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Arista almost done with Cisco workarounds as revenue and profit soar

Borg attack repelled, Microsoft and cloud are now Prime Directive (and cash source)

Customer certification delays resulting from its ongoing patent lawsuit brought by Cisco have delayed some of its revenue, but upstart Arista Networks still turned in a tidy result for Q4 2017 and for the full year.

The company last Friday announced US$467.9 million in revenue for Q4 2017, up 42.7 per cent on Q4 2016, and a full-year 2017 result of $1.6 billion, up 45.8 per cent on 2016. Q4 profit was $103.8 million and $423.2 million for the full year.

In part, the results reflect the long-running lawsuit coming to an end. The company announced the availability of its workaround for what's known as the '945 ITC investigation in September 2016, but as CEO Jayshree Ullal said during the earnings call, customers then needed to start certifying the workarounds would, erm, work in their environments.

"The majority of those certifications were completed in Q4," Ullal said, but "some spilled over into Q1".

Only the most complex use-cases missed end-of-year 2017, she said.

Microsoft provided a highlight for the company. Ullal said Arista was able to expand its business within Redmond's operations, and with international expansion (for example, a data centre expansion in Israel), Redmond made up 16 per cent of the company's sales (as it also did in 2016).

Ullal expects Arista's other "cloud titan" customers to continue driving its growth, and at the same time that segment will rebalance the business towards non-US revenue (earlier this month arch-enemy Cisco made a broadly similar prediction, saying that while North America might flatten out, big clouds need to create data centres closer to users in the rest of the world). Over time, as much as 60 per cent of Arista's business could come from international markets, she said.

The shift towards 100 Gbps Ethernet and 400 Gbps Ethernet is beginning, but Ullal said that's a trend that will play out over many, many years: today's 100 Gbps deployments are serving what she said is a very long tail of 10 Gbps ports and a growing number of 40 Gbps ports.

A similar pattern will play out in the fastest speeds: 400 Gbps Ethernet will take its place to trunk the traffic driven by 40 Gbps and 100 Gbps workloads. In most of Arista's largest customers, she believes 400 Gbps trials will start in 2019.

As we reported last week, Arista had another win, with the Federal Court on February 14 upholding an earlier decision by the Patent Trial and Appeal Board to invalidate Cisco's US patent 7,224,668, which covers "call plane security and traffic flow management".

Arista's results documents are here for those of you looking for sure-fire sleep-helpers. ®


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