Arista Networks, Inc. · NYSE:ANET
Arista Networks — Q1 2017 Earnings Presentation
29 slides from Arista Networks's earnings presentation, May 4, 2017
Slide 1: Arista in Q1 2017
Arista in Q1 2017 Copyright © Arista 2017. All rights reserved.
Slide 2: Safe Harbor
Safe Harbor This presentation and the accompanying oral presentation contain forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements other than statements of historic
Slide 3: Inevitable Shift to Seamless Cloud Networking
Inevitable Shift to Seamless Cloud Networking Cloud Native Containers Seamless PICS* Software Defined Cloud Networking Leaf-Spine 100,000s Cloud Networks Zettabytes of Storage High 100,000s+ of Servers Performance 1,000,000s of VMs Computing 50,000s Convergence of PICS Containerization Client Server
Slide 4: Cloud vs Enterprise – They are Different Networks
Cloud vs Enterprise – They are Different Networks Traditional Networking (Legacy) Cloud Networking (Arista) Serves <100,000 employees Serves hundreds of millions of users Expensive to build and scale 10x-40x more cost effective Minimal API usage API for programmatic access Manual management Automate
Slide 5: Arista's Cloud Networking Opportunity
Arista’s Cloud Networking Opportunity Server Shipments Data Center Ethernet Switch Revenue 100% $15 Percent of Server Shipments Enterprises/Premises Revenue in $ Billions Telco SPs Top 7 Cloud Providers $10 50% Rest of Cloud $5 Rest of Market Cloud and SP (Enterprise and SMB) 0% $0 Source: Dell’Oro
Slide 6: Arista Market Share vs. Cisco
Arista Market Share vs. Cisco High Speed Data Center Switching Market Share in Ports (10GbE and Higher) 22.0% 73.3% 74.0% 71.4% 20.0% 72.0% 70.8% 18.0% 70.0% Arista 16.0% 68.0% 14.5% 66.1% 14.0% 66.0% 12.0% 12.0% 64.0% 9.3% 10.0% 62.0% 60.7% 8.0% 6.7% 60.0% 6.0% 4.9% 58.0% 3.4% 4.0% 56.0% 2.0% Cisco
Slide 7: Market Potential by Speed
Market Potential by Speed Data Center Ethernet Switch Revenue ($Bn) $15 Software Revenue in $ Billions $10 > 100 GE 40 GE 50 GE* $5 10 GE 25 GE* 1 GE $0 *Shows discrete 25G or 50G ports only. Majority of 25/50GE server ports are expected to connect via QSFP-100G break out to 100 GE switch ports at t
Slide 8: Cloud-Class Market Leadership Platform Portfolio
Cloud-Class Market Leadership Platform Portfolio Single-Image Arista EOS Across All Platforms 7300X 7500E/R Series Spine/SplineTM Series 7050X/7060X Series 7150, 7160 & 7280R Series Leaf Leaf EOS Volume Value Diverse Merchant Silicon Architectures 8 Copyright © Arista 2017. All rights reserved.
Slide 9: Proven Arista EOS Architecture Flexibility
Proven Arista EOS Architecture Flexibility Automation & Cloud Programmability Networking Telemetry Consistent and Open Arista EOS One Single EOS Abstraction Layer Fulcrum-FM BRCM-DNX BRCM-XGS CAVIUM-XPA 4 Architectures Jericho Trident-II+ Tomahawk+ Alta Arad Trident-II Tomahawk 12 Silicon Families B
Slide 10: Arista's Cloud Scale Software Architecture
Arista’s Cloud Scale Software Architecture • Arista has ONE Operating System, purpose built for the cloud Legacy – Spaghetti Code Arista Programmable EOS OTV MSDP PIM IGMP Notify Resilient LC IGMP ACL IPQOS FIB Snoop Programmable STP U4RIB U6RIB CoPP Publish BGP RIP OSPF EIGRP ISIS Scalable Suscepti
Slide 11: Universal Cloud Network Architecture
Universal Cloud Network Architecture Legacy Leaf/Spine Universal Leaf-Spine Internet DCI Internet DCI Internet Inter-DC WAN DCI Transit Peering Optical Legacy Core Routing Universal Spine Core Spine Switching Spine Leaf Distribution Universal Leaf Access W E Core is subsumed in Spine 11 Copyright ©
Slide 12: Arista's '5 A' Architecture
Arista’s ‘5 A’ Architecture Private Cloud Public Cloud Best-of-Breed 3rd party Technology Integration Cloud Orchestration Open Cloud API Integration & Automation 3x Savings with faster migration and integration between Any Cloud API private and public clouds Network State Streaming & Telemetry Cloud
Slide 13: Foundational High Availability and Resiliency
Foundational High Availability and Resiliency CLOUDVISION ADVANTAGE • Automated network wide change NETWORK controls, including upgrades and rollback SPINE Smart System Upgrade – (SSU) • Maintenance mode • Dual SUP SSO with NSF SPINE • MLAG Active/Active L2 SSO LEAF Smart System Upgrade - SSU • Hitl
Slide 14: Arista EOS Evolution
Arista EOS Evolution History of Rich Innovation in Extensible – Open – Scalable 2004-2009 2010-2012 2013 2014 2015 2016 2017+ EOS EOS EOS EOS EOS EOS EOS Architecture Cloud Designs High Availability Scale Automation Architecture 2017 State NetDB Programmability Leaf-Spine Cloud SSU VXLAN Integration
Slide 15: Arista EOS Supports Many Roles
Arista EOS Supports Many Roles • We target a large and growing market, $10B+ in 20171 • Our open software approach is applicable to new opportunities • EOS software is our foundational building block which drives TAM growth • Arista has a proven ability to insert and drive sharp share gains • New ap
Slide 16: Disruptive Cloud Economics for Routers
Disruptive Cloud Economics for Routers Arista 7500R Traditional Router Spine Interface Types Legacy & Ethernet Ethernet 100G Density ~80 Ports 432 Ports Arista’s Power ~200+ watts 25 watts Disruptive (per 100G port) Economics List Pricing $100,000+ $3,000 (per 100G port) Cloud-optimized Routing, Sof
Slide 17: Routing Use-Cases - Arista Universal Spine & Leaf
Routing Use-Cases - Arista Universal Spine & Leaf Cloud DCI Cloud DC Peering and Interconnect Content Provider Internet Inter-DC WAN DCI Peer F Peer G Public Peer E Transit Peering Spine Peer D Peer H Universal Core Spine Spine Private WAN Leaf Peer C DC Universal Spine Content Provider WAN Next Gen
Slide 18: Migration to Cloud Storage Architectures in the Enterprise
Migration to Cloud Storage Architectures in the Enterprise Traditional Enterprise Cloud Storage Storage Cost per GB $5/GB ~ 36¢/GB (2-3¢/GB/month) Market Growth -6% CAGR + 22% CAGR Scaling Scale-up Scale-out Architecture Siloed Fibre Channel Common IP/Ethernet SANs Infrastructure Transforming Storag
Slide 19: Arista's IP Storage Solution
Arista’s IP Storage Solution Compute Spine Storage Spine Hyperconverged Storage/Compute App Servers App Servers IP Storage App Servers App Servers IP Storage Hyper-converged Storage Racks Dedicated Storage Rack (Small) (Medium) Dedicated Storage Spine (Large) Scalable to Lossless High Simplified Ret
Slide 20: Arista's Containerization
Arista’s Containerization Designed for DevOps and Microservices Containers Container Containerized EOS on EOS Tracer (cEOS) New EOS running in a Container, Run containerized apps on EOS Network Visibility into as a packaging option Common development containerized workloads Common development enviro
Slide 21: Cloud Networking is Everywhere: Three Key Segments
Cloud Networking is Everywhere: Three Key Segments Arista Cloud Arista Arista Cloud Converged Cloud Scale Class Enterprises Titans Key Verticals § Compute, Storage, § 25/50/100GbE Scale § Leaf-Spine Switching Security Tech § Internal Projects § Spine Routing Partners § API controls § UCN Designs § C
Slide 22: Major Verticals
Major Verticals Large Cloud Titans Financial Services Cloud Specialty & Hosting Providers Tier 1, 2, 3 Government Service Provider Media & Entertainment 21% Education Oil & Gas 79% Business Rest of Services Enterprise Research Labs Healthcare Retail Manufacturing U.S. International Moderate Follower
Slide 23: Foundational Technology Underpins TAM Expansion
Foundational Technology Underpins TAM Expansion • We partner with customers and follow their journey • EOS software drives repeat purchases, Arista cultivates customer advocacy • EOS software organically enables additional use cases Top 15 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Customers 2014 2014 2014
Slide 24: Financial Highlights
Financial Highlights1 $400 Total Revenue Gross Margin Millions 70% 65.8% 65.5% 64.0% 64.4% $350 64.1% 64.6% 64.4% 64.2% 60% $300 $250 50% $200 40% $150 30% $100 20% $50 10% 196 218 245 242 269 290 328 335 $0 0% Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16
Slide 25: Balance Sheet & Cash Conversion Cycle
Balance Sheet & Cash Conversion Cycle $1,100 Cash, Cash Equivalents & $300 AR and DSO 80 71 $1,000 Marketable Securities AR DSO (R) 67 70 $900 $250 $800 56 60 51 50 $700 $200 50 Millions Millions $600 $150 40 $500 $400 30 $100 $300 20 $200 $50 10 $100 135 147 210 253 209 762 824 800 868 1,043 $0 $0
Slide 26: Arista in Q1 2017
Arista in Q1 2017 Key Highlights Financial Results (non-GAAP)1 Containerized EOS (cEOS) supports alternate models of procuring, packaging and deploying Q1’17 Revenue: $335.5M Arista’s EOS® across cloud, enterprises and service providers. Q1’17 EPS: $0.93* Arista Data ANalyZer DANZ 2017 R-Series Q1’1
Slide 27: Appendix: GAAP to Non-GAAP Reconciliation
Appendix: GAAP to Non-GAAP Reconciliation 27 Copyright © Arista 2017. All rights reserved.
Slide 28: Legal Status – 2017 Timeline
Legal Status – 2017 Timeline Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec 944 CBP Hearing 944 CBP Decision 944 ID 944 FD Feb. 13 April 7 June 20 Sept 20 944 945 ID 945 FD End of 945 PRP Dec. 7 May 4 July 3 945 IPR Hearing IPR FWD March 7 June 11 IPRs 28 Copyright © Arista 2017. All rights reser
Slide 29: Thank You
Thank You www.arista.com Copyright Copyright © Arista © Arista 2017. 2017. All rights All rights reserved. reserved.