What happened

Shares of Arista Networks (NYSE:ANET) jumped as much as 6% this morning after the company reported fourth-quarter earnings. The results topped expectations and Arista also offered a rosy forecast. As of 12 p.m. EST, the stock had given back nearly all of those gains and was up less than 1%.

So what

Revenue in the fourth quarter was $648.5 million, beating the consensus estimate of $630.3 million in sales. That resulted in adjusted net income of $197.7 million, or $2.49 per share, also ahead of the $2.39 per share in adjusted profits that Wall Street analysts were expecting. The networking technology company reported an adjusted gross margin of 65%.

Green stock chart fluctuating

Image source: Getty Images.

"I am pleased with Arista's return to growth in Q4 2020. With our laser focus on customer success, pristine financials and transformative innovations, Arista is well positioned to continue our momentum in the post pandemic era," said CEO Jayshree Ullal.

Now what

Arista forecast first-quarter revenue in the range of $630 million to $650 million, well above the $608.1 million in sales that analysts are currently looking for. Adjusted gross margin is expected to be 63% to 65%, with an adjusted operating margin of approximately 37%.

"We saw good diversification of the business in fiscal 2020, with expected declines in Cloud Titan revenue, somewhat offset by growth in our other market sectors," CFO Ita Brennan added on the conference call with analysts. "Looking to 2021, we expect continued growth with our enterprise and provider customers, combined with the solid Cloud Titan contribution."

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