What happened

Shares of Arista Networks (NYSE:ANET) fell more than 10% on Friday following the company's second-quarter results and subsequent conference call.

So what

Arista's Q2 results were solid. Revenue rose 17% year over year to $608.3 million. That was slightly above Wall Street's estimates for $606.8 million. 

Better still, the company's non-GAAP (adjusted) net income jumped 28% to $198.6 million, or $2.44 per share. The figure was well above analysts' expectations for adjusted EPS of $2.20. 

"In Q2 2019, Arista raised the ante with innovative products in both 400G and Cognitive Campus," CEO Jayshree Ullal said in a press release. "Our leadership in cloud area networking is now widely recognized by industry analysts, partners, and customers."

A line chart that rises then falls

Image source: Getty Images.

Now what

Shares initially rose following the release of its second-quarter report, but then sank after the conference call. Comments made by CFO Ita Brennan regarding potentially slowing growth appear to have spooked investors.

"We experienced some softness in demand from our cloud customers in the second quarter," Brennan said. "While early indications are for improved demand from these customers in the September period, we believe that second-half growth in this business will remain somewhat muted as compared to prior years." 

Even after today's decline, shares trade for more than 28 times trailing earnings. With its stock priced at a premium to the overall market, any hint of slowing growth will likely be met with trepidation from investors.

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