Arista Networks, Inc. (NYSE:ANET) Q4 2022 Earnings Call Transcript

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Jim Suva: Thank you. Jayshree, and Ita and everyone, congratulations on great results. My question is, I think it was Ita made the comment of expect a deceleration in revenues as we progress throughout the same €“ throughout the year just to get to the 25% revenue growth. I want to make sure I heard that right because that would then also mean that even with very, very difficult year-over-year comps for revenues, you wouldn’t expect them to go negative at all. And I guess when we look at that deceleration, it kind of seems like a steep decline to get to an average of 25%. So can you help me with my math there or the missing pieces? Or is it some conservatism? Or I’m just kind of wondering, but it definitely doesn’t seem like negative growth is in the works.

Ita Brennan: Yes. No. No, we didn’t talk about negative growth. If you look at the trend last year, you’ll see it really accelerated post Q1, right? So that’s why you’re seeing a much stronger growth rate year-over-year with our Q1 guide, then you will move through the year. So I think after Q1, it’s better to start to look at it as a quarter-by-quarter €“ on a quarter-by-quarter basis and kind of earlier revenues quarter-by-quarter. There is certainly no kind of negative growth in that. I think you’ll get a better answer if you kind of just grow kind of quarter-over-quarter from there on out. Q1 was a much lower revenue number last year back on the trend.

Jim Suva: Great. Thank you for the details and congratulations and Happy Valentine’s to all of you.

Ita Brennan: Thank you, Jim.

Jayshree Ullal: Thank you, Jim. This is all about comps, isn’t it?

Operator: Your next question comes from the line of Samik Chatterjee with JPMorgan. Please go ahead. Your line is open.

Samik Chatterjee: Hi, thanks for taking my question. Congrats on the results as well. I guess, I had a quick one, which is…

Jayshree Ullal: Can you speak louder?

Samik Chatterjee: Yes. Hopefully, you can hear me now. Is this better? Can you hear me now?

Jayshree Ullal: Yes, much better. Thank you.

Samik Chatterjee: Yes. So I was just going to ask you on your large cloud customer, Meta, and their recent announcement around architecture changes related to data centers and trying to run AI workloads and non-AI workloads together on the same data centers and some of those related announcements if you’ve been able to dissect that and sort of have any thoughts about how that might impact their spending in relation to switching and routing equipment, particularly as it relates to your portfolio. Thank you.

Jayshree Ullal: Yes. So Samik, I’ll say some few words and obviously, Anshul can get into detail. We don’t foresee any major architectural changes in the build-out of the AI clusters. Clearly, we continue to work with them on the front end of the network. And on the back end, these have been based on the flagship 7800 spine, the AI spine, where you can have a distributed AID for it can be going straight into the spine. And when you have the hundreds and thousands of GPUs, you need a lossless fabric that has all of the congestion control and bandwidth management required. So in the short-term, no major change in architecture. In the long-term, as these customers look for efficiency, we look for these AI fabrics to get larger or more distributed, but there will naturally be an evolution as the market grows, but no dramatic shift or change, just more of the same. Anshul, say few words?

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