Here's our initial take on Arista Networks' (ANET -2.20%) first-quarter financial report.
Key Metrics
| Metric | Q1 2024 | Q1 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Total revenue | $1.57 billion | $2.00 billion | +28% | Beat |
| Adjusted earnings per share | $0.50 | $0.65 | +30% | Beat |
| Adjusted gross margin | 64.2% | 64.1% | -0.1 pp | n/a |
| Adjusted operating margin | 47.4% | 47.8% | +0.4 pp | n/a |
Arista Reaches a Milestone
Arista's first-quarter financial report was cause for celebration as far as the company was concerned. Revenue inched just above $2 billion for the first time ever, growing 28% from the same period a year earlier. Solid margin performance helped the company boost its adjusted earnings to $0.65 per share, 30% higher than in the year-earlier period.
AI and other technological advances played their part in pushing Arista higher. The company highlighted its recent advanced AI capabilities to help make AI-enhanced networks more productive, ensuring reduced latency, better troubleshooting, and maximized workload performance.
Just about the only potential negative was in Arista's guidance. Revenue of $2.1 billion would be slightly higher than what most investors were looking to see. However, calls for gross margin and operating margin to decline slightly from first-quarter levels might have been a disappointment.
Immediate Market Reaction
Perhaps because of that guidance, shares of Arista fell about 7% in the first hour of trading following the release of the report in Tuesday's after-hours trading session. Given that the stock hasn't performed terribly well during 2025 on the whole, many investors would have hoped for a more positive response to the results. Indeed, CFO Chantelle Breithaupt lauded Arista's strong business execution in generating such good performance.
What to Watch
It's consistent with Arista's view that the share price isn't fairly reflecting the company's potential that the volume of stock buybacks has risen substantially. Breithaupt noted that the $787 million in repurchases in the first quarter marked the highest level of stock repurchases in Arista's history. Moreover, the Arista board authorized another $1.5 billion for future buybacks. That could open the door for even more repurchase activity going forward -- particularly if the stock keeps losing ground despite what Arista sees as good long-term prospects for the business.
