. You need them both. It's an industry-wide problem. This is nothing unique to Arista about this. The semiconductor side in particular, the merchant silicon versus in-house silicon isn't actually the big issue because the bottleneck isn't the chip designer, the bottleneck is the fab, right? Moderator: Right. Ken Duda, President and CTO, Arista Networks: That doesn't really turn out to matter very much. From a supply allocation point of view, obviously, we've been managing that through being aggressive with our supply agreements and our purchase commitments, and we feel good about our position there. Arista has been a merchant silicon company from day one. I think our focus has been to add value through the system and through the software. Better software, better integrated into the system. We have many examples where our software unlocks capabilities of the silicon, which is not unlocked through other vendors because of limitations in the software stack. So I think we've proven in the market that that merchant silicon approach has been successful. Moderator: Great. That is very clear. Chantelle, maybe on gross margins. Arista has 2026 gross margin guidance of 62%-64%, and you maintained that last quarter despite cost inflation, customer mix shifts. What are some of the puts and takes for gross margin this year? Chantelle Breithaupt, CFO, Arista Networks: I think that if we go back to our Analyst Day we had, I think in October 2025, we stated the 2026 margin guide to be, gross margin guide to be 62-64. To your point, with all the different things that have come in, we still have that guide. I am very proud of the team to allow us to do that. What are the main components? The main components usually for us is end customer mix, and from that perspective. The other one, too, that I would say is coming into this year a little bit similar to our peers is there are tariffs this year. There are tariff refunds. If you look at that 62-64 guide, maybe 30 basis points, I would say on the year is going to be tariff, one time coming back into the P&L, just to be transparent about that. If you think about the other pieces that are coming to mix, if we talk about the price component inflation side of it, our philosophy earlier this year was to measure two or three times, cut once. We tried to sweep in everything we thought could happen in the time frame, component inflation, maybe other different tariffs, et cetera. We had one price increase, but it was just meant to offset the inflation, not meant to be accretive to our gross margin, but to hold it. We only applied that to POs in the future to customers that had significant pieces of their bill of material. It was pretty curated. It was not just everyone got it. It was not like Oprah, everyone gets a car, everyone gets a price increase. We were pretty segmented and pretty accurate on that one. Those will start to come in, those price increases, as we work through the backlog into new purchase orders. The component inflation comes and goes depending on our supplier agreements, and so we have tried to make that neutral coming into this year, and we will see where we get in 2027 based on the market. A lot of great work by the team, both the commercial and the supply chain side, and we have been able to steer the ship within that guide so far. Moderator: Great. Could you just expand a little bit on some of the price increases implemented by Arista to recover that cost inflation? Whether that be timing, magnitude, types of products, anything you could talk about as it relates to next year's gross margins, just given some of the puts and takes on the price increase, tailwind, the tariff refund, I will call it, reversal. Chantelle Breithaupt, CFO, Arista Networks: Yeah, sure. I think that from the perspective of the price increase, the largest component is the memory in the current kind of conversation. If the bill of material had a higher memory component to it, we would have a price increase in that situation and explain to the customer, trying to be as transparent as possible, how that kind of flows through. Not a lot of our products have high memory bill of material, so those weren't necessarily impacted. Then you will have some of the chips and some of the other factors that go in. So those were all averaged out to a particular product, a particular conversation. I think going into next year, I am not guiding next year at this point, but I think from the perspective of, I do not know if we will have to do another price increase, we will have to see, but hopefully the one we have done will carry into next year and keep us margin neutral within the same kind of range territory. Moderator: That is great. Moderator: Great. Maybe we'll follow up on something that you guys talked about earlier, which is the multi-year purchase commitments. I think last quarter they nearly tripled to $9.7 billion. What does this component commitment talk about or reflect in terms of your confidence in delivering and sustaining, fulfilling the consumer demand over the next couple of years? How much visibility on the component side do you actually have? Chantelle Breithaupt, CFO, Arista Networks: Yeah. As a company, we have many different frameworks. Some people call us conservative, I would call us prudent, and one of the ways we're prudent is the way we operate our balance sheet. When we do lean into things, it is with intention. Our lean into the purchase commitments should be seen by this audience and those that will see this after as a demand signal, right? Chantelle Breithaupt, CFO, Arista Networks: That's a demand signal that you're seeing there. It's not that that's all inflation on components, that's demand. I think that's very exciting from our perspective regarding that. I think that if you look at the visibility side, our biggest component are the chips, and that's 52-week lead time, right? We're already leaning into fast-forward a year from now. How do I reconcile, I have two quarters of visibility, but I have one year lead time? Chantelle Breithaupt, CFO, Arista Networks: The great thing about our portfolio is it's pretty fungible. It's not like we're ordering specific chips that we can't use or building specific products we can't offer a different customer. Again, going back to the flexibility of the portfolio, the fungibility of the components, we feel very comfortable we're not walking into a large obsolescence inventory risk environment. Some of the customers, we have the larger customers, Neo Clouds, hyperscalers. We're having 18, 24 months technology conversations, right, Ken? We have an idea of where they're going and we're helping them design. We directionally know without a PO in hand where they should be going. We balance those two things. Ken Duda, President and CTO, Arista Networks: Michael, if I could just comment. Moderator: Please. Ken Duda, President and CTO, Arista Networks: This is an example of how the alignment that Arista has between the hyperscaler side of our business and the enterprise side of our business is so useful because we've got competitors that have different business units going after these things with completely independent engineering engagements. Then they're taking a lot more risk of component obsolescence than we are when we can utilize the same switch models, which of course obviously contain the same components. Moderator: Right Ken Duda, President and CTO, Arista Networks: across multiple use cases, multiple types of customers that are operating at different time frames. Some are a lot more aggressive than others, as you can imagine, in adopting the new technologies. So we have a lot of room there to find demand downstream. Moderator: Great. Yeah. That's very clear. Maybe just on the other balance sheet item that investors focus on a lot, deferred revenue. How much visibility do you actually have in the deferred revenue recognition into actual revenue? Does things like data center readiness, the availability of power, affect your ability to recognize revenue, in terms of your products being shipped? Chantelle Breithaupt, CFO, Arista Networks: Yeah. Just to remind, because sometimes it is not clear to all, deferred revenue means it has been shipped, invoiced, and usually cash collected within the payment term. That is what is in deferred. Sometimes people confuse it for backlog. It is already shipped, so there is no supply chain issue because it is already been deployed. From that perspective, we have an idea. So deferred revenue is a new use cases, new products, right? Right now, you think about what is that for Arista? It is scale out, it is scale-across, eventually scale-up. Those are new use cases, new product 1.6 T. So those are the types of things, 800G, that goes into deferred. And visibility is as good as the expected time frame it is going to take to get to the revenue recognition of the criteria. So of course, we have an idea, but we do not determine it in the sense of when it actually gets accepted. So we will have a time frame, usually within a quarter or two, and it is usually landed pretty well. But I can give you some anecdotes in the sense of what we are hearing, and I am sure that you guys have many more than I do, given that you cover many companies. But we had a large customer say to us, they said a three to four-week delay that their data center stopped constructing because an employee was hurt, and they had to prove that the facility was okay for employees to work. So that is almost a month gone already just because of an employee injury, which you have to take very seriously. So add the power, the cooling, the facilities, the cabling. There are many reasons why it can take 18 to 24 months for some of these things to be completed. And so that is the average time frame. Each is bespoke. But every quarter, things are coming off being accepted and things are being added. So I think that healthy kind of turnover I am comfortable with in the way that it is acting. Moderator: Yeah. Just to remind us, the nature of the deferral, is it because you are promising a certain level of uptime and performance, and it has to be in production for that to- Chantelle Breithaupt, CFO, Arista Networks: Well, it is different things. Chantelle Breithaupt, CFO, Arista Networks: The thing I would say is the customers really enjoy it because we have skin in the game until they have gotten to where they need to get to. We do not- Chantelle Breithaupt, CFO, Arista Networks: ship it, leave it, and say- Moderator: Done Chantelle Breithaupt, CFO, Arista Networks: Good luck to you. Not to be flippant, but that's the opposite in that aspect. Moderator: The customer has to accept the product as working Chantelle Breithaupt, CFO, Arista Networks: Yeah Moderator: in their use case. Chantelle Breithaupt, CFO, Arista Networks: That's right. It can be site by site, it can be performance. There's many different things for different customers, but it keeps us engaged, and our SEs and our technical team engaged until they've gotten to. Because you think about some of these clusters are some of the largest in the world. Moderator: Great. I wanted to ask about NeoClouds. It constantly comes up as something when I do my channel checks and expert calls as something that Arista's doing really well with in terms of a customer cohort, but maybe a little bit underappreciated. Talk a little bit about the NeoCloud segment. How has competitive intensity in the segment evolved? Are these all net new logos, or are they expansions of existing relationships? How important is NeoCloud in your AI outlook? Ken Duda, President and CTO, Arista Networks: We're very happy about the NeoClouds. This is a great thing for Arista because this is where we can really leverage our expertise. We have built out some of the interconnects for some of the largest AI clusters in the world. So we bring that to the table along with switches that are proven and the most reliable switch operating system. NeoClouds, in some ways, are our ideal customer because they appreciate the best-of-breed capabilities. They have the mandate to get to the lowest token cost, which means optimizing across the full stack and not simply accepting a lock-in solution from a single vendor. Ken Duda, President and CTO, Arista Networks: But at the same time, they really benefit from what we bring in terms of a fully tried and tested interconnect, including the load balancing, the ability in the scale-out network to deal with a multi-tier situation and avoiding the kinds of hash collisions that lead to fabric slowdowns in an unoptimized architecture, along with the manageability benefits with CloudVision and the ability to automate the upgrades and the rollout, the reconfiguration, and get that sort of combined visibility. CloudVision enables you to see simultaneously what's happening in the network with respect to queuing, packet drop latency, bursts, and flow data, and what's going on on the AI server in terms of flow control, RDMA timeouts, congestion loss, and retransmissions. That visibility feature is difficult for the NeoClouds to reproduce on their own, and it's another way we add value there. Chantelle Breithaupt, CFO, Arista Networks: Then the only other thing I'd add to NeoClouds as the CFO, we're very excited about this market. It means a lot to us. It's almost like a high-risk, high-reward segment in my view, so we're very cognizant of how we enter into the terms and conditions. Because this market's not necessarily always proven out from a financial backing perspective, so we either walk away from the deal or we have prepayment scenarios, et cetera. So we're very clear as do we understand where the invoice is going to be paid at the end of the day, given the volatility of what you've seen? Because there are many NeoClouds starting, and not all make it. So we're just very clear just to be super clear for the audience as investors. Moderator: Great. Ken, you talked about single vendor lock-in, and I am assuming that is a reference to somebody who has both compute and networking. Maybe you could just talk a little bit about that. Arista is obviously an open ecosystem beneficiary. What determines whether a customer is in a closed ecosystem versus an open ecosystem? Is there a specific customer profile that is more likely to seek out the best of breed, despite who the vendor is? Ken Duda, President and CTO, Arista Networks: Oh, yes, for sure. It is about scale. Customers who are operating at scale have the mandate, they have the incentive, the business driver to do a full stack optimization. They need all the pieces to work together properly. They need the best of breed at each layer of their infrastructure. What we are seeing is low volume customers do not have that same mandate. They do not have the same leverage on building that kind of optimized solution, and they are more likely to go with a turnkey solution. Ken Duda, President and CTO, Arista Networks: There are also issues with allocation, where you do not necessarily get your fair share of the allocation unless you buy the vendor's turnkey solution. That creates complications for our customers and drives them more towards a single vendor solution if they lack the purchase leverage to sort of split that apart, if you know what I mean. Moderator: Yep. Ken Duda, President and CTO, Arista Networks: It is really about the scale of the customer. Moderator: Great. Very clear. We talked a little bit about scale-across. You guys mentioned the importance of EOS when you think about things like routing tables. I think those things are related. You recently said that scale-across was going to represent, I think, 30% of the $3.5 billion AI revenue target this year. Maybe for the audience, just define scale-across. Is that all DCI, but for distributed AI training, will products go in scale-across, and how do you see it scaling over the long term? Ken Duda, President and CTO, Arista Networks: Well, since you invited it, I'll give a 30-second primer on AI networking. You first have to separate out the front end from the back end. On the front end, we're talking about connecting AI clusters to the other infrastructure. Internet routing to storage, to the other systems, the tools, the sources of input to the AI, the training data, all that comes in through the front-end network. The back end is all about connecting GPUs or accelerators to other accelerators. Within that, exchanging all the model weights and the partial matrices and all the data flow, especially during training, that's required for the training algorithms. The back-end network has three parts. There's scale-up, typically within one rack, within one enclosure, connecting GPUs that are physically maybe on the same board or certainly in the same system. There's scale-out, which is interconnecting many of those systems across many racks in a data center. There's scale-across, which is interconnecting at the back end, clusters that are essentially been split across data centers. Scale-across has a lot more challenge than scale-out in routing complexity and in deep buffering requirement, because you need to get enough data in flight to cover the full round trip between clusters that may be geographically distributed. That drives the 7800R Series platform, I think you mentioned. Ken Duda, President and CTO, Arista Networks: The higher buffering and the higher routing capabilities of our more advanced platforms. We're seeing very good demand there because our customers are facing very severe constraints in the power and cooling and just getting the data center space they need. They're having to take what they can get. They can only get so much power in any one location, put as many GPUs as they can within that power envelope, and they need to expand their clusters larger. That's where scale-across becomes so critical for them and where we're seeing really good demand. Chantelle Breithaupt, CFO, Arista Networks: Yeah, I think the only thing I would add to Ken's comments is we feel incredibly well-positioned for this market. Not that we don't feel for scale-up or scale-out, but scale-across specifically, because you need the hardware portfolio, you need the software portfolio, and I would say the experience we have with some of the larger scale-out AI deployments, and you bring all those three things together, and I think it positions us very well, and that's why you're seeing us talk so much about it in the scale-across environment. Moderator: Sounds like that's accretive to margins given the complexity. Is that fair? Chantelle Breithaupt, CFO, Arista Networks: I would say that for the value provided, there's opportunity there, depending on the customer end segment. Moderator: Okay, great. On scale-up Ethernet, when does that become something that's more meaningful to Arista? Yeah. Ken Duda, President and CTO, Arista Networks: Yeah, scale-up is such a huge opportunity for us. We have almost no share there now, as you probably know. But there's a standardization going on, which has happened so many times in our industry, where you start off with single-vendor proprietary technologies moving towards open standards where Arista has been so successful. We see that happening now exactly in the scale-up network with ESAN. Ethernet, again, is coming to the table to take its fair share, and we're really excited by our customer engagements there. There's early trial stuff already going on, but we expect this to really start to ramp probably the later part of 2027 and really see volume in early 2028. Chantelle Breithaupt, CFO, Arista Networks: Yeah, I think it's analogous to when I was taking the role back in early 2024 when I started. We were having the same conversations on pilots, trials, and production for InfiniBand Ethernet. Ken Duda, President and CTO, Arista Networks: Yeah, exactly. Chantelle Breithaupt, CFO, Arista Networks: It feels like a rinse repeat in the most respectful way to enter the scale-up market. I think it'll be a similar kind of journey. Ken Duda, President and CTO, Arista Networks: All right. Moderator: Why don't we pivot and talk a little bit about campus? Arista raised its campus revenue target for this year to over $1.25 billion. What specific value props does Arista offer relative to incumbents? How much of that growth is cross-selling into some of your very happy data center customers versus net new enterprise logos? Chantelle Breithaupt, CFO, Arista Networks: Do you want to start, Ken? Ken Duda, President and CTO, Arista Networks: Yeah. Thanks, Michael. Campus is a great growth opportunity for us, and the value proposition fundamentally, it's the same thing. It works. We have a level of quality there that is unmatched in our industry. Again, we've captured, by having the same software stack, very similar hardware platforms. You need Power over Ethernet. The hardware platforms are not identical, but they're very similar, built by the same team, targeting data center, targeting campus. Having the same software and the same hardware architectures across that whole thing means we're able to leverage our experience, our success in the data center into those other market segments, not just from a business point of view, but from a technical point of view as well. Having the same CloudVision management stack, it manages data center networks, it manages campus networks. It manages them both together, providing end-to-end flow visibility. If you're troubleshooting a client over Wi-Fi, going through a campus network across the WAN into the data center, trying to understand what's going on there, if you've got one system, that's a lot easier than if you have three. We bring that consistency of operation, that EOS quality, to the campus networking problem. Our early campus customers were basically people who said, "We love you so much in the data center. Could you please make some campus switches? Because we're already taking your data center switches, putting them onto the campus using PoE power injectors, because we want to get the Arista value proposition that much. Our early customers were largely data center, but more recently we're seeing bigger and bigger fraction of new campus logos, people coming to us because they're so frustrated with their incumbent vendor, their quality problems, the licensing contracts that they're putting them through. We're getting a lot of campus first deals as well now. Chantelle Breithaupt, CFO, Arista Networks: Yeah. Just to kind of close on that, we're starting with a roughly 5% market share. For us, this is high volume- Ken Duda, President and CTO, Arista Networks: Yeah Chantelle Breithaupt, CFO, Arista Networks: lower dollar, steady growth over many years to come. The fact that our portfolio is recognized on its own to not even need to be in the data center is, I think, a huge validation for the team. I would say look for more in this space, right? Moderator: On the campus piece, is it really just Arista getting their fair share? Because to your point, You are not there yet. Thematically are there campus switches and wireless access point drivers from security concerns, Mythos, Wi-Fi 7, product cycles, just anything that you would call out there? Chantelle Breithaupt, CFO, Arista Networks: Well, I think the way we kind of package is we call it the Cognitive Campus. So it is always on, to Ken's point, it is always on, zero touch operations and zero trust networking. I think you could talk about each of those three things as how it is a competitive advantage the way that we are approaching it. I do not know if there is anything you want to talk about the always on piece of it, the same time upgrades in the sense of you do not have to. Ken Duda, President and CTO, Arista Networks: Yeah, I think that consistency of operation is so important in the fact that you can use the same CloudVision provisioning automation to roll out a new set of branches or a new campus deployment. You're also using to roll out new racks, new halls in your data center. It helps our customers simplify their operations. Chantelle Breithaupt, CFO, Arista Networks: You don't need to have downtime to do the next upgrade, right, which is pretty significantly different than our competitors. Ken Duda, President and CTO, Arista Networks: Thanks for that. In-service software upgrades in the campus. I used to think, "Hey, it's a campus. People go home at 4:00 in the morning. You can just upgrade the network then, right?" Well, it turns out there are a lot of 24 by 7 operations out there, and the whole thing is your security systems, your telephone systems, all your HVAC systems, is all running over that same network and in a hospital, in a manufacturing facility, in a logistics center, in a media distribution center. This is campus gear with a 24 by 7 requirement and our in-service upgrades, which we built for the data center. I didn't think they would even be useful in the campus. They turned out to be a major differentiator. Ken Duda, President and CTO, Arista Networks: This is another great example of how we gain leverage by having a consistent portfolio across all of the different domains of the network. Moderator: Maybe two more questions from me. Chantelle, how are you thinking about capital allocation at this stage? Buybacks, M&A, potential working capital investments, to potentially increase visibility into supply availability? Chantelle Breithaupt, CFO, Arista Networks: Yeah, I think that in that order for sure, I would prioritize working capital. We're going to go through fluctuations. We're at step function growth, right? When you're doing 40% per year on a company that's 12 years old, that's step function. Absolutely, working capital will be the theme for the next couple of years as we work through this new stage of growth, which we're very excited about. The buyback philosophy for Jayshree and I is opportunistic. We'll continue to watch and see what makes sense, but we're okay to have the cash to work through the working capital at this moment. M&A, lots of things are brought to us. We haven't seen anything that fits both the tech and the culture that we need. If there's something that hits that Venn diagram, always excited to look at it, but nothing specific at the moment. Moderator: In the last minute or so, to close out, as you both look out at Arista's multi-year product roadmap, what specific technology or market opportunities are you personally most excited about? Ken, maybe you can kick off. Ken Duda, President and CTO, Arista Networks: Oh, man. Yeah. I am a software guy. I have been programming my whole life, and the AI coding assistants were eye-opening in the capabilities of this technology, a technology which has been so great for us from a, on the sell side, you are selling into the AI networks. I believe we can also incorporate into our products and create a network engineering and operations assistant with the same kind of impact as AI coding assistants have had for software engineers. This is going to be a real important driver of our mainstream customer, improving their efficiency, improving their uptime, improving their operations through AI solutions. Chantelle Breithaupt, CFO, Arista Networks: Yeah. The only thing I would add to that I am excited about, just to close out, is Arista is made for AI, for networking. Scale-up, scale-out, scale-across, training, inference, front end, back end, Mythos environment, you name it. We stay true to the networking and we are very excited about where the AI journey can take us. Thank you. Moderator: Great way to cap it off. Ken, Chantelle, thank you so much for being part of the conference. Chantelle Breithaupt, CFO, Arista Networks: Thank you. Ken Duda, President and CTO, Arista Networks: Thanks, Michael. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.