Arista Networks reported Q3 2025 revenue of $2.308 billion, up 27.5% year‑over‑year, and non‑GAAP diluted earnings per share of $0.75, beating the consensus estimate of $0.72 by $0.03. The company’s product revenue reached $1.912 billion, while service revenue grew to $396.6 million, reflecting continued demand in its AI, cloud, and campus segments.
Revenue growth slowed from the 30.4% year‑over‑year increase seen in Q2 2025, a deceleration that the company attributes to a shift toward lower‑margin cloud and AI customers and to supply‑chain constraints that have lengthened lead times. Product revenue rose 31.9% to $1.912 billion, driven by strong sales to large‑scale AI data‑center operators, while service revenue grew 22.7% to $396.6 million, supported by expanding support contracts.
Non‑GAAP operating margin held at 48.6% and non‑GAAP gross margin stood at 65.2%, both consistent with the prior quarter. The 25% year‑over‑year increase in non‑GAAP EPS reflects disciplined cost management and the company’s ability to maintain pricing power in high‑margin AI and enterprise contracts, even as it navigates a mix shift toward lower‑margin cloud deployments.
Management highlighted that the “centers of data” strategy is resonating with customers, citing strong demand from NVIDIA and OpenAI partnerships. CEO Jayshree Ullal said the strategy “delivers a superior client‑to‑campus‑to‑cloud/data‑and‑AI‑center experience,” while CFO Chantelle Breithaupt noted that disciplined execution of the strategic roadmap has driven the 25% EPS growth.
For Q4 2025, Arista guided revenue of $2.3 billion to $2.4 billion and a non‑GAAP operating margin in the 47%–48% range, slightly lower than the 48.6% achieved in Q3. The company reiterated its full‑year 2025 revenue outlook of $8.87 billion, up from the previously reported $8.75 billion, signaling confidence in sustained demand for its high‑performance networking solutions.
Investors reacted cautiously to the guidance, focusing on the projected margin compression and the pace of AI spending. Analysts noted that while the company’s revenue beat and EPS beat are solid, the slight decline in operating margin and the shift toward lower‑margin cloud customers raise concerns about short‑term profitability, leading to a muted market response.
Overall, Arista’s Q3 2025 results demonstrate strong execution and robust demand in AI and cloud markets, but the company faces headwinds from mix shifts and supply‑chain constraints that could pressure margins in the near term. The guidance indicates confidence in continued growth, while the market’s focus on margin sustainability underscores the importance of maintaining pricing power as the company scales its AI‑centric portfolio.
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