ANET earnings analysis
What we found in ANET's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
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.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- 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.
- 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.
- 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%.
- 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.
- 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.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.95
- Gross margin
- 62.9%
- Operating margin
- 45.4%
- Segment
- Product revenue: $2.6052 billion, up $728.2 million (38.8%) year over year
- Segment
- Service revenue: $430.5 million, up $102.7 million (31.3%) year over year
- Segment
- Americas revenue: $2.3379 billion (77.0% of total), up from $1.7241 billion
- Segment
- EMEA revenue: $438.2 million, up from $281.6 million
- Segment
- Asia-Pacific revenue: $259.6 million, up from $199.1 million
What they said about what is next.
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.
The filing reads better than the one before it.
What came before.
- 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%,…
- 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. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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