Arista Networks' (ANET -0.80%) quarterly performance left investors impressed. In this clip from "3 Minute Stocks Updates" on Motley Fool Live, recorded on Feb. 16, Motley Fool contributors Brian Feroldi and Brian Withers review the cloud computing company's financials and discuss its goal to grow its top line by 30% this year.
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Brian Feroldi: Arista Networks, ticker symbol ANET. This is a company that struggled in 2020 and 2021, even though the fact that spending on the cloud was exploding. The company has since returned to its high-growth way. In the most recent quarter, revenue grew 27% to $825 million. Of that total, about 21% is service and support revenue. That's good to see. Arista now has 8,000 customers that have bought from it. But, don't be fooled. Of that 8,000 customers, 15% of that total is revenue and 10% is Facebook [Meta Platforms (META 1.54%)]. The company still gets a sizable amount of its revenue from just two businesses. Gross margin for the company were strong, down a little bit due to supply chain pressures and the semiconductor crunch, dropping about 50 basis points on a GAAP basis to 63%. Net income for the quarter was up 32% to $263 million. So, $825 million in revenue, $263 million in non-GAAP net income, that is what you call impressive total margins. Earnings per share came in at $0.82, nine cents ahead of estimates. The company also bought back $176 million of stock during the quarter. This is a company that has done quite a good job with share repurchases, buying back about 60 million shares in total for an average price of $60 per share. Not a bad job with the stock currently trading at $130 or so. Moving forward, in the first quarter, the company expects revenue growth of about 32%. Margins are about the same, stable, and the company continues to believe that it's going to grow its top line about 30% for 2022 and has multiple years of growth ahead of it. Financially, Arista is doing great.
Brian Withers: Yeah. Sounds like an awesome quarter, Brian. Investors who have held Arista for the long period of time know that there is a major shift in the data center technology. Most of the technology today is sold on the 100-gig speed platform. Arista has a bunch of products that are in the 400G. For a long time, Arista Networks investors have been waiting for this transition. Is it finally going to happen now?
Feroldi: What's going to happen first, 400G or [Tesla's (TSLA -3.55%)] Cybertruck? What's going to get to market first? I don't know. We saw that the company said that it was taking orders and announced the products in November. They are slated for deliveries in the first half of 2022. Some of their customers are actually currently testing and developing their products, and this is true. Some of those products were co-developed with Facebook, so customer concentration is an issue. Facebook is a major customer, but it's a good sign. If they help you to develop the product specifically for them, that should really start to kick in earnestly in 2022 but, to your point, it's been a few years wait.
Withers: Yeah. Awesome. Really excited about that. Thanks, Brian.
