Arista Networks, Inc. ANET reported strong fourth-quarter 2024 results, with revenues and adjusted earnings soaring year over year, driven by robust demand trends. Innovative product launches and steady customer additions backed by the company’s best-in-class portfolio strength ensured top-line expansion. Both bottom and top lines beat the respective Zacks Consensus Estimate.

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Net Income of ANET

GAAP net income in the reported quarter improved to $801 million or 62 cents per share from $613.6 million or 48 cents in the year-ago quarter, mainly propelled by higher revenues.

On a non-GAAP basis, net income was a record high at $830.1 million or 65 cents per share compared with $664.3 million or 52 cents in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by 8 cents.

In 2024, GAAP net income improved to $2.852 billion or $2.23 per share from $2.087 billion or $1.65 in 2023. On a non-GAAP basis, net income was $2.91 billion or $2.27 per share compared with $2.199 billion or $1.73 in the previous year.

Revenues of ANET

Revenues surged to $1.93 billion from $1.54 billion in the prior-year quarter, driven by strength in the enterprise vertical. The company introduced various solutions for cloud, Internet service providers and enterprise networks to meet the rising demands of AI/ML-driven network architectures. These innovations enabled Arista to deliver a superior customer experience and increase customer engagement. The top line beat the consensus estimate of $1.89 billion.

In 2024, the company generated $7 billion in revenues, up from $5.86 billion in 2023.

Net quarterly sales from Products totaled $1.6 billion compared with $1.31 billion in the year-ago quarter. Service revenues increased to $322.3 million from $230.1 million. Arista witnessed positive demand trends owing to its strong product portfolio, which is highly scalable, programmable and provides data-driven automation, analytics and world-class support services. The company gained solid market traction in 100, 200 and 400 gig high-performance switching products.

Net sales from the Americas contributed 84% to total revenues, while international revenues accounted for the remainder. Driven by its relentless pursuit of innovative products, Arista maintains a strong leadership position in the Data Center and Cloud Networking vertical.

ANET’s Other Details

Non-GAAP gross profit rose to $1.23 billion from $1 billion for respective margins of 64.2% and 65.4%. Despite a year-over-year margin decline, the figure was above the company’s guidance and was buoyed by stronger enterprise margins, supply-chain and inventory management.

Total operating expenses were $431.3 million, up from $359.3 million in the year-ago quarter. Research & development costs rose to $285 million from $211.5 million. Sales and marketing expenses also increased to $110.9 million from $105.5 million.

ANET’s Cash Flow & Liquidity

In 2024, Arista generated $3.7 billion of net cash from operating activities compared with $2.03 billion in the year-ago period. As of Dec. 31, 2024, the company had $2.76 billion in cash and cash equivalents and $252.8 million in other long-term liabilities compared with respective tallies of $1.93 billion and $227.14 million in 2023. During the quarter, the company repurchased $123.8 million worth of shares at an average price of $94.8 per share.

Outlook of ANET

For the first quarter of 2025, management expects revenues in the range of $1.93-$1.97 billion owing to healthy growth momentum. Non-GAAP gross margin is estimated at 63% and non-GAAP operating margin is approximated at 44%.

The company expects healthy demand trends in 2025, backed by the strength of its existing portfolio, new product introductions and healthy traction in the cloud, AI and enterprise markets.

For 2025, management expects revenues to improve approximately 17% year over year, with a gross margin of 60-62% and an operating margin of 43-44%.

ANET’ Zacks Rank & Other Stocks to Consider

Arista currently sports a Zacks Rank #1 (Strong Buy).

Keysight Technologies, Inc. KEYS has a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last reported quarter, it delivered an earnings surprise of 5.10%. Keysight is expected to benefit from the growing proliferation of electronic content in vehicles, momentum in space and satellite applications, and rising adoption of driver-assistance systems globally.

InterDigital IDCC sports a Zacks Rank #1 at present. In the trailing four quarters, it delivered an earnings surprise of 158.41%.

It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions, used in digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.

Akamai Technologies, Inc. AKAM carries a Zacks Rank #2 at present. AKAM delivered an earnings surprise of 2.69%, on average, in the trailing four quarters. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Its offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.

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