Arista Networks notched a fourth-quarter earnings beat and raise while overcoming supply chain constraints. Arista stock popped on Tuesday as revenue guidance for the current March quarter also topped expectations.
ANET stock popped 5.4% to 129.50 in early trading on the stock market today. The company reported December quarter earnings after the market close on Monday.
"Management reiterated its target to grow sales 30% in 2022, which stems from favorable exposure to large cloud projects as well as a developing campus switch business from a small base," said Simon Leopold, a Raymond James analyst, in a report. "Arista appears to be managing supply chain constraints better than most networking companies are and indicated that it observed deterioration in January, which makes its growth outlook even more impressive."
For the three months ended Dec. 31, Arista earnings rose 32% from a year earlier to 82 cents per share, topping estimates of 74 cents. Revenue grew 27% to $824.5 million, beating forecasts for $790 million.
A year earlier, Arista earnings were 62 cents on revenue of $648 million.
Arista Stock: Guidance Tops Expectations
For the March quarter, Arista said it expects revenue of $850 million at the midpoint of guidance. Analysts had predicted revenue of $833 million. Arista also forecasts adjusted operating margin of 38%, down a bit from 39.3% in the December quarter.
Heading into the ANET earnings report, the computer networking stock had a Relative Strength Rating of 94 out of a best-possible 99.
Arista sells switches that speed up communications among racks of computer servers packed into data centers. Arista's primary customers have been internet companies.
Analysts expect higher capital spending by Facebook-parent Meta Platforms to be a growth driver in 2022.
Gaining Traction In Enterprise Market
Also, Arista is gaining traction in the enterprise market — large companies, government agencies and medical institutions.
A rival of Cisco Systems, Arista Networks in November announced a 4-for-1 stock split. The company also announced a $1 billion stock buyback program.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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