Arista Networks (ANET), a company that produces cloud computing network gear, announced its first-quarter earnings and revenue after the market closed on Monday. The results exceeded analyst estimates, but the news caused Arista stock to fall.
For the three months ending March 31, Arista’s earnings rose by 70% to $1.43 per share, exceeding the estimated $1.35 per share. Meanwhile, the revenue surged by 54% to $1.35 billion, surpassing the forecasted $1.31 billion. In comparison, the company’s earnings were 84 cents per share on revenue of $877 million for the same period the previous year.
For the June quarter, Arista predicted revenue between $1.35 billion and $1.4 billion, which is higher than the estimated $1.35 billion.
Despite the good news, ANET stock fell 3.2% to almost 155 in extended trading on the stock market on the same day. Some analysts have expressed concerns about the valuation of ANET stock, as they expect the company’s sales growth to slow down moderately in 2024 and 2025.
Before the earnings report, ANET stock had risen by nearly 32% in 2023. Arista’s main customers are Microsoft (MSFT) and Facebook-parent Meta Platforms (META). Arista sells switches that increase communication speed among racks of computer servers in data centers, and its primary competitors are Cisco Systems (CSCO) and Juniper Networks (JNPR).
According to analysts, Arista is gaining market share in the “enterprise” market, which includes large companies, government agencies, and educational institutions.