Then, more recently, a second cloud titan (presumably Facebook) notified Arista that it would reduce spending in the fourth quarter of 2019 and in 2020. Both are innovating on the leading edges of technology and selling into large growing markets. A whole lot for Facebook rides on it getting this right. In other words, Arista's network technology saves time and money (because fewer network personnel are required to be on call to monitor thousands of servers). I'll offer one last thought. Microsoft and Facebook each account for at least 10% of Arista's total revenue. Arista's sales are surely driven by long-term trends, but visibility in the short term is very low, and investors could be in for occasional shocks (again, as we saw in the recent quarter).YOY = year over year. I would like to learn more about its acquisition strategy and the financial criteria (and hurdles) that it will use to measure success. Some of the Key Considerations And, of course, acquisitions can be used to enhance the product or service and can drive long-term organic growth. Arista Networks was founded to pioneer and deliver software-driven cloud networking solutions for large data center storage and computing environments. Returns as of 07/30/2020.At a high level, cloud software is distributed across hundreds of thousands of servers, and those servers are connected to each other (and connected to the Internet) with high-speed switches and routers. Source: S&P Global Market Intelligence; author's calculations. Together, they create a networking corporate dream team.In the medium term, Arista's growth is powered by:Second, Arista made its first two acquisitions in 2018 (Mojo and Metamako) to expand its networking cloud product offering. SANTA CLARA, Calif.--(BUSINESS WIRE)--Arista Networks (NYSE:ANET) today announced several additions to its multi-cloud and cloud-native software …
Arista’s Universal Cloud Network (UCN) delivers these common cloud principles for simplified networking topologies and architectures across use-cases. Supplier concentration risk and the ever-present risk of product obsolescence are also out there, but these don't concern me as much.As I've already noted, this is a corporate dream team, with Andy Bechtolsheim as the spiritual leader. This is different from legacy network equipment vendors that use different operating systems for different items of hardware in the network, adding layers of complexity and making software updates and maintenance difficult. Facebook accounts for at least 10% of Arista's sales, so its spending actions have a large effect on Arista's overall results. And Arista is vocal about its laser focus on profitable growth.For example, Arista offers a flex route license, which turns a switch into a router and increases the number of routes from roughly 256,000 to more than 2 million. Leaf switches provide connectivity to storage, compute, service, and data center edge network elements. So Andy Bechtolsheim (co-founder of Sun Microsystems and the first outside investor in Google) put together a team -- including co-founders David Cheriton and Ken Duda -- to deliver on Google's request.Related to customer concentration, Arista doesn't have any long-term purchase commitments from customers, and customers can cancel at any time. But these mid- to high-teens revenue growth estimates do not apply to 2020 anymore. Arista's business is highly technical, and Arista's management team often explains it using technical jargon. Arista Networks announced several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge: designed to integrate with native cloud networking services like … Arista Networks' () stock hasn't gotten much love lately. Combined, it spent $97 million on these two acquisitions. Arista Multi Cloud Networking Platform CloudEOS™ is Arista’s multi cloud and cloud native networking solution enabling a highly secure and reliable networking experience with consistent segmentation, telemetry, provisioning and troubleshooting for the entire enterprise. The pioneer of cloud-based networking hasn't had the smoothest of transitions since its growth trajectory started to slow a … They don't adapt to change; they are the change.