10-Q · May 5, 2026
Arista Networks reported a strong Q1 2026, with revenue reaching $2.709 billion and EPS at $0.87, both exceeding analyst expectations. The company experienced substantial year-over-year revenue growth of 35.1%,…
Earnings analysis · 10-Q
ANET earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Arista delivered Q2 revenue of $3.0357 billion, up 37.7% year over year and 12.0% sequentially, while GAAP diluted EPS rose to $0.95 from $0.70 a year ago. Operating margin expanded to 45.4%, but gross margin remained…
Read full summary
Arista delivered Q2 revenue of $3.0357 billion, up 37.7% year over year and 12.0% sequentially, while GAAP diluted EPS rose to $0.95 from $0.70 a year ago. Operating margin expanded to 45.4%, but gross margin remained below the prior-year level at 62.9% versus 65.2%, reflecting large-customer discounting. Liquidity of approximately $13.3 billion and six-month operating cash flow of $2.7765 billion provide substantial capacity to fund growth, though $9.7 billion of purchase obligations and elevated inventory create execution risk if AI-related demand or supply conditions shift.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.95
What stood out
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Revenue growth accelerated above $3 billion
Q2 revenue reached $3.0357 billion, up $830.9 million or 37.7% from $2.2048 billion a year earlier and up 12.0% from $2.71 billion in Q1 2026. Product revenue rose 38.8% to $2.6052 billion, while service revenue grew 31.3% to $430.5 million.
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EPS and operating leverage improved
GAAP diluted EPS was $0.95, versus $0.70 in Q2 2025 and $0.80 in Q1 2026. Operating margin expanded to 45.4% from 44.7% a year ago and 42.7% in Q1 2026, as operating expenses rose 17.7%, well below 37.7% revenue growth.
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Sequential gross-margin recovery
Gross margin increased 100 basis points sequentially from 61.9% in Q1 2026 to 62.9%, although it remained 230 basis points below the 65.2% reported in Q2 2025. Gross profit increased $471.7 million year over year to $1.9103 billion.
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Operating cash flow rose to $2.8 billion
Six-month operating cash flow increased to $2.7765 billion from $1.8418 billion, supported by a $1.5 billion increase in deferred revenue. The filing does not disclose period capital expenditures, so free cash flow and capex intensity cannot be calculated from the reported cash-flow detail.
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Large liquidity position supports investment
Liquidity was substantial at approximately $13.3 billion of cash, cash equivalents and marketable securities at June 30, 2026; cash, cash equivalents and restricted cash increased $326.3 million in the first six months. Management states these resources and operating cash flow are sufficient for working-capital needs and growth plans for at least the next 12 months.
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EMEA drove stronger international mix
International mix improved: EMEA revenue grew to $438.2 million from $281.6 million, and non-Americas represented 23.0% of Q2 revenue versus 21.8% a year earlier. Americas revenue still grew $613.8 million to $2.3379 billion.
What to watch
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Large-customer mix continues to pressure margin
Gross margin fell to 62.9% from 65.2% a year ago, primarily because a higher share of sales went to large end customers receiving greater discounts. Management also cites tightening memory and silicon supply, tariffs and material scarcity as potential further margin pressures.
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Elevated purchase commitments raise inventory risk
Purchase obligations were $9.7 billion at June 30, 2026, including $9.4 billion due within one year. Management expects inventory and commitments to remain elevated amid AI-network deployment and tightening memory and silicon supply, creating excess-inventory and supplier-liability risk if demand changes.
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Customer concentration creates order volatility
Two end customers represented 16% and 26% of 2025 revenue, respectively, and management expects customer concentration and sales timing to remain variable. Large-customer discounts also contributed to the Q2 gross-margin decline to 62.9%.
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Receivables and inventory consumed working capital
Accounts receivable increased $379.3 million and inventory increased $288.2 million during the first six months of 2026, partially offsetting the $1.5 billion deferred-revenue increase that supported operating cash flow. Extended-payment arrangements with certain large customers can create working-capital timing differences.
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Trade-policy uncertainty remains a supply risk
The filing emphasizes evolving tariff exposure: products are primarily manufactured in Malaysia, Vietnam and Mexico, while some products or components originate in China, Taiwan, Thailand and the Philippines. Although IEEPA tariffs were held invalid in February 2026, management states trade policy remains fluid and additional measures could raise costs or disrupt supply.
Management's outlook
The 10-Q does not provide quantitative forward revenue or EPS guidance; quantitative outlook was deferred to the earnings release/call. Management expects gross margin to fluctuate and expects R&D and sales and marketing expenses to increase in absolute dollars. It expects Santa Clara project capital spending of approximately $110.0 million to $135.0 million through fiscal 2026.
Earlier filings 4
10-K · February 17, 2026
Arista’s 2025 10-K emphasizes a strategic pivot to a "Centers of Data" platform (AI, Data Center, Campus, WAN) anchored by EOS, NetDL and CloudVision and an expanded Etherlink hardware portfolio. Financially, 2025…
10-Q · November 5, 2025
Arista reported a strong Q3 with revenue of $2,308.3M, up $497.4M (+27.5%) year-over-year and $108.3M (+4.9%) sequentially. Gross margin was roughly stable at ~64.6% while operating margin compressed to 42.4%; diluted…
10-Q · August 6, 2025
Arista reported strong Q2 results with revenue of $2,204.8 million (up from $1,690.4 million a year ago) and expanded profitability: gross profit was $1,438.6 million and income from operations was $986.2 million.…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.