Arista Networks, Inc. ANET reported strong first-quarter 2026 results with both adjusted earnings and revenues beating the Zacks Consensus Estimate.
The company posted a solid 35.1% year-over-year increase in revenues, driven by higher demand for artificial intelligence (AI) infrastructure, growth in high-speed networking, expansion in enterprise and data center markets, and continued product innovation.
Net Income
GAAP net income in the reported quarter increased to $1.02 billion or 80 cents per share from $813.8 million or 64 cents per share in the year-ago quarter, driven by higher revenues.
On a non-GAAP basis, net income was $1.11 billion or 87 cents per share compared with $845.9 million or 66 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate by 6 cents.
Arista Networks, Inc. Price, Consensus and EPS Surprise
Arista Networks, Inc. price-consensus-eps-surprise-chart | Arista Networks, Inc. Quote
Revenues
Quarterly revenues increased to $2.71 billion from $2 billion in the prior-year quarter, mainly due to solid growth in both Product and Service segments. The top line beat the consensus estimate of $2.62 billion.
Net quarterly sales from Products totaled $2.31 billion compared with $1.69 billion in the year-ago quarter, driven by strong demand for high-speed cloud and AI networking solutions and customer wins across enterprise and service provider markets.
Service revenues increased to $397.7 million from $312.3 million, supported by increased adoption of support contracts, software subscriptions and maintenance services.
Other Details
Non-GAAP gross profit rose to $1.69 billion from $1.28 billion for respective margins of 62.4% and 64.1%. Total operating expenses were $519 million, up from $417.3 million in the year-ago quarter. Research & development costs rose to $343.7 million from $266.4 million. Sales and marketing expenses also increased to $141.6 million from $116.6 million. Non-GAAP operating income for the quarter increased to $1.29 billion from $957.4 million, with respective margins of 47.8% each.
Cash Flow & Liquidity
In the first quarter, Arista generated $1.69 billion of net cash from operating activities compared with $641.7 million in the year-earlier quarter. As of March 31, 2026, the company had $2.79 billion in cash and cash equivalents and $320.1 million in other long-term liabilities. Arista has $817.9 billion worth of shares available for repurchase under its $1.5 billion share buyback program.
Outlook
For the second quarter of 2026, management expects revenues to be approximately $2.8 billion, driven by healthy growth momentum and solid demand trends. Non-GAAP operating margin is expected to be 46-47%, and non-GAAP earnings are expected to be around 88 cents per share.
Zacks Rank
Arista currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
HubSpot, Inc. HUBS is scheduled to release first-quarter 2026 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at $2.47 per share, suggesting growth of 38.76% from the year-ago reported figure.
HubSpot has a long-term earnings growth expectation of 20%. The company delivered an average earnings surprise of 3.01% in the last four reported quarters.
Workday, Inc. WDAY is set to release first-quarter fiscal 2027 earnings on May 21. The Zacks Consensus Estimate for earnings is pegged at $2.49 per share, implying growth of 11.7% from the year-ago reported figure.
Workday has a long-term earnings growth expectation of 20.16%. The company delivered an average earnings surprise of 8.53% in the last four reported quarters.
Motorola Solutions, Inc. MSI is set to release first-quarter 2026 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at $3.25 per share, implying growth of 2.2% from the year-ago reported figure.
Motorola has a long-term earnings growth expectation of 9.4%. The company delivered an average earnings surprise of 5.66% in the last four reported quarters.
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This article originally published on Zacks Investment Research (zacks.com).