Arista Networks Inc at Citi TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : (Event Instructions) Chantelle, so many aspects of the AI opportunity, not least of which is accelerating hyperscaler CapEx investments, expanding Ethernet adoption. You provided a number, $750 million AI target two years ago, and you have not updated that number officially. So how do we reconcile in the backdrop of increasing hyperscaler investments and Ethernet adoption and that number?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : And your most recent earnings, you maintain the $750 million backend and then talked about $750 million frontend number. But you've raised the full-year guidance from 17% to 25% growth. So what has been the driver behind the revised expectations?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : All right. And Ashwin, going to you. Can you level set us on Arista's four major AI backend customers? How are these projects progressing? I know Jayshree updates up periodically about the cluster size is getting bigger. So just walk us through the discussions with these customers with respect to investments.

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Okay. And then you mentioned in the past that two of your cloud AI customers are hybrid in terms of the mix of Arista-branded EOS and other open systems. Are some of your other cloud AI customers trying to diversify in the backend networking as they scale, maybe using Arista in the spine versus different vendors?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : And then when we look at the cloud spending profile, the big four have been very strong the last couple of years. But as we layer the Tier 2 guys, the neoclouds, the Oracles of the world, they're actually going to grow faster than the big four. So if you can just talk about your AI funnel outside of the four guys that you've talked about, the titans, how does the funnel look like and your opportunity with the Tier 2 cloud service providers?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : And how are you approaching the sovereign AI opportunity? Is it different versus the traditional hyperscalers?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Okay. Now, Arista has talked about a $70 billion TAM by 2028. How do you break that out between your customer segments, cloud titans versus enterprise? And the question around the scale up, I think the debate on Ethernet on scale out is largely over. But there's also this new scale up category for Ethernet. And is that part of this TAM or is incremental to this TAM?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Great. Ashwin, you've followed this industry longer than I have. And when we look at the market share figures for white box guys or merchant GPU providers, they're currently kind of dominating the 800G pie on the switching side. But as you went through the 400G cycle, are there any parallels where the initial share went to the white box guys -- or because of the relationship with certain hyperscalers that like to go first on a particular standard? Or it's going to be different for 800G and [1.60] from here because AI is different?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : And where are we on the 500G cycle? Are you still seeing incremental investments or the focus remains on 800G? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 1:00PM, ANET.N - Arista Networks Inc at Citi TMT Conference

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : And what is your timeline on 1.60?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Great. The question we often get from our clients is that as the adoption of open source solutions grows, will it be harder for Arista to differentiate itself? Does EOS become less of a critical facet of your offering?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : All right. Let me pause here and see if there are any questions in the audience. (Event Instructions) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 1:00PM, ANET.N - Arista Networks Inc at Citi TMT Conference All right. We'll keep going. Chantelle, VeloCloud acquisition. Can you walk us through Arista's strategy in SD-WAN and is Arista looking to become a full SASE solution provider?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Right. We haven't spent much time on the campus refresh. And I mean, remember in the last trainings call, you started to see that starting to improve. And just kind of help us understand where we are in the campus refresh cycle and also your share gains. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 1:00PM, ANET.N - Arista Networks Inc at Citi TMT Conference

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Okay. Chantelle, your operating margins are off the charts this year and not to steal your thunder for next week, AI event -- I mean, the investor event. How should we think about -- when you talk about $10 billion-plus sales, how should we think about the normal operating margin range? And also if you can walk us through any kind of tariff impact on the gross margin line and [original] mix?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Ashwin, there is always excitement about photonics and co-packaged optics. And you guys, some would rely on at least Broadcom as a supplier into yourself. But can you just talk about what is your strategy around photonics? Where do you see the adoption coming? And what could this change look like? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 1:00PM, ANET.N - Arista Networks Inc at Citi TMT Conference

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Okay. And then a question we get often asked is like you're somewhat relying on your supplier Broadcom's roadmap in terms of when they bring the latest switch in the market. And the merchant competitor on the GPU side is trying to push this roadmap to every year or so. So can you just help us understand the risk in you guys relying more on your suppliers and if there is a need to kind of accelerate these roadmaps to keep up with the GPU cycle every year?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : I think that's a fair point. Chantelle, a few quarters ago, Arista talked about its first win in the federal sector, and you have spoken previously about

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Great. And then another question clients ask us is about the timing of when your networking equipment goes into to build these racks and data centers from the CapEx announcement that your customers at the Meta or Microsoft, that they make. So can you help us understand the lead times and the timing of when a CapEx announcement is made, approximately how many months later will you see pickup in your equipment sales?

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Quite a bit of lag. Let's see if there are any final questions. Unidentified Participant Thanks for the question. I'm just hoping you could touch on your strategy with the channel. You mentioned some investments internationally, but just hoping you could delve into that, how much versus doing direct versus how much you plan to lean into the channel.

Question: Atif Malik - Citi Infrastructure Investments LLC - Analyst : Questions? All right, if there's no final questions, we can wrap up our discussion. Chantelle and Ashwin, thank you for coming to the Citi conference.