Arista Networks, Inc. (ANET) Q2 FY2026 10-K and 10-Q Summary: Business, Risk Factors, MD&A

Sources: Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (filed February 17, 2026, accession 0001596532-26-000013); Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (filed August 5, 2026, accession 0001596532-26-000175); Current Reports on Form 8-K, principally accession 0001596532-26-000174 (August 4, 2026), accession 0001596532-26-000118 (June 2, 2026), accession 0001596532-25-000258 (September 8, 2025), accession 0001596532-25-000170 (June 16, 2025) and accession 0001596532-25-000077 (March 17, 2025). Arista is a Delaware corporation headquartered in Santa Clara, California, with a December 31 fiscal year end.

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Business

From the FY2025 Form 10-K, accession 0001596532-26-000013.

Arista supplies data-driven, client-to-cloud networking, high-speed Ethernet switching and routing platforms, the software that runs them, and the support contracts attached to them. The company frames its strategy as "Centers of Data": a single network-as-a-service fabric interconnecting four domains, AI Centers, Data Centers, Campus Centers and WAN Centers, rather than the siloed, domain-specific architectures of legacy networking. Two pieces of software anchor everything: EOS (Extensible Operating System), a state-oriented operating system running on standard Linux that stores system state in a centralized database accessed via publish/subscribe, giving module independence and in-service upgradeability; and NetDL (Network Data Lake), which aggregates streamed device state, telemetry, packet, flow, alert, sensor and third-party data behind a single service endpoint.

How it makes money. Product revenue (switching and routing platforms plus related network applications) was 84.1% of FY2025 revenue; service revenue, post-contract support (PCS) sold alongside product and subsequently renewed, was 15.9%. Arista reports one reportable segment; the CEO, as chief operating decision maker, reviews consolidated revenue, gross margin, operating margin and net income.

Product framing. Management groups the portfolio three ways, with FY2025 revenue mix disclosed for each:

• Core (AI, cloud and data center networking), approximately 65% of FY2025 revenue
• Cognitive Adjacencies (campus and routing), approximately 18%
• Software and Services, approximately 17%

AI networking. Arista segments the AI opportunity into three domains. Scale Up, high-bandwidth, low-latency interconnect linking multiple accelerators inside a single rack, is today dominated by proprietary technology; Arista treats it as a future incremental opportunity as the market shifts toward open standards such as Ethernet for Scale Up Networks (ESUN). Scale Out, connecting accelerators across racks for large training and inference clusters, is where the substitution of Ethernet (per the Ultra Ethernet Consortium) for proprietary InfiniBand creates the company's share-gain thesis, scaling from thousands to a million-plus XPUs. Scale Across, long-distance routed interconnect between geographically distributed clusters, driven by power and space constraints and edge inference. The Etherlink portfolio spans over twenty products aimed at these use cases; named platforms include the 7800R AI Spine, the 7060 AI Leaf and the 7700R4 Distributed Etherlink Switch (DES). EOS features cited as differentiators include Smart System Upgrades (SSU), AI Analyzer and load balancing.

Campus, routing and WAN. The cognitive campus portfolio spans modular and fixed campus spine switches, Power-over-Ethernet leaf switches and Wi-Fi access points, all managed through CloudVision. The VeloCloud SD-WAN portfolio, acquired from Broadcom, extends this into cloud-delivered SD-WAN with integrated security for the branch. Cloud-Grade Routing platforms, 7280R4 Universal Leaf, 7500R3 and 7800R4 Universal Spine, combine high port density, deep buffers, integrated DWDM and wire-speed encryption for multi-cloud connect, Data Center Interconnect, peering, business VPN and core routing.

Software and services. CloudVision is the multi-domain AI Ops and management platform. Arista AVA (autonomous virtual assist) is an agentic decision-support system for network and security operations. The security suite is positioned against CISA's Zero Trust Maturity Model. A-Care Services provides support, with spare parts stocked in over 200 locations worldwide via third-party logistics suppliers.

Customers. Three categories: Cloud and AI Titans, AI and Specialty Providers (including AI Neoclouds), and Enterprise. FY2025 revenue mix was approximately 48% Cloud and AI Titans, 32% Enterprise, 20% AI and Specialty Providers. Concentration is severe and persistent: two end customers each exceeded 10% of revenue in each of the last three years. One represented 26%, 20% and 18% of total revenue in FY2025, FY2024 and FY2023; the other represented 16%, 15% and 21% over the same years, a combined 42% of FY2025 revenue.

Manufacturing and supply. Arista subcontracts the majority of manufacturing to Jabil Inc., Sanmina Corporation and Foxconn Hon Hai, who build in Malaysia, Vietnam, Mexico and other countries; all sites must be ISO-9001 certified. Finished goods ship to four direct fulfillment facilities in the United States, the Netherlands and Singapore. Arista retains control of the bill of materials, qualified component suppliers, test procedures and quality programs. Key components, merchant silicon, integrated circuits, power supplies, come from a limited number of suppliers, and the company is primarily reliant on Broadcom as its predominant merchant silicon vendor for switching chips. Generally neither Arista nor its contract manufacturers hold written supply-guarantee agreements with these component providers, nor exclusive rights to key components.

Go-to-market. Direct sales force plus channel, distributors, value-added resellers, systems integrators and OEM partners, organized under the Arista Partner Program. Partners typically take an end-customer order before placing an order with Arista and generally do not stock inventory.

Competition. The data center and campus markets have historically been dominated by Cisco, with Dell/EMC, Extreme Networks, Hewlett Packard Enterprise, Huawei, Juniper Networks, Nvidia and white-box vendors on open-source operating systems also competing. Consolidation is a stated concern: Broadcom acquired VMware, HPE acquired Juniper Networks, and Nvidia has made significant investments in several AI Neoclouds. In back-end AI clusters, Ethernet competes with InfiniBand and NVLink, both often sold vertically bundled with Nvidia GPUs. In network detection and response, Arista NDR competes with Cisco, Darktrace and ExtraHop; in network packet brokers, DANZ Monitoring Fabric competes with Cisco, Gigamon, Keysight and Netscout.

People and R&D. Approximately 5,115 full-time employees worldwide as of December 31, 2025; none represented by unions. R&D priorities are adapting EOS to new silicon architectures (especially for AI workloads), extending EOS control- and management-plane functionality, expanding CloudVision, building services such as microsegmentation, NDR and network access control, hardening the software supply chain, and hardware quality/power efficiency.

Properties. Headquarters in Santa Clara under a lease of approximately 180,000 square feet expiring March 2027, plus leased offices and data centers in the U.S., Ireland, Canada, India and Australia. Land purchased in Santa Clara in 2021 is being built out for office, lab and data center space.

Capital returns. Arista has never declared or paid a cash dividend and does not anticipate doing so. Capital is returned through buybacks (see MD&A). A four-for-one forward stock split took effect December 3, 2024, with authorized common shares increased from 1.0 billion to 4.0 billion.

Cybersecurity. The board delegates oversight to the Audit Committee, which receives quarterly reports from the CISO and reports to the full board at least annually. As of the FY2025 annual report, Arista had not identified risks from cybersecurity threats, including from prior incidents, that it believes have materially affected or are likely to materially affect the business.

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Leadership and board

From the FY2025 Form 10-K (accession 0001596532-26-000013) and Current Reports on Form 8-K: accession 0001596532-25-000077 (March 17, 2025), accession 0001596532-25-000170 (June 16, 2025), accession 0001596532-25-000258 (September 8, 2025) and accession 0001596532-26-000118 (June 2, 2026).

Jayshree Ullal is Chief Executive Officer and Chairperson of the Board, signing the annual report as principal executive officer; she is also the chief operating decision maker for segment-reporting purposes. Chantelle Breithaupt is Senior Vice President and Chief Financial Officer, serving as both principal financial officer and principal accounting officer.

Arista now has two Presidents. On June 13, 2025 the board appointed Todd Nightingale, then 45, as President and Chief Operating Officer, joining on or about July 1, 2025. He had been Chief Executive Officer and a director of Fastly, Inc. from September 2022 to June 2025 and, before that, EVP and General Manager of Enterprise Networking and Cloud at Cisco, and SVP/GM of Cisco Meraki. His terms: $350,000 base salary, a $30.0 million restricted stock unit grant vesting 25% after one year then quarterly over approximately four years, a $2.0 million performance-based grant covering three six-month performance periods, and a severance agreement providing 12 months of salary continuation plus 12 months of time-based equity acceleration on an involuntary termination without cause or resignation for good reason, 50% of then-unvested equity if that is greater and the termination falls within 12 months of a change in control.

On September 5, 2025 the board appointed co-founder Kenneth Duda, Chief Technology Officer and SVP of Software Engineering since 2011, and a director since December 2023, as President and Chief Technology Officer, effective immediately, with an expanded remit covering cloud and AI systems engineering and business development. No compensation arrangement was entered into in connection with the appointment. The bylaws were amended and restated the same day to provide that the role of President may be held by more than one individual; the same amendment broadened the Delaware forum-selection provision following recent DGCL changes. Beyond Duda's stated scope, no filing in the public record sets out how the two President roles divide, so the working split between Nightingale and Duda is not established by the filings. Alongside Duda's expanded role, Tyson Lamoreaux was appointed Senior Vice President of Cloud and AI Networking in September 2025, reporting to Chief Development Officer Hugh Holbrook.

Board and senior-management change, March 2025. On March 14, 2025 the board expanded to nine members and appointed Greg Lavender, Chief Technology Officer of Intel Corporation, as an independent Class III director and a member of the Audit Committee. The same day, John McCool notified Arista of his intention to step down as Chief Platform Officer and SVP of Engineering and Operations effective April 7, 2025, remaining as a senior advisor to the CEO and planning a leave of absence for personal reasons with the expectation of returning; the company stated the decision was not the result of any disagreement. Alex Rose (VP, Hardware Engineering) and Mike Kappus (AVP, Manufacturing) assumed his hardware engineering and manufacturing responsibilities. As of the FY2025 annual report the nine-member classified board comprised Ullal (Chairperson), Duda, Kelly Battles, Lewis Chew, Charles Giancarlo, Greg Lavender, Dan Scheinman, Mark Templeton and Yvonne Wassenaar.

The 2026 annual meeting recorded substantial dissent. At the meeting held May 29, 2026, all three Class III nominees were elected and Ernst & Young LLP was ratified as auditor (1,103,492,066 for, 31,447,422 against, 344,467 abstaining). The advisory vote on named executive officer compensation passed with 624,907,669 shares for and 410,157,079 against, plus 862,319 abstentions, roughly 40% of votes cast opposed. Nominee Mark B. Templeton drew 380,564,767 withheld votes against 655,362,300 for, versus 225,130,281 withheld for Lewis Chew and 216,112,800 for Greg Lavender; each director vote also carried 99,356,888 broker non-votes. The filing reports the tallies without commentary.

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Risk factors

Condensed from Item 1A of the FY2025 Form 10-K (accession 0001596532-26-000013) and the updated Item 1A in the Q2 FY2026 Form 10-Q (accession 0001596532-26-000175).

Customer concentration is the defining risk. Two end customers were 26% and 16% of FY2025 revenue. Purchases are based primarily on purchase orders that customers can cancel, delay, reduce or modify with little or no notice. Large customers receive more favorable terms, pricing discounts, bundled upgrades, acceptance terms, indemnification, which compress gross margin in the periods those sales land. Timing is unpredictable because of order complexity, capital-expenditure budget shifts, internal cost-reduction and efficiency initiatives, deployment timing and long evaluation/test/qualification cycles. Volatility in demand for the AI models underlying these networks amplifies this unpredictability. Customer consolidation could remove customers outright.

Single-vendor silicon dependence. Arista is primarily reliant on Broadcom for switching chips, generally without guaranteed supply contracts. If Broadcom or other merchant silicon vendors fail to innovate, miss deadlines, under-supply, or become competitive by selling silicon for white boxes, Arista could be forced to redesign products, delaying launches and losing sales. Component suppliers may also expose Arista to third-party IP claims for which it is not indemnified.

Supply chain and inventory. Arista issues large non-cancellable, non-returnable purchase commitments to shorten lead times. The Q2 FY2026 filing flags tightening supply conditions in memory and silicon markets driven by AI infrastructure and advanced automotive demand, which have pressured gross margin and could prevent on-time shipment of end-customer orders. If suppliers miss commitments or demand undershoots forecasts, the result is excess or obsolete inventory write-downs and supplier liability charges; the company expects inventory and purchase commitments to remain elevated and volatile.

Tariffs and trade. Products are primarily manufactured in Malaysia, Vietnam and Mexico, with a limited number originating in China, Taiwan, Thailand and the Philippines, and some components procured from China. Since 2018 the U.S. has imposed Section 301 tariffs on Chinese-origin communications equipment, and since February 2025 additional global, country-specific and commodity-specific tariffs under IEEPA, Sections 122 and 301 of the Trade Act of 1974, and Section 232. In February 2026 the U.S. Supreme Court held that the tariffs imposed under IEEPA were invalid, but the policy environment remains fluid, with retaliatory tariffs, new Chinese export controls on critical minerals and rare earths, and USMCA renegotiation all in play. Arista may not be able to pass increased trade costs through to customers.

Revenue volatility and acceptance-based deferrals. Annual revenue growth was 28.6%, 19.5% and 33.8% in 2025, 2024 and 2023. Arista remains in a period of new product introductions and expanded use cases in AI Ethernet, which has increased customer trials and contracts with acceptance periods, raising the volatility and magnitude of evaluation inventory and product deferred revenue. If trial or acceptance requirements are not satisfied, Arista may have to accept returns, forgo revenue recognition and write down inventory. Management explicitly cautions that near-term revenue trends may not reflect current demand levels because shipments run against previously committed deployment plans.

AI demand durability. Generative and agentic AI have driven networking demand, but the long-term trajectory is unknown. Customers may overestimate demand for their AI build-outs and cancel, delay or reduce commitments; they may also re-architect networks to improve efficiency and reduce demand. If the AI Ethernet market does not develop as anticipated, or if Ethernet loses to InfiniBand or competing AI Ethernet products, results suffer. The filings also warn that AI Ethernet markets may experience prolonged slowdowns, cyclical contractions, or "the correction of speculative bubbles."

Gross margin. Margins vary with competitive pricing pressure, the ability of vertically integrated competitors to bundle or use proprietary silicon, large-customer mix, product mix, merchant silicon costs, excess/obsolete inventory and supplier liability charges, expedite fees and tariffs. Operating expenses are set on anticipated revenue and are largely fixed in the short and medium term, so revenue shortfalls translate directly into operating-margin variance.

Competition and industry consolidation. Intense competition from larger, better-capitalized incumbents; vertically integrated bundling; white-box hardware with free open-source network operating systems; and disaggregated procurement. New entrants and alternative technologies may create downward pricing pressure.

Other named risks. Long and unpredictable sales cycles; dependence on channel partners and exposure to their credit (standard terms of 30–90 days, with extended payment terms granted to certain large customers); government-sales certification and audit risk; product defects and cybersecurity incidents (the filings note that the Awake Security NDR offering may make Arista a more attractive target); third-party IP assertions, with competitors holding larger patent portfolios; reliance on licensed third-party and open-source software; U.S. export controls and Chinese retaliation; evolving AI, privacy (CCPA/CPRA, GDPR, UK GDPR, India's DPDP Act), NIS2, DORA and environmental regulation; income tax volatility and IRS/foreign examinations; a classified board and other anti-takeover provisions; insider control; and no dividends. Macroeconomic uncertainty, inflation, monetary policy shifts, recession risk, government-administration policy change and geopolitical conflict, is carried as a standing overlay.

Litigation posture. Arista is party to ordinary-course claims including intellectual property and patent disputes. As of June 30, 2026, provisions recorded for contingent losses were not significant, and management does not believe unresolved matters are likely, individually or in the aggregate, to have a material adverse effect.

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Management's discussion and analysis, fiscal year 2025

From Item 7 of the FY2025 Form 10-K, accession 0001596532-26-000013.

Results. Total revenue of $9,005.7 million, up 28.6% from $7,003.1 million in FY2024. Product revenue rose $1,692.9 million (+28.8%) to $7,576.9 million on healthy demand and higher shipments of switching and routing platforms, with contributions across the customer base. Service revenue rose $309.7 million (+27.7%) to $1,428.8 million as initial and renewal support contracts grew with the installed base.

Gross margin was flat at 64.1% in both FY2025 and FY2024 (versus 61.9% in FY2023, when the FY2024 improvement had been driven by a $180.4 million reduction in net excess/obsolete inventory and supplier liability charges). Cost of revenue rose $725.2 million (+28.9%) to $3,237.0 million, tracking revenue.

Operating expenses of $1,912.6 million were 21.3% of revenue, down from 22.1%, operating leverage on a 28.6% top line:

• Research and development $1,237.3 million, +24.1% (13.8% of revenue vs. 14.2%), driven by a $95.6 million increase in personnel costs on higher headcount and a $78.6 million increase in new product introduction costs (third-party engineering and prototypes).
• Sales and marketing $533.4 million, +24.8% (5.9% vs. 6.1%), on headcount-driven personnel costs.
• General and administrative $141.9 million, +15.6% (1.6% vs. 1.8%), primarily higher professional fees.

Income from operations $3,856.1 million (42.8% of revenue) versus $2,944.6 million. Other income, net was $393.6 million, up $73.1 million on $72.4 million more interest income from larger cash and securities balances. Net income $3,511.4 million; diluted EPS $2.75 versus $2.23. The effective tax rate rose to 17.4% from 12.6%, primarily because of a decrease in tax benefits attributable to equity-based compensation; the OBBB Act, signed July 4, 2025, is reflected in FY2025 results.

Geographic mix. Americas $7,122.1 million (79.1% of revenue) versus $5,729.0 million (81.8%); EMEA $1,070.3 million (11.9%) versus $713.2 million (10.2%); Asia-Pacific $813.3 million (9.0%) versus $560.9 million (8.0%). Non-Americas revenue rose from 18.2% to 20.9% of total, driven by geographic mix of sales to large global customers.

Liquidity. Cash, cash equivalents and marketable securities of $10.7 billion at December 31, 2025, approximately $1.0 billion held offshore. Operating cash flow was $4.4 billion, from net income of $3.5 billion, a $687.8 million net decrease in working capital requirements and $172.7 million of net non-cash adjustments. The dominant working-capital inflow was a $2.5 billion increase in deferred revenue (product deferrals on contracts with acceptance terms, plus PCS growth) and $379.9 million more accounts payable and other liabilities, partly offset by a $937.4 million increase in other assets (deferred cost of goods sold on higher product revenue deferrals), a $746.4 million increase in receivables and a $412.5 million increase in inventory. Non-cash items were $439.2 million of stock-based compensation, largely offset by a $312.0 million increase in deferred income taxes tied to the deferred-revenue build.

Investing used $3.6 billion: $6.7 billion of available-for-sale securities purchased, $300.0 million for the VeloCloud acquisition, and $119.5 million of property, equipment and intangibles, against $3.6 billion of maturities and sales. Financing used $1.6 billion, entirely open-market share repurchases.

Buybacks. The $1.2 billion prior repurchase program was completed in May 2025 and the board authorized a $1.5 billion program at the same time. FY2025 repurchases totalled $921.0 million under the prior program and $682.1 million under the new one; $817.9 million remained authorized at December 31, 2025. Fourth-quarter 2025 activity was 4.8 million shares at an average of $127.84, all in November.

Commitments. Non-cancellable purchase obligations of $6.8 billion at December 31, 2025 ($6.3 billion expected within 12 months, $0.5 billion beyond), plus $53.0 million of deposits with contract manufacturers. Operating lease obligations of $90.5 million ($22.1 million within 12 months). The Santa Clara building project carried $170.0–$195.0 million of estimated capital expenditure through the end of fiscal 2026. No off-balance-sheet arrangements.

Management's framing of the environment. The company is working with contract manufacturers and suppliers to optimize the supply chain against evolving trade policy and tariff uncertainty, maintaining "a disciplined fulfillment cadence," shipping against previously committed demand/deployment plans and accelerating some deployments. It expects continued inventory and purchase-commitment volatility, and flags supply chain inflation and material scarcity, specifically memory-market tightening, as gross-margin pressure. Critical accounting estimates centre on revenue recognition (standalone selling price allocation across multi-element product/PCS contracts), inventory valuation and supplier liabilities (including evaluation inventory held at customer sites where title stays with Arista until acceptance), and income taxes.

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Current quarter, Q2 fiscal 2026 (quarter ended June 30, 2026)

From the Form 10-Q filed August 5, 2026, accession 0001596532-26-000175, and the results release furnished on Form 8-K, accession 0001596532-26-000174.

The first $3 billion quarter. Revenue of $3,035.7 million, up 37.7% year over year and up 12.1% sequentially from Q1 2026. Product revenue $2,605.2 million (+38.8%, or +$728.2 million); service revenue $430.5 million (+31.3%, or +$102.7 million). For the six months, revenue was $5,744.7 million, up from $4,209.6 million, with product up $1,347.0 million (+37.7%) and service up $188.1 million (+29.4%).

Margins compressed, primarily on customer mix. Gross margin fell to 62.9% in the quarter and 62.4% for the half, from 65.2% and 64.5% a year earlier. Management attributes the decline primarily to a higher proportion of sales to large end customers, who generally receive higher discounts. A second, secondary pressure runs alongside it: the company says supply chain inflation and material scarcity, specifically the tightening of supply conditions in the memory and silicon markets, driven by AI infrastructure and advanced automotive demand, have continued to weigh on gross margin, and that margins could be affected further if supply conditions worsen or trade measures escalate and the costs cannot be passed on to customers. The filing does not quantify how the two split. Cost of revenue rose 46.9% in the quarter and 44.3% for the half, faster than revenue.

Operating expenses of $532.3 million: R&D $348.2 million (+17.4%, driven by $33.3 million more personnel cost and $8.3 million more new product introduction cost; for the half, +22.9% with $59.4 million personnel and $58.8 million NPI), sales and marketing $150.3 million (+18.8% on headcount), G&A $33.8 million (+15.0%). Operating expense growth well below revenue growth pushed GAAP operating margin to 45.4% from 44.7%; non-GAAP operating margin was 49.9% versus 48.8%. Income from operations was $1,378.0 million.

Other income, net was $126.3 million, up on $32.0 million more interest income from larger balances. The effective tax rate rose to 19.4% from 17.7% (19.5% versus 16.3% for the half), again on lower equity-compensation tax benefits. Net income $1,212.9 million; GAAP diluted EPS $0.95 versus $0.70; non-GAAP diluted EPS $1.02 versus $0.73. Six-month net income was $2,235.8 million and diluted EPS $1.75.

Geography. Americas $2,337.9 million (of which $2,319.6 million from the U.S.), EMEA $438.2 million, Asia-Pacific $259.6 million. Non-Americas was 23.0% of revenue in the quarter and 19.4% for the half, versus 21.8% and 21.0% a year earlier.

The deferred revenue build is the number to watch. Deferred revenue ended the quarter at $6,865.9 million, up from $4,061.7 million a year earlier, $5,100.7 million current and $1,765.2 million non-current on the balance sheet, versus $4,002.6 million and $1,369.8 million at December 31, 2025. In the quarter alone, $1,703.2 million of new deferrals were added against $1,036.0 million recognized from the opening balance. This is a mix of multi-year PCS and product deferrals on contracts with acceptance clauses. Adding contract liabilities and other performance obligations (including $427.8 million of unbilled multi-year PCS and $875.1 million of binding contractual commitments primarily for future product shipments), total remaining performance obligations were $8.4 billion, of which approximately 91% is expected to be recognized within two years and 9% in years three through five.

Balance sheet. Total assets $23,720.1 million. Cash, cash equivalents and marketable securities of approximately $13.3 billion ($2,290.2 million cash plus $11,053.1 million securities), of which only about $0.5 billion is held offshore, down from $1.0 billion offshore at year end. No debt is disclosed; total liabilities of $8,922.4 million are dominated by the $6,865.9 million of deferred revenue. Stockholders' equity $14,797.7 million. Inventories rose to $2,535.3 million from $2,247.1 million, with raw materials up sharply to $859.6 million from $611.2 million and evaluation inventory at customer sites up to $616.0 million from $403.7 million. Deferred cost of goods sold within prepaid expenses reached $1,621.9 million from $1,197.0 million. Accounts receivable $2,266.2 million. Goodwill unchanged at $416.1 million; acquisition-related intangibles net $258.2 million with a 4.9-year weighted-average remaining life. Property and equipment rose to $312.5 million from $203.1 million on the Santa Clara build-out.

Cash flow. Six-month operating cash flow of $2.8 billion versus $1.8 billion a year earlier: net income $2.2 billion, a $476.4 million net decrease in working capital requirements (led by the $1.5 billion deferred revenue increase and $198.4 million more income tax payables, offset by $619.7 million more other assets, $379.3 million more receivables and $288.2 million more inventory), plus $64.3 million of favorable non-cash adjustments ($241.3 million stock-based compensation less a $213.1 million deferred-tax increase). Investing used $2.4 billion, all securities activity, no acquisitions in the period, versus $300.0 million for VeloCloud in the prior-year half. Financing used only $1.5 million.

No buybacks. Arista repurchased no shares in the first six months of 2026; $817.9 million remains authorized under the May 2025 $1.5 billion program. Shares outstanding were 1,261.2 million at June 30, 2026 (1,261,224,648 as of July 30, 2026), up from 1,256.5 million at year end, so the share count drifted up with equity-plan issuance rather than being offset by repurchase.

Purchase commitments jumped. Non-cancellable purchase commitments reached $9.7 billion at June 30, 2026 ($9.4 billion within twelve months, $0.3 billion beyond), up from $6.8 billion at December 31, 2025, a 43% increase in six months. Deposits with contract manufacturers rose to $124.4 million from $53.0 million. Management ties this to responding to rapid AI network deployment and navigating tightening memory and silicon supply, and warns it will increase working capital requirements. Remaining Santa Clara capital expenditure was $110.0–$135.0 million through the end of fiscal 2026.

Stock compensation. $120.4 million in the quarter ($241.3 million for the half), versus $85.2 million and $178.2 million a year earlier, growing faster than revenue. Unvested RSUs of 24.6 million at a $77.36 weighted-average grant fair value; RSUs granted in the half carried a $139.92 grant-date fair value. $1.5 billion of unamortized compensation cost remains, to be recognized over approximately 3.9 years.

Management's tone. Set against the annual report, the macroeconomic discussion in the quarterly filing is the more cautious of the two: it now cites "supply constraints" alongside potential supply chain disruptions, adds the war in Iran to the geopolitical pressures listed, and states that ongoing supply constraints and future trade measures "have and could continue to" adversely affect supply chain stability and increase product costs.

Governance and insider activity. The annual meeting fell inside the quarter, on May 29, 2026: all three Class III nominees (Lewis Chew, Greg Lavender, Mark B. Templeton) were elected and Ernst & Young LLP was ratified as auditor, with the say-on-pay and Templeton tallies set out under "Leadership and board" above. During the quarter, CFO Chantelle Breithaupt modified a Rule 10b5-1 trading arrangement on June 2, 2026 (running to December 31, 2026), and director Mark Templeton adopted one on June 9, 2026 covering up to 50,000 shares (running to June 30, 2027).

Product and recognition. During and around the quarter Arista introduced the 7060XE7 Series, a 1.6-terabit Etherlink portfolio for AI fabrics delivering up to 100 Tbps of system bandwidth and supporting Linear Pluggable Optics, which the company says cuts interconnect power consumption by approximately 60% versus traditional pluggable optics, with liquid-cooled options for scale-up, scale-out and scale-across. It also detailed multi-planar leaf-spine designs, the open Multipath Reliable Connection (MRC) protocol and SRv6. Arista was named a Leader in the 2026 Gartner Magic Quadrant for Enterprise Wired and Wireless LAN and entered the 2026 Fortune 500.

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Subsequent events

Neither the FY2025 Form 10-K (accession 0001596532-26-000013) nor the Q2 FY2026 Form 10-Q (accession 0001596532-26-000175) contains a subsequent-events note. The notes to the condensed consolidated financial statements in the quarterly report run from Note 1 (Organization and Summary of Significant Accounting Policies) through Note 9 (Segment and Geographical Information) with no such disclosure, and the annual report's notes likewise end at Note 9. No acquisition, divestiture, financing, borrowing, debt issuance, dividend declaration or litigation settlement occurring after June 30, 2026 is disclosed in either filing. The only acquisition of the recent period, VeloCloud, purchased from Broadcom for $300.0 million in cash and completed June 30, 2025, closed a full year before the current period end; its preliminary purchase price allocation comprised $268.4 million of intangible assets, $148.0 million of goodwill and $116.4 million of net tangible liabilities assumed, and goodwill carrying value was unchanged through June 30, 2026.

The one material post-period-end item disclosed by the company is:

• August 4, 2026, second quarter 2026 results and third quarter guidance (Form 8-K, accession 0001596532-26-000174). For Q3 2026 Arista guided to revenue of approximately $3.3 billion, non-GAAP operating margin of 48–49%, and non-GAAP diluted EPS of $1.06 to $1.08. Non-GAAP guidance excludes stock-based compensation, intangible asset amortization, tax benefits on stock-based awards and the tax effect of the exclusions; the company does not provide a forward-looking GAAP reconciliation. At the midpoint, the revenue guide implies roughly 8.7% sequential growth off the $3,035.7 million second quarter.

The only other post-period datum in the record is the cover-page share count as of July 30, 2026, given above. No Current Report on Form 8-K was filed by Arista between the August 4, 2026 results release and the filing of the quarterly report on August 5, 2026.