ARISTA NETWORKS, INC. (ANET)

Business overview

Business In a world where data is increasingly a precious commodity and competitive differentiator, Arista was founded to enable our customers to access all their centers of data in the quickest, most reliable, and secure manner. Over the last two decades, we have emerged as an industry leader, delivering data-driven, client-to-cloud networking-as-a-service. Our “Centers of Data” strategy is a fundamental pivot from legacy networking approaches that create incongruent silos to a unified, data-driven approach in which the network is a service that interconnects four primary domains: AI Centers, Data Centers, Campus Centers, and WAN Centers. Anchored by Arista’s state-oriented Extensible Operating System (EOS) and Network Data Lake (NetDL), our network-as-a-service platform delivers a seamless, consolidated networking experience regardless of data location.

Our solutions are differentiated because they: • offer uncompromising reliability derived from the foundation of robust quality assurance capabilities, and a suite of automated diagnostics, • are based on advanced open and standards-based technology that avoids what is often expensive vendor lock-in, and • provide consistent real-time telemetry and intelligent automation to decrease the manual workload on the operator. This strategy and differentiation have also allowed us to deliver our comprehensive suite of products, services, and technologies to a global customer base segmented into three primary categories: Cloud and AI Titans, AI and Specialty Providers, and Enterprise. Market research confirms that we continue to be a leader in high-speed Ethernet switching.

Our Market Drivers and Products Centers of Data Drive the World 1 In the modern competitive landscape, the ability to access, manipulate, and leverage data is fundamental to an organization’s growth and viability. This is especially true in the era of Large Language Models (LLMs), agentic AI, and physical AI, where data has evolved from a byproduct of operations into the primary engine of intelligence and autonomy. Consequently, the network has matured beyond traditional "IT infrastructure" to become the spine or central nervous system. It serves as the critical conduit through which data flows from cloud and edge environments to the AI models that drive decision-making. This heightened dependency on real-time data movement underscores the necessity for a network architecture defined by unprecedented scale, availability, predictable performance, and open programmability.

Operational simplicity and robust security are essential to ensure the business can compete in a world of massive, networked transactions. Public cloud titans and, more recently, AI Neocloud providers have been at the forefront of this evolution, pioneering the development of large-scale data and AI centers to meet the growing demands of their users, including business customers. These networks have become the benchmark for superior performance and efficiency of IT infrastructure at the lowest unit cost. Enterprises and service providers worldwide are therefore adopting these hyperscale technologies and principles for their own network operations to achieve similar performance, operational efficiencies, and cost reductions. Arista established itself as a market leader with platforms, products, and people to enable some of these hyperscalers’ most consequential networks.

Our network-as-a-service approach now empowers customers of all sizes to seamlessly leverage their data through offerings spanning three key categories: Core (AI, Cloud, and Data Center Networking), Cognitive Adjacencies (Campus and Routing), and Cognitive Networks (Software and Services). With world-class engineering expertise and platform innovation, our customers gain the predictable performance and operational simplicity required to turn data into a sustainable competitive advantage in a modern, AI-driven world. Networking at Scale for the AI Center The rapid expansion of generative, agentic, and physical AI computing and distributed applications is blurring the lines between frontend and backend AI, Cloud, and Data Centers. Modern workloads are both data- and compute-intensive and place significant demands on the underlying network.

For instance, a typical AI job involves large, sparse matrix math, distributed across hundreds or thousands of AI accelerators (XPU, GPU, TPU, etc.) with intense computations for a period of time. This type of workload requires a high-bandwidth, scalable, lossless, and power-efficient network, based on open standards, to eliminate operational costs and complexities associated with proprietary approaches. 2 As a pioneer of leaf and spine networking for cloud and data centers, Arista’s "AI Center" now delivers a unified, data-driven network architecture that integrates distinct connectivity layers to optimize time-to-first-job, AI job completion times, and XPU utilization/efficiency. This strategy addresses the massive bandwidth and traffic fidelity requirements of AI workloads through three specific domains: • Scale Up: Currently dominated by proprietary technologies, this domain involves high-bandwidth, low-latency interconnects linking multiple XPUs within a single rack. […]

Management discussion and analysis

Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Overview In a world where data is increasingly a precious commodity and competitive differentiator, Arista was founded to enable our customers to access all their centers of data in the quickest, most reliable, and secure manner.

Over the last two decades, we have emerged as an industry leader, delivering data-driven, client-to-cloud networking-as-a-service. Our “Centers of Data” strategy is a fundamental pivot from legacy networking approaches that create incongruent silos to a unified, data-driven approach in which the network is a service that interconnects four primary domains: AI Centers, Data Centers, Campus Centers, and WAN Centers. Anchored by Arista’s state-oriented Extensible Operating System (EOS) and Network Data Lake (NetDL), our network-as-a-service platform delivers a seamless, consolidated networking experience regardless of data location Our solutions are differentiated because they: • offer uncompromising reliability derived from the foundation of robust quality assurance capabilities, and a suite of automated diagnostics; • are based on advanced open and standards-based technology that avoids what is often expensive vendor lock-in, and • provide consistent real-time telemetry and intelligent automation to decrease the manual workload on the operator.

This strategy and differentiation have also allowed us to deliver our comprehensive suite of products, services, and technologies to a global customer base segmented into three primary categories: Cloud and AI Titans, AI and Specialty Providers, and Enterprise. Market research confirms that we continue to be a leader in high-speed Ethernet switching. The percentage of revenue derived from these customers during the current fiscal year was approximately 48% from Cloud and AI Titans, 32% from Enterprise and 20% from AI and Specialty Providers. Arista established itself as a market leader with platforms, products, and people to enable some of these hyperscalers’ most consequential networks. Our network-as-a-service approach now empowers customers of all sizes to seamlessly leverage their data through offerings spanning three key categories: Core (AI, Cloud, and Data Center Networking), Cognitive Adjacencies (Campus and Routing), and Cognitive Networks (Software and Services).

The percentage of revenue derived from these product categories during the current fiscal year was approximately 65% from Core, 18% from Cognitive Adjacencies, and 17% from Software and Services. With world-class engineering expertise and platform innovation, our customers gain the predictable performance and operational simplicity required to turn data into a sustainable competitive advantage in a modern, AI-driven world. The market for cloud networking is characterized by rapid technological evolution, intensifying competition, and the expansion of generative and agentic AI. To sustain our success and adapt to the market, we must increase sales in cloud, AI and enterprise data center Ethernet switching/routing markets, and campus workspace markets by leveraging our ability to rapidly develop new features and software applications.

Our growth strategy relies on maintaining our agility and increasing our investment in research and development to deliver market-leading features to enhance the functionality of our existing cloud networking platform, expand our product offerings and build upon our technology leadership. In addition, we must continue to expand our global sales force and deepen our channel partnerships to reach new customers more effectively and increase sales to existing customers. Historically, a limited number of customers have accounted for a significant portion of our revenue. Two of our customers accounted for more than 10% of our total revenue in each of the last three years. Sales to one end customer represented 16%, 15%, and 21% of our total revenue, and sales to the other end customer represented 26%, 20%, and 18% of our total revenue for the years ended December 31, 2025, 2024, and 2023, respectively.

We have experienced unpredictability in the timing of orders from our high-volume customers, primarily due to the inherent complexity of large-scale orders and fluctuations in their specific demand. This includes reductions or shifts in their capital expenditure budgets, as well as the impact of their internal cost-reduction and efficiency initiatives. […]

Key risk disclosures

Risk Factors You should consider carefully the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, which could materially affect our business, financial condition, results of operations and prospects. The risks described below are not the only risks facing us. Risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially affect our business, financial condition, results of operations and prospects. Risk Factors Summary Our business is subject to numerous risks and uncertainties. These risks include, but are not limited to, the following: Risks Related to Our Business and Industry • some of the key components in our products come from sole or limited sour ces of supply and increases the risk of supply shortages, extended lead times or supply changes; • large purchases by a limited number of customers represent a substantial portion of our revenue; • escalated or escalating United States (the "U.

S.")

tariffs as well as countermeasures and retaliatory actions taken by other countries, may have a negative effect on global economic conditions, financial markets and our business; • adverse economic conditions, continuing uncertain economic conditions or reduced information technology and network infrastructure spending may adversely affect our business; • our revenue and revenue growth rates are volatile and may decline or not meet our or our investor's expectations; • we expect our gross margins to vary over time and may be adversely affected by numerous factors; • our results of operations may vary significantly from period to period and can be unpredictable; • the networking market is rapidly evolving; • failure to successfully carry out new product and service offerings and expand into adjacent markets could adversely impact our business; • we face intense competition and industry consolidation; • we are subject to risks associated with the expansion of our international sales and operations; • we face risks associated with the investments in and acquisitions of complementary companies, products or technologies; • industry cyclicality may cause fluctuations in our revenue; • fluctuations in currency exchange rates could adversely affect our business; • failure to raise additional capital on terms satisfactory to us.

Risks Related to Customers and Sales • inability to attract new large customers or sell additional products and services to our existing customers could adversely affect our revenue growth; • sales of our switching and routing platforms generate most of our product revenue; • inability to increase market awareness or acceptance of our new products and services may adversely affect our revenue; • sales prices of our products and services may decrease; • sales cycles can be long and unpredictable; • inability to offer high quality support and services offerings could adversely affect our business; • declines in maintenance renewals and support contracts by customers could harm our business; • indemnification provisions under our standard sales contracts could expose us to losses; • we rely on distributors, systems integrators and value-added resellers to sell our products; • sales to government entities are subject to a number of challenges and risks; • we are exposed to the credit risk of our channel partners and some of our end customers.

Risks Related to Products and Services • product quality problems, defects, errors or vulnerabilities could harm our business; • failure to anticipate technological shifts could harm our business; • our products must interoperate with operating systems, software applications and hardware that is developed by others. Risks Related to Supply Chain and Manufacturing • insufficient component supply and inventory management; 12 • primarily reliant upon a predominant merchant silicon vendor; • we depend on third-party manufacturers to build our products; • future sales forecasts may materially change, which could result in incorrect levels of inventory and purchase commitments; • shipment interruptions or delays could cause our revenue to fall.

Risks Related to Intellectual Property and Other Proprietary Rights • assertions by third parties of intellectual property rights infringement, misappropriation or other violation could harm our business; • failure or inability to protect or assert our intellectual property rights could harm our competitive position; • we rely on the availability of licenses to third-party software and other intellectual property; • failure to comply with licenses to software and other technology could restrict our ability to sell our products; • our competitors could develop products that are similar to or better than ours because we provide access to our software and selected source code to certain partners. […]

Source and methodology

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