What changed in this filing

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Item 1. Financial Statements

2025-05-07 compared with 2024-11-08 · 160 added, 227 removed, 329 unchanged (54% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(In thousands, except par value)

September 30, 2024 December 31, 2023

(In millions, except par value)

March 31, 2025 December 31, 2024

CURRENT ASSETS:

6 unchanged sentences

Property and equipment, net 123.9 98.8

Goodwill and acquisition-related intangible assets, net 337,230 357,299

Acquisition-related intangible assets, net 56.4 62.0

Goodwill 268.5 268.5

Deferred tax assets 1,544.3 1,440.4

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Deferred revenue 2,072.7 1,727.3

Income taxes payable 249.1 50.1

Other current liabilities 147.6 138.4

Total current liabilities 3,121.6 2,732.2

Income taxes payable 116,604 95,751

Deferred revenue, non-current 1,016.1 1,064.1

3 unchanged sentences

STOCKHOLDERS’ EQUITY:

Preferred stock, $ 0.0001 par value— 100,000 shares authorized and no shares issued and outstanding as of September 30, 2024 and December 31, 2023

Common stock, $ 0.0001 par value— 1,000,000 shares authorized as of September 30, 2024 and December 31, 2023;

314,847 and 312,245 shares issued and outstanding as of September 30, 2024 and December 31, 2023

Preferred stock, $ 0.0001 par value— 100 shares authorized and no shares issued and outstanding as of March 31, 2025 and December 31, 2024

Common stock, $ 0.0001 par value— 4,000 shares authorized as of March 31, 2025 and December 31, 2024;

1,256.6 and 1,261.3 shares issued and outstanding as of March 31, 2025 and December 31, 2024

Additional paid-in capital 2,551.7 2,465.4

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Condensed Consolidated Income Statements

(Unaudited, in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2024 2023 2024 2023

(Unaudited, in millions, except per share amounts)

Three Months Ended March 31,

Product $ 1,692.5 $ 1,328.8

22 unchanged sentences

Diluted 1,279.2 1,279.4

(1) Prior period results have been adjusted to reflect the four -for-one stock split effected in December 2024.

See Note 1, Organization and Summary of Accounting Policies, for details.

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

1 unchanged sentence

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

(Unaudited, in millions)

Three Months Ended March 31,

Net income $ 813.8 $ 637.7

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Change in net unrealized gains (losses) on available-for-sale securities 10.6 ( 7.2 )

Reclassification adjustment included in net income ( 21 ) ( 26 ) ( 27 ) 3,832

Other comprehensive income (loss) 11.3 ( 8.6 )

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Condensed Consolidated Statements of Stockholders ’ Equity

(Unaudited, in thousands)

Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

(Unaudited, in millions)

Three Months Ended March 31, 2025

Common Stock Additional

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Income (Loss) Total

Stockholders’ Equity Common Stock Additional

Paid-In Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss) Total

Stockholders’

Shares Amount Shares Amount

Stockholders’ Equity

Shares Amount

Balance at beginning of period 1,261.3 $ 0.1 $ 2,465.4 $ 7,542.5 $ ( 13.2 ) $ 9,994.8

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Balance at end of period 1,256.6 $ 0.1 $ 2,551.7 $ 7,569.2 $ ( 1.9 ) $ 10,119.1

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Common Stock Additional

Paid-In Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss) Total

Stockholders’ Equity Common Stock Additional

Paid-In Capital Retained

Paid-In Capital (1)

Earnings Accumulated

Comprehensive

Income (Loss) Total

Stockholders’

Shares Amount Shares Amount

Stockholders’ Equity

Balance at beginning of period 1,249.0 $ 0.1 $ 2,108.3 $ 5,114.0 $ ( 3.3 ) $ 7,219.1

Net income — — — 637.7 — 637.7

Other comprehensive income, net of tax — — — — 2,042 2,042 — — — — 10,742 10,742

Other comprehensive loss, net of tax — — — — ( 8.6 ) ( 8.6 )

Stock-based compensation — — 77.2 — — 77.2

2 unchanged sentences

Tax withholding paid for net share settlement of equity awards ( 0.4 ) — ( 25.5 ) — — ( 25.5 )

Common stock issued for business acquisition — $ — $ — $ — $ — — 32 $ — $ 2,331 $ — $ — 2,331

Balance at end of period 1,254.4 $ 0.1 $ 2,185.1 $ 5,689.0 $ ( 11.9 ) $ 7,862.3

(1) Prior period results have been adjusted to reflect the four -for-one stock split effected in December 2024.

See Note 1, Organization and Summary of Accounting Policies, for details.

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

Nine Months Ended September 30,

(Unaudited, in millions)

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

4 unchanged sentences

Deferred income taxes ( 107.1 ) ( 77.8 )

Amortization (accretion) of investment premiums (discounts) ( 44,609 ) ( 22,389 )

Other ( 12.1 ) ( 7.8 )

4 unchanged sentences

Accounts payable 6.7 ( 207.2 )

Accrued liabilities ( 84,565 ) 117,481

Deferred revenue 297.4 157.0

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Proceeds from maturities of marketable securities 799.2 590.4

Proceeds from sales of marketable securities 44,865 49,584

Proceeds from sale of marketable securities 8.8 36.8

Purchases of marketable securities ( 1,545.5 ) ( 912.4 )

Purchases of property and equipment ( 28.4 ) ( 9.4 )

Other investing activities ( 6,628 ) ( 2,451 )

Other — ( 1.0 )

Net cash used in investing activities ( 765.9 ) ( 295.6 )

5 unchanged sentences

Effect of exchange rate changes 0.7 ( 1.6 )

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 1,237,074 1,073,698

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 917.3 ) 153.5

CASH, CASH EQUIVALENTS AND RESTRICTED CASH —Beginning of period 2,763.8 1,939.5

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Arista Networks, Inc.

(together with our subsidiaries, “we,” “our,” "Arista," "Company" or “us”) is a supplier of cloud networking solutions that use software innovations to address the needs of next generation data center, campus and routing environments.

(together with our subsidiaries, “we,” “our,” "Arista," "Company" or “us”) is an industry leader in data-driven, client-to-cloud networking for large AI, data center, campus and routing environments.

Our cloud networking solutions consist of our Extensible Operating System ("EOS®"), a set of network applications and our Ethernet switching and routing platforms.

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Securities and Exchange Commission (the “SEC”) for interim reporting.

As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted.

As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted.

In management’s opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our financial information.

The results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results expected for the full fiscal year.

The results for the three months ended March 31, 2025, are not necessarily indicative of the results expected for the full fiscal year.

The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statements.

All significant inter-company accounts and transactions have been eliminated.

Certain reclassifications of prior period amounts were made in the current year to conform to the current period presentation.

On November 7, 2024, the Company announced a four -for-one forward stock split ("Stock Split") of the Company’s common stock that was effected through the filing of an amendment to the Company's Amended and Restated Certificate of Incorporation ("Amendment") on December 3, 2024.

The Stock Split proportionately increased the authorized shares of common stock, and all share and per share amounts presented herein have been retroactively adjusted to reflect the impact of the Stock Split.

Our condensed consolidated financial statements and related financial information in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 18, 2025.

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Actual results could differ materially from these estimates.

Risks and Uncertainties

Global economic and business activities continue to face widespread macroeconomic uncertainties, including the effects of, among other things, inflation, monetary policy shifts, recession risks, potential supply chain disruptions, and geopolitical pressures.

Our business is emerging from a period of unprecedented global supply chain disruptions.

Throughout this period, we made significant supply chain investments, including funding additional working capital and incremental purchase commitments in response to extended visibility to deployment plans from our customers.

We have worked closely with our contract manufacturers and supply chain partners to ramp production following a period of delayed component sourcing and workforce disruptions.

Increased capacity has allowed us to ship products against previously committed demand/deployment plans and accelerate some deployments where needed, while trying to minimize building customer inventory, and to some extent balancing customer lead times with those currently experienced from our key suppliers.

As a result, some shipments against these previously committed demand/deployment plans have extended into 2024.

As the global supply chain has experienced some improvements and as customer lead times have been reduced from their peak, we have seen and expect to continue to see a commensurate reduction in visibility to customer demand and a gradual return to shorter demand-planning horizons.

Given these shipment and order patterns, near term revenue trends may not be solely reflective of current demand levels, but as discussed above will benefit from demand/deployment plans that had been

previously committed.

We expect that our inventory and purchase commitments will remain volatile as we ramp new product introductions.

The magnitude of these balances, combined with a reduction in customer demand-planning horizons and shifting customer product priorities, has resulted in increased risk that we may not be able to sell all of this inventory, which in turn has resulted in additional excess and obsolete inventory and supplier liability charges.

In addition, inflation pressure in our supply chain and scarcity of some materials needed to build our products have increased our cost of revenue and have impacted, and may continue to negatively impact our gross margin.

While we have seen improvements in our supply chain and manufacturing operations, any remaining or new supply chain and manufacturing related constraints could negatively impact our business in future periods.

Management continues to actively monitor the impact of macroeconomic factors on the Company's financial condition, liquidity, operations, suppliers, industry, and workforce.

The extent of the impact of these factors on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, will depend on future developments, the impact on our customers, partners, employees, contract manufacturers and supply chain, all of which continue to evolve and are unpredictable.

In addition, any continued or renewed disruption in manufacturing and supply resulting from these factors could negatively impact our business.

Recent technologies, such as generative AI models, have emerged, and while they have driven increased demand for networking, the long-term trajectory is unknown.

As such, demand estimates for our new products may be inaccurate and create volatility in our revenue and inventory levels.

Furthermore, any prolonged economic disruptions or further deterioration in the global economy could have a negative impact on demand from our customers in future periods, particularly in the enterprise market where we are continuing to expand our penetration.

Accordingly, current results and financial conditions discussed herein may not be indicative of future operating results and trends.

Recent Accounting Pronouncements Not Yet Effective

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures.

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures.

The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold.

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Early adoption is permitted for annual financial statements that have not yet been issued.

The amendments should be applied on a prospective basis although retrospective application is permitted.

As of September 30, 2024 , we have not early adopted ASU 2023-09 and we are currently evaluating the impact of future adoption on our financial disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)-Improvements to Reportable Segment Disclosures.

The ASU requires that an entity disclose significant segment expenses impacting profit and loss that are regularly provided to the chief operating decision maker.

The update is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption.

The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

As of September 30, 2024, we have not early adopted ASU 2023-07 and we are currently evaluating the impact of future adoption on our financial disclosures.

The amendments should be applied on a prospective basis although retrospective

application is permitted.

We will adopt the standard in our 2025 annual period and are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

In November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40).

The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions.

This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses.

The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements.

Early adoption is also permitted.

This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.

We are currently evaluating the impact of future adoption on our financial statement disclosures.

Fair Value Measurements

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We measure and report our cash equivalents, restricted cash, and available-for-sale marketable securities at fair value on a recurring basis.

The following tables summarize the fair value of these financial assets by significant investment category and their levels within the fair value hierarchy (in thousands):

September 30, 2024 December 31, 2023

We use a fair value hierarchy to measure fair value, maximizing the use of observable inputs and minimizing the use of unobservable inputs.

The two-tiers of the fair value hierarchy are as follows:

Level I —Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date and Level II —Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

We don't have any level III financial assets measured at fair value on a recurring basis.

The following tables summarize the fair value of these financial assets by significant investment category and their levels within the fair value hierarchy (in millions):

March 31, 2025 December 31, 2024

Level I Level II Level III Total Level I Level II Level III Total

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Commercial paper — 43.3 — 43.3 — 48.8 — 48.8

Certificates of deposits (1)

— — — — — 5,000 — 5,000

government notes 2,094.8 — — 2,094.8 1,921.5 — — 1,921.5

5 unchanged sentences

Total Financial Assets $ 3,167.8 $ 4,271.8 $ — $ 7,439.6 $ 3,661.8 $ 3,622.6 $ — $ 7,284.4

______________________________________

(1) As of December 31, 2023, all of our certificates of deposits were domestic deposits.

During the three and nine months ended September 30, 2024, the Company did not make any transfers between the levels of the fair value hierarchy.

The following table summarizes the amortized cost, unrealized gains and losses, and fair value of our debt securities measured at fair value on a recurring basis (in thousands):

September 30, 2024 December 31, 2023

During the three months ended March 31, 2025, the Company did not make any transfers between the levels of the fair value hierarchy.

Debt securities

The following table summarizes the amortized cost, unrealized gains and losses, and fair value of our debt securities measured at fair value on a recurring basis (in millions):

March 31, 2025 December 31, 2024

Amortized Cost Unrealized Gains Unrealized Losses Fair Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value

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For debt securities in unrealized loss positions, it is not likely that we will be required to sell such securities before recovery of their amortized cost basis nor do we have the intent to sell such securities before maturity.

We invest in debt securities that have maximum maturities of two years and are generally deemed to be low risk based on their credit ratings from the major rating agencies.

We invest in debt securities that have maximum maturities of three years and are generally deemed to be low risk based on their credit ratings from the major rating agencies.

The longer the duration of these marketable securities, the more susceptible they are to changes in market interest rates and bond yields.

Given the short-term and conservative nature of our portfolio, our debt securities are generally not subject to credit risk;

therefore, we did not recognize any credit losses or non-credit-related impairments related to such securities for the three and nine months ended September 30, 2024.

All unrealized losses were recognized in other

comprehensive income (loss).

Realized gains or losses were immaterial for the three and nine months ended September 30, 2024.

The following table is an analysis of our debt securities in unrealized loss positions (in thousands):

September 30, 2024

therefore, we did not recognize any credit losses or non-credit-related impairments related to such securities for the three months ended March 31, 2025.

All unrealized losses were recognized in other comprehensive income (loss).

Realized gains or losses were immaterial for the three months ended March 31, 2025.

The following table is an analysis of our debt securities in unrealized loss positions (in millions):

March 31, 2025

Unrealized Losses within 12 months Unrealized Losses 12 months or greater Total

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Total $ 2,239.4 $ ( 5.2 ) $ 2.8 $ — $ 2,242.2 $ ( 5.2 )

As of September 30, 2024, we had no marketable securities with contractual maturities that exceeded 24 months.

The fair values of marketable securities by remaining contractual maturities, are as follows (in thousands):

September 30, 2024

As of March 31, 2025, we had no marketable debt securities with contractual maturities that exceeded three years .

The fair values of marketable debt securities, by remaining contractual maturities, are as follows (in millions):

March 31, 2025

Due in 1 year or less $ 2,534.6

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Total debt securities $ 6,304.5

The weighted-average remaining duration of our marketable securities is approximately 0.9 years as of September 30, 2024.

As we view these marketable securities as available to support current operations, we classify marketable securities with maturities beyond 12 months as current assets under the caption "Marketable securities" on the condensed consolidated balance sheets.

Assets measured at fair value on a non-recurring basis

Non-Marketable Equity Securities

We have non-marketable equity securities in privately-held companies that do not have readily-determinable fair values.

These equity securities are included in Other Assets on the condensed consolidated balance sheets.

Their initial cost is adjusted to fair value on a non-recurring basis based on observable price changes from orderly transactions of identical or similar securities of the same issuer, or for impairment.

These investments are classified within Level III of the fair value hierarchy as we estimate the value based on valuation methods using the observable transaction price at the transaction date and other significant unobservable inputs, such as volatility, rights, and obligations related to these securities.

In addition, the valuation requires management judgment due to the absence of market price and lack of liquidity.

We did not record any realized gains or losses on our non-marketable equity securities during the three and nine months ended September 30, 2024 and September 30, 2023, and w e recorded immaterial amounts of unrealized gains or losses for the three and nine months ended September 30, 2024 and September 30, 2023, respectively .

We evaluate our non-marketable equity securities for impairment at each reporting period via a qualitative assessment with various potential impairment indicators, including, but not limited to, an assessment of a significant adverse change in the economic environment, significant adverse changes in the general market condition of the geographies and industries in which our investees operate, and other publicly-available information that affected the value of the non-marketable equity securities .

The following table summarizes the activity related to our non-marketable equity securities as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Cost of investments $ 38,284 $ 31,656

Cumulative impairment and downward adjustment — —

Cumulative upward adjustment 43,032 30,632

Carrying amount of investments $ 81,316 $ 62,288

The weighted-average remaining duration of our marketable debt securities is approximately 1.3 years as of March 31, 2025.

As we view these marketable debt securities as available to support current operations, we classify marketable debt securities with maturities beyond 12 months as current assets under the caption "Marketable securities" on the condensed consolidated balance sheets.

Financial Statements Details

Inventories consist of the following (in thousands):

September 30, 2024 December 31, 2023

Inventories consist of the following (in millions):

March 31, 2025 December 31, 2024

Raw materials $ 576.2 $ 565.4

Finished goods (1)

1,381.1 1,269.2

Total inventories $ 1,957.3 $ 1,834.6

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

September 30, 2024 December 31, 2023

Inventory deposits $ 113,705 $ 130,509

Other current assets 434,988 282,009

Total prepaid expenses and other current assets $ 548,693 $ 412,518

(1) The balance includes evaluation inventory held at customers or partners totaling $ 435.8 million and $ 422.1 million as of March 31, 2025 and December 31, 2024, respectively.

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):

September 30, 2024 December 31, 2023

Property and equipment, net consists of the following (in millions):

March 31, 2025 December 31, 2024

Land $ 47.3 $ 47.2

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Leasehold improvements

34,781 34,584

Furniture and fixtures 3.5 3.5

Construction-in-process 32.9 8.2

Property and equipment, gross 351.3 318.2

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Property and equipment, net $ 123.9 $ 98.8

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

September 30, 2024 December 31, 2023

Accrued compensation-related costs $ 107,545 $ 134,225

Accrued supplier liability 90,053 167,878

Accrued manufacturing and product development costs 77,574 62,532

Other 48,818 42,667

Total accrued liabilities $ 323,990 $ 407,302

Depreciation expense was $ 8.0 million and $ 8.6 million for the three months ended March 31, 2025 and 2024, respectively.

Contract Liabilities, Deferred Revenue and Other Performance Obligations

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A contract liability is recognized when we have received customer payments in advance of our satisfaction of a performance obligation under a cancellable contract.

The following table summarizes the activity related to our contract liabilities (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The following table summarizes the activity related to our contract liabilities (in millions):

Three Months Ended March 31,

Contract liabilities, beginning balance $ 160.8 $ 133.2

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Contract liabilities, ending balance $ 160.5 $ 139.6

As of September 30, 2024 and December 31, 2023, contract liabilities included in "Other current liabilities" were $ 60.0 million for each period, with the remaining balances included in "Other long-term liabilities" on the condensed consolidated balance sheets.

As of March 31, 2025 and December 31, 2024, $ 66.3 million and $ 65.7 million of our contract liabilities, respectively, were included in "Other current liabilities" with the remaining balances included in "Other long-term liabilities" on the condensed consolidated balance sheets.

Deferred Revenue

Deferred revenue is comprised mainly of unearned revenue related to multi-year post-contract support ("PCS") contracts, services and product deferrals related to contracts with acceptance clauses.

The following table summarizes the activity related to our deferred revenue (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The following table summarizes the activity related to our deferred revenue (in millions):

Three Months Ended March 31,

Deferred revenue, beginning balance

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Other Performance Obligations

Other performance obligations totaling $ 626.3 million as of September 30, 2024 include unbilled multi-year PCS and service contract amounts of $ 514.0 million and $ 112.3 million of binding contractual agreements with certain customers that are primarily related to future product shipments.

Other performance obligations totaling $ 419.9 million as of March 31, 2025 include unbilled multi-year PCS and service contract amounts of $ 357.2 million and $ 62.7 million of binding contractual agreements with certain customers that are primarily related to future product shipments.

Revenue from Total Remaining Performance Obligations

T otal revenue from our contract liabilities, deferred revenue and other performance obligations that is expected to be recognized in future periods was $ 3.3 billion as of September 30, 2024 .

T otal revenue from our contract liabilities, deferred revenue and other performance obligations that is expected to be recognized in future periods amounts to $ 3.7 billion as of March 31, 2025 .

A pproximately 86 % of this future revenue is expected to be recognized over the next two years and the remaining 14 % is expected to be recognized during the third to the fifth year.

Other Income (Expense), net

Other income (expense), net consists of the following (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Other income (expense), net consists of the following (in millions):

Three Months Ended March 31,

Interest income $ 90.2 $ 63.8

Gain (loss) on strategic investments 12,400 ( 473 ) 12,400 18,699

Other income (expense), net 6.0 ( 1.2 )

Total $ 96.2 $ 62.6

Goodwill and Acquisition-Related Intangible Assets

Acquisition, Goodwill and Acquisition-Related Intangible Assets

We had no business acquisitions during the three months ended March 31, 2025 and 2024.

No changes were made to the carrying values of goodwill for the three months ended March 31, 2025 and 2024.

Acquisition-Related Intangible Assets

Acquisition-related intangible assets, excluding those that are fully amortized, were as follows (in thousands, except years):

Acquisition-related intangible assets, excluding those that are fully amortized, were as follows (in millions, except years):

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Useful Life (in years)

December 31, 2024

Additions September 30, 2024 December 31, 2023

Amortization September 30, 2024 December 31, 2023

September 30, 2024

Additions March 31, 2025 December 31, 2024

Amortization March 31, 2025 December 31, 2024

March 31, 2025

Developed technology $ 154.9 $ — $ 154.9 $ ( 119.2 ) $ ( 3.2 ) $ ( 122.4 ) $ 35.7 $ 32.5 3.2

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Total $ 221.9 $ — $ 221.9 $ ( 159.9 ) $ ( 5.6 ) $ ( 165.5 ) $ 62.0 $ 56.4 3.4

Amortization expense related to acquisition-related intangible assets was $ 6.7 million and $ 8.1 million for the three months ended September 30, 2024 and 2023, respectively, and $ 20.1 million and $ 26.7 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, future estimated amortization expense related to acquisition-related intangible assets is as follows (in thousands):

Amortization expense related to acquisition-related intangible assets was $ 5.6 million and $ 6.7 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, future estimated amortization expense related to the acquisition-related intangible assets is as follows (in millions):

Future Amortization Expense

Remainder of 2025 $ 14.1

Thereafter 1,633

Total $ 68,698

There was no change to goodwill for the three and nine months ended September 30, 2024.

Commitments and Contingencies

We have operating lease arrangements for office space, data center, equipment and other corporate assets.

As of September 30, 2024, we had lease payment obligations, net of immaterial sublease income, of $ 69.8 million, with $ 24.1 million payable within one year.

Purchase Commitments

We outsource most o f our manufacturing and supply chain management operations to third-party contract manufacturers, who procure components and assemble products on our behalf.

A significant portion of our purchase orders to our contract manufacturers for finished products consists of non-cancellable purchase commitments.

A significant portion of purchase orders to our contract manufacturers for finished products consist of non-cancellable purchase commitments.

In addition, we purchase strategic component inventory from certain suppliers under non-cancellable purchase commitments, including integrated circuits, which are consigned to our contract manufacturers .

As of September 30, 2024, we had non-cancellable purchase commitments not recorded on our balance sheet of $ 2.4 billion, of which $ 2.0 billion have expected receipt dates within 12 months, and $ 0.4 billion have expected receipt dates greater than 12 months.

As of March 31, 2025, we had non-cancellable purchase commitments not recorded on our balance sheet of $ 3.5 billion, of which $ 3.0 billion have expected receipt dates within 12 months, and $ 0.5 billion have expected receipt dates greater than 12 months.

These open purchase orders are considered enforceable and legally binding, and while we may have some limited ability to reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services, this can only occur with the agreement of the related supplier.

We also had deposits to our contract manufacturers to secure our purchase commitments in the amount of $ 116.5 million and $ 133.3 million as of September 30, 2024 and December 31, 2023, respectively, which were recorded within prepaid expenses and other current assets, as well as other assets in the condensed consolidated balance sheets.

We also had deposits to our contract manufacturers to secure our purchase commitments in the amount of $ 80.1 million and $ 95.8 million as of March 31, 2025 and December 31, 2024, respectively, which were recorded within prepaid expenses and other current assets, as well as other assets in the condensed consolidated balance sheets.

Property project

During the year ended December 31, 2021, we purchased land and the improvements thereon in Santa Clara, California to construct a building for office, lab and data center space.

The estimated remaining capital expenditures related to this project are expected to be approximately $ 215.0 million to $ 240.0 million for the next two years , with construction expected to be completed by the end of fiscal 2026.

We have entered into agreements with some of our direct customers and channel partners that contain indemnification provisions relating to potential situations where claims could be alleged that our products infringe the intellectual property rights of a third party.

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On May 30, 2023, the US Patent Trial and Appeal Board (“PTAB”) ruled all challenged claims in the inter partes review unpatentable.

The district court case remains stayed pending appeal and/or final resolution of the PTAB ruling.

On March 10, 2025, the Federal Circuit affirmed the PTAB’s decision.

The parties subsequently agreed to stay the litigation for an additional 90 days to allow WSOU to change counsel.

We intend to vigorously defend against the claims brought against us by WSOU;

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We record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

As of September 30, 2024, provisions recorded for contingent losses related to other

claims and matters have not been significant.

As of March 31, 2025, provisions recorded for contingent losses related to other claims and matters have not been significant.

Based on currently-available information, management does not believe that any additional liabilities relating to other unresolved matters are probable or that the amount of any resulting loss is estimable, and believes these other matters are not likely, individually and in the aggregate, to have a material adverse effect on our financial position, results of operations or cash flows;

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Stockholders’ Equity and Stock-Based Compensation

Stock Repurchase Program

In April 2024, we completed repurchases under our previous $ 1.0 billion stock repurchase program (the “Prior Repurchase Program”).

In May 2024, our board of directors authorized a new $ 1.2 billion stock repurchase program (the “New Repurchase Program” and together with the Prior Repurchase Program, the "Repurchase Programs"), which commenced in May 2024 and expires in May 2027.

Stock Repurchase Programs

Our current repurchase program (the "Existing Repurchase Program") allows for stock repurchases of up to $ 1.2 billion through May 2027.

In May 2025, our board of directors authorized and announced a new $ 1.5 billion stock repurchase program (the “New Repurchase Program” and together with the Existing Repurchase Program, the "Repurchase Programs").

This authorization allows us to repurchase shares of our common stock that will be funded from working capital.

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The Repurchase Programs do not obligate us to acquire any of our common stock and may be suspended or discontinued by the Company at any time without prior notice.

During the three months ended September 30, 2024 , we repurchase d a total of $ 65.2 million of our common stock under our New Repurchase Program.

D uring the nine months ended September 30, 2024 , we repurchase d a total of $ 155.2 million of our common stock under our New Repurchase Program and $ 144.6 million of our common stock under our Prior Repurchase Program.

As of September 30, 2024, the remaining authorized amount for stock repurchases under the New Repurchase Program was approximately $ 1.0 billion.

A summary of the stock repurchase activity for the three and nine months ended September 30, 2024 is as follows (in thousands, except per share amounts):

Three Months Ended Nine Months Ended

September 30, 2024 September 30, 2024

During the three months ended March 31, 2025, we repurchase d a total of $ 787.1 million of our common stock under our Existing Repurchase Program .

As of March 31, 2025, the remaining authorized amount for repurchases under the Existing Repurchase Program was $ 133.9 million.

In April 2025, we repurchased an additional $ 100.0 million of our common stock authorized under the Existing Repurchase Program.

A summary of the stock repurchase activity under the Existing Repurchase Program for the three months ended March 31, 2025 is as follows (in millions, except per share amounts):

Three Months Ended

March 31, 2025

Aggregate purchase price $ 787.1

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On April 16, 2024, our board of directors adopted an amended and restated Arista Networks, Inc.

2014 Equity Plan (the "Restated Plan"), effective April 17, 2024 (the "Effective Date") subject to the approval of our stockholders, which wa s approved at the 2024 Annual Meeting of Stockholders on June 7, 2024.

2014 Equity Plan ("Restated Plan"), effective April 17, 2024 ("Effective Date") subject to the approval of our stockholders, which wa s approved at the 2024 Annual Meeting of Stockholders on June 7, 2024.

The Restated Plan provides for the grant of equity-based awards, including stock options, restricted stock units, restricted stock, stock appreciation rights, and performance awards.

The share pool available under the prior version of the Company's 2014 Equity Incentive Plan (the "Prior Plan") was extinguished, and the Restated Plan provides for a new share pool not to exceed (i) 13,200,000 shares of our Common Stock (“Shares”), plus (ii) any Shares subject to awards under the Prior Plan that, on or after the Effective Date, expired or otherwise terminated without having been exercised in full, or that were forfeited to or repurchased by us, including net settlement of Shares subject to restricted stock units, with the maximum number of Shares to be added to the Restated Plan as a result of clause (ii) equal to 10,039,657 Shares.

The share pool available under the prior version of the Company's 2014 Equity Incentive Plan ("Prior Plan") was extinguished, and the Restated Plan provides for a new share pool not to exceed (i) 52.8 million shares of our Common Stock (“Shares”), plus (ii) any Shares subject to awards under the Prior Plan that, on or after the Effective Date, expired or otherwise terminated without having been exercised in full, or that were forfeited to or repurchased by us, including net settlement of Shares subject to restricted stock units, with the maximum number of Shares to be added to the Restated Plan as a result of clause (ii) equal to 40.2 million Shares.

The Restated Plan’s terms are substantially similar to the Prior Plan’s terms, including with respect to treatment of equity awards in the event of a “change in control” as defined under the Restated Plan, but with certain modifications, including the elimination of the automatic “evergreen” share reserve increase provided for under the Prior Plan.

As of September 30, 2024, there remained approximately 13.1 million shares available for grant under the Restated Plan.

As of March 31, 2025, there remained approximately 52.3 million shares available for grant under the Restated Plan.

2014 Employee Stock Purchase Plan

In April 2014, our board of directors and stockholders approved the 2014 Employee Stock Purchase Plan (the “ESPP”).

In April 2014, our board of directors and stockholders approved the 2014 Employee Stock Purchase Plan (“ESPP”).

The ESPP became effective on the first day that our common stock was publicly traded.

The number of shares reserved for issuance under the ESPP increases automatically on January 1 of each year by the number of shares equal to 1 % of

our shares outstanding on the immediately preceding December 31, but not to exceed 10 million shares, unless our board of directors, in its discretion, determines to make a smaller increase.

Effective January 1, 2024, our board of directors authorized an increase of 3.1 million shares to the shares available for issuance under the ESPP.

During the nine months ended September 30, 2024, we issued 280,843 shares at a weighted-average purchase price of $ 116.31 per share under the ESPP.

As of September 30, 2024, there remained approximately 26.2 million shares available for issuance under the ESPP.

The number of shares reserved for

issuance under the ESPP increases automatically on January 1 of each year by the number of shares equal to 1 % of our shares outstanding on the immediately preceding December 31, but not to exceed 40 million shares, unless our board of directors, in its discretion, determines to make a smaller increase.

As of March 31, 2025, there remained approximately 104.5 million shares available for issuance under the ESPP.

Under our ESPP, eligible employees are permitted to acquire shares of our common stock at 85 % of the lower of the fair market value of our common stock on the first trading day of each offering period or on the exercise date.

Each offering period lasts approximately two years starting on the first trading date after February 15 and August 15 of each year, and includes purchase dates every six months on or after February 15 and August 15 of each year.

Participants may purchase shares of common stock through payroll deductions up to 15 % of their eligible compensation, subject to Internal Revenue Service mandated purchase limits.

During the three months ended March 31, 2025, we issued 0.4 million shares at a weighted-average purchase price of $ 62.31 per share under the ESPP.

Stock Option Activities

The following table summarizes the option activity under our stock plans and related information (in thousands, except per share amounts):

The following table summarizes the option activity under our stock plans and related information (in millions, except years and per share amounts):

Outstanding Options Weighted-

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Options canceled ( 0.1 ) 14.49

Balance—September 30, 2024 1,042 $ 24.39 1.5 $ 374,471

Vested and exercisable—September 30, 2024 997 $ 23.26 1.4 $ 359,633

Balance—March 31, 2025 2.0 $ 7.92 1.8 $ 137.8

Vested and exercisable—March 31, 2025 1.9 $ 7.74 1.8 $ 134.8

Restricted Stock Unit (RSU) Activities

A summary of the RSU activity is presented below (in thousands, except per share amounts):

A summary of the RSU activity is presented below (in millions, except years and per share amounts):

Shares Weighted-

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RSUs and PRSUs forfeited/canceled ( 0.9 ) 43.37

Unvested balance—September 30, 2024 7,678 $ 168.28

Unvested balance—March 31, 2025 26.4 $ 49.36

Stock-Based Compensation Expense

The following table summarizes the stock-based compensation expense related to our equity awards (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The following table summarizes the stock-based compensation expense related to our equity awards (in millions):

Three Months Ended March 31,

Cost of revenue $ 5.5 $ 3.4

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Sales and marketing

20,960 20,490 56,630 51,461

General and administrative 10.6 11.1

Total stock-based compensation $ 93.0 $ 77.2

As of September 30, 2024, there were $ 1.1 billion of unamortized compensation costs related to all unvested awards.

As of March 31, 2025, there were $ 1.1 billion of unamortized compensation costs related to all unvested awards.

The unamortized compensation costs are expected to be recognized over a weighted-average period of approximately 4.4 years.

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Basic net income per share is computed using the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per share is computed using the weighted-average number of shares of common stock outstanding during the period, including potential common shares assuming the dilutive effect of outstanding stock options,

restricted stock units, and the employee stock purchase plan using the treasury stock method.

Potential common shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share.

The following table sets forth the computation of our basic and diluted net income per share (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The following table sets forth the computation of our basic and diluted net income per share (in millions, except per share amounts):

Three Months Ended March 31,

Net income $ 813.8 $ 637.7

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Diluted $ 0.64 $ 0.50

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net income per share for the periods presented because their effect would have been anti-dilutive for the periods presented (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Employee equity awards 0.9 0.7

Income Taxes (in thousands, except percentages)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Income Taxes (in millions, except percentages)

Three Months Ended March 31,

Income before income taxes $ 955.0 $ 722.8

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Effective tax rate 14.8 % 11.8 %

The decrease in the effective tax rates in the three and nine months ended September 30, 2024, as compared to the same periods in 2023, was primarily due to a change in the jurisdictional mix of earnings.

Geographical Information

We operate in one reportable segment.

The following table represents revenue based on customers’ shipping addresses (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The increase in the effective tax rates in the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to a decrease in the proportion of tax benefits attributable to equity-based compensation versus total pre-tax income.

Segment and Geographical Information

We operate as one reportable segment.

The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies.

Our chief operating decision maker ("CODM") is our President, Chief Executive Officer and Chairperson of the Board, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

The financial information reviewed by the CODM reflects quarterly and year-to-date operating results, with a primary focus on revenue, gross margin, operating margin and net income as reported on the consolidated statements of income.

Consolidated financial information is used by the CODM to evaluate performance and make decisions regarding resource allocation and other strategic initiatives.

This consolidated financial information is also what is used to establish and approve operating budgets and forecasts.

The measure of segment assets is reported on the consolidated balance sheets in total.

There was no change for each of the periods presented in the measurement methods used to determine reported segment profit and loss.

The CODM reviews the following significant segment expenses, which are presented separately on the Company’s consolidated statements of income:

cost of product, cost of services, selling and marketing expenses, general and administrative expenses, and research and development expenses.

Other segment items that are included in the calculation of the Company’s net income include other income (expense), net, which is further described in Note 3.

Financial Statements Details and income taxes, which is further described in Note 8.

Income Taxes.

Other segment disclosures such as depreciation and amortization and stock-based compensation are disclosed in the Consolidated Statements of Cash Flows.

The following table represents revenue based on customers’ shipping addresses (in millions):

Three Months Ended March 31,

$ 1,598.5 $ 1,255.4

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(1) Includes $ 1,581.5 million and $ 1,232.8 million revenue generated from the U.S.

for the three months ended September 30, 2024 and September 30, 2023, respectively, and $ 4,060.8 million and $ 3,366.8 million for the nine months ended September 30, 2024 and September 30, 2023, respectively.

Long-lived assets, net, excluding intercompany receivables, investments in subsidiaries, privately-held equity investments and deferred tax assets, by location are summarized as follows (in thousands):

September 30, 2024 December 31, 2023

for the three months ended March 31, 2025 and March 31, 2024, respectively.

March 31, 2025 December 31, 2024

United States $ 108.3 $ 83.5

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Total $ 123.9 $ 98.8

Subsequent event

Arista’s board of directors has approved a four -for-one forward stock split to make Arista’s common stock more accessible to a broader base of investors.

The four -for-one forward stock split will be effected through the filing of an amendment to Arista’s Amended and Restated Certificate of Incorporation that will proportionately increase the authorized shares of common stock.

Our stockholders will receive an additional three shares of common stock for each share held as of the effective time of the filing of the amendment on December 3, 2024.

Prior to market open on December 4, 2024, trading is expected to commence on a split-adjusted basis.

The following table reflects basic and diluted weighted average shares and net income per share on an unaudited pro forma basis giving effect to the stock split as if it had been effective for all periods presented (in thousands, except per share amounts).

Pro Forma (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Net income $ 747,938 $ 545,327 $ 2,051,058 $ 1,473,685

Basic weighted-average shares outstanding 1,257,928 1,240,740 1,254,968 1,234,408

Add weighted-average effect of dilutive securities:

Employee equity awards 23,864 29,784 25,344 31,848

Diluted weighted-average shares outstanding 1,281,792 1,270,524 1,280,312 1,266,256

Net income per share:

Basic $ 0.59 $ 0.44 $ 1.63 $ 1.19

Diluted $ 0.58 $ 0.43 $ 1.60 $ 1.16

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements