Arista Networks Inc at JPMorgan Global Technology, Media and Communications Conference Transcript

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

Question: Samik Chatterjee - JP Morgan - Analyst : When we think about the incremental opportunity for the company relative to AI, you've done well with the cloud customers for a longer period even before that. How do you think of AI either being a continuation of that opportunity or does it layer on top of what you've already done with the cloud company?

Question: Samik Chatterjee - JP Morgan - Analyst : Got it. You've invested significant resources in relation to your portfolio specific for the AI products. One of the questions we get often from investors is how do you get confidence around cloud companies continue to spend on this front. What has driven you to be willing to spend that much resources on it? I'm sure you have a different perspective. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 2:10PM, ANET.N - Arista Networks Inc at JPMorgan Global Technology, Media and Communications Conference

Question: Samik Chatterjee - JP Morgan - Analyst : We can talk about AI a lot more, but before we go for, just help us think about -- we don't want to ignore the non-AI part as well. How do you think today about the addressable market for the company in relation to AI versus the non-AI? And What are the drivers for the non-AI part that you see?

Question: Samik Chatterjee - JP Morgan - Analyst : In the traditional cloud, non-AI, whatever you want to call it -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 2:10PM, ANET.N - Arista Networks Inc at JPMorgan Global Technology, Media and Communications Conference

Question: Samik Chatterjee - JP Morgan - Analyst : -- the differentiation for Arista was already quite well defined for switches. And when you now move those to AI products, just help us think about are the differentiation drivers for products the same? Are they even more sort of specific in terms of what AI products need? How should we think about the hyper skills that you work with and the differentiation that you had in the cloud plus cloud carrying over to AI?

Question: Samik Chatterjee - JP Morgan - Analyst : Jayashree, for the -- I don't want to put words in your mouth, but overall, if there was a software differentiation in the classic cloud sounds like software differentiation on the mode is even higher for AI.

Question: Samik Chatterjee - JP Morgan - Analyst : So if I then switch gears and you've done really well with your key hyperscale customers Meta and Microsoft. But beyond that, we've seen limited willingness from like a Google or Amazon to use Arista and they've stuck to White Box. So maybe just help us think what what's -- sort of how does AI change that? Do you see potentially a change because of AI, given the amount of complexities?

Question: Samik Chatterjee - JP Morgan - Analyst : There's a lot of conversation on White Box, but I think when investors talk about white box, they tend to miss that there's no White Box really outside the hyper scales. When you think about what we're seeing in terms tier 2 sort of cloud companies really emerging as a big spender, right, how do you think about the opportunity there now, particularly when you compare to sort of the classic cloud when the ramp was? How do you see the opportunity differently versus --

Question: Samik Chatterjee - JP Morgan - Analyst : I'll just follow up with the second part of that, neo clouds or the tier 2 clouds as they're called, like how are you evaluating the opportunity there? What are the engagements there like at this point?

Question: Samik Chatterjee - JP Morgan - Analyst : Moving to another topic that comes up a lot is how should we think about the differentiation that Arista brings in the spine layer of a data center, particularly how critical are Jericho chips to the differentiation? I'm sure you've seen these questions as well, but do we envision a change in the landscape where the importance of having a Jericho enabled switch moderates over time?

Question: Samik Chatterjee - JP Morgan - Analyst : Just to clarify, when you say there are some customers that choose the alternate, is that using Tomahawk in the spine?

Question: Samik Chatterjee - JP Morgan - Analyst : Okay, optics is a good segue. Can you talk about one, the need to support technologies like LPO, LRO that the industry is already talked about? Does it really change anything materially in terms of economics for Arista, when you go and support those? Are those just more adjacent technologies that you just need to enable at some point?

Question: Samik Chatterjee - JP Morgan - Analyst : Maybe taking that discussion forward to co-packaged optics. And obviously, one of your, I guess you could call it competitors as well as enablers of the ecosystem has discussed co-package optics. But one -- I mean, there's a maybe from an investor standpoint there's a question more about when will Arista be ready with the core packaged optic solution? Secondly, how do you view the opportunity around the market? Do you see it as a sort of eventuality that everyone has to go to co-packaged optics, or do you see multiple other technology solutions before --

Question: Samik Chatterjee - JP Morgan - Analyst : One more tech technology question. A lot of conversation recently about optical circuit switches. And Google uses them in the spine. What does that imply if more hyperscalers move to adopting OCS? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 2:10PM, ANET.N - Arista Networks Inc at JPMorgan Global Technology, Media and Communications Conference

Question: Samik Chatterjee - JP Morgan - Analyst : Okay. Let me bring in Chantelle here and it will be probably not right if I don't ask a question on the second half guide, I am sure you can take a shot at it as well --

Question: Samik Chatterjee - JP Morgan - Analyst : whichever you're willing to give us.

Question: Samik Chatterjee - JP Morgan - Analyst : But the question is you had a strong 1Q. Your 2Q guide is materially above the street, and now you're implying almost plateauing at this 2Q revenue level for the rest of the year, to get to your full year guide. So we get the macro uncertainty, but in terms of really seeing any tangible slowdown in any customer vertical, what is giving you that concern? What are you really watching for if we have to say, okay, this is what makes you feel better when you come back next quarter for the guide? What has that -- what does that have to be?

Question: Samik Chatterjee - JP Morgan - Analyst : Okay, got it. Let me just open it up to see if anyone in the audience has a question, otherwise we can continue. Anything in the audience? Okay, so maybe Jayashree, I'll ask you just breaking the order here a bit. And one question that I've seen from investors and has come up in even in the discussions of the conference is in relation to your management team and the changes there. You did have a bunch of announcements on the last earnings call, but I think there is -- and for most investors I know they've been in the Arista stock for a long time and this is the first time they've seen that much management change happen at the same time. So there's some level of hesitation in terms of what's going on. So one, sort of what's the broader holistic view that you're taking on the management team? And how do you reassure investors that sort of you reach stable state with the management team?

Question: Samik Chatterjee - JP Morgan - Analyst : Are there more management changes -- additions coming in relation?

Question: Samik Chatterjee - JP Morgan - Analyst : Okay, Just changing gears here we were talking recently to one of the leaders in the distribution reseller channel, and one of the comments he made about Arista really stood out to us, which is why we wanted to ask you the question is. When they were compared to other companies like Cisco for example, HPE, they've seen everyone addressing or attacking the AI landscape with a lot more partnerships, whereas ARISTA has been, at its execution but at the same time, solo. And I really wanted to get that across as a question in terms of do you see something that's very well done on a standalone basis, solo basis that cannot be done in a partnership or do you even see the need to have partnerships that the rest of the POs are pursuing at this point?

Question: Samik Chatterjee - JP Morgan - Analyst : There's one question here, which is on Nexthop, but I'll rephrase it for you and make it broader, which is Nexthop is a new company trying to enter the space. When you think about other similar companies that might look to enter the space to given the attractive TAM, I mean, Arista was once a new company in this area, how do you think about the sort of barrier to entry or how tough is it for new suppliers to really come into this space? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 2:10PM, ANET.N - Arista Networks Inc at JPMorgan Global Technology, Media and Communications Conference

Question: Samik Chatterjee - JP Morgan - Analyst : Last question from my End. Talk about the enterprise opportunity and I'll sort of bifurcate into one the opportunity on the data center side how much of this is still about going and battling the incumbent versus on the campus side where you've sort of significantly enhanced your efforts, but there's probably more to come and it's a much bigger revenue TAM as well.

Question: Samik Chatterjee - JP Morgan - Analyst : Just last one as a follow up there what we've been wondering about for a while is with all this AI opportunity that you're posting in the cloud. Has enterprise and campus come down in terms of the amount of time you can even focus from a management level on those opportunities or is it pretty much sort of under the cover going at the same rate in terms of resources?

Question: Samik Chatterjee - JP Morgan - Analyst : I will wrap it up there. But thank you, everyone. Thank you for coming.