Arista beats its sales forecast with $3.66 billion quarter and 58.5% growth

Arista Networks brought in $3.66 billion in third-quarter revenue, beating its $3.3 billion guidance and recording its fastest annual growth since its IPO. The November 3 earnings release showed sales rising 58.5% from a year earlier. Management expects another increase in the fourth quarter, forecasting revenue of $3.9 billion to $4.0 billion.

Growth came with higher operating margins

Revenue also rose 20.5% from the second quarter. The result cleared Arista’s own sales target, rather than an analyst estimate cited in the announcement. The company supplies networking for AI, data centers, campuses and routing environments; the $3.66 billion figure covers the company as a whole, not a separately identified AI revenue category.

CEO Jayshree Ullal described the quarter as delivering record profitability and said momentum across customer sectors reflected Arista’s growing relevance to generative and agentic AI. That is management’s interpretation of the results. The financial highlights present company-wide revenue and profitability, without assigning a share of the sales increase to AI.

Profitability improved under both of the operating-margin measures Arista publishes. Its margin under generally accepted accounting principles, or GAAP, reached 44.9%, compared with 42.4% a year earlier. The adjusted, non-GAAP margin increased to 49.1% from 48.6%. Both measures rose alongside revenue, though the improvement was larger under standard accounting than under the company’s adjusted calculation.

Two earnings measures, with a revised comparison

Diluted earnings per share reached $1.22 under GAAP, up from $0.67 a year earlier. Adjusted diluted earnings were $1.20 a share, compared with $0.77. The standard-accounting figure was therefore slightly higher than the adjusted figure this quarter, even though Arista’s adjusted operating margin was higher than its GAAP margin.

The adjusted figures exclude items including stock-based compensation, amortization of intangible assets, investment gains or losses and certain tax effects. Arista says these measures help management evaluate ongoing operations and make forecasts. It also cautions that non-GAAP measures have no standardized meaning, may not be comparable with other companies’ similarly named figures, and should not replace GAAP results.

Beginning in the fourth quarter of 2025, Arista changed how it calculates tax effects associated with stock-based awards and recast the prior-period non-GAAP results in this release. For the third quarter of 2025, the change increased adjusted net income by $17.1 million and adjusted diluted earnings by $0.02 a share.

The next-quarter profit target is adjusted

Arista forecasts fourth-quarter non-GAAP operating margin of 48%–49% and adjusted diluted earnings of $1.26–$1.30 a share, alongside revenue of $3.9 billion to $4.0 billion. The earnings range is above the third-quarter result, while the projected margin range is below the third quarter’s 49.1%.

Arista did not provide a corresponding GAAP profit forecast. It said reconciling the adjusted guidance would require unreasonable effort because excluded items can be difficult to predict. Those include stock-based compensation and tax benefits affected by employee stock transactions and the future share price. The company said the eventual exclusions will significantly affect its GAAP margins and earnings per share.