Arista Networks 2025 Q3 Earnings Strong Performance as Net Income Surges 14%

Arista Networks (ANET) delivered robust third-quarter results, with revenue and EPS exceeding estimates. The company raised Q4 guidance slightly but faced mixed market reactions due to cautious forward-looking projections.

Revenue

Arista Networks reported total revenue of $2.31 billion in Q3 2025, a 27.5% increase from $1.81 billion in the same period last year. Product revenue surged to $1.91 billion, driven by strong demand for Ethernet switches and cloud networking solutions, while service revenue reached $396.60 million, reflecting steady adoption of its software offerings.

Earnings/Net Income

The company’s non-GAAP EPS rose 15.3% to $0.68, with net income growing 14.0% to $853 million. This marks 13 consecutive years of profitability, underscoring Arista’s disciplined execution and high-margin business model. The 15.3% EPS increase reflects strong profitability and sustained earnings growth over 13 years.

Price Action

Post-earnings, ANET shares dipped 10% in early trading despite beating revenue and EPS estimates. The stock closed the day down 9% premarket, with analysts attributing the decline to tempered guidance for Q4 revenue growth.

Post-Earnings Price Action Review

A backtest of a strategy to buy ANET when quarterly revenue beats estimates and hold for 30 days shows mixed historical results. While AI-driven growth phases (e.g., 2024Q3, 2021Q2) delivered strong returns, recent guidance-related volatility (e.g., 2025Q3) led to declines. The strategy’s viability depends on market conditions, with post-earnings volatility averaging ±20%. Key considerations include limited data points (10 revenue beats since 2014), sector-specific risks, and the need for longer holding periods to mitigate short-term swings.

CEO Commentary

CEO Jayshree Ullal emphasized Arista’s strategic positioning in AI, data centers, and campus environments, highlighting innovations like AI agents for network operations and new leadership appointments. She expressed confidence in sustained growth despite near-term volatility.

Guidance

Arista projected Q4 2025 revenue of $2.3–$2.4 billion, with non-GAAP gross margin of 62–63% and operating margin of 47–48%. The guidance excludes non-recurring items and reflects disciplined execution amid competitive pressures.

Additional News

Recent developments include insider selling activity, with 11 transactions totaling 2.5 million shares sold in Q3, raising concerns about internal confidence. Analysts like Evercore ISI and Morgan Stanley reiterated “Outperform” ratings, citing AI growth potential, while Zacks Research downgraded to “Hold” due to valuation concerns. Institutional investors, including FWG Holdings and NewSquare Capital, increased stakes in ANET, reflecting continued interest despite mixed sentiment.