Key Highlights

  • The third quarter brought 58.5% year-over-year Revenue growth to USD 3.66 billion, the fastest rate since the IPO and ahead of the company's own USD 3.3 billion guidance.
  • Arista Networks (NYSE:ANET) recorded GAAP diluted EPS of USD 1.22 against USD 0.67, and non-GAAP EPS of USD 1.20 against USD 0.77.
  • Fourth-quarter guidance sets revenue at USD 3.9 to 4.0 billion, a non-GAAP Operating Margin of 48% to 49% and non-GAAP EPS of USD 1.26 to 1.30.
  • Non-GAAP gross margin eased to 64.0% from 65.2%, yet non-GAAP operating margin improved to 49.1% from 48.6%.

Growth Beats the Company's Own Revenue Target

Arista Networks (NYSE:ANET) closed its third quarter, ended September 30, 2026, and reported on November 3, 2026. Revenue reached USD 3,657.6 million, rising 58.5% from the year-earlier quarter and 20.5% above the second quarter of 2026. Product revenue advanced to USD 3,190.0 million from USD 1,911.7 million, and services grew to USD 467.6 million from USD 396.6 million. GAAP Net Income totaled USD 1,560.4 million, versus USD 853.0 million. Management said the result cleared its prior revenue target of USD 3.3 billion and called it the strongest annual growth rate since going public. The company also noted its September 2026 inclusion in the S&P 100 index.

Why GAAP EPS Ranks Above the Non-GAAP Figure

GAAP diluted Earnings of USD 1.22 topped non-GAAP diluted earnings of USD 1.20, an atypical pattern. The cause is a USD 134.5 million gain on strategic investments, which lifted GAAP profit and was excluded from non-GAAP results, along with other adjustments such as USD 138.1 million of stock-based compensation. Other income, net, reached USD 273.1 million compared with USD 98.9 million, reflecting those gains and interest on a bigger portfolio. Cash and equivalents of USD 2,288.1 million plus marketable securities of USD 12,070.9 million total about USD 14.4 billion (own arithmetic on two Balance Sheet lines). Current and non-current deferred revenue combined to about USD 6.8 billion, up from about USD 5.4 billion at December 31, 2025 (own arithmetic). Operating margin was 44.9% GAAP and 49.1% non-GAAP.

Margin Erosion, Inventory Growth and Customer Concentration

Less favorable figures appear further down the statements. Non-GAAP gross margin dropped 1.2 points year over year, while inventories rose to USD 3,209.8 million from USD 2,247.1 million at year-end, locking up cash and raising Supply exposure. Nine-month Operating Cash Flow was USD 3,977.4 million, even though inventory build absorbed USD 962.8 million. Its risk disclosures point to tariffs, sole-source parts, dependence on one dominant merchant silicon supplier and heavy purchases from a few customers. Fourth-quarter guidance of USD 3.9 to 4.0 billion implies sequential growth of roughly 7% to 9% (own arithmetic). The conference call was set for 1:30 p.m. Pacific Time on November 3, 2026.

Where Things Stand

Strong product sales, which rose to USD 3,190.0 million, let Arista Networks (NYSE:ANET) post 58.5% revenue growth beyond its own guidance. The growth was real and bigger than management had guided, and it arrived with a higher operating margin and a stronger next-quarter outlook. Liquidity looks sizable too, with cash and equivalents of USD 2,288.1 million and marketable securities of USD 12,070.9 million on the balance sheet. Weighing on the picture are a gross margin drifting lower, a large inventory build, GAAP profit inflated by Investment gains and reliance on a few large customers. Fourth-quarter results, supply conditions and Tariff exposure are what to monitor next.