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Why Arista Networks Stock Popped Today

By Evan Niu, CFA - May 5, 2021 at 12:48PM

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The networking specialist reported first-quarter earnings results.

What happened

Shares of Arista Networks (ANET 0.66%) have popped as much as 6% today after the company reported first-quarter earnings. The results easily topped analyst expectations.

So what

Revenue in the first quarter came in at $667.6 million, comfortably above the consensus estimate of $644.9 million. That resulted in adjusted net income of $198.8 million, or $2.50 per share. Wall Street was modeling for just $2.39 per share in adjusted profits. The networking technology company said adjusted gross margin was 64.7%.

Green stock chart going up

Image source: Getty Images.

"Arista begins the 2021 year with a flying start," CEO Jayshree Ullal said in a statement. "Clearly, the focus on our cognitive cloud networking suite is resonating with customers across diverse data sets and applications."

Now what

CFO Ita Brennan added that demand for Arista's offerings was strong across all market and product sectors. On the conference call with analysts, Brennan acknowledged that supply constraints held back sales. The global semiconductor shortage is impacting many industries, so Arista is hardly alone here.

Guidance for the second quarter calls for revenue in the range of $675 million to $695 million, which is above the $645.9 million in sales that analysts are looking for. Adjusted gross margin should be 63% to 65%, and adjusted operating margin is forecast at approximately 37%. The outlook reflects Arista's "current understanding" of the ongoing COVID-19 pandemic and the related impacts on the company's business and supply chain, according to Brennan.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Arista Networks. The Motley Fool has a disclosure policy.

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Arista Networks, Inc. Stock Quote
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