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Call sheet · Q1'26

Arista Networks (ANET)

Q1'26 earnings call · held May 5, 2026 · compared with the Q4'25 call · management-credibility review
11/12
Disclosure score
4 medium, 2 low flags
Financial quality
Bottom line
Supply constraints are now the binding factor, not demand - Ullal called it the 'best demand ever seen' but supply is a '1-2 year phenomenon' forcing them to pay 'horrendous' prices. The sleeper story is scale-across DCI becoming dominant over scale-out, representing 'at least a third' of $3.5B AI revenue at much higher ASPs via 7800 platforms. Most revealing quote: 'We certainly do not want to keep GPUs idle because Arista did not supply the network' - they'll sacrifice margins to maintain supply continuity. My view changes if deferred revenue starts declining or if they lose a major customer to supply allocation.

The 30-second version

  • Supply chain constraints are now the real growth governor, not demand
  • Scale-across (DCI) quietly becoming the dominant AI fabric, not scale-out
  • XPO optics standard getting real traction but monetization timeline is vague

What changed this quarter

MetricQ4'25Q1'26Change
Total Revenue$2.49B (+28.9% YoY)$2.71B (+35.1% YoY)+630bp acceleration, beat guidance by $110M
AI Revenue (run-rate)$3.25B target$3.5B targetRaised target by $250M, 'more than doubling' from 2025
Total Year Growth Guidance25% for 202627.7% for 2026+270bp raise to $11.5B from $11.25B
Gross Margin63.4%62.4%-100bp sequential decline, supply pressure visible
Operating Cash Flow$1.26B$1.69BAll-time record, +$430M sequential
Purchase Commitments$6.8B$8.9B+$2.1B increase, 'multiyear' commitments
Deferred Revenue$5.37B$6.2B+$830M, acceptance cycles now '6-8 quarters'
Inventory$2.25B$2.38BMarginal increase despite record revenue
International Revenue %21.2%15.5%-570bp driven by Americas hyperscale sales
DSO70 days64 days6-day improvement in collections

Accountability tracked

8 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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