Arista Networks, Inc.

Arista Networks, Inc. (NYSE: ANET) supplies networking hardware and software for cloud data centers, AI infrastructure, campuses and routing. Its product sales and support services span those markets.

Sales moved beyond the earlier forecast

Q3 revenue reached $3.658 billion, versus August's approximately $3.3 billion forecast. Growth was 58.5% year over year and 20.5% from Q2. Product revenue rose to $3.190 billion from $1.912 billion, while services increased to $467.6 million from $396.6 million.

Adjusted operating income removes stock compensation and intangible amortization. Adjusted net income also removes strategic-investment gains and selected tax items. Current GAAP results include a $134.5 million pretax investment gain. Adjusted net income was $1.531 billion.

Arista changed its treatment of stock-award tax effects in Q4 2025 and recast earlier adjusted comparisons. The year-earlier adjusted EPS is now $0.77, versus the $0.75 originally reported. GAAP figures are unchanged.

Gross margin improved from Q2 to 63.6% on a GAAP basis but remained below the year-earlier 64.6%. GAAP operating margin of 44.9% and adjusted margin of 49.1% improved year over year while easing from Q2's 45.4% and 49.9%.

Inventory changed the quarter's cash needs

Comparing the original six-month and latest nine-month statements gives Q3 operating cash of $1.201 billion, down from $1.268 billion a year earlier. The inventory cash-flow adjustment was a $674.6 million use of cash versus $96.6 million. Deferred revenue contributed negative $26.4 million versus positive $624.3 million.

The latest nine-month figures are stronger: operating cash reached $3.977 billion from $3.110 billion. Property and equipment purchases were $184.9 million versus $82.5 million. Inventory on the balance sheet reached $3.210 billion from $2.535 billion in June.

Deferred revenue mainly comprises unearned support revenue and product deferrals under contracts with acceptance clauses. September's current and noncurrent deferred revenue totaled $6.840 billion, slightly below June's $6.866 billion. Separate liabilities for advance payments under cancellable contracts are defined differently.

A large liquid pool and dated supply commitments

September cash and equivalents of $2.288 billion and marketable securities of $12.071 billion totaled $14.359 billion. The comparable total was $13.343 billion in June and $10.743 billion at year-end.

The last detailed commitments disclosure, at June 30, showed $9.7 billion of noncancelable purchase obligations, up from $6.8 billion in December. Of June's total, $9.4 billion had expected receipt dates within 12 months. Those were existing supply commitments when Q3 began.

The nine-month cash statement shows no common-stock repurchases, compared with $983 million a year earlier. Employee share-tax withholding was a separate use of cash. It also shows no business-combination cash payments in 2026.

Arista bought VeloCloud from Broadcom for $300 million on June 30, 2025. That completed acquisition predates both quarters in the current annual comparison.

What the next forecast asks of the business

Q4 guidance calls for $3.9 billion to $4.0 billion of revenue, adjusted operating margin of 48% to 49%, and adjusted EPS of $1.26 to $1.30.

Read our analysis of Arista's record sales and inventory cash needs.