The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: David Vogt - UBS Investment Bank, Research Division - Analyst
: I just want to go back to the margin performance. If I go back to 2019, I think your titan mix was relatively similar to where we are
today, maybe a little bit less but your gross margins were almost 300 -- on your product gross margins were almost 300 basis points
higher. So can we kind of disaggregate that delta is how much of that is from expedited freight, supply chain versus maybe somewhat
structurally lower margins with some of the new titans and/or Microsoft and Meta. And then on OpEx, just a quick question. Growth
has been 15% to 20% sort of on a year-over-year basis. Is that kind of how we should think about the business as we progress over
a couple of year cycle?
Ita Brennan
Yes, I think on the gross margin piece, I mean, there is more cloud mix in the business, I think that we've seen than we've ever seen.
Question: David Vogt - UBS Investment Bank, Research Division - Analyst
: Got it. And maybe just a quick follow-up. So it sounds like your structural margins on the titans are relatively unchanged over the
last, call it, 2 to 3 years outside of the expedite fee and supply chain. Is that a fair characterization on the product side?
Ita Brennan
I think it depends on the product mix to some degree, right? I mean, you've got -- there's more -- you'd have to do more disaggregation
to really get to what's happening there, right? But there's -- the product mix is a part of that as well.
Question: Samik Chatterjee - JPMorgan Chase & Co, Research Division - Analyst
: I guess it's a similar question to the last one, but Jayshree, I just wanted to understand, as we look at your growth with cloud customers,
how should we think about sort of that growth relative to sort of how much of that growth is coming from the additional use cases
you're addressing beyond traditional switching. So for example, like DCI or routing, how much of that is probably contributing to
the strong growth you're seeing with cloud customers?
As we think about sort of the next couple of years, how should we think about the -- given the visibility you have in terms of designs,
how is that sort of momentum progressing from here on? And just a quick follow-up there. So outside of Facebook and Meta as we
think about the engagement with other cloud companies, is that on some of the new use cases? Or is that traditional switching in
leaf and spine?
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