Arista Networks, Inc. · NYSE:ANET

Arista Networks — FY2014 Earnings Presentation

22 slides from Arista Networks's earnings presentation, March 2015

  1. Slide 1: 2014 Highlights

    2014 Highlights! March 2015!

  2. 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

  3. Slide 3: Paradigm Shift – Data Center Moving to the Cloud

    Paradigm Shift – Data Center Moving to the Cloud Cloud Virtualization Internet Environment Client Server Architecture Database Server Rise of the PC Server Petabytes of Storage Client Client Client Client Client 100,000s of Servers Mainframe 1,000,000s of VMs 10,000s 1,000s 100s 10s 1970 1980 1990 2

  4. Slide 4: Arista's Served and Total Addressable Market

    Arista’s Served and Total Addressable Market Switching Market Size ($Bn) 25.4 25.7 24.5 24.9 25.1 22.4 23.0 TAM TAM CAGR: 2.3% SAM SAM CAGR: 14% Data Center Switching (10/25/40/50/100GbE) Market Size (1) Remaining Ethernet Switching Market (2) Note 1. High-speed data center switching market, excludi

  5. Slide 5: 2014 Market Share

    2014 Market Share High Speed Data Center Switching Market Share in Ports (10/40/100GbE) • Increasing market share from EOS and timely productization of merchant Arista silicon Cisco Source Arista 2011 revenue based on management estimates. All other information based on Crehan Research 4Q14 Data Cen

  6. Slide 6: Market Potential by Speed

    Market Potential by Speed Switching Market Aggregate Revenue ($Bn) $25 $19.5Bn $20 $19Bn $0.07Bn $15 $79Bn $0.4Bn $10 $181Bn $5 Notes 1. Dell’Oro, 2015: 1GbE aggregate revenue from 1997-2019; 10GbE aggregate revenue from 2001-2019; 25GbE aggregate revenue from 2018-2019; 40GbE aggregate revenue from

  7. Slide 7: Arista Platform Delivers Software Driven Cloud Networking

    Arista Platform Delivers Software Driven Cloud Networking + EOS Merchant Silicon Cloud Scale Open and Availability Visibility Automation Architecture Programmable Accelerates Time to Service and Reduces TCO Higher Feature Velocity 7

  8. Slide 8: Arista Key Differentiators of Software Driven Cloud Networks

    Arista Key Differentiators of Software Driven Cloud Networks EOS Programmable & Open 8

  9. Slide 9: Arista Portfolio

    Arista Portfolio 7300 Series 7500E Series Spline/Spine 7050 Series 7150 & 7280 Series Leaf Volume Value Single-Image Arista EOS Across All Platforms 9

  10. Slide 10: Arista's Ecosystem: Open and Programmable

    Arista’s Ecosystem: Open and Programmable Hypervisor/Virtualization Management, Automation, Orchestration Network Services EOS Application Programming Interfaces (APIs)! JSON | XMPP | CLI | Python | CloudVision! EOS Extensible Operating System! Scalability | Availability | Programmability | Automati

  11. Slide 11: Broad Customer Adoption

    Broad Customer Adoption End Customers (Cumulative) 3500! 3000+ 3000! 2500! 2300+ 2000! 1600+ 1500! 1000+ 1000! 500+ 500! 0! FY10! FY11! FY12! FY13! FY14! 11

  12. Slide 12: Pace of Cloud Networking Adoption

    Pace of Cloud Networking Adoption Large Financial Services Web1 520+ Customers 100+ Customers Cloud Spend Service Provider / High Tech Cloud / Hosting 360+ Customers Government Media & 150+ 330+ Customers Entertainment 190+ Oil & Gas Education Business 30+ 210+ Services 220+ Research Labs 75+ Health

  13. Slide 13: Sales Cycle and Value of Purchase Over Time

    Con5nue to address incremental spend – build-­‐out or replacement $ Value of Purchase Therea1er Deployment into cri5cal path – data center / core Billings Begin 12-­‐24 Months Proof of Concept – likely 1-­‐2 applica5ons 7-­‐12 Months Sales Cycle 0-­‐6 Months Time 13

  14. Slide 14: Average: All Customers – Purchases Over Lifetime

    Average: All Customers (1)(2)(3) Top 25 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 11.9x Customers 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 Customer1 Customer2 Customer

  15. Slide 15: Arista in 2014

    Arista in 2014 Compelling Attributes Financial Results (non-GAAP)1 Talented team, technology Q4’14 Revenue: $173.5M and results FY14 Revenue: $584.1M Large and expanding FY13-FY14 Revenue YOY Growth: 61.7% market opportunity FY10-FY14 Revenue CAGR: 68.9% Q4’14 Gross Margin: 67.4% Sustainable softwar

  16. Slide 16: Strong Revenue Growth

    Strong Revenue Growth Annual Revenue Quarterly Revenue $M $M $173 2010-2014 $584 $155 CAGR: 68.9% $138 $115 $117 $361 $193 $140 $72 FY10 FY11 FY12 FY13 FY14 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 16

  17. Slide 17: 2013-2014 Financial Highlights

    2013-2014 Financial Highlights1 $200 Revenue Gross Profit Millions Millions $180 $140 $160 $120 $140 $100 $120 $100 $80 $80 $60 $60 $40 $40 $20 $20 61 83 102 115 117 138 155 173 42 54 65 78 82 94 101 117 $0 $0 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14

  18. Slide 18: Cash Flow and Balance Sheet

    Cash Flow and Balance Sheet ($ In Ms) Q1’14 Q2’14 Q3’14 Q4’14 Cash and Cash Equivalents $129.5 $397.2 $408.6 $240.0 3. Marketable Securities $209.4 Cash Flow From Operations $17.7 $46.3 $34.8 $15.8 Accounts Receivable $63.0 $67.9 $84.1 $97.0 DSO 48 45 50 51 Inventories $79.0 $71.1 $62.6 $80.5 Turns

  19. Slide 19: Arista vs. Select Peers – GAAP

    Arista vs. Select Peers – GAAP (In 000s except per share data) Q1’14 Q2’14 Q3’14 Q4’14 Q/E Jan 2014 Q/E Apr 2014 Q/E Jul 2014 Q/E Oct 2014 Revenue 117,207 137,947 155,463 173,489 141,068 150,700 178,231 192,346 qoq% 2.1% 17.7% 12.7% 11.6% 10.1% 6.8% 18.3% 7.9% yoy% 91.1% 65.2% 53.0% 51.2% 46.2% 48.8

  20. Slide 20: Arista Evolution

    Arista Evolution People 6 100 250 500 750+ 1,000+ EOS 7500 VXLAN 7050 7150 7500E 7300 EOS+ Products 7100S Best of Interop Best of VMworld Best of Interop 7000X 7280E High Tech Enterprise Customers Financial 50+% 1000+ Web SP/Cloud 3000+ Financial H UK India Germany Hong Kong Sweden Company Founded J

  21. Slide 21: 2014 Summary

    2014 Summary • Strong revenue and market share growth driven by broad customer adoption • Visibility from deep customer engagement • Diverse and growing customer base across key verticals • Proven land and expand model • Good margins supported by differentiated technology advantage 21

  22. Slide 22: Appendix: GAAP to Non-GAAP Reconciliation

    Appendix: GAAP to Non-GAAP Reconciliation In 000's except per share data Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 GAAP gross profit $ 42,128 $ 53,901 $ 65,036 $ 77,473 $ 81,314 $ 93,380 $ 100,957 $ 116,440 Stock compensation 67 83 107 151 211 301 480 543 Non-­‐GAAP gross profit $ 42,195 $ 53,

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